After failing to close a deal with Boeing, Brazilian aerospace conglomerate Embraer SA is now looking to India and China to find a suitable new partner. The company also stated that it is looking to other countries, including Russia, for companies interested in its commercial jets division.
Embraer initially reached an agreement with Boeing in February last year for the latter to purchase an 80 percent stake in the former's commercial jet division. The deal would have also involved the marketing of Embraer's E-Jet and E-Jet E2 narrow-body jet airliners. Unfortunately, the deal eventually collapse and was canceled in April this year amid Boeing's ongoing financial troubles due to the coronavirus pandemic and the grounding of its Boeing 737 Max airplanes.
During its earnings call on Monday, Embraer chief executive officer, Francisco Gomes Neto, stated that it was engaging in discussions for its new five-year plan. He hinted that partnerships were part of its long-term strategy. Geto specifically mentioned China and India as potential partners, while also stating that other countries may be involved.
In response to rumors regarding its possible partners, Embraer clarified that it currently not in talks with companies such as Russia's Irkut or China's COMAC. The company did state that it is actively evaluating possible partnerships to replace the one it once had with Boeing.
For its first quarter this year, Embraer reported a $292 million loss, which it mainly attributed to the massive drop in demand due to the coronavirus pandemic. The company also noted that the failed deal with Boeing had contributed to it reporting a loss for the quarter.
The company's substantial $677 million expense during the quarter entirely wiped out any prospect of a profit for the period. Embraer added that its decision to put part of its staff on paid leave as part of its process to prepare for the Boeing deal reduced its revenues for the quarter by over 23 percent. Due to the coronavirus pandemic, Embraer was forced to put its workers on continued paid leave in March.
Executives did not touch on the topic of a possible arbitration process against Boeing over the failed deal. Embraer is expected to at least recover some tax costs related to the deal.
Embraer assured its stakeholders that it was seeking additional liquidity to shore up its finances amid the slump in demand. A report from Reuters revealed that Embraer was engaging in talks with Brazilian development bank BNDES for a possible $600 million loan.
