Boeing has scrapped a proposed deal with Embraer to create a joint commercial aviation business.
The agreement, valued at $4.2 billion, had been under discussion for two-years, and aimed to boost Boeing in the lucrative single-aisle segment.
It was widely seen as a response to the Airbus acquisition of the Bombardier C-Series programme, which was subsequently rebranded as the A220.
However, the deal has now been terminated as the manufacturers enter a new commercial reality post-Covid 19.
“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 master transaction agreement conditions.
“We all aimed to resolve those by the initial termination date, but it did not happen,” said Marc Allen, president of the Embraer partnership at Boeing.
“It is deeply disappointing.
“But we have reached a point where continued negotiation within the framework of the agreement is not going to resolve the outstanding issues.”
The planned partnership between Boeing and Embraer had received approval from all necessary regulatory authorities, with the exception of the European Commission.
The market value of Embraer has fallen to less than $1.1 billion this year, about a quarter of what Boeing had been poised to pay for the commercial plane operations of the company alone.
Reacting to the news, Embraer said the deal had been unfairly terminated.
“Embraer believes strongly that Boeing has wrongfully terminated the master transaction agreement, 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,” said a statement.
“We believe Boeing has engaged in a systematic pattern of delay and repeated violations of the agreement, 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 argued it had been in full compliance with its obligations under the agreement.
The Brazilian company said it would pursue all remedies against Boeing for the damages incurred.
A second joint venture, originally signed in 2012 and expanded in 2016, to jointly market and support the C-390 Millennium military aircraft, will continue.