(recasts headline, lead, adds deal details and S7's future plans in paras 3-6)

LE BOURGET (France), June 18 (RIA Novosti) - Russia's S7 Airlines (formerly Sibir Airlines) signed a contract Monday with European aviation giant Airbus to buy 25 new A320 medium-haul passenger planes for more than $1.6 billion.

"This plane is the best choice for most of S7's routes. The new A320s will be a reliable mainstay of the S7 fleet," S7 CEO Vladislav Filev said at Le Bourget air show near Paris.

Airbus sales chief John Leahy said S7 is Airbus's key customer in Russia.

The deal is part of a seven-year procurement plan which will see all the airline's Soviet-made planes, mainly the Tupolev Tu-154Ms, written off by 2012. S7 says it will operate at least 50 short-to-medium-range Airbus planes by then, at least 35 of which will be A320s.

Russia's largest airline Aeroflot said ahead of the air show that it could sign contracts to buy up to 15 A321s and A330s during the week-long show, for about $1.3 billion. Such a deal would put an end to a period of uncertainty since 2005, during which the state-controlled company has been wavering between the Airbus planes and Boeing 787 Dreamliners.

S7 currently operates eight A319s and is considering obtaining 13 more A320s under leasing agreements by mid-2008, including nine before end of this year.