China Eastern , which ranks among the top three carriers in the country, would sell up to a 25 percent stake in the airline to a foreign strategic investor, China Eastern chairman Li Fenghua told the Shanghai Securities News in an interview.

"So far, the negotiations with Singapore Airlines are smooth ... But when we can reach an agreement will be up to the support of the government," Li said.

A deal would need support from the China Securities Regulatory Commission, the country's top stock market watchdog, and the government agency known as SASAC, which oversees large state firms, Li said. Li did not give a timing on the planned tie-up.

The Shanghai Securities News cited unidentified China Eastern sources as saying a deal could be cut this year, and China Eastern was likely to issue additional local currency A shares to Singapore Airlines.

China Eastern's talks with Singapore Airlines, the world's most valuable carrier, were first confirmed last July.

China Eastern Airlines said last week it was in contact with and discussing cooperation with potential strategic investors, including Singapore Airlines.

The loss-making airline, in a brief statement to the Shanghai Stock Exchange, said it had consulted its government in order to remove legal and policy-related obstacles to a deal.

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