China's Spring Airlines to buy 21 Airbus planes

Chinese budget carrier Spring Airlines said it plans to buy 21 Airbus A320 planes for 12.45 billion yuan ($2.04 billion), citing growth in both international and domestic air travel.

The Shanghai-listed company plans to fund the purchase in part through a private placement of shares to raise 4.5 billion yuan, according to a statement to the exchange late Monday.

The single-aisle A320 has a list price of $97 million, according to Airbus.

"Demand in China's domestic and international aviation market is steadily increasing," Spring said in the statement. "The company intends to reasonably expand the scale of its fleet to increase its air transport capacity."

Spring Airlines, headquartered in the Chinese commercial hub of Shanghai, was founded in 2005 and now flies more than 90 domestic and international routes, according to its website.

Spring's shares, which had been suspended since June 26 amid a rout on China's stock market, were down the daily limit of 10 percent to 113.48 yuan after resuming trading on Tuesday.

The company's net profit for the first quarter this year jumped 46.43 percent year-on-year to 25.43 million yuan.

China, the world's second-largest economy, is already Asia's biggest aircraft buyer as a growing middle class takes to the skies in ever-increasing numbers.

Last year, US aircraft giant Boeing forecast Chinese carriers will need nearly 6,000 new planes valued at $780 billion over the next 20 years, accounting for around 16 percent of world demand and nearly half of Asia's.

But China hopes part of its vast aircraft market will go to a homegrown passenger plane -- the 168-seat C919 -- in a challenge to the global dominance of Boeing and Airbus.

Chinese economic growth is also slowing and expected to soften further in coming years -- a trend industry officials say could put a dent in air travel.

China's gross domestic product expanded 7.4 percent last year, the slowest since 1990. The country's GDP grew 7.0 percent year-on-year in the second quarter, matching the 7.0 percent expansion in the first three months of this year.