THE central government has approved Singapore Airlines Ltd's plans to buy a stake in China Eastern Airlines Corp (stock code: 600115)in a move that will expand its presence in China's rapidly growing aviation market.

The deal will be signed on Sunday, said Luo Zhuping, board secretary of China Eastern, yesterday. Luo, however, wouldn't comment on the size of the stake.

Details will be released in statement to the Shanghai Stock Exchange on Sunday night, according to Luo.

Wang Yong, spokesman at the Singapore-based carrier, declined to comment yesterday, adding that the company didn't "have a transaction to announce at this point."

Singapore Airlines and its parent Temasek Holdings Pte may purchase a combined stake of about 24 percent in China Eastern with about US$930 million, according to previous media reports, citing sources close to the deal.

The tie-up will help both firms' ambitions, analysts said. On the Chinese carrier's side, the deal may work to bolster its bottom line with Singapore Airlines' managerial expertise, reputation and branding strategy.

"The deal will spur China Eastern's stock price after three months' suspension from trading," said analyst Ma Ying.

China Eastern shares have more than doubled to 9.60 yuan (US$1.27) so far this year. Stock in the carrier was suspended from trading since May 22 pending the release of an important transaction. China Eastern, the nation's third-largest carrier, lost 2.78 billion yuan last year and 510.86 million yuan in the first quarter of 2007.

The deal will help Singapore Airlines grab more market share in the rapidly expanding China aviation industry whilst fending off competition from rivals such as Cathay Pacific Airways Ltd, analysts said.

The nation's airlines are likely to carry 185 million passengers this year, 16 percent more than in 2006, the General Administration of Civil Aviation said in June. Passenger traffic expanded 15 percent to 160 million people last year.