Boeing terminated the proposed joint venture between Boeing and Embraer to design, build, and sell commercial airliners worldwide. Boeing had previously agreed to purchase an 80% stake in Embraer’s commercial aircraft division. Ernest Arvai of the AirInsight group wonders,

Over the weekend, Boeing terminated its agreement with Embraer to acquire the E2 series of commercial jets. Embraer has protested this termination, but this transaction appears now to be like Humpty Dumpty and is unlikely to be put together again. The proposed deal had several potential advantages for each side. Embraer would have obtained the marketing clout of Boeing and the opportunity for the E2 family to be considered in multiple-aircraft deals with Boeing. Boeing would have obtained the excellence in engineering at Embraer, who has introduced 14 new models in 14 years, with a track record for being on-time and on-budget. But in the end, the impact on the aviation market from the coronavirus resulted in market valuation that made the original proposed transaction mispriced.

Scott Hamilton, managing editor of Leeham News and Analysis, calls this a crushing blow to Embraer,

When the JV was announced in 2019, the advantages for Boeing were:

• Access to EMB engineers at a time when Boeing’s are aging and ready to retire.
• Access to much lower cost base in Brazil.
• KC-390 program.
• Revenue from EMB Commercial services.
• E2 program, though this is tangential.

The advantages for Embraer were:

• Access to Boeing’s vast customer base, marketing power, balance sheet (again, pre-virus) and capital markets.
• Access to work on new airplane programs: NMA (at the time,) Future Small Airplanes (single aisle, either to compete with A220 or larger.)
• Work for its engineers.
• A future beyond the struggling E2 and beyond the fanciful turboprop concept.
• A future for Embraer Commercial Airplanes, which in LNA’s view was increasingly risky.

Airfinance Journal has reported that “Boeing must pay Embraer a termination fee of $100m for the early termination of the venture. Embraer incurred $34.8m in costs associated with the carve out or separation of its commercial aviation business in the third quarter of 2019.”