China Eastern buys 60 A320s to tap demand

CHINA Eastern Airlines, one of the country's top three carriers, has agreed to buy 60 Airbus 320 aircraft for about US$5.4 billion, likely to be delivered in stages from 2014 to 2017.

The new aircraft will help the airline satisfy rising demand for domestic medium and short-haul passenger routes, China Eastern said yesterday. The deal is subject to approval by regulators and the airline's shareholders.

In a filing to the Hong Kong stock exchange, China Eastern said it planned to finance the purchase from its working capital, commercial bank loans and other sources it did not specify.

While this may increase its debt-to-equity ratio, the airline said it did not expect the deal to have a substantial impact on its cash flow position or its business operation.

China Eastern said it also sealed a disposal agreement with Airbus for eight of its Canadair Regional Jets and 10 Embraer Regional Jets that have a combined book value of 1.5 billion yuan (US$240 million).

These 18 aircraft are expected to be delivered to Airbus in stages from 2014 to 2016.

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