SAO JOSE DOS CAMPOS, Brazil, April 24 (UPI) -- Brazilian aviation major Embraer has dropped plans to build a new helicopter range with Italy's AgustaWestland as a joint venture partner.
A statement said the two companies jointly decided to terminate negotiations on the project which was agreed in January.
Neither side gave an immediate explanation for the talks' collapse. Embraer didn't say the end of a potential deal with AgustaWestland meant it would shelve plans to build new helicopters with any other partner.
Latin America has a growing market for helicopters for business travel, industrial research and development and scientific activities. Military uses for new helicopters were also part of the plan when Embraer signed a memorandum of understanding with AgustaWestland, a unit of Italy's Finmeccanica.
Both sides then said the project "could lead to the production of AgustaWestland helicopters in Brazil to be marketed for both commercial and military use in Brazil and Latin America."
A recent growth in offshore business and military operations, including Brazil's oil and gas sector, has increased the business potential for helicopters.
AgustaWestland wants to expand its market share in Latin America, currently said to average 20 percent.
Embraer has plans for creating a bigger footprint with a whole range of civilian and military helicopters that could go with its inventory of executive jets, light attack aircraft and tactical military transport planes.
Embraer last year announced advances in tactical transport and tanker aircraft and this year won its first U.S. contract for Super Tucano light attack aircraft.
Brazil has yet to announce how it will fulfill the Brazilian air force requirements for a new fleet of multi-role jet fighters. Boeing's F/A-18 Super Hornet, France's Rafale and Swedish Saab's JAS-39 Gripen NG are competing for an $8 billion contract.
Analysts said it seems likely that Brazil wouldn't give up on plans to develop helicopter manufacturing as part of an overall strategy to expand aerospace, aviation, defense and security industries.
The termination of talks caps a difficult period for AgustaWestland and Finmeccanica, which are at the center of a New Delhi investigation into an Indian government acquisition of 12 VIP-configured AW101 helicopters. Both companies deny any wrongdoing.
AgustaWestland has had a change of executive leadership since the initial announcement was made in January and Finmeccanica is due to release delayed 2012 financial results, Aviation Online said on its website.
AgustaWestland apparently was hoping to use the joint venture as entry into Brazil's lucrative oil and gas market for its AW139 and AW189 medium twins, Aviation Online said.
Rival Helibras, Eurocopter's Brazilian subsidiary, has delivered more than 500 helicopters in Brazil since 1978.