Chinese Buyer May Step In As Boeing Axes Embraer Bid

Brazilian planemaker Embraer has been thrust into an uncertain future with no immediate plan B, while not ruling out seeking a bailout after Boeing jettisoned a US$4.2 billion commercial aerospace tie-up amid the coronavirus crisis.

The company's shell-shocked chief executive, in the job for a year with little aerospace experience, sought to rally staff after the board held late-night talks to review the collapse of plans for surviving mounting aerospace competition.

"Our history is full of difficult moments, and we have overcome all of them," Francisco Gomes Neto told Embraer's 20,000 staff before giving them a thumbs up.

But Embraer now faces a historic crisis with its isolation reinforced by the breakup – two years after Europe's Airbus absorbed Embraer's main competitor, the Canadian-designed A220.

"For Embraer, it could be very damaging," said Teal Group consultant Richard Aboulafia, noting it was the only significant independent jetmaker.

"It's hard to pressure your suppliers when the volume you're offering is a fraction of your competition's".

Embraer's immediate aim is to reassure investors. It pledged cost savings and said it had solid liquidity.

Embraer says Boeing scuppered the deal on technicalities because of its own financial problems. Boeing says it pulled out only because Embraer failed to meet conditions. But the row itself could be damaging.

"Since it came apart in such vitriolic fashion, it's hard to believe they can pick up the pieces and try again," Jerrold Lundquist, managing director of The Lundquist Group, said.

That leaves limited options for Embraer though none has been discussed as a serious plan B.

One potential wild card is China, which almost beat Airbus to the A220 program and which remains on the hunt for ways of accelerating its own aerospace ambitions.

"From a strategic point of view, it is an option but it could be politically problematic," Lundquist said.

Members of the inner circle of Brazilian President Jair Bolsonaro have repeatedly attacked China over coronavirus. (Reuters)