Last week, Boeing and Embraer announced they have signed a Memorandum of Understanding to establish a strategic partnership that positions both companies to accelerate growth in global aerospace markets.

The non-binding agreement proposes the formation of a $4.75 billion joint venture comprising the commercial aircraft and services business of Embraer that would strategically align with Boeing’s commercial development, production, marketing and lifecycle services operations. Under the terms of the agreement, Boeing will hold an 80 percent ownership stake in the joint venture and Embraer will own the remaining 20 percent stake.

The joint venture will become one of Boeing’s centers of excellence for end-to-end design, manufacturing, and support of commercial passenger aircraft, and will be fully integrated into Boeing’s broader production and supply chain. Boeing and the joint venture would be positioned to offer a commercial airplane portfolio that ranges from 70 seats to more than 450 seats and freighters.

In addition, both companies will create another joint venture to promote and develop new markets and applications for defense products and services, especially the KC-390 multi-mission aircraft, based on jointly-identified opportunities.

The move could also set the stage for further development of Boeing’s New Midsize Aircraft, the “797,” which could compete against Airbus’ A320neo jet.  Like the 787 Dreamliner, the 797 will have an all-composite fuselage, and Boeing is considering all options for fabricating the carbon fiber composites for the jet, including various new out-of-autoclave and resin infusion methods. Embraer brings engineering talent that Boeing could potentially use for the new midrange jet.

“By forging this strategic partnership, we will be ideally positioned to generate significant value for both companies’ customers, employees and shareholders – and for Brazil and the United States,” said Dennis Muilenburg, Boeing’s Chairman, President and Chief Executive Officer. “This important partnership clearly aligns with Boeing’s long-term strategy of investing in organic growth and returning value to shareholders, complemented by strategic arrangements that enhance and accelerate our growth plans.”