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Embraer union seeks planemaker's board ouster after failed Boeing deal

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07/03/2020 | 03:01pm EDT
FILE PHOTO: The Embraer logo is seen during the LABACE fair in Sao Paulo

By Marcelo Rochabrun

A union representing workers at Embraer filed a lawsuit on Friday seeking to dismiss the company's board, after a $4.2 billion (3.3 billion pounds) deal with Boeing Co collapsed amid the pandemic, claims the Brazilian planemaker said were an act of "bad faith."

The failed deal left the Brazilian jetmaker scrambling for a new path forward as the coronavirus pandemic hammered travel demand.

Embraer said the union was "using unfounded allegations and distorting information in order to confuse public opinion and the company's workers." It added it had yet to be served.

The lawsuit is the latest headache for Embraer in the aftermath of its breakup with Boeing. Under the deal signed in 2018, Boeing was going to buy the majority of Embraer's commercial aviation unit in order to take on Airbus in the mid-range jet segment.

But the deal collapsed at the 11th hour in April, leaving Embraer and Boeing pointing fingers at each other.

The lawsuit accuses Embraer's board of having allowed Boeing to conduct what amounted to "espionage," by having its U.S. engineers work within Embraer's research and development unit during the time when the deal seemed like it would in fact materialize.

In the wake of the pandemic, Embraer is now being supported by the government through a $600 million loan and said this week it was negotiating a buyout program. It posted a loss of $210 million last quarter.

Embraer's board "operates creating billionaire losses and passing on the cost of its incompetence to workers," the union alleged in court papers.

The planemaker said the union's claims showed "ignorance about the company and its management."

The Boeing-Embraer deal was subject to several lawsuits, including by the metalworkers union which sought to stop it. Some judges initially agreed to block the deal, but appeal judges ultimately overturned all allegations.

(Reporting by Marcelo Rochabrun; Editing by Alistair Bell and Chizu Nomiyama)

Stocks mentioned in the article
ChangeLast1st jan.
AIRBUS SE -1.62% 72.11 Real-time Quote.-44.73%
BOEING COMPANY (THE) 1.92% 178.08 Delayed Quote.-45.33%
EMBRAER S.A. 1.05% 7.68 End-of-day quote.-61.07%
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