Brasilia, Jan 25 (IANS): Brazilian aircraft manufacturer Embraer has signed a contract to sell majority of its commercial division to US firm Boeing that will create a new civil avaiation company.

President Jair Bolsonaro's government gave the green signal in January to the agreement that was yet to be approved by the shareholders, Efe news reported.

Both firms signed on Thursday the deal containing the terms and conditions for the implementation of a strategic partnership in the field of commercial aviation, Embraer said in a statement.

Embraer called its shareholders meeting on February 26 to approve the agreement, according to which it will sell 80 per cent of its commercial aircraft division for $4.2 billion to Boeing, which will have full control of the new company.

Likewise, the companies also agreed to develop the military cargo plane KC-390, through a second company dedicated to the promotion and development of new markets in the defence sector.

According to analysts, the deal aims to counteract the partnership between the Canadian firm Bombardier and the European aerospace giant Airbus.

The alliance needed the backing of the government, as it has a "golden share" with veto power that was kept when Embraer was privatised in 1994.

Embraer is now the third-largest aircraft manufacturer in the world and leader in the segment of aircraft for regional flights.

The government said that both companies will maintain the current jobs in Brazil, but the unions said that the agreement "puts at risk the jobs and the technological sovereignty" of the country.