EMBRAER · THE AIRCRAFT STORY

The Boeing agreement

In December 2018, Embraer and Boeing agreed the terms of a transaction that would have transferred control of Embraer’s commercial-aircraft business. Boeing was to pay US$4.2 billion for 80 per cent of a joint venture containing the commercial-aircraft and related services operations. Embraer would retain 20 per cent. A separate venture for the KC-390 would reverse the balance: Embraer would hold 51 per cent and Boeing 49 per cent.

The commercial business would have Brazil-based leadership, but Boeing would exercise operational and management control. Embraer retained consent rights over certain strategic decisions, including moving operations out of Brazil. Executive aviation, defence and the services attached to those products would remain in the continuing Embraer company. Engineering, facilities and supply arrangements would connect businesses that had previously been managed within the same group.<a href="/sources/#source-127">127</a>, <a href="/sources/#source-128">128</a> At an extraordinary shareholders’ meeting in February 2019, the proposal received 96.8 per cent of the valid votes cast. About 67 per cent of the outstanding shares participated. The Brazilian government had approved the transaction in January, and definitive agreements had been signed. Both companies hoped to close by the end of 2019. The remaining approvals were now central to the timetable.<a href="/sources/#source-128">128</a> In Europe, the transaction raised a different question. The European Commission opened an in-depth investigation in October 2019. It was concerned that the arrangement could remove an important competitor from an already concentrated commercial-aircraft market. The Commission saw an overlap between Boeing and Embraer in aircraft with roughly 100 to 150 seats, and it considered Embraer capable of exerting competitive pressure beyond that segment. Potential entrants from China, Japan and Russia faced obstacles that could prevent them from replacing that pressure for years.<a href="/sources/#source-129">129</a> The two companies were presenting a larger combined organisation to their customers. The Commission was examining the consequences of having one fewer independent seller. That examination was still unfinished when the transaction reached its contractual deadline in April 2020.<a href="/sources/#source-129">129</a>, <a href="/sources/#source-130">130</a> On 25 April, Boeing announced that it had terminated the master transaction agreement. It said Embraer had not satisfied necessary conditions and that negotiations had failed to resolve the outstanding issues. Embraer disputed that account. In its own regulatory filing, it said it had fulfilled its obligations and accused Boeing of wrongfully ending the agreement. The companies’ statements left the contractual dispute unresolved and the planned change of ownership abandoned. 130, The collapse left Embraer with organisational work to reverse. Its commercial business had been separated in preparation for the transaction. Reintegration began in May 2020 and continued through the restoration of the main information systems and processes in January 2022. Commercial aviation was again directly linked to the wider company.<a href="/sources/#source-132">132</a> The financial dispute lasted longer. In September 2024, Embraer disclosed that the arbitration proceedings had concluded. Boeing would pay US$150 million gross under a collar agreement between the parties.<a href="/sources/#source-133">133</a> The E-Jets remained under Embraer’s control. Decisions about the E175, E2 production, future products and the resources available to develop them continued to be made within the Brazilian group. The ownership structure agreed in 2018 never took effect.