China National Aviation Holding will soon complete the takeover of East Star Airlines, a small private air carrier located in Wuhan, Hubei Province, central China
The general manager, Kong Dong, said that early this year, Air China announced that its parent, CNAH, was in preliminary negotiations with related sides, but they had not entered into any formal agreement.
Several insiders revealed that the Wuhan government would likely to give a strong policy support to this acquisition scheme.
CNAH is estimated to further build up its presence in Wuhan, an aviation hub in central China, by buying into East Star Airlines. The Civil Aviation Administration of China (CAAC) has selected Wuhan as a pilot integrated aviation transportation reform base, which should create even more competition.
East Star Airlines was jointly established by Wuhan Eaststar International Travel Service, Hubei Dongsheng Real Estate Developmentand Hubei Meijing Tourismon May 16, 2005, and its second operation base is in the southern Chinese city of Guangzhou, Guangdong Province.
According to Trading Market so far, it has operated the regional airlines between Wuhan and Shenzhen, Guangzhou, Shanghai, Haikou, Hangzhou, Guilin, Chongqing, Xi’an, Shenyang, Tianjin, Qingdao, Dalian, Changde, and Sanya.
On November 6, 2007, the private air carrier was licensed to fly between Wuhan and Hong Kong, Macao, Singapore, and Thailand.
East Star Airlines now owns nine aircraft now, and its total assets have reached RBM700 million to 800 million. The Beijing-located company underwent loss of around RMB 657.25 million in the first three quarters of last year, and its total assets had increased 10.49% from the 2007-end to RMB97.55 billion by September 30, 2008.
Citibank forecaste that Air China’s total loss for the entire 2008 would be around RMB7.7 billion, and it was likely to suffer fuel hedging loss.