October 16, 2019 / 9:44 PM / a month ago

Left-wing Brazil political party sues to block Boeing-Embraer deal

The logo of Brazilian aviation company Embraer is seen during the Latin American Business Aviation Conference & Exhibition fair (LABACE) at Congonhas Airport in Sao Paulo, Brazil August 14, 2018. REUTERS/Paulo Whitaker

RIO DE JANEIRO (Reuters) - A left-wing political party on Wednesday filed a lawsuit to block the sale of 80% of Brazilian planemaker Embraer SA’s (EMBR3.SA) commercial jet division to Boeing Co (BA.N) for $4.2 billion (3.3 billion pounds), arguing it will harm Brazil’s sovereignty.

The deal, which would position Boeing to compete more directly with Airbus SE (AIR.PA) in the market for mid-sized passenger planes, has faced significant left-wing opposition largely because Embraer is seen as a strategic company for Brazil’s national security.

So far, a handful of lower court decisions temporarily blocking the deal have been overturned by appeals court judges. The government has authorized the deal and Embraer’s shareholders are all for it.

But the latest lawsuit, filed by Brazil’s Democratic Labor Party (PDT), underscores that there is still a political risk that could potentially unravel the agreements reached so far between Boeing and Embraer. The PDT’s leader, Ciro Gomes, has staunchly opposed the sale of Embraer’s commercial jet division to Boeing.

Embraer declined to comment on the lawsuit.

The proposed deal with Boeing was first announced in July 2018.

Boeing and Embraer are waiting for antitrust approval to finalise the deal, including intense scrutiny from European regulators. They expect that to happen in early 2020.

Reporting by Rodrigo Viga Gaier in Rio de Janeiro; Editing by Matthew Lewis

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