Fang Yan and Jacqueline Wong

Chinese airlines are negotiating with Boeing Co to further delay taking delivery of 787 Dreamliner orders, a senior Boeing executive said on Monday, as they continue cost-cutting initiatives amid weak international air travel demand.

A sharp global economic downturn had pushed China's top three airlines -- Air China <601111.SS><0753.HK> and China Eastern Airlines <600115.SS> <0670.HK> -- into a combined loss of more than $4 billion in 2008, forcing them to slash their capital expenditures.

Meanwhile, Boeing, the No. 2 plane maker behind EADS unit Airbus, has also been struggling with a range of supply, manufacturing and design problems, made worse by a two-month strike at its Seattle-area plants last year.

All of them have already delayed. It's a mutual decision, it's not one-sided, David Wang, president of Boeing's China operations, told Reuters on the sidelines of a business event.

Based on our delay, we could have aircraft for them by the end of next year, but it's too early for them. Actually they are supposed to get some of the early positions, but they would rather have some of the later positions now.

Chinese carriers, including China Southern Airlines <600029.SS> <1055.HK>, have ordered nearly 60 Boeing 787 jets, Wang said, adding the Dreamliner is expected to make its first flight by the end of this year with initial delivery expected in the fourth quarter of 2010.

Global orders for the Dreamliner totaled 852 units as of the end of 2008, according to Reuters calculations.

ORDER CANCELLATION?

The Chinese government has handed out cash aid to its ailing airlines and encouraged them to scrap or delay aircraft orders after the country's air travel growth fell into single digits in 2008 for the first time in five years.

China Eastern executives said previously that the carrier would cut the number of plane deliveries this year by nearly half to 13 from 29 and may consider scrapping its previous order for 9 Boeing 787 jets.

Wang did not respond to questions about whether any Chinese carriers had scrapped orders for Boeing's Dreamliner.

But Airbus' China president told reporters in March that the European aircraft maker has had no order cancellations from China.

A few Chinese airlines have asked for delays in taking delivery of previous orders but none has canceled, Laurence Barron told Reuters at the time.

Airbus runs a joint assembly venture in the northern Chinese city of Tianjin, which makes aircraft in the A320 family.

(Editing by Ken Wills)

China Manufacturing