Dubai Airshow

Embraer ‘Respectful’ of EC’s Pause in Boeing Merger Probe

 - November 17, 2019, 11:09 PM
Embraer 190E2

The European Commission’s pause of its antitrust review of the Boeing-Embraer combination has put Embraer Commercial Aircraft CEO John Slattery in the unenviable position of having to practice patience with the process while costs associated with preparations for the proposed merger continue to mount. Speaking with AIN in downtown Dubai the day before the start of the Dubai Air Show, Slattery expressed respect for the EC and its request for more information from the companies before resuming its review, all the while he and hundreds of Embraer employees work diligently to complete the process of compiling the requested data “in the next couple of days.”

Slattery declined to delve into the nature of the requests by the EC or whether or not it had asked for the information originally, however. “I would only refer to the type of information as very detailed and voluminous,” he said. “But I do want to register that Embraer has deep, profound respect for the process and the integrity of the EU commission.” Slattery added he believed that the EC would resume its review “in the near term.”

Of course, Embraer (Pavilion A47) has already gained approval from the U.S. and several other jurisdictions, leaving the EU as one of the last remaining holdouts. Slattery expressed optimism that, in fact, the approvals would come in due course while emphasizing his position that no overlap exists between the Embraer E-Jets and the Boeing 737 Max line of narrowbodies. “We respect that the authorities that are outstanding want to do their own due diligence,” he said. “There is no arrogance in Embraer over this process. So I’m hopeful and confident in equal proportions.”

Characterizing it as a marquee transaction, Slattery explained that the Embraer-Boeing deal differs from the Airbus-Bombardier C Series takeover in that the earlier deal required only German approval because the lesser breadth of the C Series’ market penetration in Europe did not trigger an EC probe. Slattery also emphatically declared that he does not believe the EC harbors any bias towards Embraer and Boeing due to tariffs on European goods leveled by the Trump administration or the ruling by the World Trade Organization allowing tariffs on Airbus airplanes by the U.S.

“As a European myself I would be surprised and disappointed if there were any other influences,” he said. “I don’t believe there are.”

Still, Slattery cannot relish the costs associated with the continuing administrative burden to Embraer the extension of the EC probe has produced. In fact, Embraer suffered a steep loss in the third quarter of the year as the company commits what he called enormous resources to the effort. “It’s principally a time of planning but not taking actions because we have to be respectful of the antitrust process,” explained Slattery, who cited the migration to new IT systems such as SAP's enterprise resource planning software as perhaps the biggest burden to address. “I’ve learned through this process that IT rules the world. I used to think it was the lawyers that ruled the world,” he quipped. “But there’s no doubt as this drags on there’s a cost associated with it. If you ask the customers, the customers don’t want this noise in the marketplace. They want clear visibility.”