China Eastern Airlines, one of China's three major carriers, is holding talks with Airbus and Boeing about its previously announced plan to cancel or delay about half the 29 planes it had expected to receive this year.
Recently appointed China Eastern Chairman Liu Shaoyong said the airline has also agreed to sell a 35 per cent stake in Joy Air Co Ltd, a regional airline in which it holds 40 per cent, to Aviation Industry Corp of China, a state-owned aircraft maker.
China Eastern Airlines has won shareholders' approval for a share placement plan that will bring it a capital injection of 7 billion yuan (Dh3.7bn or $1.02bn) from the government.
The airline will use the funds to improve its balance sheet and strengthen its ability to continue operations, the company said.
After years of robust growth on the back of a soaring domestic economy, China's airlines face falling passenger demand, intensifying competition and heavy cost pressures as the world's third-largest economy slows with the global recession.
China Eastern and its peers Air China and China Southern Airlines all predicted losses for 2008, and will disclose detailed figures in their annual financial reports, scheduled for release before April 30.
China Southern Airlines' shareholders also approved a share placement that will bring it an injection of three billion yuan in government funds. Both China Eastern and China Southern will issue shares to their state-owned parent companies, which have already secured funds from the government.
Joy Air, which has yet to start regular operations, is capitalised at one billion yuan. China Eastern has also slashed management salaries by up to 30 per cent, effective from February 1, and is encouraging staff to extend their annual leave to one month from between three days and 15 days, said Liu Jiangbo, Vice President of China Eastern's state-owned parent.
The extended leave alone would save the carrier 90 million yuan this year, she said. China Eastern will issue 1.44 billion new Shanghai-listed A shares at 3.87 yuan each to its state-owned parent, as well as 1.44 billion Hong Kong-listed H shares at 1.00 yuan each.