Rio de Janeiro - Brazil's government awarded the national planemaker Embraer a defence contract worth 1.4 billion dollars for developing a new military cargo plane. The KC-390 cargo plane, which is expected to have a capacity of 19 tons, is to be developed jointly with Brazil's Air Force over the next seven years to replace old Hercules-C-130 planes.

The Air Force is expected to place an initial order of 22 jets.

Defence Minister Nelson Jobim said the planes also were to improve the Air Force's transport capacity for humanitarian missions in remote regions of the country.

The contract also includes the modernization of 12 fighter jets of the Brazilian Navy stationed on aircraft carriers.

Brazil's national planemaker has is reeling under the effects of the global downturn, as orders for regional jets, its core market, dropped sharply.

Embraer recently laid off 4,300 employees, or about 20 per cent of its workforce. Profits dropped by more than half in 2008 to 194 million dollars compared to the previous year. (dpa)