South Korea's sole aircraft manufacturer Korea Aerospace Industries Ltd. said Wednesday it agreed to step up strategic cooperation in the aviation industry with Airbus Group.

The memorandum of understanding signed on the sidelines of the Seoul International Aerospace and Defense Exhibition calls for greater technical cooperation between the two companies, and joint efforts to expand business areas.

KAI said the MOU outlines bilateral tie-ups in both civilian and military aircraft, as well as in maintenance and repair overhaul operations.

It also said the two sides will work more closely in such areas as helicopters, space satellites, and the development of medium fixed-wing planes, which can all contribute to more business opportunities and growth.

"Close cooperation between the two companies will result in mutually beneficial growth," said Byun Sang-bong, general manager of KAI's commercial aircraft business division.

KAI expressed hope that the MOU could lead to 1 trillion won ($879 million) worth of new orders down the line.

KAI is already working with Airbus to develop the South Korean next generation light civil and light armed helicopters.

The South Korean company headquartered in Sacheon, 437 kilometers southeast of Seoul, has been building various airframe structures for Airbus for over 10 years.

More recently it won a contract to build wing bottom panels for the very popular A320 passenger jets, and is one of the international partners involved in the production of the A350 XWB that is just starting to reach airlines around the world.

In 2015, KAI expects airframe structure exports to reach 910 billion won, with this number likely to grow to 2 trillion won by 2020. (Yonhap)