This month Brazilian aircraft maker Embraer signed a strategic partnership agreement with Portugal that gives the Brazilian aviation giant a head start with anticipated early access to parts it cannot immediately produce at home.
Embraer is banking on being able to break even and make good on its investment in the KC-390 military airlifter and aerial refueling jet program with just 120 orders, industry sources said.
Embraer said the deal with Portugal's Industria Aeronautica de Portugal will give the company access to components to be made in Portugal.
Global demand for the 20-ton versatile air transport sector, dominated for years by the C-130 and its Russian rivals, remains strong. Aviation industry forecasts said the total international demand for aircraft in the category could exceed 700.
Embraer hopes to develop the jet-powered KC-390 to a point where it can compete comfortably in price and capacity with the Lockheed Martin C-130J, the Airbus A400M, the Russian AN-12 and its Chinese prototype the Yun-8/9 as well as the Indo-Russian Irkut/HAL MRTA aircraft.
The air transport market has also seen the emergence of smaller transport aircraft, including the European EADS-CASA C-295M and Italian Alenia Aeronautica's C-27J that Embraer as well as its rivals have to contend with.
Embraer said it hopes to enter the market with a jet-powered medium transport KC-390 model that is likely to have a cargo capacity of around 23 tons, able to refuel and be refueled in the air.
Portuguese components for the KC-390 are likely to include structural parts and aerial refueling jet technologies.
Embraer Defense and Security President Luiz Carlos Aguiar said, "Portugal's participation in the KC-390 program strengthens our position in the European defense market."
A declaration of intent between the Brazilian and Portuguese ministries of defense, signed in September 2010, preceded this contract which also emphasizes Portugal's commitment to purchasing KC-390 airplanes.
Brazilian government sources said the partnership with Portugal gives Brazil new opportunities to boost its military aviation sector and develop technological competencies.
The original C-390 was meant to be a militarized ERJ-190 jet that competed in a niche market between EADS-CASA's C-295M and Lockheed Martin's C-130 Hercules. The aircraft served Brazil's postal services but over the years additional research and development allowed Embraer to add or modify features, turning it into a serious rival to the C-130 range.