Midlands aero-engine giant Rolls-Royce could benefit from a new deal which will see Virgin Atlantic buy 15 Boeing 787-9 Dreamliners.

Virgin yesterday also confirmed that it had options on another eight 787-9s and purchase rights on a further 20 aircraft.

The company said the order is the largest yet by a European airline for Boeing's new 787 Dream-liner and worth up to $8 billion (£4 billion).

Virgin will take delivery of the new planes, which will replace the A340-300 aircraft in its fleet, by 2011.

Virgin Atlantic said it will choose between Derby-based Rolls-Royce or US rival General Electric as engine manufacturer for the aircraft in due course.

However, Virgin Atlantic chairman Sir Richard Branson also said that the airline could still consider buying Airbus' A350 jet if it proved to be more fuel efficient.

Sir Richard's comments threw a lifeline to European planemaker Airbus, part of EADS, which is struggling to make inroads into the lucrative wide-body market.

"The 787 is available and it performs very well," Sir Richard said at a press conference at the Museum of Science and Industry in Chicago, following the inaugural flight of Virgin Atlantic's relaunched Heathrow to Chicago route.

Sir Richard, who has publicly expressed concerns about airlines' impact on the environment, also said Virgin would consider alternatives to the 787 if they proved more fuel efficient. "That's what competition is all about," he said.

Virgin has teamed up with Boeing and US engine maker GE to design biofuel that can be used in commercial aircraft in a bid to make the airline industry more environmentally friendly.

The group aims to test the fuel in a Boeing 747-400 aircraft by the end of next year. Although this will not carry any passengers, the move would be the first time that bio-fuel has ever been used to run a commercial aeroplane.

Virgin Atlantic will say that it hopes the first passengers could even be flying in an aircraft run on the "green" jet fuel within two years.

The group is set to test a range of biofuel sources over the next year, including soya, vegetables and newspaper.

The "green" fuel initiative forms part of a drive by Sir Richard to clean up the airline industry and reduce carbon emissions.

Last September the Virgin group pledged to spend £1.5 billion on researching clean fuel over the next ten years.