Sao Paulo - In Brazil, president Michel Temer approves the joint venture agreement between Embraer and Boeing, reports Bloomberg citing insiders.

The government has veto power over the agreement between Embraer and Boeing. If the green light is confirmed, the deal with Boeing could be signed in the coming weeks, creating a strong alliance against the one between Airbus and Bombardier.

The agreement will provide American and Brazilian aircraft manufacturers with the same advantages as the partnership announced by their rivals Airbus and Bombardier. Embraer will benefit from Boeing's commercial strength in negotiations and will be able to reduce its costs, while the American giant will be able to rely on, in particular, the Embraer's E2 family aircraft to offer a complete range from 80 to more than 400 seats.

Embraer splits its commercial aircraft division from the defense division for the joint venture, in which Boeing will take the majority. The defense business is now to be continued as an independent company.

The news was well received on the stock market. Shares of the Brazilian company increased by almost six percent.