China Southern in $4bn jet order

The new planes should boost capacity by 19.5% , says China Southern

China Southern Airlines has ordered 45 jets, worth up to $3.7bn (£1.8bn) in total, to boost passenger capacity.

China's third largest airline said it would buy 25 B737-800 planes from Boeing and 20 A320 jets from Airbus.

The A320s are due for delivery between 2009 and 2010, while Boeing will deliver its planes to the airline's Xiamen unit between 2011 and 2013.

The news came as China and the US signed an aviation pact that will lead to a sharp rise in air traffic.

Under the agreement, US carriers will be able to operate 23 daily flights by the year 2012 - up from 10 currently - with Chinese airlines being allowed equivalent services. The deal also allows for unlimited cargo flights.

US Transportation Secretary Mary Peters and China's civil aviation minister Yang Yuanyan signed the pact on Monday, after more than a year of negotiations.

Details of the agreement were finalised in Washington in May.

According to US estimates, the deal could generate as much as $5bn for the airline industry in passenger and cargo revenues.