Boeing, Embraer to partner on military cargo plane

* Companies join forces on KC-390 military tanker, cargo jet

* Partnership to share expertise, study sales possibilities

SAO PAULO, June 26 (Reuters) - U.S.-based Boeing Co and Brazil's Embraer said on Tuesday they would collaborate on some aspects of developing Embraer's KC-390 military transport and refueling jet, tightening relations between the two countries' defense industries.

The companies will share expertise and study possibilities for joint sales, the heads of their defense units told reporters in Sao Paulo. Boeing defense chief Dennis Muilenburg said the KC-390 complemented the U.S. manufacturer's lineup of larger military transport planes.

"We're not selecting a risk-sharing partner or a supplier here," said Embraer's defense chief, Luiz Carlos Aguiar. "It's simply a technical collaboration with a leading company that has been through similar experiences in military transportation."

Embraer currently has letters of intent for at least 60 planes from partner countries involved in the program's supply chain. The company sees a market for up to 700 new cargo planes worth more than $50 billion by 2025 as countries replace aging versions of the C-130 Hercules, made by Lockheed-Martin Corp.

Boeing and Embraer's collaboration comes as both are vying for key defense contracts in each other's backyards.

Boeing has been working for years to land a Brazilian jet fighter contract for its F-18 Super Hornet worth an initial $4 billion. Embraer submitted a second bid this month for a $355 million U.S. Air Force contract for 20 planes in Afghanistan.