American plane maker, Boeing, has terminated its Master Transaction Agreement (MTA) with its Brazilian counterpart, Embraer.
Under the contract, the two companies had agreed to create a joint venture, including Embraer’s commercial aviation business, to develop new markets for the C-390 Millennium medium airlift and air mobility aircraft.
According to a statement by Boeing, they decided to terminate the agreement after Embraer failed to satisfy some of the conditions of the deal. Initially, the initial termination date was set for 24th April 2020, subject to extension by either party if certain conditions were met.
We all aimed to resolve those issues by the initial termination date, but it didn’t happen. We have reached a point where continued negotiation within the framework of the agreement is not going to resolve the outstanding issues.
Marc Allen, President of Embraer Partnership & Group Operations.
However, Embraer argues that it had satisfied all conditions by 24th April 2020, and that the termination was Boeing’s way of avoiding its commitment to close the transaction and pay Embraer the $4.2 billion purchase price.
Despite all these, the two companies will maintain their existing agreement to jointly market and support the C-390 Millennium military aircraft.
Embraer is a Brazilian aerospace conglomerate that produces commercial, military, executive, and agricultural aircraft, and provides aeronautical services. Its headquarters are in São José dos Campos, São Paulo. It is the third-largest producer of civil aircraft after Boeing and Airbus.
On 26th February 2019, the two plane makers announced the acquisition of an 80% share of Embraer’s commercial division, dubbed Boeing Brasil – Commercial.
However, the deal was canceled in April 2020, following Boeing’s financial troubles. The American plane maker became financially strapped after being profoundly affected by the reduction of demand caused by the COVID-19 pandemic and, to a lesser degree, the disasters involving flaws in the design of its 737 MAX airplanes.
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