Loss-making China Eastern Airlines Corp said on May 4 that it would sell two aircraft and lease them back to improve cash flows.

China Eastern has signed sales and leasing contracts with Bank of Communications Finance Leasing Co Ltd for two Airbus A340 jets, the carrier said in a statement to the Shanghai Stock Exchange.

China Eastern will sell the two planes around their combined book value of about 590 million yuan (US$86 million), and will pay about 17 million yuan each quarter to lease them back over the next five years.

China Eastern said last month that it may consider scrapping its previous order for nine Boeing 787 Dreamliners if the international travel market remained sluggish.

The Shanghai-based company, which already cancelled leasing contracts for seven Boeing single-aisle 737 jets, has said it may return to the black this year due to a pick-up in the domestic air travel market.

Photograph: A China Eastern Airlines' Airbus A340 jet at Canada's Vancouver International Airport on May 16, 2007. Photo by CARNOC.com message board member - landwind (Peter Yang).