Key Points:

The Government's near-$1 billion upgrade of the Air Force's helicopter fleet was completed yesterday, with Defence Minister Phil Goff signing a contract to buy five aircraft, a flight simulator and spares.

In July 2006 the Government confirmed the $771 million purchase of eight NH90 helicopters to replace the ageing Iroquois fleet.

Yesterday it followed up by completing a $139 million deal to buy five Agusta Westland A109 light utility helicopters and associated equipment.

The Italian-made helicopters replace the Air Force's Sioux training machines. They were the most expensive of the two aircraft the Government and defence force considered as trainers, but their ability to be used to train AH90 and Seasprite pilots was the clinching factor, Mr Goff said.

"It is a major investment of the taxpayer's dollar, but it is also an investment that will take us forward a generation. These are aircraft that the Royal New Zealand Air Force will probably still be operating in 30 years' time, so it was important, therefore, from our perspective that we purchase aircraft that were state-of-the-art, that would stand the test of time, that would do all of the things that we required of it."

As well as being training machines, the A109s will also take over some of the roles of the Iroquois, and be available for search and rescue, counter terrorism work, command and control and disaster relief.

The US, British and Australian Air Forces fly variants of the AH90, and Sweden, South Africa and Malaysia use the same helicopter.

"While the aircraft are operated by the RNZAF, they are a critical part of the capability of both the Army and the Navy as well, so across the board these were the aircraft we needed," Mr Goff said.

The first A109 will be delivered in October 2010.