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Chinese airlines sign contracts to buy 42 Boeing 787s

Four Chinese airlines have signed contracts to buy 42 of Boeing's new-generation 787 airliners worth US$5.04 billion, with more orders in the works, officials said yesterday.

The deal involved two of the nation's largest carriers, Air China (中國航空) and China Eastern Airlines (東方航空), which both ordered 15 planes, and the smaller regional Shanghai Airlines (上海航空), which ordered nine, and Xiamen Airlines (廈門航空), which ordered three.

George Liu, vice-president of communications at Boeing China, told reporters that negotiations were continuing with Hainan Airlines (海南航空) and China Southern Airlines (南方航空), which are also considering buying the jet, as previously announced.

"Forty-two planes are involved. The other deals with the other airlines are still in the works," he said.

In a statement, the Chicago-based aeroplane manufacturer said it was working to reach agreement on 18 additional 787s, which are part of a previously announced commitment by China.

"We remain confident a deal will be completed in the near future," it said.

In January Boeing signed an initial agreement to sell 60 787s worth US$7.2 billion to Chinese airlines.

That was followed by an announcement late last month by the Chinese government that it would finalize the contracts for a combined US$6 billion for 50 787s this month.

A spokesman for Hainan Airlines, in which international financier George Soros owns a 14.9-percent stake, said it had signed an agreement of intent but no more.

In Hong Kong, China Eastern and Air China were suspended on the stock exchange yesterday ahead of news on the deal.

China Eastern Airlines last traded flat at HK$1.30 (US$0.1), while Air China was at HK$2.525, after falling 0.025 or 0.98 percent prior to the halt.

Shares of China Southern, the country's largest operator, were also suspended, but it was not clear why. An official at the airline refused to comment.

China's fast-growing aviation industry needs more planes to meet demand. The 121 million passengers carried last year represented 16 percent annual growth, which was twice the world average, according to Beijing's statistics.

Production of the 787, a long-haul 217-seat plane which Boeing says is more fuel-efficient than other jets, will begin next year. The first flight is expected in 2007 with deliveries starting in 2008.

The new Boeing plane faces stiff competition from the European consortium Airbus, with the growing Chinese market seen as one of the major prizes.
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