MILAN (Reuters) - Italian defence group Leonardo said on Tuesday it had signed a framework agreement with the country's main unions to allow some 1,100 employees to retire early, in a bid to increase its competitiveness and profitability.

The state-controlled company said it aimed to return to double-digit profitability by 2020 - half-way through its five year plan - after cutting revenue and profit guidance last year over issues with its helicopter business.

The agreement covers employees who qualify for retirement over the next four years and the option could be extended to managers, it said in a statement.

At the same time new workers would be employed "taking into account the company's financial resources," it added.

All layoffs will be substituted with either new hires or by stabilising existing workers' contracts, a separate statement by FIOM-CGIL, one of the industry's biggest unions, said.

"The strategic agreement will support the technological transformation and sustainable development of the company ... It is an important step toward the full implementation of our 2018-2020 industrial plan," Chief Executive Alessandro Profumo said in the statement.

The group had 45,600 employees at the end of October 2016, a third of whom worked in Italy.

Details of the scheme will be negotiated in the coming weeks with Leonardo's different units, "taking in account business need and the required eligibility of the workforce".

A final agreement will be reached and signed by the end of next month, FIOM-CGIL said, adding that workers are expected to leave the company in three different time slots - November 2018 and July and November 2019.

(Reporting by Giulia Segreti, editing by Steve Scherer and David Evans)