Boeing and Embraer to create $4.75bn joint-venture

Boeing and Embraer, two of the world's biggest aircraft makers, agreed to a memorandum of understanding on Thursday that will see the pair create a joint-venture comprising the commercial aircraft and services operations of the Brazilian firm in a $4.75bn deal.

Under the terms of the non-binding agreement, Boeing will take as much as an 80% stake in the new venture, valued at $3.8bn, with the aim of strengthening the US company's position against the likes of Airbus.

The deal leans heavily on Embraer's sensitive military business, but the pair also revealed their intention to form another joint-venture to promote and develop markets for defense products and services, including the Brazilian firm's new military transport aircraft, the KC-390.

The pair said the transaction would take another 12-18 months to wrap up, at which time the firms will begin the process of obtaining shareholder, regulatory and governmental approval.

Securing the government's permission to go ahead with the deal has been seen as the last hurdle in the formation of a long talked about combination between the two aircraft manufacturers.

The pact will also allow Boeing to make its presence in the region known as European rival Airbus begins to take control of Bombardier's C Series aircraft programme.

Both deals could potentially reshape the landscape for aircraft manufacturing, extending the Boeing-Airbus duopoly from bigger passenger aircraft all the way down into the smaller regional market.