Boeing-Embraer deal blocked by Brazilian court

Boeing and Embraer announced a stronger strategic partnership during a press conference at Farnborough Airshow. Photo: © Jakob Wert / IFN

A Brazilian court has stopped the joint venture deal between Boeing and Embraer.

The partnership agreement, which was announced by the two parties during Farnborough Airshow 2018 in July, is put on hold until at least January 1st, 2019, when Brazil’s president-elect Jair Bolsonaro takes office.

This decision made by a federal court prevents Boeing and Embraer from signing the deal which would hand control of the Brazilian aircraft manufacturer over to Boeing.

The two companies had planned to create a joint venture to better compete with rivals Airbus and Bombardier. Embraer says this deal, in which Boeing would acquire 80% of the regional jet manufacturer for $4.75 billion, is crucial to its survival.

Even though the deal is waiting for approval since July, the Brazilian government has not yet approved it and will leave this decision to Bolsonaro, who will be Brazil’s next president in 2019.

At the moment, the counrty’s government has full veto power at Embraer. If the partnership with Boeing goes through, Brazil would be forced to give up all control of the aircraft manufacturer to the American company. This is a key reason why the deal was stopped, according to the court.

Experts say it is unlikely that Jair Bolsonaro will approve this deal, as it also includes the defence unit of Embraer.

Earlier this year, Airbus and Bombardier formed a joint venture for the construction and sale of the Airbus A220 (formerly Bombardier CSeries). Boeing and Embraer, who already have a strategic partnership in place, intend to make a similar move, to keep up with the competing European-Canadian aircraft programme.