Feb 28 (Reuters) - Canada's CAE Inc will buy L3Harris Technologies Inc's military training division for $1.05 billion to boost its defense business at a time of low demand for flight simulators from airlines in a pandemic-battered industry.

The deal, announced on Monday, broadens the company's position in simulation and is expected to augment the development of training systems for fighter and bomber aircraft, submarines and remotely piloted aircraft.

"It (the deal) accelerates our growth strategy in Defence and Security and is highly complementary to our core military training business," CAE Chief Executive Officer Marc Parent said in a statement.

The world's largest civil aviation training company expects the deal to add to earnings in the first full year after closing and projected annual cost savings of about C$35 million ($27.57 million) to C$45 million after the second year.

CAE, which produces flight simulators for Boeing Co and Airbus, posted a 50% slump in third-quarter profit but expects to see an uptick in training contracts as more people resume air travel following vaccinations.

The deal will be funded by a private placement of roughly C$700 million from two institutional investors, CAE said.

Canada's second-largest pension fund Caisse de dépôt et placement du Québec (CDPQ) said it would invest C$475 million in the deal, becoming CAE's largest shareholder.

Post deal, which is expected to close in the second half of 2021, the training division will be based in Tampa, Florida. The deal was earlier reported by the Wall Street Journal.

($1 = 1.2696 Canadian dollars) (Reporting by Juby Babu and Shreyasee Raj in Bengaluru; Editing by Peter Cooney and Sriraj Kalluvila)