Brazilian aircraft company Embraer has threatened to seek damages from US aerospace giant Boeing, after the latter “wrongfully terminated” a $4.2 billion merger deal.
In a statement issued on Saturday, the Brazil-based jet manufacturer accused its American counterpart of using “false claims” to pull out of the deal, which would give Boeing an 80-percent stake in Embraer’s commercial jet unit. Embraer says Boeing wanted to avoid its commitments to close the transaction and pay the agreed purchase price as the US company faces financial troubles linked to the 737 MAX fiasco.
“Embraer will pursue all remedies against Boeing for the damages incurred by Embraer as a result of Boeing’s wrongful termination and violation of the MTA [Master Transaction Agreement],” the Brazilian aircraft producer said.
The statement came shortly after the US aviation major claimed that Embraer “did not satisfy the necessary conditions” of the agreement. After what Boeing called “productive but ultimately unsuccessful negotiations” to resolve some existing disputes, it was free to cancel it.
“It is deeply disappointing. But we have reached a point where continued negotiation within the framework of the MTA is not going to resolve the outstanding issues,” Marc Allen, president of Embraer Partnership & Group Operations, said.
However, Embraer insists that it was in full compliance with its obligations under the agreement, arguing that it satisfied all necessary conditions before the deadline.
The collapse of the deal, which was set to mirror a similar Airbus-Bombardier partnership, comes as the aviation sector faces a major crisis amid the coronavirus pandemic. The deadly virus has halted most travel, grounding almost entire fleets across the globe and resulting in huge losses. It could take years for the industry to offset the aftermath of the coronavirus crisis.
Boeing was facing financial troubles even before the Covid-19 outbreak started wreaking havoc across the globe. After two deadly crashes that left 346 people dead, its once best-selling 737 MAX jets were grounded throughout the world, and the company saw massive cancellations of jet orders by its customers, which led to its first full-year loss in more than two decades.
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