Jens Flottau Dubai, United Arab Emirates, and Tony Osborne London

Being based in a market where a great many senior executives commute to work by helicopter, it seems surprising that Embraer has not attempted to breach the helicopter market until now.

The Brazilian aircraft manufacturer recently signed a memorandum of understanding (MOU) with Anglo-Italian AgustaWestland that targets establishing a rotorcraft final assembly line in Brazil. While production collaboration would be the first step, developing new helicopters as part of the joint venture does not seem too far-fetched in the longer term.

Moving into the helicopter business would be the latest step in Embraer's broader diversification strategy. The company has long focused on the regional aircraft market, initially with the EMB-110 Bandeirante, followed by the EMB-120 Brasilia and then the ERJ 145, the big seller in the 1990s, when small regional jets became so popular. With the market for smaller regional jets weakening, the company moved up with the launch of its E-jets, which serve the 70-120-seat market and are no longer purely geared toward regional airlines. In fact, some low-cost carriers such as JetBlue Airways are operating them.

The diversification strategy led Embraer to enter the business jet market with its Legacy family. In 2007, the company also announced the launch of the KC-390 military transport, which is intended to strengthen its defense business. This would also benefit from the AgustaWestland cooperation, once military types are included.

But it is not like the country has no experience with helicopters. Brazil developed the Beija-Flor (Beautiful Flower) light helicopter before Embraer was formally set up in 1969. Much of the knowledge that went into that project was gleaned from the country's research institutes.

While Embraer is rediscovering its roots, AgustaWestland has been assessing how best to enter one of the world's booming helicopter markets. Brazil's helicopter demand has been growing by 20% annually, propelled by the private sector and the growing oil and gas enterprises.

“Before you go into a market you start with two business plans, one with a partner and one without. Embraer is a natural partner, a powerful OEM with an established supply chain,” says Roberto Garavaglia, vice president of marketing at AgustaWestland.