In its initial order in February, the airline said it would buy five of the fuel-efficient, long-range Dreamliners outright, with purchase rights to five more.

The airline exercised those purchase rights on Tuesday and plans to take delivery of its first 787 in 2008, when the plane is scheduled to enter service.

In a news release Tuesday, Chicago-based Boeing Co., which builds most of its commercial planes in the Seattle area, said the deal was worth about $1.6 billion at list prices.

Boeing now has 266 orders and commitments from 21 customers for the 787.

Ethiopian Airlines flies more than a million passengers a year. It serves most cities in Ethiopia and more than 40 international destinations. It will be the first Africa-based airline to fly the 787, Boeing said.

"The 787 represents the future - one in which Ethiopian Airlines will play a major part - and we view this airplane to be a cutting-edge solution to bolster our passenger service, improve our efficiencies and add to the airline's bottom line," said the airline's CEO, Ato Girma Wake.