Boeing’s Embraer Acquisition Deal Delayed Until 2020

The proposed Boeing-Embraer acquisition deal has been delayed until at least March of 2020. European Union regulators are concerned that the deal would remove Embraer from being the world’s third-largest planemaker, leaving Boeing and Airbus with less competition.

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European regulators have stopped the clock on the Boeing-Embraer deal. Photo: Embraer

Having now said that they have not received a sufficient amount of information regarding Boeings’ investment in Embraer, the European regulators have suspended their in-depth antitrust probe.

The Boeing-Embraer deal could result in higher prices

The European Commission investigating the deal is warning that allowing Boeing to effectively take over the Brazilian aircraft manufacturer could result in higher plane prices and less choice for airlines. While writing about the merger, Bloomberg quotes one of the world’s toughest merger regulators as saying that it has “stopped the clock” until it gets the answers it needs.

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The Boeing-Embraer deal could result in fewer choices for airlines. Photo: Embraer

This new heightened scrutiny by the European regulators puts unwanted added pressure on Boeing’s plan to buy an 80% venture-controlling share of the Brazilians commercial aircraft division.

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There is no escaping why Boeing wants to buy a controlling interest in Embraer. Clearly, it is in direct response to Airbus’ joint venture with Canadian aircraft maker Bombardier and their CSeries regional jet.

Now being marketed as the Airbus A220 the former C Series twin-engine regional jet is fast becoming an airline’s top choice for the 100-150 seat regional market. Not surprisingly Embraer’s E-Jet family is designed to compete in the medium-range market and would be a competitor to the A220.

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The Airbus A220 is fast becoming an airline favorite. Photo: Markus Eigenhee via Flickr

A spokesperson for the European regulators issued a statement on Monday which read:

“Parties must supply the necessary information for the investigation in a timely fashion. Failure to do so will lead the commission to stop the clock.”

Last month the European regulators said that for at least the next five to ten years that they could not see a rival aircraft manufacturer from Russia, China, or Japan being able to replicate Embraer’s competition with the world’s two largest plane makers, Boeing and Airbus.

They also brought up the point that Boeing and Embraer are currently competing against one another in the 100 to 150 seat aircraft market and that Embraer is a small but important competitor in the market for slightly larger planes.

Boeing is convinced the deal will pass scrutiny

A representative from Boeing’s Chicago headquarters said that both Boeing and Embraer “continue to co-operate with the European Commission as they assess our transaction and look forward to a positive resolution.”

The European regulators had initially penciled in a February 20th, 2020 deadline to rule on the deal and then extended the deadline to March 5th before the current review got suspended.

Meanwhile, both Embraer and Boeing had already moved their expectations from completing the deal this year to sometime in early 2020 after saying they expected further scrutiny from the European regulators.

The deal the Seattle plane maker has put together requires them to pay Embraer $4.2 billion for an 80% stake in the Brazilians commercial aircraft division.

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Moke

Decades ago you had 7 or 8 good plane makers, today thanks to all corporate mergers we have Boeing-Airbus twins duopoly. No wonder aviation is stagnating.

Porter

Hope there is more love for the E2. Yes the A220 is a great plane but it’s wayyy too expensive. The older E-jet is already such great on its cost performance ratio, the E2 would be better. In regional operations, airlines don’t need a bontique and luxurious plane, they need a cheap and durable workhorse!!! I can understand why some airlines like Delta chooses A220, because they uses it for long and skinny route sometimes like 4hrs+, let is the time that passenger comfort is important. But European hops are so short, most like 1hr. That is the time you… Read more »

Sam Rittler

Its because the E jets are pretty unreliable in terms of maintenance. The A220, albeit with a higher price tag, is far more reliable.

K.P.

Really, when was the E jets grounded due to engines going BOOM. Drink more Kool aid from Airbus.

Ueli Praett

Sometimes I am travelling in France and I have to admit that the regional connections are far better using the TGV, Thalys, Eurostar trains. running from Lille to Marseille in less than 4 hours (by plane it’s more). So in France the situation appears to me different.

K.P.

Love how it was all fine when Airbus took over CS Series but the Boeing one is bad. Typical European BS.

Peter

Poor Embraer 🙁
A perfectly good company with nice products…and now it’s going to be flushed down the Boeing toilet 🙁

JFP

The EC will never approve it. They will sink Boeing…