Gilles,Gilles Hudicourt wrote: ↑Sun May 03, 2020 7:56 pm Boeing pulled the plug on the Embraer purchase. From Wikipedia
Is this the kind of bickering we may see in the near future ? AC is seeking government aid, from both the Federal government and the Quebec government. Can government aid money be used to buy a competitor ? What will the public perception be ?Boeing terminated the planned joint ventures on April 24, 2020, saying that Embraer did not satisfy the conditions established in their agreement.[33] Industry analysts said that the $4.2 billion deal became unbalanced as Embraer's market value fell to less than $1.1 billion as air travel demand dropped as a result of the impact of the 2019–20 coronavirus pandemic on aviation.[34][35] Industry analysts speculated that Boeing may have also cancelled the deal because it had recently been awarded a U.S. government pandemic relief loan, and wanted to avoid making the impression that funds intended to support U.S. jobs were instead used to secure a deal with a Brazilian firm.[36]
Embraer has rejected Boeing's reasons for the termination of the deal and said the company "has manufactured false claims as a pretext to seek to avoid its commitments" because of its financial condition after the 737 MAX groundings and "other business and reputational problems." [37] Embraer threatened to pursue "all remedies against Boeing for the damages incurred."[37] The agreement had a termination fee of $75 million according to a copy of the merger agreement filed to U.S. authorities.[38] Industry analysts also believe that Embraer may file suit to recover the $100-120 million it spent separating its commercial and military units, and claim lost business opportunities as orders for new jets were slow while customers were waiting for the deal to close.
I think AC is just getting the lay of the land at the moment. Figure out if there is any government motivation to help make the deal work. Once they know what the government is, or is not willing to do, they will make a decision on direction.
My bet is if the deal isn’t renegotiated. Or Government doesn’t add sweetener. AC will pull a Boeing.
My money is still on a renegotiation with government support to make the deal happen. But make no mistake. AC will likely attempt to walk as the deal stands. It’s also possible that due to AC’s revised business plan, the transaction no matter the sweetener, is no longer workable.
When the Transat transaction comes up tomorrow listen closely. Evasive deflection and non answers mean something is up. Not re stating a commitment to the transaction, after all the investor angst of late will only fuel more speculation. CR knows this. We will see what he chooses to do. Will he stir the anxiety? Or put it to rest?
My guess is he stirs the pot.