International Airlines Group (IAG) has ordered 18 new Airbus A350 aircraft for its subsidiary British Airways(BA).
The move is part of the company's plan to phase out a fleet of 30 Boeing planes over the next 10 years. The $1.6bn deal allows for an option for an additional 18 A350 aircraft.
IAG plans to place firm orders on 18 Boeing 787s, which together with the new A350s will be used to replace BA's fleet of 30 Boeing 747-400 planes between 2017 and 2023.
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The company also said it was in talks with Airbus and Boeing about supplying aeroplanes for its Spanish arm Iberia.
The A350 aircraft are powered by Rolls-Royce Trent XWB engines.
"The A350-1000 will bring many benefits to our fleet. Its size and range will be an excellent fit for our existing network and, with lower unit costs, there is an opportunity to operate a new range of destinations profitably," said IAG Chief Executive Willie Walsh.
"This will not only bring greater flexibility to our network but also more choice for our customers."
He said both aircraft would provide further cost efficiencies and environmental benefits with fuel cost per seat improvements of more than 20%.
"This order will also secure jobs in Britain and Spain," he added.
"The A350's wings are made in Britain while its horizontal tail plane, horizontal tail plane boxes and lower wing covers are made in Spain. Rolls-Royce Trent XWB engines are assembled in Britain."
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