European aircraft maker Airbus (search) signed a deal Tuesday worth more than $7 billion to sell 24 airplanes including four of its new A380 (search) jumbo jets to Abu Dhabi-based Etihad Airways (search).

Airbus and Etihad said the deal — the biggest announced so far at this week's Farnborough International Air Show (search) — includes options for the young airline to buy an additional 12 planes.

Airbus is developing the A380, which will seat about 550 passengers, to fill a demand it sees for super-size planes flying large numbers of passengers between specific cities. Airbus has now pre-sold 133 of the A380s, which will make their first test flights early next year.

The sale eclipses a $2.96 billion deal announced Monday by Airbus rival Boeing Co. (BA) Chicago-based Boeing sold four 777-300ERs (search) with options on nine more, to another Gulf-based carrier, Emirates Airline (search).

The sale to Etihad was "one of the biggest orders ever" for Airbus' long-range jets, Airbus chief executive Noel Forgeard told a news conference. Etihad agreed to buy 12 A330-200s, four A340-500s and four A340-600s, besides the four A380s. It has options on all types, including A380s. Airbus is to begin delivering the planes in 2006.

The A340s will be powered by Rolls-Royce Trent 500S engines. Etihad has yet to select engines for the A330s and A380s, Airbus said.

In a blow to Boeing, Etihad chairman Sheik Ahmed bin Saif Al-Nehyan said Etihad had considered buying the American company's experimental 7E7 "Dreamliner" but didn't want to wait until the medium-sized plane became available in 2008.

Etihad, which only began operating in November, expects to receive its four double-decker A380s in 2007. It plans to use them on flights to China and Britain, Sheik Ahmed told reporters after he and Forgeard signed a memorandum of understanding at the air show outside London in southeastern England.

The deal intensifies the competition between Airbus and Boeing. Both manufacturers have noted a modest improvement in the market for airliners after an unprecedented global downturn and despite high fuel costs.

Boeing foresees 5.2 percent annual growth in global passenger traffic and 6.2 percent growth in air cargo business, after nearly three years of lost production due to the Sept. 11, 2001 attacks, the SARS epidemic in Asia, the bursting of the dot-com bubble and the war in Iraq. Boeing estimates that airlines will buy some 25,000 new planes worth $2 trillion over the next two decades, Boeing Commercial Airplanes chief executive Alan Mulally said Monday.

Forgeard of Airbus has estimated that air traffic grew by 7 percent last year and would rise by 10 percent this year, even though aviation fuel prices also have increased.

Airbus, headquartered in Toulouse, France, is owned 80 percent by European Aeronautic Defense & Space Co. NV, with BAE Systems PLC of Britain holding the remaining 20 percent.

In separate business, British Defense Secretary Geoff Hoon announced that the French-owned company Thales is likely to win a major contract to supply unmanned aircraft for the British armed forces.

Speaking at Farnborough, Hoon said Thales had been awarded preferred bidder status for the contract to deliver the Watchkeeper program worth several hundred million dollars. The company edged out competition from BAE Systems, Northrop Grumman and Lockheed Martin.

Once a contract is signed, all the work would take place in the United Kingdom through the subsidiary Thales U.K.

More than 300,000 people were due to attend Britain's Farnborough International Air Show, where more than 1,300 exhibitors from 32 countries are showing off the latest in aviation technology, from flight simulators and unmanned reconnaissance drones to a space pavilion run by the British National Space Center.

A miniature town complete with traffic circles and avenues has sprung up on the 66-acre Farnborough Aerodrome site for the temporary exhibition.