WASHINGTON, Nov 14: Pakistan signed its biggest-ever airline contract with the Boeing firm on Thursday, under which it will buy eight Boeing 777 aircraft for $1.6 billion.

“It is the biggest ever deal in the history of Pakistan International Airlines,” said PIA’s Chairman Hamid Nawaz Khan who is heading a high-level team, which came Washington to sign the deal.

Under this agreement, Boeing will start delivering the aircraft by the end of 2003.

The US Export-Import Bank agreed to provide 85 per cent of the fund to Pakistan to help it buy passenger aircraft from Boeing.

This is the first time the bank has underwritten a deal between Pakistan and a private US firm. The United States has agreed to help Pakistan revive its ailing economy — which Islamabad said was adversely affected after Sept 11.

Last month, the Pakistani government agreed to contribute $150 million over three years to help PIA finance the purchase of new planes.

Pakistan’s Finance Minister Shaukat Aziz said the money will help the airlines embark on an ambitious $2bn fleet-overhaul programme that includes the scheduled purchase of eight planes from the Boeing.

In August, Mr Khan disclosed plans to improve the airline’s aging fleet with new aircraft.

“Our relationship with the Boeing began in 1960 when we bought 707 aircraft on lease from Pan Am,” Mr Khan said.

“The new extended range, 777 aircraft shall enable us to regain our lost status and make us comparable to other world-class airlines,” said Mr Khan.

PIA is trying to reduce the 18-hour fly time between Pakistan and the United States by inducting faster long haul aircraft into its fleet.

Currently, flights from Pakistan stop at airports in Europe before continuing on to the United States. With the new aircraft, PIA hopes to fly 14-hour direct flights to New York and Chicago.

PIA has 40 planes and 22,000 employees. The average age of PIA planes is 23 years.