Boeing's newly named CEO David Calhoun, who has replaced Dennis Muilenburg, currently has a lot on his plate as he takes over solving the company's immediate crisis involving its grounded 737 Max jets.
Unfortunately, Calhoun will likely need to strengthen his resolve even further as he faces renewed scrutiny from European regulators over a deal that was made with Brazil's Embraer.
According to reports citing sources with knowledge of the matter, European regulators have launched an investigation into Boeing's planned tie-up with Embraer. As part of its investigation, regulators have reportedly asked the company to provide thousands of pages worth of documents and data involving its sales over the last two decades.
EU regulators are reportedly concerned that Boeing's planned $4.2 billion tie-up deal could reduce the number of participants in the global jet market. Boeing, Airbus, and Embraer are currently the three major players in the aviation industry segment involving planes with 150 seats and below.
Embraer currently produces jets with below 150 seats, competing directly with Boeing's offerings. Regulators are concerned that Boeing's plan to purchase 80 percent of Embraer's commercial jet division could reduce the major participants in the sector from three companies to two. Airbus had made a similar deal with Canada's Bombardier, essentially extending their rivalry into smaller regional jets.
Boeing has expressed its intention of going after the deal, with Embraer already agreeing to the purchase. Calhoun reportedly personally knows people at Embraer, most of which he had met when he was still working with General Electric's engine manufacturing unit.
The major stake purchase was originally meant to be finalized this year. However, Boeing had been forced to delay the deal following news of a probe into the transaction. Sources close to the investigation revealed that Boeing delayed the deal after the EU commission had requested extra data on top of the information it had already provided.
If EU regulators do manage to derail the transaction, it could become a major setback for Boeing, who is still dealing with the aftermath of the global grounding of its 737 Max jets. The crisis had even forced the company's board to oust Muilenburg, who did not handle the situation as expected.
Boeing's lawyers are now just waiting for the EU Commission to launch a "statement of objections." If it does launch the objection, a request for concessions would have to be filed. Regulators from the United States, China, and Japan have already approved the Boeing-Embraer deal, with Brazil expected to follow suit.
