Embraer's commercial airplane business opts to find a Chinese partner on a military cargo plane project. The company is also exploring opportunities with India or Russia. The move was said to be taken after Boeing abruptly cancelled on their April agreement to take over the company's commercial aircraft division.
The president of Embraer Francisco Gomes Neto said on a June 1 quarterly earnings call, the company is reviewing its five-year plan. He claimed that Embraer is currently analyzing and examining its potential or possible business models to create meaningful partnerships with companies from China, India, or Russia.
Last Monday, Embraer claimed that companies from these countries could be potential partners. Russia, in particular, was claimed to be interested in the company's commercial jet division.
During the call, Neto claimed that the pandemic significantly affected the industry, Embraer's productivity to the markets, and caused uncertainties for its customers, employees, and suppliers. He then suggested that during such difficult times, the business would focus on its strategy.
Neto established give main areas that the company is considering. These markets, he said, would allow Embraer to recover and excel during the crisis. He also discussed cash preservation in the company.
Embraer has launched a cash management team that would address the liquidity, define financial actions, and preserve the company's cash. He also noted that strict expense control has been implemented. This would focus on its account receivables, inventory reduction, and the implementation of a more robust investment approval process.
The Brazilian company also highlighted on the total losses incurred that reached 292 million USD during the first quarter. He claimed that the pandemic weakened market demand, along with the contributory failure of the agreement with Boeing.
Last April, Boeing terminated a 4.2 billion USD deal with the aircraft maker. The deal was supposed to give Boeing a greater stake in the market for smaller jets and establish cheaper services to its customers.
Embraer then noted that it would pursue all remedies against Boeing for the damages that the company incurred after Boeing backed out from the deal. Embraer also noted that Boeing's move was a wrongful termination.
It was also highlighted that Boeing caused Embraer at least 18.7 billion USD caused by two fatal crashes of its aircraft. Furthermore, it claimed that Boeing has been manufacturing false claims against Embraer to evade the payment of the 4.2 billion USD. The amount was said to be Boeing's own financial condition and reputation problems.
The joint venture between Embraer and Boeing was decided last April 24, 2020. Still, the deadline passed, and Embraer had not satisfied the necessary conditions. Boeing then claimed that it declined the deal because of those unmet conditions.
