Embraer E-Jet series Embraer
The Embraer E-Jet series of a narrow-body, twin-engine jets are used in standard commercial routes and for regional service. The E175 seats 78 to 88 passengers, while the larger E190 and E195 jets seat 100 to 124 passengers.

Court Blocks Boeing-Embraer Joint Venture

Brazilian judge grants injunction, concludes Embraer may not sell its commercial-aircraft business

A Brazilian federal judge granted an injunction in a suit brought by labor union leaders and congressmen blocking directors of Embraer S.A. from proceeding with a merger of its commercial aircraft business with Boeing Co., essentially halting the deal that has been in development for over a year.

Boeing has not commented on the court’s decision. It’s uncertain what recourse it may have available.

In a subsequent security filing, Embraer announced it will appeal the court ruling.

Boeing stands to hold 80% of the proposed joint-venture. The $4.75-billion business would consist of the current Embraer commercial aircraft and services business, which will be headquartered in Brazil but aligned with Boeing Commercial Airplanes’ commercial development, production, marketing and lifecycle services operations. Embraer would hold 20% of this new venture.

While Embraer is a public company, the Brazilian government holds a "golden share" that allows it to block any transaction that would change majority ownership of the company. Embraer would retain its military aircraft division after the proposed merger.

Labor groups in Brazil have been opposing the transaction from the time it was first reported, and the injunction suit was brought last spring by congressmen with Brazil’s left-wing Workers Party. Such opposition to the sale has stalled a government decision on the merger agreement for five months.

The court decision bars Embraer’s board from finalizing the venture, with Judge Victorio Giuizio Neto concluding that “Boeing is not giving up anything” in deal, according to reports.

The U.S. aircraft builder is seeking to acquire Embraer in order to bolster its own stake in the commercial aircraft mid-market, meaning medium-range jets for 70-150 passengers. The acquisition also would counter rival Airbus’ consolidation of the Bombardier C-Series medium-range product line.

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish