Air China, China's leading carrier listed in Hong Kong, said late Friday that it would pay US$1. 3 98 billion to buy 20 Boeing 737-800 planes.

In a statement filed to the HK stock exchange, the carrier said the cost would be "payable by cash in installments" and it would " take delivery of the Boeing Aircraft in stages from 2013 to 2015".

"The aircraft price is subject to price escalation by applying a formula. Boeing Company has granted to the Company (Air China) significant price concessions with regard to the Boeing Aircraft," said the statement.

The transaction will be funded through cash generated from Air China's business operations, commercial bank loans and other financing instruments of Air China, said the statement.

The Beijing-based airlines said the transaction would expand its fleet capacity with an increase of around 5 percent based on available tonne kilometers of Air China by the end of 2009.

In particular, the deal would reinforce Air China's market share in the Chinese domestic market, and would also increase frequency of flights for a number of domestic and neighboring international routes, it added.

By the end of September last year. Air China owned 256 passenger planes, mostly Boeing and Airbus. It operated 250 routes covering 32 countries and regions worldwide. It currently has another 130 or so planes in several orders.

(Xinhua News Agency June 27, 2010)