Qantas has selected the Airbus A320neo and Airbus A220 as the preferred aircraft for the long-term renewal of its domestic narrow-body fleet.

A firm commitment for 40 aircraft – 20 A321XLR (extra long-range) and 20 A220 aircraft – is expected to be placed with Airbus by the end of next year.

The move follows discussions with employees about arrangements to operate the new aircraft types and a final decision by the Qantas board.

Qantas will also have a further 94 purchase right options on aircraft over a ten-plus year delivery window as its existing Boeing 737-800s and 717s are gradually phased out.

The order is in addition to Jetstar’s existing agreement with Airbus for over 100 aircraft in the A320neo family.

Part of this new deal includes combining these two orders so that the group can draw down on a total of 299 deliveries across both the A320 and A220 as needed over the next decade and beyond for Qantas, QantasLink and Jetstar.

Once finalised, this will represent the largest aircraft order in Australian aviation history.

Financial details of the deal are commercial in confidence but represent a material discount from list prices, Qantas said.

Qantas Group chief executive, Alan Joyce, said the airline had called the renewal of its domestic fleet Project Winton after the town where the national carrier was born 101 years ago, because it’s a key strategic decision for the future of Qantas Domestic.

“This is a long-term renewal plan with deliveries and payments spread over the next decade and beyond, but the similarly long lead time for aircraft orders means we need to make these decisions now,” he added.

“Qantas is in a position to make these commitments because of the way we’ve navigated through the pandemic, which is a credit to the whole organisation.

“This is a clear sign of our confidence in the future and we’ve locked in pricing just ahead of what’s likely to be a big uptick in demand for next-generation narrow-body aircraft.

“That’s good news for our customers, our people and our shareholders.

“We’ll be having discussions with our people to ensure we have the arrangements necessary to support such a large investment.”