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China to Make Fewer Plane Purchases

BEIJING -- China plans to tell its troubled state-owned airlines to delay new aircraft purchases because of a travel slowdown amid economic turmoil, a news report said Friday, a move that could hurt U.S. and European aircraft makers.

Regulators also might put a moratorium on new purchases, Hong Kong's South China Morning Post newspaper said, citing Hu Bin, general manager of Xiamen Airlines, a mainland carrier.

A spokeswoman for the Chinese aviation regulator, the Civil Aviation Administration of China, said she could not confirm the report. She refused to give her name.

A cutback in Chinese purchases could hurt global aircraft suppliers Boeing (BA) and Airbus Industrie, which are looking to China's booming travel market to help drive future sales.

Chinese carriers have been squeezed by high oil prices and falling passenger and cargo revenues. State-owned airlines had total losses of about 4.2 billion yuan ($615 million) in the first 10 months of this year, according to the government.

Regulators are expected decide on changing delivery schedules at a meeting early next month, Hu said.

Two of China's three major carriers have turned to the government for financial aid. China Southern Airlines (ZNH) said this week it will receive a 3 billion yuan ($440 million) capital injection from the government, and China Eastern Airlines (CEA) said it's seeking similar help.

In the most recent major aircraft order, the third carrier, Air China, said in July it was buying 45 Boeing jetliners, one of China's biggest purchases to date. The list price for the aircraft is $6.3 billion but Air China said its final price would be lower.
Copyright 2008 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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