Air Berlin cancels $1.7 billion Boeing 787 order

* Air Berlin cuts firm Boeing 787 order to 15 from 25 planes

* Cuts options on further aircraft to 5 from 10

* Defers nine 737 deliveries to 2015 from 2010 or 2011

* Air Berlin shares fall 0.7 percent

Defense News: FRANKFURT, March 16 (Reuters) - Air Berlin (AB1.DE), Germany's second-biggest airline after Lufthansa (LHAG.DE), cancelled about $1.7 billion worth of firm orders for Boeing's (BA.N) 787 Dreamliner aircraft to cut its financial obligations.

"With a partnership spirit we have mutually agreed with Boeing to adjust the Air Berlin order book to meet Air Berlin's operational requirements and the market conditions," the company said on Tuesday.

Air Berlin cut its firm order to 15 planes from 25 and the number of options for further 787 aircraft to 5 from 10. Each 787 aircraft has a list price of about $170 million.

In addition, it is deferring delivery of nine Boeing 737 aircraft to 2015 from 2010 or 2011, it said.

"For Air Berlin, the agreement means a significant reduction of its financial obligations due to lower and much more distributed investment profile," it said.

Air Berlin had already said last year that it could cancel or defer some of its outstanding aircraft orders, which also include 4 Q400s built by Bombardier (BBDb.TO) and 26 A320-family aircraft from Airbus (EAD.PA). (Reporting by Maria Sheahan)