Air China has launched its Hubei branch company while officially abandoning its pursuit of East Star Airlines and opening its own service from Wuhan to Guangzhou, Hangzhou and Shenzhen.
Air China is basing six aircrafts at Wuhan and plans to introduce another half-dozen by the year’s end, by which time it will have launched service to Xi’an, Urumqi, Nanjing, Shenyang, Macau (July) and Taipei (August).
A spokesperson from parent CNAC said, "We will develop our network in the middle part of China on our own. So whether East Star goes bankrupt or introduces new investors doesn’t bother us at all. We won’t have anything to do with it anymore."
The Hubei branch has hired about 600 former East Star employees, including 47 pilots.
Meanwhile, East Star suffered a blow as the Wuhan court rejected the takeover offer from Shanghai YuField Industrial. East Star investor East Star Tourist Agency said it would appeal to the Hubei provincial court.
ATW Online reported that East Star’s liquidation team comprising Wuhan government organs had rejected the takeover offer, citing the large debt owed by the airline. According to the accounting firm, Wuhan Zhonghuan, East Star has a debt of RMB1.01 billion ($147 million) with a negative net asset value of RMB579.9 million.
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