International Airlines Group (IAG) has reached agreement with Boeing for new long-haul aircraft to replace the older Boeing 747s in the British Airways fleet between 2017 and 2021.

IAG plans to convert 18 existing Boeing 787s options into firm orders for British Airways. The aircraft will be powered by Rolls-Royce Trent 1000 engines and a comprehensive maintenance package is included in the engine deal.

Willie Walsh, IAG chief executive, said: “British Airways has 24 787s on order already and we plan to boost this by a further 18 aircraft by exercising our options.

“The aircraft offers a step change in fuel burn efficiency versus our existing aircraft with improvements in fuel cost per seat of more than 20 per cent. New technology engines and improved aerodynamics will lower fuel burn leading to reduced carbon and NOx emissions.”

Keith Williams, BA chief executive, said: “This agreement is a demonstration of confidence in British Airways’ future, and underlines our commitment to offer the best possible network and flying experience for our customers.

“It also emphasises the crucial importance of achieving the objectives of our current business plan, and in particular generating an annual profit of £1.1bn by 2015. Profit is essential to pay for investment – and there is no bigger investment for an airline than in new aircraft.”

IAG has also reached agreement with Boeing to secure commercial terms and delivery slots that could lead to an order for 787s for Iberia when it has restructured and reduced its cost base and is in a position to grow profitability.

The fleet order is subject to approval by IAG shareholders.