Embraer and AgustaWestland have called off plans to create a joint venture to produce helicopters in Brazil.
The pair in January announced they were in talks to look at producing helicopters for the Brazilian civil market. However, they have now decided to "terminate" those negotiations "without reaching an agreement for the establishment of a joint venture in Brazil," Embraer says.
Neither company provided any details as to why the agreement broke down.
The parties had been looking at the production of both civil and military helicopters, initially the AW139, AW189 and AW149. A major focus would have been Brazil's offshore oil and gas market, which is likely to boom with the development of massive oil fields in the Santos Basin, 250km (155 miles) east of Rio de Janeiro.
Data from Flightglobal Ascend shows that AgustaWestland accounts for less than 14% of the Brazilian market for civil rotorcraft, although the airframer itself places the figure closer to 25%.
Embraer, for its part, said in January that it views rotorcraft as a "strategic niche".
The announcement adds to what had already been a difficult year for AgustaWestland and Finmeccanica, which are embroiled in a scandal related to New Delhi's acquisition of 12 VIP-configured AW101 helicopters.
Although both companies steadfastly deny any wrongdoing, Italian and Indian authorities are probing into the 2010 deal.