China Eastern Airlines has signed a deal to buy 10 A320 passenger jets from Airbus to meet domestic demand for short-and medium-distance passenger transport.

The cost would be below the market price of 4.64 billion yuan (US$618 million), said the company in a statement on its website.

The purchase would be paid in US dollars mainly with loans from commercial banks, and analysts said it would have no effect on the carrier's daily cash flow and its short-term operations.

The aircraft would be delivered between March 2011 and May 2012, according to the announcement.

Air China and China Southern Airlines announced earlier this month that they had agreed to buy 23 and 45 passenger jets respectively to improve operating capacities.

China Eastern said the company's profit totaled 263 million yuan in the first six months after suffering losses for two consecutive years, on the back of better performance and income generated from the rising yuan.

It carried 18.33 million passengers and 422,800 tons of cargo in the first half, up 9.17 percent and 0.81 percent respectively.

As one of the three largest carriers in China along with Air China and China Southern Airlines, China Eastern Airlines registered losses of 467 million yuan in 2005 and 2.78 billion yuan in 2006.

Under the fierce competition from other domestic and foreign airlines, the China Eastern's market share in Shanghai, its major market, has dropped below 40 percent.

Li Fenghua, chairman of the airline, was optimistic about the company's future performance, and said it was working hard to fulfill the goal of more than 200 million yuan in profits this year.

The company is in talks with Singapore Airlines, which is looking to become a strategic investor.

Trading of the company's stocks has been suspended since May 22, and its stock price closed at 9.6 yuan before suspension.