Airline Finance News - Asia / Pacific.

 
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Mar 29, 2009

Air China, East Star Airlines

Air China parent CNAC intends to move forward with its acquisition of a stake in East Star Airlines despite the Wuhan-based carrier's "strong opposition" to its "forceful purchase." East Star was forced to suspend operations on March 15 by CAAC owing to its heavy debt burden and the collapse of a stake sale deal with CNAC. Chairman Lan Shili was reported to have been kept under surveillance by local police following East Star's suspension. The airline sent an e-mail to CNAC Saturday outlining its objections to the sale. A CNAC spokesperson said, "For now, the working group [CNAC] has sent to Wuhan for the stake purchase deal with East Star is staying in Wuhan, as the company hopes to continue pushing forward the deal with East Star." But the spokesperson also admitted that the "attitude and concrete measures taken by the Wuhan local government" will be a critical factor in CNAC's effort to take control of East Star. It currently is negotiating the wet-lease of East Star's aircraft. Mar 25, 2009

Air China, United Eagle Airlines

China[sup.1]s private airlines created competition for state-controlled carriers, just as the government wanted. Now, they are the ones suffering from it. United Eagle Airlines Co., the first private carrier to win government approval, agreed to a takeover by a state-controlled airline last week. East Star Airlines also halted flights two days after rejecting a bid from Air China Ltd.[sup.1]s state-owned parent. From December, Okay Airways grounded passenger planes for more than a month because of a management dispute. Mar 27, 2009

CAAC

CAAC (Civil Aviation Administration of China) said it will disallow competition on 51 new domestic routes that Chinese airlines will add between March 29 and Oct. 24. The regulator said that each one of the new routes will be operated by only one Chinese carrier for three years. Industry analysts noted that the 51 routes are not particularly sought after and airlines would be reluctant to operate flights on them absent the protection against competition. CAAC said it is seeking to expand the domestic market in a weak economic environment in which domestic demand has been soft. Spring Airlines spokesperson Zhang Lei noted. But Zhang didn't rule out the possibility of earning profits on the routes as the market is changing all the time and the airline can make proper capacity adjustments so as to take advantage of being the only operator for the...

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