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China Eastern Airlines, one of the country's top three carriers, said on Thursday it has agreed to buy 20 Airbus A320 aircraft with a list price of 9.92 billion yuan (US$1.45 billion).
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China Eastern did not disclose the actual amount it would pay for the order, which still needs regulatory approval, but said it would be less than the list price.
Loss-making China Eastern had previously announced drastic cost-cutting initiatives, including postponing or canceling half of the 29 plane deliveries it had expected from Airbus and Boeing [BA
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] this year.
The carrier has also been in talks with Airbus and Boeing to scrap some previous orders, company executives have said.
But China Eastern, which recently received 7 billion yuan in cash aid from the government, is currently discussing a merger with loss-making smaller rival Shanghai Airlines that would bolster its position in China's financial hub.
An outline of the merger plan will be announced in coming weeks, China Eastern Chairman Liu Shaoyong told reporters over the weekend.
China's air passenger market has also started to return to its normal growth pattern this year, after an economic slowdown, volatile fuel prices and a series of natural disasters pushed China's big carriers into the red last year.
The A320 aircraft, scheduled for delivery between 2011 and 2013, will be used to meet domestic air travel demand in the coming years and improve the carrier's competitiveness, China Eastern said.
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The deal, which will be funded mostly by bank loans, will increase China Eastern's debt ratio in the short term but will not affect its daily cash flow or operations, it added.
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