Chinese Airlines Reviewing Plane Deliveries - CAAC

Chinese airlines would respect signed contracts for aircraft orders, but negotiate the timing of those deliveries, the head of the Civil Aviation Administration of China said on Wednesday.

Aircraft makers such as Airbus and Boeing are struggling with falling demand due to the global financial crisis, while production delays in new aircraft for both companies could lead to order cancellations, say analysts.

"We will respect all contracts," Li Jiaxiang, CAAC's director general, told reporters on the sidelines of a meeting of a parliamentary advisory body.

Li said, however, that Chinese airlines are reviewing their needs for new aircraft according to changing market conditions, and it is up to the companies to decide whether to adjust their orders, he said.

"They will negotiate directly with suppliers," Li said.

Some Chinese airlines may choose smaller-sized cargo aircraft instead of the bigger ones to cope with a slump in cargo traffic, Li said.

International cargo volume fell 28 percent in February, said Li. While Chinese domestic passenger volume rose 13.5 percent last month. International passenger volume fell 16 percent.

Both passenger and cargo volume this year is expected to see a larger decline than in the previous two years, as the global crisis continues to hit international trade, he said.

Li said the government supports consolidation among domestic airlines, but the decision would be up to individual companies.

Chinese airlines are struggling in the face of a slowing economy and Air China's Chairman Kong Dong said on Wednesday the airline has asked the government for a cash injection of at least CNY3 billion yuan (USD$439 million).