China Southern Airlines Co Ltd agreed on Friday to buy 21 Airbus A320 aircraft from the giant France-based aircraft maker.

The airline, one of the nation's top three, will buy 15 A320 aeroplanes and six A319 aeroplanes from the firm for a category price of more than US$1 billion.

The contract makes China Southern one of the largest A320 customers in China and Asia. The aircraft, powered by CFM International's CFM56-5 engines, are due to be delivered in the first quarter of 2005.

China Southern Chairman Yan Zhiqing told China Daily that the A320 fleet is "suitable for our route structure and will be conducive to our expansion programme." "And they are expected to reduce our operating costs and enhance our services."

China Southern has 135 aircraft, 38 of which were manufactured by Airbus.

The company ordered four A330-200 aircraft last September, making it the first airline to own such a plane on the domestic market.

China Southern has flights connecting around 80 cities across the world, with its annual passenger traffic exceeding 20 million.

The contract marks a milestone in terms of the firm's progress in China's market, according to Airbus Senior Vice-President and Airbus China President Laurence Barron.

"China's air traffic is growing rapidly and some 1,600 large aircraft might be needed in the coming two decades," Barron said. "We are in China for the long-term, and our goal is to take at least 50 per cent of the market shares," he explained.

He said that the 2008 Beijing Olympics will be an incentive to China's aviation development and the increasingly dynamic business communications due to China's entry into the World Trade Organization will also intensify demand for more aircraft.

He said that Airbus China is working very hard this year, seeking orders for the 555-seat A380, offering training and support services, sponsoring seminars to share experiences and provide technical expertise as well as seeking new investment opportunities.

(China Daily April 10, 2004)