updated 6/6/2006 4:34:06 PM ET 2006-06-06T20:34:06

Continental Airlines Inc. said Tuesday it has ordered 34 new airplanes — with a list price of $3 billion — from Boeing Co. to increase its ability to serve long-haul routes and remove gas-guzzling planes from its fleet.

Chairman and Chief Executive Larry Kellner said the airline still plans to expand its passenger-carrying capacity 5 percent to 7 percent per year.

Continental said it was ordering 10 more Boeing 787 Dreamliner jets, doubling its previous orders. That would make it the largest U.S. buyer of Boeing’s latest widebody jet, which is scheduled to go into service in 2008, a Boeing spokesman said.

The airline also ordered 24 more Boeing 737s and will have 213 “next-generation” 737s when all the planes it has ordered are delivered.

Continental didn’t disclose how much it will pay for the 34 planes. The jets would have a total list price of about $3 billion, based on current list prices, but airlines rarely pay sticker price when placing large orders.

Continental has been ordering more fuel-efficient aircraft for the past several years, believing this would give it an advantage over rivals whose planes use more costly jet fuel. The company has also taken steps such as adding upturned winglets, which boost mileage, and improving operating procedures to save fuel.

Also Tuesday, shareholders of Continental, the nation’s fifth-largest airline by revenue, re-elected 11 directors and gave them power to issue more new shares.

Shareholders approved a change in the company bylaws to allow directors to issue 400 million shares of common stock, up from the current cap of 200 million, all but 78 million of which have been used or earmarked for other purposes. The board said it may need more shares to handle stock-based financing or acquisitions.

Investors rejected a resolution to discourage political activities tilted toward one party. The board said the proposal was unnecessary because of current laws and company policies. Continental has a political action committee that the company says is nonpartisan and financed entirely by voluntary contributions from employees.

On Monday, Continental officials said summer bookings were running ahead of last year and flights will be more crowded, especially in the United States. It said average fares would show a “solid” rise.

But the airline warned that it expected jet fuel to rise to an average $2.10 per gallon in the second quarter and $2.13 per gallon for the full year.

Like other airlines, Continental tries to dampen the effect of rising fuel prices by locking in some purchases in advance. The company said it had hedged about one-fourth of its fuel for the second quarter at an average price of $66.69 per barrel of crude oil, or about six dollars lower than oil futures; and 17 percent of third-quarter fuel at nearly $73 per barrel.

Continental lost $68 million last year, down from a $409 million loss in 2004. The company’s shares rose 57 percent last year and recently hit their highest level since 2002.

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