FILE PHOTO: The logo of Brazilian planemaker Embraer SA is seen at the company’s headquarters in Sao Jose dos Campos, Brazil February 28, 2018. REUTERS/Roosevelt Cassio

SAO PAULO (Reuters) – Brazil’s Embraer SA (EMBR3.SA) on Monday said it had begun an arbitration process against Boeing Co (BA.N), after the U.S. planemaker canceled a $4.2 billion deal over the weekend that its former partner saw as crucial to its long-term success.

Embraer shares fell 14% in Sao Paulo on the news.

The sudden collapse of the deal, triggered by a deadline that Boeing refused to extend, drew an irate response from Embraer.

But on Monday, when Embraer executives hosted a call with analysts, the angry rhetoric was largely absent. Embraer Chief Executive Francisco Gomes Neto declined to provide more details on the process and if it will be accompanied by a lawsuit in either a Brazilian or a U.S. court.

Embraer tried to reassure investors that it remains a solid company, arguing it has been able to find $1 billion in cash savings for 2020, and that it has not suffered any aircraft order cancellations due to the coronavirus crisis.

Still, Gomes Neto said 2020 will be a “tough” year and that 2021 “will be worse than we had thought.”

Embraer, the world’s No. 3 planemaker, was hoping to benefit from Boeing’s marketing power to scale up sales of its E2 regional jets, which have been lauded for their fuel efficiency even as sales have lagged. Boeing, meanwhile, was aiming to compete more directly with Airbus (AIR.PA) in this market.

Reporting by Marcelo Rochabrun; Editing by Toby Chopra and Andrea Ricci

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