Boeing-Embraer Deal Stands Cancel


Boeing has canceled a $4.2B deal of buying 80% of Brazilian Aircraft maker Embraer

In July 2018 a deal was finalized between the American aircraft manufacturer Boeing and the Brazilian aircraft maker Embraer where Embraer agreed to sell 80% of its commercial jets but Boeing on Saturday terminated the deal and claimed that Embraer had failed to fulfill certain conditions for the deal.

The termination of the deal is a bad sign for Embraer as it was very crucial for the financial support of the company. According to the experts, the Boeing – Embraer deal was not just beneficial for the company but it was very much important for the very existence of the company in the near future. Keeping current situations in mind where the entire world is under lockdown and uncertain about the future in such cases the Embracer survival is almost impossible.

Adding to the severity, shares in Embraer fell 11%  in line with a sell-off with the Brazilian market after the justice minister resigned accusing president Jair Bolsonaro of interference. While Boeing shares were down by 5.9% only.

There is also a third angle to the deal. Due to the COVID-19 crisis, the Embraer stocks are falling sharply and there might be some cash concerns at Boeing too, and these factors might have disturbed the deal’s economics which caused the deal to terminate. Moreover, the agreement contained a termination fee of $75 million, rising to $100million if it is for antitrust reasons.

There is a problem with Boeing too. Boeing has been struggling to get its 737 MAX aircraft again following two fatal crashes in 2018 and 2019. These crashes have lowered the demand for Boeing aircrafts and the corona crisis is adding more problems to it.

Not only Boeing and Embraer, but the entire aviation industry is going through its most precarious phase as the service costs are high while yield remains null. Losses are estimated to grow and debt will pile up. The only thing for which the aviation industry can look is the onset of favorable conditions.

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Jyotika Kumari
Content Writer +Creative Writer +Social Media Manager so basically I get you Up 2 Date.