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Potential International Partnerships Arise For Embraer After Boeing Fallout
Brazilian planemaker Embraer confirmed Monday that it has entered talks with at least two potential new partners after its previous deal with American manufacturing giant Boeing fell through.
Embraer CEO Francisco Gomes Neto said that his company is negotiating with companies in China, India and “others.”
The Chinese state-owned manufacturer COMAC has informally voiced interest in working with Embraer, while the Russian Irkut has explored the issue despite denying any current interest in an Embraer collaboration. India’s government, which is getting into aerospace manufacturing and engineering, expressed interest at a governmental level, but it is still studying the matter.
Embraer said Monday that it is not currently negotiating with COMAC, Irkut or the Indian government, adding that it regularly evaluates potential partnerships.
COMAC and Irkut are both developing aircraft to compete directly with Airbus and Boeing in the 150-seat aircraft market, so working with Embraer could give either manufacturer a sizable portion of another valuable sector of aviation manufacturing. Acquiring a majority stake in Embraer would allow COMAC or Irkut to compete directly with Airbus’ A220 and would give them a substantial advantage over Boeing, who does not have a similar aircraft and has no known plans to develop or acquire one after its deal with Embraer fell through. Such a deal could also help those manufacturers develop international credibility by providing them access to an established lineup that could help them develop their own aircraft to international standards.
Irkut’s parent company, Rostec, is focusing on further developing its MS-21 as well as its own Superjet regional aircraft, according to CNBC. COMAC already makes a regional jet that could compete with Embraer called the ARJ21, but the model has struggled to sell outside of China.
Meanwhile, India, which currently only makes a 14-seat jet called SARAS, has a potential need for an 80-90 seat regional jet, a sector Embraer currently fills, to pursue Prime Minister Narendra Modi’s plans to expand air services to small towns. Such a deal could also help India expand its aircraft manufacturing sector to compete with China’s.
Whether Embraer actively pursues any new partnerships is up in the air. But should the manufacturer make one, it would be a major shake-up in the global aviation industry that could expedite a new manufacturer’s entrance into mainstream manufacturing, potentially disrupting the Airbus-Boeing duopoly. Bombardier’s sale of its CRJ series to Mitsubishi may set a precedent for any new deal that Embraer pursues and could foreshadow how any future Embraer deal could impact other manufacturers.
Embraer employees were especially bitter after the Boeing deal fell through, saying that the American planemaker fell through on its obligations at the last minute and without warning. A new deal could help Embraer realign and develop a unique aspect of its aircraft lineup, which has been increasingly popular as airlines pursue the quieter, comfortable, efficient E-Jet series.
Embraer is reeling from a $677 million cash loss in Q2 and is close to securing a $600 million loan. It has been hit hard by the Coronavirus-related travel slowdown, and it has already been forced to put portions of its staff on leave twice this year. Reuters has also reported that Boeing has filed for arbitration against Embraer, a move that Embraer has already made against Boeing, another headache for both plane manufacturers at an already-difficult time.
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