Boeing Gets A Big Blow After Embraer Deal Blocked By Brazilian Court

Boeing has been eying up Embraer, there’s no secret about it. However, it appears as though Boeing will have to wait a little bit longer for the golden acquisition it desires. After a Brazillian court ruling, the decision over whether Boeing should be allowed to purchase the commercial arm of the manufacturer should be postponed until after the country’s new government has been elected. This is as the government has a veto in Embraer, the world’s third largest manufacturer of Aircraft, and is currently not allowing a deal to move forward. The deal is reportedly worth $4.75 billion for 80% of Embraer’s commercial arm.

Boeing seeks to purchase 80% of Embraer’s commercial arm. Photo: Embraer

Who Is Embraer?

Embraer is currently the world’s third-largest civil aircraft manufacturer behind Airbus and Boeing. The Brazillian company currently manufactures commercial, business and military jets. Next August will see the company celebrate its 50th birthday. As of 2014, Embraer employed just over 19,000 members of staff, while last year the company had a net income of R$2.74 billion. The aerospace company currently manufactures three series of commercial jets. While the smallest ERJ carries just 37 passengers, the largest E2 can carry up to 146 passengers.

Purchasing Embraer would allow Boeing to compete against Airbus’ A220. Photo: Airbus

Why Does Boing Want Embraer?

The company was until recently competing against the Bombardier C Series program, which has since been sold to Airbus. Additionally, the program was rebranded as the A220. In fact, the Embraer E-Jets are almost like to like with the A220 in some respects. As such, by purchasing Embraer, the American manufacturing giant would be able 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.

The ruling doesn’t completely rule out the Boeing Embraer deal. Photo: Boeing

What Did The Brazillian Court Rule?

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, however, it is common for injunctions to be saught against large business deals by groups of workers in Brazil. The injunction stops Embraer’s board of directors from signing a deal with Boeing. However, it is too early to tell whether the injunction will alter or cancel the purchase by Boeing. As such, Embraer’s shares fell by 2.4 per cent following the news. Brazil’s new President-elect, Jair Bolsonaro, has said that he is in favour of the deal. Given this, the deal, which Embraer says is crucial to its survival, could still go ahead in the new year.

Do you think Boeing will be allowed to purchase Embraer? Let us know what you think in the comments down below!