China Eastern to expand with huge aircraft order

China Eastern Airlines Corp (CEA)<600115><670>, plans to purchase 40 Airbus A320 aircrafts, in line with its objective of expanding domestic and regional routes, according to a senior executive with the carrier.

Besides the plan of buying A320 aircrafts, China Eastern has now entered into talks for a similar order of Boeing 737s. Chairman Li Fenghua disclosed that the new planes would be primarily used to consolidate the airline's domestic routes as well as routes to Japan and South Korea.

With respect to the order proposal, the airline expects to expand its fleet by 53% to 322 aircrafts by 2010 from the existing 210 aircrafts. He added that, "a big portion of the new planes will be allocated to Shanghai routes, and that's before the potential A320 and B737 orders."

Confronted with fierce competition from domestic markets, China Eastern is trying to win opportunities in the world's fast-growing economy. In line, it is seeking to build up its premium-class seats up to 50% from the current 20% in 2008.

Besides, the airline has signed a preliminary agreement to sell a stake to Singapore Airlines, in order to gain access to the latter's extensive international routes and financial backup.

At present, China Eastern has 36% market shares in Shanghai. As a result of its expansion, the airline aims to achieve over 50% of the market especially when the deal with Singapore Airlines is approved on Jan. 8.