Vector Aerospace will repay about $4 million in financing from the province over a 15-year term and it is receiving another $1.4 million that will not be repaid.
The province says the non-repayable portion of the government's aid will be paid out in 2017 if the company maintains or exceeds its current staffing levels.
Premier Wade MacLauchlan says the government financing will help Vector add a third engine test cell at its operation in the Summerside area and let the company provide uninterrupted service should one of its existing test cells be taken off line.
Vector Aerospace has also signed a new 15-year lease to remain at its current location as part of the deal.
The company employs 440 workers at its facility in P.E.I. and does aircraft engine repair, restoration and overhaul services.