The giant Franco-Dutch airline is to order 25 Airbus A350-900s and 25 Boeing 787-9 Dreamliners with options to buy another 60 planes to renew its fleet with more fuel-efficient, lightweight models.
The order has attracted huge attention in France, where some politicians have put pressure on Air France-KLM to buy from Airbus -- which has its major plant in Toulouse, in the south of the country -- rather than from Boeing.
The planes will replace Air France's A340 fleet and KLM's stock of Boeing MD-11s, although neither of the new models using lightweight composite components is yet operational.
The deal, to be finalised by the end of the year, also includes options to buy 60 more planes, 25 for Boeing, bringing the total number of potential sales to 110, in an order potentially worth $26.96 billion.
Last week the airline's chief executive Pierre-Henri Gourgeon said the proposed deal was to replace planes that will reach the end of their service in 2018-2020.
Air France-KLM, which is 15.7-percent owned by the French state, has been under French political pressure to order from Airbus, including a petition signed by 180 MPs.
President Nicolas Sarkozy in June wrote a letter to an MP from his UMP party saying he "was closely following the discussions between Airbus and Air France-KLM on upgrading its long-haul fleet".
Sarkozy wrote: "I am sure that Air France-KLM will of its own accord recognise the qualities of the A350, a plane whose production we have supported with loans."
In a statement, the airline stressed that its decision was founded on the planes' technical characteristics and performance
"For its first joint order, Air France-KLM made its choice following a detailed evaluation that brought out all the advantages of each aircraft, notably their energy and environmental performances," Gourgeon said.
The first B787-9 will enter service with KLM in 2016 and the first A350-900 will enter services with Air France in 2018.
Airbus in July scored a victory against its US rival, when American Airlines announced a record order for 460 planes that included 260 Airbus aircraft, breaking Boeing's monopoly of its fleet.
That split order marked a major setback for Boeing, supplier of American's entire 600-plus plane fleet, which had not included an Airbus plane since 2009.