Chinese airlines are increasing capacity ahead of the Olympics

The US aeroplane maker is competing with Europe's Airbus for Chinese contracts, as Chinese airlines increase capacity ahead of the 2008 Olympics.

China Southern will buy 12 Boeing 737-700s and 33 737-800s, 15 of which are earmarked for Xiamen Airlines.

The 45 aeroplanes are due to be delivered between 2006 and 2008.

Asian orders

"The purchases would increase China Southern's capacity by 15%," China Southern said in a statement.

Earlier this week, Boeing completed a deal for 30 Boeing 787 Dreamliners and 30 Next-Generation 737-800 passenger aeroplanes with Japan Airlines (JAL), in a deal worth $5.3bn at list prices.

China Southern Airlines has also ordered five A380s from Airbus

JAL also has options for 20 more 787s and 10 more 737s.

Boeing has recently won a number of large orders in the region, including a $7bn order from Air India, and its shares are trading near their high for the year.

Airbus challenge

Airbus has also been making inroads in Asia.

In April, it announced that three Chinese airlines had signed contracts for the purchase of 30 Airbuses.

These include China Southern Airlines, which has ordered five A380 superjumbos, while China Eastern Airlines has ordered five A319s, 11 A321s and four A320s.

Shenzhen Airlines has signed with China Aviation Supplies Import & Export Group and Airbus for three A320s and two A319s.