Cathay Pacific said Wednesday it had signed its largest aircraft sale and leaseback agreement and planned to sell almost half of its stake in an engineering affiliate to preserve cash in the downturn.

The embattled Hong Kong carrier said in a statement it had signed an agreement with BOC Aviation, Bank of China's aircraft leasing company, for the sale and leaseback of six of the 19 Boeing 777-300ER aircraft it has on order.

"This is a landmark agreement because it is the largest single leaseback arrangement we have entered into. It is consistent with our cash-preservation priority during this difficult time," Cathay chief executive Tony Tyler said.

He said in the statement that the arrangement would have no impact on the company's debt-equity ratio as there would be no need to raise finance for the purchase of the aircraft.

Tyler said Cathay had no intention of cancelling aircraft orders but hoped to defer some of them.

"We are in negotiation with aircraft manufacturers to defer some of our deliveries to align our capacity with expected demand. We believe this is a prudent step to take."

Cathay has 39 aircraft on order for delivery before 2013. It has a fleet of 122 at present, including 25 that are leased.

The leaseback deal was unveiled a week after Tyler publicly lashed out at aircraft and parts suppliers -- including Boeing and Airbus -- for charging airlines more for their products despite the economic downturn.

The carrier also announced separately on Wednesday that it had agreed to sell 20.7 million shares in engineering services firm Hong Kong Aircraft Engineering Company (HAECO) to its parent group Swire Pacific to raise 1.9 billion Hong Kong dollars (244 million US).

The transaction would see Cathay's stake in HAECO reduced almost by half, from 27.45 percent to 15 percent, the statement said.

Cathay chairman Christopher Pratt said the transaction would bring clear advantages for all parties concerned.

"From a Cathay Pacific point of view, it will improve the airline's cash position during an extremely difficult time for the aviation industry," he said.

But he added that the airline would retain a strategic interest in HAECO after the share sale.

Swire's controlling stake in HAECO will rise to 45.96 percent from 33.52 percent following the transaction.

Cathay reported last month that its first-half revenue plummeted 27.1 percent year-on-year to 30.92 billion dollars due to weak demand for air travel.

The airline industry has been severely hit by the downturn amid slowing cargo trade as families defer holiday plans and companies cut spending on business travel.

Escalating fuel prices and the global outbreak of human swine flu have exacerbated the issue.

The International Air Transport Association had earlier forecast that full-year losses for the airline industry would reach about 9.0 billion US dollars.

Tyler said at the region's largest air show held in Hong Kong last week that aircraft and parts manufacturers had continued to hike prices over the past year.

"It's absurd to expect an industry which is estimated to be going to lose around nine billion dollars this year to keep paying higher costs for the same thing," he said.

He called for closer alignment between the interests of airlines and suppliers.