China Eastern Airlines says it has signed a deal with Airbus to buy 20 A320 aircraft for delivery between 2011 and 2013, despite drastic cost-cutting plans.

In a statement released by the company, there was no indication how much it would pay for the aircraft, but said it was less than the list price of 9.92 billion yuan (1.45 billion dollars).

The purchase means the state-controlled company is expecting rising passenger demand in the domestic market, the carrier said in its statement.

China Eastern Airlines lost 15.3 billion yuan during the current downturn, prompting announcements of measures to improve its cash flow.

The airliner has received nine billion yuan as a bailout from the government since last year, and is currently discussing a merger plan with a smaller Chinese company Shanghai Airlines.

China Eastern chairman Liu Shaoyong has said that details of the merger plan will be announced over the next few weeks.