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China Eastern Airlines to buy 20 Airbus A320 jets

(Agencies)
Updated: 2009-06-18 14:03

SHANGHAI -- Financially struggling China Eastern Airlines says it plans to buy 20 Airbus A320 jets following an agreement last week with the European aircraft maker.

In this April 8, 2009 file photo, an aircraft of China Eastern Airlines takes off from the Hongqiao International Airport in Shanghai. [Xinhua]

The purchase will cost about $1.45 billion, based on 2008 catalog prices, Shanghai-based China Eastern said in an announcement late Wednesday to the Hong Kong Stock Exchange.

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It said China Eastern, one of China's three big state-owned carriers, gained what it called "fair and reasonable" price concessions in its negotiations with Airbus SAS.

The purchase was made under the assumption that the airline will "have steady and organic growth over the next few years ... when the global economy recovers," it said.

The single-aisle aircrafts are meant to meet rising demand for domestic short to medium-range routes, it said. The A320 family of jets can seat anywhere from 107 to 220 depending on how the plane is configured, according to the Airbus Web site.

China Eastern's shares have been suspended from trading since June 8 as the carrier finalizes negotiations on a tie-up with local rival Shanghai Airlines. China Eastern has confirmed that a deal is pending, but has not announced any details.

The jets are due to be delivered between 2011-2013.

China Eastern has so far obtained 7 billion yuan ($1 billion) in government bailouts, with more to come, to tide it through the economic slowdown.