Last updated 2323UTC with the reply from Boeing
Just two days ago I wrote that a Brazillian Court had blocked a sale of Embraer to Boeing. Now another article is in order, as the injunction has just been overturned. Embraer has reportedly told that the decision was overturned by a federal appeals court. As such, the American manufacturing giant Boeing could be one step closer to acquiring a stake in the commercial arm of the Brazilian aerospace company. This would allow for even more competition against European rivals Airbus.
Why Does Boing Want Embraer?
Embraer was, until recently, competing against the Bombardier C Series program. However, this has since been sold to Airbus in addition to being rebranded as the A220. In fact, the Embraer E-Jets are almost like to like with the A220 in some respects. As such, a purchase of Embraer would allow Boeing to directly compete with Airbus in the regional jet market. This would add to the other markets where Boeing and Airbus are in direct competition.
In a deal worth US$3.8 million, Boeing is set to purchase an 80% stake in Embraer. In fact, Embraer has said that this deal is crucial for the company’s survival. Embraer is currently the world’s third-largest civil aircraft manufacturer, manufacturing commercial, business and military jets. It is the commercial jets, that Boeing is interested in. Namely the E and E-2 series aircraft. These are the aircraft which would allow Boeing to compete with the A220, and airliner which it particularly dislikes.
What Had The Court Ruled?
The Brazillian courts ruled in favour of an injunction to halt the decision of a sale of Embraer to Boeing. Brazil’s left-wing Workers Party brought the action against Boeing and Embraer. The injunction stops Embraer’s board of directors from signing a deal with Boeing. Now, the injunction has been cancelled after one of the country’s top lawyers took action. He argued that it “violated the constitutional right to freedom of enterprise by interfering in the negotiations between two private companies.”
Brazil’s government gets a deciding say in the matter as a key shareholder, and as a new president takes office at the end of the month, the decision is being left to him. The president-elect has previously spoken in support of the deal. After this, the deal will be put in front of Embraer shareholders, where it is expected to gain a seal of approval. Despite the previous news causing shares in Embraer to fall, today’s news has helped that to recover. Embraer declined to provide a comment, however, told Simple Flying “The Company will keep its shareholders and the Market informed on any material developments related to the Class Action.” Meanwhile, a Boeing spokesperson told Simple Flying “productive discussions are continuing as we work towards finalizing our agreement”.
Will Boeing succeed in purchasing Embraer? Let us know in the comments down below!