Boeing said good bye to Embraer. Part 3

After two air crashes of Boeing 737 MAX and full discontinuation of operation and production of these airplanes American aviation giant appeared on the verge of financial crisis.

Direct and indirect Boeing losses already exceeded 20 billion USD and continue to grow fast. Airline companies of entire world have already cancelled about 500 orders for these airplanes and filed many million lawsuits with claims for compensation of the suffered losses.

Back in the end of the previous year market experts considered that because of the situation with 737 MAX airplanes Boeing will lose about 30-35 billion USD but will be able to restore gradually their paying capacity and get out of the crises to the end of the current year. But already in March it became clear that this will not happen because of COVID-19 pandemic. Even more, not only Boeing 737 MAX program was threatened but also further existence of American aviation giant in the current form. So, a little more than one month ago Boeing attracted bridge financing in amount of almost 10 billion USD for working capital financing that was consumed during just three weeks. But aviation giant failed to improve financial position and was forced to ask Federal Government to allocate 60 billion USD “to support aviation industry”. However, authorities do not hurry to allocate these money, considering rightly that first Boeing has to reconstruct their business.

It in fact already takes place. In such a way Boeing announced discharge of about 10% of all employees that work on creation of civil airplanes. But this is not all. Aviation giant will reduce production rate of wide-body airplanes Boeing 787 up to 10 units per month and most likely will stop work on creation of the new long-haul aircraft NMA that had to replace in the fleet of airline companies outdated Boeing 767.

It is clear that in such situation the fate of partnership with Embraer was sealed. Most experts are sure that offer on the world market of airplanes will steady exceed demand during minimum five years and prices for new airplanes may be almost by half. In these conditions to pay billions USD for control share in stagnate business would be equal to self-destruction for Boeing. Moreover, that American aviation giant already had negative experience of production of jet regional aircrafts. So, after buying McDonnell Douglas corporation Boeing produced for some time airplanes MD-95 (later renamed to Boeing 717). But during eight years corporation managed to sell just about 160 such airplanes after what Boeing 717 model had to be withdrawn from production. And apparently Boeing don’t want to repeat this experience anymore.