China Eastern Airlines Corp late yesterday said it had obtained a 5.55 billion yuan (HK$6.3 billion) short-term loan from a subsidiary of its parent in a bid to increase liquidity at the heavily indebted carrier. The loan is part of a rescue plan that includes a 7 billion yuan capital injection from the government to keep the Shanghai carrier afloat. The loan will be repaid in six months with an interest rate of 4.374 per cent, a 10 per cent discount to the benchmark rate offered by the People's Bank of China. The lender is 53.75 per cent owned by China Eastern Air Holding. Shares in China Eastern rose as much as 10 per cent yesterday on news the carrier will sell part of its assets in Joy Airlines, as well as on speculation it may cancel aircraft orders. China Eastern could receive 350 million yuan from its investment in Joy Air, a joint venture based in Xian, by selling a 35 per cent stake to China Aviation Industry Corp (Avic). China Eastern would keep a 5 per cent stake in Joy Air and continue to offer training programmes for the carrier, Avic said. Joy Air was scheduled to launch by the end of last year. China Eastern might also cut capital expenditure by cancelling plane orders or delaying their delivery, Bloomberg and Reuters reported. The carrier would take delivery of only 13 or 14 planes, instead of the planned 29 aircraft this year, said an executive quoted by Bloomberg. But the executive said the airline had not yet started talks with the manufacturers and it might agree to delay delivery instead of cancelling orders, the report added. 'Everything is possible, I can't confirm anything,' said China Eastern director Lou Zhuping yesterday. Planemaker Boeing could not be reached for comment yesterday. China Eastern shares closed 6.93 per cent up at HK$1.08 yesterday. 'Airlines should review their fleet plans and capacity growth to ensure a healthy cash flow in the light of a downturn in demand and squeeze on sales,' said Andrew Au, a transport analyst at Cazenove. China Eastern has cut frequency on certain international and regional routes. Executives in Hong Kong said the number of daily flights between Hong Kong and Shanghai had been reduced to 10 although the carrier had the right to fly 15 a day. 'The Hong Kong unit is under review and might be cut back due to direct flights between the mainland and Taiwan,' the executive said. To encourage more mainlanders to travel by air, the Civil Aviation Administration of China lifted all fuel surcharges on domestic flights yesterday, according its website.