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Debt-laden East Star Airlines goes bankrupt

(Xinhua)
Updated: 2009-08-28 10:02

The bankruptcy proceedings were launched on March 30 at the request of six creditors, according to the Communications Commission of Wuhan city.

East Star Airlines announced last month that its total debt surpassed 752 million yuan.

General Electric's aircraft leasing arm, GE Commercial Aviation Services, one of the creditors, has taken back all nine aircraft it had leased to the airline.

State-owned Air China has recruited about 600 out of the more than 1,000 staff of East Star Airlines.

The global economic downturn reduced air travel severely, making last year a hard time for the airline industry.

The Chinese government injected billions of yuan into Air China, China Southern Airlines and China Eastern Airlines, the three major State-owned carriers, to help them ride out the downturn.

Wang Chaoyong, chairman of ChinaEquity, said private airlines had no access to bailouts.

Zhao Changbing, spokesman of East Star Airlines, said the government should protect the brand of the private business.

Zhao said the airline rejected the takeover by the parent of Air China because the offer was too low and it only covered the debts.

(For more biz stories, please visit Industries)

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