HONG KONG - CHINA Eastern Airlines intends to buy 40 Airbus A320 aircraft under an agreement signed between France and China and is in talks for a similar number of Boeing 737s to expand its domestic and regional routes, its senior executive said.

But Chairman Li Fenghua, in Hong Kong to lobby investors to back a US$920 million (S$1.3 billion) deal to sell a 24 per cent stake to Singapore Airlines and Temasek Holdings, said the firm had no plans to buy Airbus's A380 superjumbo.

He said many Chinese airlines were flying with empty seats on long-haul routes. China Eastern's overseas routes are loss-making and buying A380s will make losses deepen.

Thus far, the only order announced under the agreement was with China Southern Airlines, which is buying 10 twin-aisle A330 aircraft for US$1.8 billion at list price. Smaller carrier Shanghai Airlines has said it was looking to buy 10 single-aisle A320 planes.

Mr Li said the new planes would be used to consolidate and expand China Eastern's domestic routes as well as routes to Japan and South Korea.

Based on its current order schedule, China Eastern's fleet would increase by 53 per cent to 322 aircraft in 2010 from 210 now.

Based in Shanghai, China Eastern faces keen competition from the country's flag carrier, Air China and China Southern Airlines.

Earlier this year Air China said it intended to create a 'super carrier' by taking over domestic airlines. It has stepped up cooperation with Cathay Pacific Airways after a share swap deal last year.

China Eastern hopes to fend off competition by forming a partnership with Singapore Airlines, which could give it access to Singapore Airlines' extensive global network and financial backing.

China Eastern controls 36 per cent of the Shanghai market and hopes to expand its share to more than 50 per cent after the Singapore Airlines deal, which shareholders will be asked to approve at a meeting on Jan 8. -- REUTERS