China Eastern Airlines Corp, the nation's third-largest carrier, said it is in talks to buy 40 Boeing Co 737 planes and has applied to the government for 40 Airbus SAS A320s to expand its fleet.

 

The planned purchases may help expand the Shanghai-based carrier's fleet by 53 percent to 322 aircraft in 2010 from the current 210, Zhang Jing, a China Eastern spokeswoman, said yesterday, confirming a Reuters report.

 

Singapore Airlines Ltd and parent Temasek Holdings Pte plan to buy a 24-percent stake in China Eastern for HK$7.16 billion (US$918 million), cutting the carrier's debt and easing its "most difficult" period, Chairman Li Fenghua said last week. The cash infusion may help the company pay for the planes to compete with Air China Ltd, according to Bloomberg News.

 

"Carriers are queuing up to buy planes as demand grows," said Ma Ying, an analyst at Haitong Securities Co in Shanghai. "China Eastern's stake sale will enable it to afford the purchases."

 

The carrier may reduce its liability-to-asset ratio to 80 percent from 95 percent after selling the stake to Singapore Air and its parent, according to the company.

 

China's airplane purchases are forecast to reach US$289 billion over two decades. The nation plans to expand its fleet by 12 percent annually to 1,550 by 2010, from 1,039 at the end of 2006, according to the aviation regulator, and will triple to 4,000 by 2020.

 

(Shanghai Daily December 18, 2007)