Embraer expects a further delay in the approval by the European Commission of the sale of 80 percent of its commercial aircraft business to Boeing until at least June 23, company executives reported during a full-year 2019 earnings call with securities analysts on Thursday. Noting that Embraer completed the so-called carve-out of its commercial business in January, Embraer CEO Francisco Gomes Neto insisted that the deal remains a top priority for the company despite the effects of the Covid-19 crisis.
The deal, approved by the Embraer shareholders last year, calls for Boeing to pay $4.2 billion in cash for the four-fifth’s stake. However, as Embraer’s stock devaluation accelerates due to the coronavirus crisis, some analysts have suggested that the price could prove too high. Embraer has pledged to pay its shareholders a $1.6 billion special dividend from the proceeds of the sale.
For now, both companies continue to concentrate on gaining antitrust approval in Europe, then enter any further negotiations on the terms of the deal. “We will work together to overcome the situation of the Covid-19 to make the deal happen,” Neto stressed.
Meanwhile, Embraer’s recent talks with customers over measures to mitigate the effects of the virus outbreak have centered almost exclusively on aircraft deferrals, primarily from this year until 2021, reported CFO Antonio Carlos Garcia. “Embraer has not yet had any cancellations of orders; that’s important for us,” he said.
Nevertheless, even before the World Health Organization declared the coronavirus crisis a global pandemic, potential E-Jet customers had shown some hesitancy to pursue deals while the European Commission repeatedly delayed its approval process for the Boeing deal.
“Certain airlines want more visibility on the transaction before they're prepared to move forward with their fleet planning,” Embraer Commercial Aircraft CEO John Slattery told AIN in February. “We are hearing increasingly that airlines are getting a little frustrated. They want some surety around what the future is going to look like so they can plan accordingly. So we understand that frustration. We're doing everything we can to get our transaction closed so that we can get back to the day job, which is designing new aircraft, building fine aircraft, and servicing them in the marketplace.”