Embraer says China, India are potential partners after failed Boeing deal

SAO PAULO (Reuters) – Brazil’s Embraer SA (EMBR3.SA) said on Monday that China and India could be potential new partners, following a Reuters report last week that said those two countries as well as Russia were interested in the planemaker’s commercial jets division.

Embraer is dealing with the abrupt collapse of a planned deal with Boeing Co (BA.N) in April that left the company scrambling for a plan B.

Embraer Chief Executive Francisco Gomes Neto said in an earnings call that it was still early to discuss new opportunities in detail as the company is studying a new five-year plan. He added that partnerships could involve products, engineering and production.

Gomes Neto named China and India as potential partners, as well as unnamed “other countries.”

Embraer said ahead of the earnings call, however, that it was not currently negotiating with China’s state-owned COMAC, Russia’s Irkut or India on any potential deal to replace the one with Boeing, adding that it regularly evaluates potential partnerships.

The company reported a $292 million first-quarter loss on Monday due to weak demand amid the coronavirus pandemic and the impact of the failed deal with Boeing.

Embraer also said it was seeking new liquidity. Reuters reported that Brazilian development bank BNDES is helping coordinate a $600 million loan for the planemaker, which burned through $677 million in cash in the quarter.

The firm said its decision to put staff on paid leave in January in order to finalize details of the Boeing deal was largely responsible for a 23% drop in revenue. In March, Embraer again put workers on leave due to the coronavirus pandemic.

Executives declined to comment on an arbitration process against Boeing due to its cancellation of the deal.

But the company did say that it expects to recover from Boeing tax costs related to the deal that negatively affected Embraer’s quarterly results.