"Etihad Airways has chosen two versions of the Rolls-Royce Trent engine family to power the airline's 16 new Airbus aircraft," a statement said on Thursday.
The airline is to begin taking delivery of the new aircraft from January 2006, it added. The deal was signed with the British aerospace giant by Etihad chairman Shaikh Ahmad bin Saif al-Nahayan during IDEX 2005, an international arms fair being hosted by Abu Dhabi and which closes on Thursday.
The $136 million capitalised airline, launched in November 2003, is fully owned by the government of oil-rich Abu Dhabi, the largest member of the United Arab Emirates.
In August 2004, Etihad ordered a total of 24 Airbuses, including four of the super jumbo A380 models, four A340-600s and four A340-500s, and took an option on 12 additional planes for a total value of $7 billion.
The airline, which currently operates two wide-bodied Airbus A330-200s and an A340-200, in addition to a leased Boeing 767, plans to have 10 wide-bodied aircraft by the end of 2005.
In December, Etihad finalised a $1-billion deal to buy five Boeing 777-300 ER planes for $1.09 billion to serve new routes in Asia, Africa, Europe and North America.
Last month, the airline said it would add 50 more destinations to its network in the next five years and buy new aircraft to keep pace with its ambitious growth plans.