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China Eastern to buy 10 A320s with $612.84m

By Jin Jing (China Daily)
Updated: 2007-07-24 09:38

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 (US$612.84 million) 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.

(For more biz stories, please visit Industry Updates)

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