The Boeing Companyof the US and its European rival Airbus Industrieboth submitted offers to supply state-owned Air Algerie with five 250-seat and three 100-150 seat planes. Canada's Bombardier, ATR of France and Brazil's Embraerbid for the contract to provide Air Algerie with nine 50-70-seat aircraft, which would be used for internal flights.

The airline intends to take delivery of 10 new aircraft - including two 250-seat and two 100-150-seat jets - by the end of the year. The seven remaining planes will be delivered in 2004. Manufacturers were asked to submit financial proposals alongside their bids and it is expected that export credits will cover around 80 per cent of the costs.

Increasing operating costs and regulatory restrictions have forced Air Algerie, which suffered its first air crash in March, to continue with the fleet renewal programme, which was first announced in the late 1990s. The company ordered 10 Boeing next-generation 737s in 1998, when noise restrictions prevented most of the airline's existing fleet from overflying Europe. An additional order for two 737-600s was placed in 1999. All 12 planes were delivered between 2000-2002 (MEED 31:7:98).

Air Algerie is one of several state-owned companies to have been slated for privatisation in recent years. In 2001, the US' Booz Allen & Hamilton was selected as consultant for the sale of a 49 per cent stake and the government has since reiterated its determination to find a private partner for the airline (MEED 26:6:01).

Aircraft belonging to Air Algerie's principal local rival, Khalifa Airways, have been grounded since early March, when Khalifa Bank,another subsidiary of the Khalifa Group, went into receivership.