(China Daily)
Updated: 2007-07-24 08:55

China Eastern Airlines Corp Ltd, the nation's third-largest carrier, yesterday announced that it will buy 10 Airbus A320 series aircraft with a list price of 4.64 billion yuan to meet the increasing domestic demand.

The airline said in a statement to the Shanghai Stock Exchange that the actual purchase price was lower than the list price, and that it would finance the purchase with bank borrowings. The 10 aircraft will be delivered from March 2011 to May 2012.

Analysts said the aircraft purchase, which will not have any negative impact on the company's cash flow and management ability, is expected to enhance China Eastern's network operation competency and help meet expected increase in market demand.

"China Eastern's fleet expansion is slower than that of the average market demand," said Ma Ying, an analyst with Haitong Securities.

"The increase of China's air passenger turnover was around 17 to 19 percent in the first half of this year, while China Eastern's aircraft purchasing is increasing at 10 to 11 percent a year," she said.

"The increase in demand is expected to continue in the long term," said Guo Dongmou, an analyst with China Merchants Securities.

The purchase is expected to bring a 3.2 percent increase in the company's Available Tonne Kilometer (ATK) from 2006, according to the company's statement.

In a separate statement yesterday, China Eastern Airlines said it is expecting profit in the first half because of foreign exchange gains brought about by the renminbi appreciation, compared with a net loss of 1.46 billion yuan in the same period last year. The airline had posted a loss of 2.8 billion yuan in 2006.

China Eastern stocks were still in trading suspension on both the Shanghai and Hong Kong stock exchanges as Singapore Airlines' bid for a stake in it is still to be cleared by the government.