Boeing Settles with Embraer for US$150 Million

DALLAS — Boeing has agreed to pay Brazilian aerospace company Embraer $150 million as part of a settlement following the termination of a commercial aviation partnership initially announced in 2018. 

This settlement concludes a lengthy arbitration process triggered by Boeing's withdrawal from the $4.2 billion deal to acquire Embraer’s commercial jet-making operations during the COVID-19 pandemic. 

Boeing had blamed the agreement's collapse on Embraer’s inability to meet the closure conditions, while Embraer argued that Boeing’s financial difficulties led to the decision.

Although the settlement amount fell below analysts' expectations, who predicted between US$300 million and US$400 million, Embraer is using the funds to help reduce its debt. 

Despite the slight dip in its shares following the announcement, the company’s stock has risen 120% this year due to strong demand for its aircraft.

This settlement comes at a challenging time for Boeing, which faces financial pressure from ongoing quality control issues, prolonged labor negotiations with itsIAM machinists, and recent accidents involving its 737 MAX airliner. 

Meanwhile, Embraer is slowly but steadily positioning itself to compete in the narrow-body aircraft market, challenging the industry’s long-standing Boeing-Airbus duopoly.

The Brazilian aerospace company is set to highlight its cutting-edge aircraft at the inaugural Bali International Airshow this week.

Sources: Reuters, MarketScreener