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Embraer plans for a post-Boeing world

Russian and Chinese firms reportedly interested in the Brazilian planemaker

Plane

Embraer, the Brazilian plane manufacturer, is currently courting interest from around the world after the cancellation of its strategic partnership with the American planemaker Boeing (BA) in the midst of the Covid-19 crisis.

Despite maintaining that the company was not currently in discussions with any specific firm, Embraer’s chief executive Francisco Gomes Neto stated that a new five-year plan is currently being drawn up and that any potential partnerships could involve engineering, production and products.

Faced with the near-collapse of air travel demand following the introduction of lockdowns to limit the spread of the novel coronavirus, Boeing cancelled its agreement with Embraer. Already struggling with the 737 MAX controversy of recent years, the pandemic pushed the American firm to the edge. In the year to date its share price has fallen over 53 per cent.

Embraer’s strategic partnership was already on ice before the crisis, with a delay in the finalisation of the deal forcing the company to put some staff on paid leave in January. The manufacturer’s 23 per cent drop in revenue is largely attributable to this early stoppage.

The arbitration process over Boeing’s cancellation, although the Brazilian firm’s executives have refused to go into the detail of the discussions, they do expect to recover tax costs from Boeing.

Overall, Embraer suffered a $292m (£234m, €262m) first-quarter loss. Down more than 63 per cent in the year to date, the company’s stock has actually gained in Monday trading, up 2.2 per cent.

The growing speculation of imminent investment and partnerships has counteracted the Boeing blow.  

While Neto has denied to currently be in negotiations, it is thought that Russia’s Irkut and the Chinese state-backed COMAC are the frontrunners for any future partnerships, with a number of Indian firms also taking an interest.

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