Denel will produce 30 complete airframes, rotor blades, rotors and onboard systems for AgustaWestland's A109 and A119 Koala light helicopters, the firm announced.

"We are delighted by this co- operation with AgustaWestland. It will allow us to enter the civil helicopter market in a meaningful way," Denel CE Flip Botha said at the signing ceremony in Pretoria.

Botha also said the company was contracted by Agusta to manufacture 25 to 30 helicopters for the SA Air Force. The first five of these aircraft will be built in Italy, where SA technicians are being trained.

Botha also said the potential worldwide market for the helicopters could be as high as 30 per year, with a sales potential worth 90m. Denel would receive a 30% share from Agusta, a branch of AgustaWestland.

"Most importantly, this agreement will ensure retention of jobs and skills (in SA), as well as transfer of sophisticated aerospace technology from Agusta," Botha said.

Under the deal, Denel will be allowed to manufacture and market both types of helicopters in specified countries in Africa, the Middle East and southeast Asia, and also to sell spare parts.

AgustaWestland executive Johann Holdt said: "We have already identified customers in Africa and elsewhere, to whom we will supply both helicopters and spares, utilising Denel."

Denel was building 20 airframes for A109 light utility helicopters which Sweden had ordered, Botha said. Sapa-AFP.