New Zealand's national carrier announced Wednesday that it is to buy seven new generation ATR 72- 600 aircraft and has purchase options on another five, with a total value of US$270 million claiming the investment was a signal of confidence in the country's economy.

The European-manufactured aircraft would be used on Air New Zealand's domestic services, said chief executive officer Rob Fyfe.

The deal, which was still subject to contract signing, would mean cheaper fares for travelers, said Fyfe.

"At a time when other businesses have shown little appetite to invest significantly in assets, particularly where revenue is derived from regional New Zealand, we have not waivered in our belief in the long-term strength of the domestic economy," said Fyfe.

The first of the 68-seat ATR 72-600 aircraft would be delivered in October next year and a second in December, followed by two in 2013 and another each year for three years.

The five purchase options would be available for delivery between 2014 and 2016.

"This order potentially doubles the size of Air New Zealand's ATR fleet and will put a further 2 million seats into the New Zealand regional market annually," he said in a statement.

The airline has been upgrading its fleet with purchases of 23 Q300 aircraft over the past six years worth more than NZ$450 million (US$358.74 million) at list price and the purchase from lease of most of the existing ATR 72-500 fleet over the past 18 months.

"Thanks to the purchase of larger aircraft and the lowering of fares we have seen regional passenger numbers increase by an average 5.6 percent annually since 2003, resulting in our regional airlines carrying 54 percent more passengers to 4.3 million in the year ended September."

The new-generation ATR 72-600 was the most efficient aircraft in its class and featured improved seating and advanced cockpit technology, including required navigation performance (RNP) technology, which would improve the airline's ability to fly during inclement weather.

Air New Zealand was the largest operator of ATR Regional Aircraft in the Pacific market, said Filippo Bagnato, chief executive officer of France-based ATR.

Formed in 1981 as a joint venture by European aerospace companies Alenia Aeronautica and EADS, ATR manufactures 50 to 74 seat regional turboprop aircraft.

The announcement came the same day that Air New Zealand said it is to host the new Boeing 787 Dreamliner in Auckland from Nov. 12 to 14.

The arrival of the Boeing 787-8 test aircraft at the airline's engineering base at Auckland International Airport would allow New Zealanders to be among the first in the Southern Hemisphere to see the new aircraft.

"This is an aircraft which has the exciting environmental advantage of using up to 20 percent less fuel while also being able to carry up to 50 percent more cargo than other jet aircraft of comparative size," said Fyfe.

Air New Zealand is the launch customer for the larger 787-9 variant, which will have a greater range and seating capacity than the 787-8.

The structure of the 787 aircraft makes significant use of lightweight high-tech composite materials to make the aircraft more efficient and comfortable.