Boeng vil markedsføre Embraer og Airbus Bombardier - Curt Lewis

Boeing Seeking Deal With Brazilian Aerospace Titan

• Options are said to include a partnership to market planes
• Talks follow European planemaker's deal with Bombardier

An eagle design sits on the nose of an Embraer SA E195-E2 aircraft. Photographer: Chris Ratcliffe/Bloomberg

Boeing Co. is considering a "potential combination" with Brazil's Embraer SA, the companies said, setting the stage for a blockbuster deal that would expand the U.S. aerospace giant's reach into the highly competitive market for smaller jets.

The options include a joint venture that would enable the companies to cross-sell their complementary lineups of commercial jets and negotiate better deals with suppliers, said a person familiar with the matter. Such a partnership would stop short of a politically risky takeover by Boeing, said the person, who asked not to be named because the talks are private.

Boeing's potential Embraer deal raises the prospect of a duopoly with Airbus SE that would extend into the market for smaller planes, where manufacturers in Canada, Russia, Japan and China are emerging as competitive threats. Airbus secured its role two months ago by agreeing to take control of Bombardier Inc.'s C Series program -- the target of a trade complaint by Boeing.

"That space is just not big enough, in my view, to support more than two OEMs," said John Plueger, chief executive officer of Air Lease Corp., using an industry acronym for original equipment manufacturers.