updated 12/29/2004 8:45:44 PM ET 2004-12-30T01:45:44

Continental Airlines Inc. said Wednesday it would become the first major U.S. carrier to buy Boeing Co.'s new 7E7 airplane, with an initial order of 10 jets.

Gordon Bethune, the Houston-based carrier's outgoing chairman and chief executive, said in a statement that the new airplanes would be "an important part of our international growth strategy."

Boeing said the deal would be worth about $1.3 billion at list prices, although airlines typically negotiate steep discounts. The airplanes are to be delivered beginning in 2009.

Continental is the second U.S. airline to say it would buy Boeing's new plane. Primaris Airlines Inc., a little-known Las Vegas carrier which plans to offer low-cost business class service, said in October that it would buy 20 of the new planes. That carrier's 7E7s are to be delivered between 2010 and 2013.

Boeing said Continental had chosen the twin-aisle 7E7-8 model, which seats 217 in a typical three-class configuration and can fly nearly 9,800 miles.

Continental also said Wednesday that it would lease eight 757-300s from Boeing, and would receive six 737s it had previously agreed to lease in 2006 instead of 2008.

Boeing has logged 56 firm orders for the 7E7, including a launch order from All Nippon Airways. Including the Continental deal, other carriers have committed to another 66 7E7s, but those agreements have yet to be completed.

Boeing earlier set a goal of securing 200 orders by the end of 2004, but analysts have said it won't be too serious if the Chicago-based airplane maker fails to reach that goal.

Boeing's widebody 7E7, scheduled to enter service in 2008, promises greater fuel efficiencies and more cargo space than similar planes on the market today.

But the new model is expected to face stiff competition from rival Airbus SAS, which recently announced plans to launch its own new plane, the A350, to compete with the 7E7.

The agreements for all the new planes, including the 7E7s, are subject to approval by Continental's board of directors by Feb. 28, 2005. That's also the deadline the company has set for finishing plans to slice $500 million annually from wages and benefits.

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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