On June 16, China Eastern Airlines Corp. signed a deal in Paris to buy 20 A320 passenger jets from Airbus to meet potential demand increase in its domestic market, said the company's statement released on June 18.

Total cost is around 9.9 billion yuan (US$1.45 billion), and the aircraft would be delivered between 2011 and 2013, according to the statement.

The purchase would be paid in U.S. dollars mainly with loans from commercial banks.

The deal is expected to increase the company's airline capacity by 5.44 percent from last year, and help optimize its domestic airline network and sharpen its competitiveness in medium- and short-haul passenger market, said the statement.

Earlier this year it was reported that the company cancelled more than half of its 29 plane deliveries it had expected from Airbus and Boeing, but it was not officially confirmed by China Eastern Airlines.

China Eastern Airlines and Shanghai Airlines, the two state-owned carriers both based in Shanghai, have announced that a restructuring plan is under way and trading of their stocks have been suspended as of June 8.

It has been reported that the restructuring plan is likely to be a merger.

Against the backdrop of global economic slowdown, China Eastern Airlines posted a loss of 13.9 billion yuan (US$2 billion) last year while Shanghai Airlines reported a loss of 1.25 billion yuan (US$183.8 million).

Photograph: Two Airbus A320s operated by China Eastern Airlines at Shanghai Hongqiao International Airport on December 26, 2008. Photo by CARNOC.com message board member - Xuz.