China's airline industry needs to spawn one or two "super-carriers" capable of competing with international airlines, the chairman of Air China Ltd said, indicating that the firm is leaving its options open in its bid to buy into rival China Eastern.

Li Jiaxiang also said Air China's planned fleet expansion ahead of the Olympics would be affected by Boeing's delay in delivering its 787 Dreamliner. He said he hoped the U.S. plane maker could help to mitigate the impact.

"Air China is still too small. For instance, we only have 215 airplanes -- just one-fifth of our partner United," Li said in an interview.

Acquisitions of smaller domestic airlines would be one option for expanding, Li told Reuters.

Addressing the airline's recently scuppered plan to buy into China Eastern, Li did not rule out another approach after an agreed standstill period ended.

Air China's parent, China National Aviation Holding Co, and Cathay Pacific Airways abandoned their plan last month.

Air China, which has a cross-shareholding with Cathay, said at the time that it would not go ahead with a deal for at least three months.

Asked whether the carrier would consider proceeding after that, he said: "Let's see the situation after three months."

Li also did not rule out using its position as a major holder of China Eastern's Hong Kong-listed shares to vote against the agreed purchase of a US$918 million stake in China Eastern by Singapore Airlines and Temasek Holdings.

Analysts have said that Air China, whose parent owns a bit more than 11 percent of China Eastern's H-shares, could seek to block the deal, which requires the support of two-thirds of minority shareholders.

"We're one of the shareholders, and normally shareholders receive their due respect," Li said.

Flying to Pyongyang

Li elaborated on an argument he made in his recent book, Route to Fly, saying that too many foreign stakes in China's airline sector would complicate consolidation of domestic carriers, which he views as essential to its competitiveness.

"To realise this 'super-carrier', Air China can do it; other airlines can also do it. Other airlines can also buy Air China -- we welcome anyone to buy Air China shares," he said.

"As long as China produces a 'super-carrier', I'll be happy."

On Boeing Co's announcement earlier that it would have to push back first deliveries of its 787 Dreamliner by at least six months, Li said that would affect its plans to use the Dreamliner for the Summer Olympics next August.

Air China has 15 787s on order, which it was hoping to use to launch an aggressive international route expansion ahead of the 2008 Games, for which it is the official carrier.

Li said he had written a letter to Boeing executives, expressing his dissatisfaction over the delay.

"On the one hand, I expressed my understanding. On the other hand, Boeing should also help us think of other ways to serve the Olympics, for instance, if we lack airplanes, to deliver other planes to us early or lease planes to us," he said.

Li, who said Air China was still taking a wait-and-see approach to Airbus's A380, disclosed that Air China would start flights to Pyongyang, North Korea, next month.

Li acknowledged that Air China has a long way to go in improving its service and the English skills of its staff as it prepares to join the Star Alliance later this year.

He vowed to tackle Air China's reputation for keeping passengers in the dark when flights are delayed. "There are two reasons for that -- insufficient communication with our customers and insufficient communication within our company," he said, a model airplane painted with the Olympic mascots resting on the end table next to him.

"We need to improve on both of them."