Posted: 18 June 2009 1527 hrs

China Eastern Airlines

SHANGHAI: China Eastern Airlines, one of the country's top three carriers, has said it had signed an agreement with Airbus to purchase 20 A320 aircraft for delivery between 2011 and 2013.

The Shanghai-based carrier did not disclose in a statement filed with the Shanghai Stock Exchange how much it had agreed to pay, but said it was less than the list price of 9.92 billion yuan (1.45 billion dollars).

The purchase reflects the company's expectation for rising passenger demand in the domestic market, especially on short- and medium-range routes, the statement said.

The deal, which will be funded by bank loans, will raise China Eastern's debt ratio in the short term but will not affect daily cash flow and regular operations, the carrier added in the statement.

China Eastern Airlines suffered a net loss of 15.3 billion yuan last year and announced drastic moves to improve its cash flow, including selling two Airbus A340 jets in early May for 590 million yuan.

The carrier has received nine billion yuan in cash aid from the government since last year, and is currently discussing a merger plan with smaller rival, Shanghai Airlines.

The merger is expected to create an aviation company with a dominant position in domestic hub Shanghai, the headquarters for both carriers.

- AFP/so

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