Trading in Shanghai Airlines shares were suspended as the company's board and shareholders discussed ways to reduce its debt, the airline said in a filing with the Shanghai Stock Exchange.

"We are in talks on the capital injection. We will make an announcement as soon as possible," company spokesman Xu Junmin told AFP, adding that the amount of aid has yet to be finalised.

Shanghai Airlines had total debts of 13.2 billion yuan (1.9 billion dollars) as of the end of September, representing a debt-to-asset ratio of 91.35 percent, according to the most recent financial statement from the company.

"These arrangements will have a big impact on the company," Shanghai Airlines said in the statement. Trading would resume after the plans were finalised, it said.

The Shanghai city government is the carrier's largest shareholder with a 35.7 percent stake.

The Shanghai Securities News, a mouthpiece for the nation's securities regulators, said the carrier was likely to receive between one and two billion yuan in government aid.

Other airlines have also said they would obtain government aid as China's aviation industry battles with dwindling passenger and cargo traffic.

China Eastern Airlines, the country's third-largest carrier, said late last year that the government would offer a seven-billion-yuan capital injection.

China Southern Airlines, the nation's biggest airline, has also said it will receive three billion yuan in government funds.

Shanghai Airlines last month estimated its net losses for 2008 would be more than double 2007's 435 million yuan due to weak demand and bad bets on fuel hedging contracts.

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