Boeing in tie-up talks with Brazil’s Embraer

reported talks.

Part of Brazilian President Michel Temer’s marketfriendly agenda has focused on privatizing state utilities and reducing the government’s role in national champions such as oil company Petroleo Brasileiro SA.

In September, Brazil’s Finance Ministry asked an audit court to study how the government could exit the golden shares it holds in former state monopolies that have been partially or fully privatized in recent years.

A closer partnership between Boeing and Embraer has long been contemplated in private, according to industry sources.

The two already work on projects including runway safety and alternative jet fuels. Their partnership intensified in recent years to include Boeing’s commitment to joint sales and support of Embraer’s KC-390 military airlifter.

“Although Boeing would look like a good fit with Embraer’s Regional Jet business, this is not the case for the company’s Executive Jet and Defense divisions,” said Rob Stallard, aerospace analyst at Vertical Research Partners in a note.

The WSJ reported that talks were on hold as the firms wait to see if Brazil’s government would approve the deal.

Boeing is willing to take steps to protect Embraer’s brand, management and jobs to help entice the government and is also willing to structure a deal to protect the government’s interest in Embraer’s defence business, the WSJ reported.