Boeing has terminated its Master Transaction Agreement (MTA) with Embraer, under which the two companies sought to establish a new level of strategic partnership.
The planned strategic partnership would have comprised two joint ventures: one joint venture made up of the commercial aircraft and services operations of Embraer (Boeing Brasil – Commercial) in which Boeing would own 80% and Embraer 20%; and another joint venture to promote and develop markets for the multi-mission medium airlift C-390 Millennium (Boeing Embraer – Defense) in which Embraer would own a 51% stake and Boeing owning the remaining 49%.
Under the MTA, 24 April 24, 2020, was the initial termination date, subject to extension by either party if certain conditions were met. Boeing exercised its rights to terminate after claiming that Embraer did not satisfy the necessary conditions.
“Boeing has worked diligently over more than two years to finalise its transaction with Embraer. Over the past several months, we had productive but ultimately unsuccessful negotiations about unsatisfied MTA conditions. We all aimed to resolve those by the initial termination date, but it didn’t happen,” said Marc Allen, president of Embraer Partnership & Group Operations. “It is deeply disappointing. But we have reached a point where continued negotiation within the framework of the MTA is not going to resolve the outstanding issues.”
In response, Embraer issued a statement countering these claims. “Embraer believes strongly that Boeing has wrongfully terminated the MTA, that it has manufactured false claims as a pretext to seek to avoid its commitments to close the transaction and pay Embraer the US$4.2 billion purchase price. We believe Boeing has engaged in a systematic pattern of delay and repeated violations of the MTA, because of its unwillingness to complete the transaction in light of its own financial condition and 737 MAX and other business and reputational problems. Embraer believes it is in full compliance with its obligations under the MTA and that it has satisfied all conditions required to be accomplished by 24 April 2020. Embraer will pursue all remedies against Boeing for the damages incurred by Embraer as a result of Boeing’s wrongful termination and violation of the MTA.”
The planned partnership between Boeing and Embraer had received unconditional approval from all necessary regulatory authorities, with the exception of the European Commission.