Cathay Pacific has firmed an agreement with Airbus to convert 16 of its Airbus A350-900 aircraft on order into the larger -1000 variant and has exercised an option to purchase 10 new -1000s.

The Hong Kong-based operator signed a supplemental agreement with Airbus on 8 August 2012, after its major shareholders approved the move.

The conversion to the larger variant is expected to cost Cathay an additional $1.087 billion at list prices. The carrier’s 2010 order for 30 -900s is worth $7.82 billion at list prices.

The additional 10 new -1000s to be purchased is expected to cost $3.286 billion at list prices.

Delivery of the 26 aircraft is scheduled to start in 2018, through to 2020.

At the Farnborough air show in July, Cathay had announced its intention to convert the -900 orders and to order an additional 10 -1000s.

The aircraft will be paid for in eight cash instalments, with seven payments to be made before the delivery of each aircraft, and the balance to be paid upon delivery, Cathay said in a statement on the Hong Kong Stock Exchange.

It adds that the purchase will be funded through commercial bank loans, other debt instruments and also cash from its operations.

“The Airbus aircraft will replenish and expand the fleet capacity of Cathay. They will principally serve long-haul destinations in North America and Europe,” says the carrier.

It adds that the aircraft is expected to improve passenger payload and also provide high standards of comfort and safety.

The announcement comes hours after the carrier reported a net loss of HK$935 million ($97 million) for the six months ended 30 June, compared with a net profit of HK$2.81 billion the same time last year.

Airbus overhauled the -1000 last year to increase its range. Four other carriers had ordered the type before the redesign.

All A350-1000s will be powered exclusively by Rolls-Royce Trent XWB engines.