Boeing has agreed to pay Embraer $150 million to settle a dispute arising from the US company’s 2020 decision to back out of a deal to acquire majority ownership of Embraer’s commercial aircraft business.
Embraer disclosed the agreement on 16 September but provides few details.
“The pending arbitration proceedings between [Embraer and Boeing] have concluded,” Embraer says. “Pursuant to [an]… agreement recently entered into between the parties, Boeing will pay the gross amount of $150 million to Embraer.”
Boeing and Embraer disclosed in July 2018 having reached an agreement under which Boeing would acquire 80% of Embraer’s commercial aircraft and services business for $4.2 billion.
At the time, Boeing was eager to offer a smaller passenger aircraft that would compete with Airbus’s A220, which Airbus had recently acquired from Canada’s Bombardier. Embraer viewed the deal as means to benefit from Boeing’s global supply chain and sales heft, helping reduce costs and making E-Jets more competitive.
But in 2020, with the Covid-19 pandemic raging and Boeing’s 737 Max still grounded following two deadly crashes, the US company backed out of the agreement. Embraer insisted Boeing had breached contract terms and said it would seek damages.
Embraer said it had gone to great lengths to prepare for the acquisition, undertaking the difficult task of carving its commercial-aircraft business into a distinct unit – a costly and disruptive process that slowed E-Jet deliveries.
Asked to comment about the $150 million settlement, Boeing says, “We’re pleased to have concluded the arbitration process with Embraer. More broadly, we are proud of our more than 90 years of partnership with Brazil and look forward to continuing to contribute to the aerospace industry in Brazil”.
Embraer declines to comment.
