UPDATE 1-British Airways parent IAG, Boeing reach deal on 18 Dreamliners

MADRID, April 3 (Reuters) - International Airlines Group said on Wednesday it had firmed up orders for 18 of Boeing's 787 Dreamliners, a show of confidence in the jet that has been grounded since January because of battery problems.

The long-haul aircraft would replace some of British Airways' current fleet of Boeing 747-400s between 2017 and 2021, IAG, which owns the UK airline and Spain's flag carrier Iberia, said in a statement to the Spanish stock exchange.

Boeing has said it is confident the recent fix for the grounded jet's battery problems would work, and Chief Executive Jim McNerney urged regulators on March 28 to let the plane back into service.

Regulators worldwide banned flights of the 787 after lithium-ion batteries overheated in two of the aircraft in January.

IAG said it is also talking with Boeing on the commercial conditions for an order of 747s for Iberia, adding the carrier had first to complete its restructuring to rein in costs.

The order is on top of a previous request by British Airways for 24 Dreamliners, IAG said in the statement.

Boeing has booked orders for 42 Dreamliners so far this year, and currently has firm orders for 841 of the planes.

Boeing says it is close to concluding testing of a revamped battery system for the 787, which will then go to regulators for approval. On Wednesday, the company said it was conducting a test flight of the 787 in Washington state for systems not related to the battery problems.