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Kuwait Airways would pay around 850 million dinars ($2.98 billion) for 25 new planes, a source with knowledge of the matter said on Monday, adding that a deal could be closed as early as this month.
Such an order would be worth $4.38 billion at list prices, but aircraft are often sold at a discount.
Under the deal, which still needs government approval, Airbus would also lease a further 13 aircraft.
The state carrier found that the Airbus offer was better than one by rival Boeing because of the cost and other specifications, Salem al-Othaina was quoted by newspaper al-Rai as saying, confirming reports earlier in the week.
He gave no further details.
The deal would be the most sweeping overhaul of Kuwait Airways since part of its fleet was seized after Iraq invaded the Gulf state in 1990.
The source said on Monday the 25 new planes would include 10 wide-bodied A350-900 jets and 15 of the slimmer medium-haul A320neo.
Kuwait Airways and Airbus, which is owned by aerospace and defense group EADS, have so far declined to comment on the deal.
Reporting by Sylvia Westall. Editing by Praveen Menon and Mark Potter.
Copyright (2013) Thomson Reuters.