Boeing Terminates Agreement to Establish Joint Venture with Embraer
In a major turn of events, Boeing has terminated the agreement to establish a joint venture with Brazilian aircraft manufacturer, Embraer. The move comes as a result of Embraer failing to meet certain conditions of the deal, forcing Boeing to reconsider its position.
The joint venture agreement, announced in 2018, was aimed at creating a new company focused on the development of commercial aircraft and services. Under the agreement, Boeing was set to acquire an 80% stake in the joint venture, while Embraer would retain the remaining 20%.
However, in recent months, the deal has been mired in controversy, with the Brazilian government raising concerns about the potential loss of control over Embraer`s commercial aircraft division. As a result, the government sought to impose certain conditions on the deal, including the requirement that Boeing agree to protect Brazilian jobs and ensure that Embraer`s military division remains separate from the joint venture.
Despite efforts by both Boeing and Embraer to address these concerns, the two sides were unable to reach an agreement. In a statement announcing the termination of the deal, Boeing cited “unfulfilled conditions” as the reason behind its decision.
The termination of the joint venture is a significant setback for Boeing, which had hoped to expand its presence in the regional aircraft market through the partnership with Embraer. The move also comes amidst ongoing challenges for Boeing, including the ongoing grounding of its 737 Max aircraft following two crashes in 2018 and 2019.
Despite these challenges, however, Boeing remains committed to its long-term growth strategy, which includes expanding its commercial aircraft portfolio and developing new technologies. In a recent statement, Boeing CEO Dave Calhoun reiterated the company`s commitment to “investing in new product development and continuing to offer the most comprehensive portfolio of products and services in the industry.”
Moving forward, it remains to be seen how the termination of the joint venture will impact the future of both Boeing and Embraer. For now, however, it is clear that the two sides will need to explore other options to achieve their respective goals in the commercial aircraft market.