October 1, 2018 / 9:59 PM / 10 months ago

UPDATE 1-Boeing, Embraer to build KC-390 military cargo jet in U.S. -newspaper

(Adds comment from Embraer)

RIO DE JANEIRO, Oct 1 (Reuters) - U.S. planemaker Boeing Co and Brazil’s Embraer SA are in talks to set up an assembly line to build KC-390 military cargo jets in the United States, Brazilian newspaper Valor Economico reported on Monday.

In July, the two planemakers announced a deal to give Boeing an 80 percent stake in Embraer’s commercial aircraft arm, marking the biggest realignment in the global aerospace market in decades.

At the time, the companies also announced a deeper sales and services partnership on the new KC-390 military cargo jet through a separate defense venture they said was likely to eventually receive a joint investment.

According to the report on Monday, which did not detail how the newspaper obtained the information, the two companies intend to create a defense-related joint venture to install the factory, which would be the second to produce the plane.

Embraer said in a statement that negotiations with Boeing related to the military plane were progressing. It said it would inform the market when decisions were taken.

The Brazilian company said it planned to keep the Brazilian production line for the KC-390, in Gavião Peixoto, Sao Paulo state, fully operational.

Boeing declined to comment.

Such a partnership would give Boeing a newly designed, U.S.-built tactical transport plane to sell directly against rival Lockheed Martin Corp’s workhorse Hercules C130.

Reporting by Alexandra Alper; Editing by Susan Thomas and Peter Cooney

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