EU holds up Boeing-Embraer tie up

The European Union has once more delayed its approval of the tie up between Boeing and Embraer, a joint venture that would see Boeing take 80% control of the Embraer business, effectively all of its E-Jet operations.

The EU has asked for years of pricing details, advertising campaigns and contracts, saying that it thinks, despite its small size Embraer ameliorates the prices charged by other manufacturers and has a direct, if small effect, on overall competition.

However some of the large European airlines feel that the deal should go ahead as they stand to benefit if Boeing can drive down component costs, thus making the finished aircraft cheaper for them to buy.

Oddly, Lufthansa, which has no E-Jets in its fleet is very pro-merger, so are AF-KLM who do.

This is another indication of a wider issue – airlines like Lufthansa which are almost all-Airbus, are feeling they need to spread their risks and Lufthansa is on the cusp of a major single aisle re-think, as the CRJ is no longer an option. AF-KLM is already an Embraer customer with KLM committed to the regional jet.

Another aspect is the aggressive tariff wielding Trump approach to dealing with friends and allies, which is causing consternation globally and has little support in the US business world. The EU may hold it as another bargaining chip against the US as Trump’s threats force counter measures.