Boeing has ended the ongoing negotiations for the last two years with Embraer and stepped out of the agreement both the parties had. The terminated deal is worth $4.2 billion and Embraer is not happy with the reason provided by Boeing. Boeing issued a statement saying it exercised its rights and ended the agreement as Embraer didn’t meet the necessary conditions. Embraer believes that Boeing has wrongfully terminated the deal and operated in bad faith. Embraer issued a statement saying that Boeing has manufactured false claims and ended the agreement so that it doesn’t have to pay $4.2 billion.
Collapse in Demand for Aircraft the Reason Behind Cancellation of the Deal
Embraer and industry specialists both know that Boeing’s decision comes out of a deliberate attempt of delaying the agreement. Brazilian aircraft manufacturer, Embraer said that Boeing didn’t complete the deal from its end because of its weak financial position. It makes sense since the demand for aircraft has come down significantly and it isn’t going to rise very soon. Boeing has also been facing issues with its 737-Max aircraft and had to ground it earlier resulting in a loss for the company. Boeing simply can’t afford the deal anymore.
Boeing’s Misfortune Airbus’s Advantage
Airbus can capitalise on the failure of the deal as Embraer is the world’s leading manufacturer of regional jets. Embraer’s E-Jets are much smaller and shorter than what Airbus makes. Airbus can shake hands with Embraer at the time when it is hurting, show Embraer that they back them and positively work out a deal for the future. One of the other reasons why Boeing didn’t complete the deal was not to get in the bad books of U.S. Government. At a time of crisis, when the government is injecting cash into the company through a bailout package; Boeing going ahead with the deal would have meant the government’s $4.2 billion dollars gone into a Brazilian company. This would have become a huge deal for Boeing had the deal finalised.