The leasing arm of Singapore Airlines said on Tuesday it would buy up to 40 Boeing 737-800 planes -- a deal worth about USD$2.6 billion at current list prices.

Singapore Aircraft Leasing Enterprise (SALE) said the deal comprises 20 firm orders and 20 purchase rights, with deliveries scheduled between the fourth quarter of 2006 and the end of 2009.

It did not give the value of the order.

"SALE has specified the 737-800 as the baseline aircraft for its order. Under the terms of its agreement with Boeing, SALE has the flexibility to convert orders and purchase rights to the smaller 737-700 or proposed higher capacity 737-900X," it said.

The unit of Singapore's state-controlled flag carrier said the fleet will be powered by engines from CFM International -- a joint venture between General Electric and France's Snecma.

The purchase represents SALE's first direct order with Boeing for the "Next-Generation" 737 product line, although the company has previously acquired eight aircraft from airlines on a purchase and leaseback basis, it said.

SALE already has outstanding firm orders with Airbus for 11 A320s, due for delivery between now and the end of the second quarter of 2006.

Robert Martin, SALE Managing Director and CEO, said the order reflected the strong recovery in demand for leased aircraft and would further diversify the firm's portfolio.

"The addition of the aircraft to our portfolio will therefore enable SALE to reach a wider range of airline customers and significantly develop our global business," he said.

SALE's current portfolio comprises 61 aircraft flying with 30 airlines worldwide with an average fleet age of 4.6 years.