Boeing terminates partnership with Embraer in the midst of COVID-19 turbulence

Following Saturday’s announce that Boeing was terminating the Master Transaction Agreement (MTA) with Embraer.

Nicolas Jouan, Aerospace and Defense Analyst at GlobalData, a leading data and analytics company, offers his view on the situation of Boeing;

“Boeing still had to close a US$4.2bn payment to seal its deal with Embraer but Boeing’s liquidity is expected to show dire results during the company’s earnings release on Wednesday 29th April. The grounding of the B737 MAX since two successive crashes last year combined to the collapse of air travel triggered by the COVID-19 crisis have severely impacted Boeing’s backlog, registering already more than 300 MAX cancellations in 2020.

“Boeing’s liquidity is one of the most important issues to understand the true condition of the company. Boeing had US$10bn of cash reserve at the end of last year, a figure set to show a reduction on Wednesday. It is understood that the abandon of the MTA was made in the optic of saving cash.

“It is certain that Boeing does not currently have the finances to make the deal but even if it had, the benefits of adding more commercial aviation to its portfolio is uncertain. Sales of ERJ regional jets are not expected to grow as air travel is set to remain low for a long time, inflicting hundreds of billions of losses to the airliner industry in 2020 and probably beyond.

“More cancellations in Boeing’s commercial backlog are also to be expected as airlines keep slimming down their fleets and brace for long-term decreases of activity.”

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