Airlines

Embraer open to new partnerships after Boeing deal collapses

Key Points
  • Brazilian planemaker Embraer said it expects to sign new strategic partnerships in the future.
  • The announcement comes after Boeing abruptly canceled a deal in April to take over the company's commercial jet division.
  • Embraer Chief Executive Francisco Gomes Neto said it was still early to discuss such opportunities as the company is studying a new five-year plan.
Embraer Phenom 300
Meghan Reeder | CNBC

Brazilian planemaker Embraer said on Monday that it expects to sign new strategic partnerships in the future, after Boeing abruptly canceled a deal in April to take over the company's commercial jet division.

Embraer Chief Executive Francisco Gomes Neto said it was still early to discuss such opportunities as the company is studying a new five-year plan. He added that partnerships could involve products, engineering and production.

Reuters reported on Friday that China, Russia and India were circling Embraer and studying potential moves, although any talks would be preliminary.

Embraer said ahead of a Monday earnings call that it was not currently negotiating with China's state-owned COMAC, Russia's Irkut or India on any potential deal to replace the one with Boeing, adding that it regularly evaluates potential partnerships.

The company reported a $292 million first-quarter loss on Monday due to weak demand amid the coronavirus pandemic and the impact of the failed deal with Boeing.

Embraer also said it was seeking new liquidity. Reuters reported that Brazilian development bank BNDES is helping coordinate a $600 million loan for the planemaker, which burned through $677 million in cash in the quarter.

The firm said its decision to put staff on paid leave in January in order to finalize details of the Boeing deal was largely responsible for a 23% drop in revenue. In March, Embraer again put workers on leave due to the coronavirus pandemic.

Executives declined to comment on an arbitration process against Boeing due to its cancellation of the deal.

But the company did say that it expects to recover from Boeing tax costs related to the deal that negatively affected Embraer's quarterly results.