Beijing - The Chinese government has agreed to buy shares worth 3 billion yuan (441 million dollars) in each of two major airlines hit by the global economic crisis, the airlines and state media said on Thursday.

China Eastern and China Southern both said they had agreed to issue additional shares valued at 3 billion yuan via the Shanghai and Hong Kong stock markets.

The government bailout should "improve the carrier's financial condition and free up cash," the official Xinhua news agency quoted China Eastern spokesman Luo Zhuping as saying.

It would reduce the airline's asset-to-liability ratio by about 3.8 percentage points after it hit 98.5 percent on September 30, the agency quoted Luo as saying.

China Southern released a similar statement on its planned issue of new shares worth 3 billion yuan through the two markets.

News of the bailout caused China Eastern shares to jump by the daily limit of 10 per cent at the opening of the Shanghai stock market on Thursday, reports said.

China's state-run carriers have enjoyed double-digit growth for most of the past 20 years but most of them have traded at a loss this year as tourism and business flights have declined.

The government cash injections were necessary because of the airlines' "irreplaceable importance in the country's economic development," industry analyst Liu Gongshi told the agency.

The planned share issues remained subject to regulatory approval and were expected to be completed next year, it said.

On Wednesday, the government asked airlines to suspend buying new planes or delay the delivery of aircraft already ordered.

Plane-leasing contracts with foreign companies would also not be renewed because of the falling passenger numbers, the Civil Aviation Administration of China (CAAC) said.

The airlines were also encouraged to ground or sell planes or convert passenger carriers into cargo planes, while the government would reduce taxes and fees charged to airlines, CAAC said. (dpa)