Boeing has reached an agreement to supply Icelandair with 12 737 MAX aircraft, with a total list price of USD$1.2 billion.
Icelandair said on Thursday it had purchase rights for another 12 aircraft. It planned to fund the acquisition from internal resources as well as bank loans.
"The company is in discussions with Export-Import Bank of the United States about possible financing support," it said. It noted that the USD$1.2 billion price was the list price and that the actual purchase price was confidential.
Boeing said it was finalising the details, after which it would post the deal as a firm order.
The airline is buying 8 737 MAX8 aircraft and 4 737 MAX9s. The MAX aircraft are a variant of the Boeing 737 and will first enter service in 2017. The first delivery to Icelandair is scheduled in the first half of 2018.
"Fuel savings compared to Icelandair's present fleet of Boeing 757 is more than 20 percent per seat," the airline said.
Icelandair operates a fleet of 23 757s for both its passenger and cargo operations.
The airline reported a 20 percent rise in pre-tax profit in the third quarter to USD$64.8 million and has benefited from increasing tourism to Iceland.
It said in the quarterly report that the number of passengers on international flights rose 11 percent to 745,000 year-on-year.