The Boeing-Embraer marriage is off, and it looks like a bad split
Boeing has called off its plan to buy the majority of Embraer's commercial aircraft division, a deal that would have strengthened its position in the smaller jet market adding the E-Jet-E2 to its portfolio.
Boeing and Embraer were unable to reach an agreement on "unsatisfied [master transaction agreement] conditions" and further negotiations would not resolve the issues, Chicago-based Boeing said on April 25.
However, in response, Embraer said Boeing "wrongfully terminated" the agreement, in its own statement on April 25. The Brazilian planemaker claimed that Boeing's move stemmed from "its own financial condition and 737 MAX" grounding.
Sign up for the free daily TPG newsletter for more airline news!
Industry observers appear to agree with Embraer's view that Boeing canceled the deal due to the collapse in aircraft demand amid the coronavirus pandemic, reported The Seattle Times.
The Boeing-Embraer tie up, while unveiled in 2018, stems from the U.S. planemaker's concerns with Bombardier. In 2017, Boeing filed a trade complaint with U.S. authorities over Bombardier's sale of at least 75 CS100s -- now the A220-100 -- to Delta Air Lines claiming "damages" from Canadian subsidies to the aircraft program. That complaint, and the threat of possible tariffs, prompted Bombardier to sell the CSeries to Airbus and Boeing to seek a partnership with Embraer.
Boeing was to take control of 80% of Embraer's commercial aircraft division, which is focused on producing and selling the E2. A separate joint venture on Embraer's KC-390, a military transport jet, was also planned.
Related: Brazil Approves Boeing's $4.2 Billion Acquisition of Embraer
Apart from regulatory hurdles, progress on the Boeing-Embraer deal appeared to be moving forward even after the 737 MAX grounding in March 2019. The grounding hit Boeing hard prompting its first annual loss since 1997.
The U.S. planemaker has focused resources on getting the MAX, the cash cow of its commercial jet business, back in the air since the grounding.
During its 2019 earnings presentation, Boeing executives mentioned the MAX 39 times and the Embraer deal just once, according to Seeking Alpha.
A legal dispute between Boeing and Embraer appears set to occur next. The Brazilian planemaker said in its statement that it will seek "damages" from Boeing for canceling the deal.
However, the damage to Embraer could be lasting. The planemaker has landed few large new orders for the E2 in the past year, save KLM's commitment for up to 35 E195-E2 jets that it finalized last November. Embraer has no orders for the re-engined E-Jet from U.S. carriers to date, whereas Airbus has sold the comparably sized A220 to Delta, JetBlue Airways and David Neeleman's start-up Breeze Airways.
Related: 737 MAX woes send Boeing to first annual loss since 1997
TPG featured card
at American Express's secure site
Terms & restrictions apply. See rates & fees.
| 3X | Earn 3X Miles on Delta purchases. |
| 1X | Earn 1X Miles on all other eligible purchases. |
Pros
- Delta SkyClub access when flying Delta
- Annual companion ticket for travel on Delta (upon renewal)
- Ability to earn MQDs through spending
- Various statement credits for eligible purchases
Cons
- Steep annual fee of $650
- Other Delta cobranded cards offer superior earning categories
- Earn 100,000 Bonus Miles after you spend $6,000 or more in purchases with your new Card within the first 6 months of Card Membership and an additional 25,000 bonus miles after you make an additional $3,000 in purchases on the Card within your first 6 months, starting from the date that your account is opened. Offer Ends 04/01/2026.
- Delta SkyMiles® Reserve American Express Card Members receive 15 Visits per Medallion® Year to the Delta Sky Club® when flying Delta and can unlock an unlimited number of Visits after spending $75,000 in purchases on your Card in a calendar year. Plus, you’ll receive four One-Time Guest Passes each Medallion Year so you can share the experience with family and friends when traveling Delta together.
- Enjoy complimentary access to The Centurion® Lounge in the U.S. and select international locations (as set forth on the Centurion Lounge Website), Sidecar by The Centurion® Lounge in the U.S. (see the Centurion Lounge Website for more information on Sidecar by The Centurion® Lounge availability), and Escape Lounges when flying on a Delta flight booked with the Delta SkyMiles® Reserve American Express Card. § To access Sidecar by The Centurion® Lounge, Card Members must arrive within 90 minutes of their departing flight (including layovers). To access The Centurion® Lounge, Card Members must arrive within 3 hours of their departing flight. Effective July 8, 2026, during a layover, Card Members must arrive within 5 hours of the connecting flight.
- Receive $2,500 Medallion® Qualification Dollars with MQD Headstart each Medallion Qualification Year and earn $1 MQD for each $10 in purchases on your Delta SkyMiles® Reserve American Express Card with MQD Boost to get closer to Status next Medallion Year.
- Enjoy a Companion Certificate on a Delta First, Delta Comfort, or Delta Main round-trip flight to select destinations each year after renewal of your Card. The Companion Certificate requires payment of government-imposed taxes and fees of between $22 and $250 (for itineraries with up to four flight segments). Baggage charges and other restrictions apply. Delta Basic experiences are not eligible for this benefit.
- $240 Resy Credit: When you use your Delta SkyMiles® Reserve American Express Card for eligible purchases with U.S. Resy restaurants, you can earn up to $20 each month in statement credits. Enrollment required.
- $120 Rideshare Credit: Earn up to $10 back in statement credits each month after you use your Delta SkyMiles® Reserve American Express Card to pay for U.S. rideshare purchases with select providers. Enrollment required.
- Delta SkyMiles® Reserve American Express Card Members get 15% off when using miles to book Award Travel on Delta flights through delta.com and the Fly Delta app. Discount not applicable to partner-operated flights or to taxes and fees.
- With your Delta SkyMiles® Reserve American Express Card, receive upgrade priority over others with the same Medallion tier, product and fare experience purchased, and Million Miler milestone when you fly with Delta.
- Earn 3X Miles on Delta purchases and earn 1X Miles on all other eligible purchases.
- No Foreign Transaction Fees. Enjoy international travel without additional fees on purchases made abroad.
- $650 Annual Fee.
- Apply with confidence. Know if you're approved for a Card with no impact to your credit score. If you're approved and you choose to accept this Card, your credit score may be impacted.
- Terms Apply.
- See Rates & Fees