China’s first private airline will soon be nationalized, after a cash injection from a state-owned carrier
The Beijing News reported that Sichuan Airlines would invest RMB200 million (US29 million) into troubled United Eagle Airlines to increase its stake in the company to 76%, up from 20%’
United Eagle Airlines, based in the southwestern city of Chengdu, started operations in 2005, when China first allowed private capital to have a share in the largely state-controlled industry.
According to the International Herald Tribune the carrier incurred RMB100 million debt in 2008 and had to suspend the operation of two of its five aircraft early this year because of rising fuel costs, the financial crisis and other factors.
The news comes shortly after it was announced that the government had ordered East Star, a cash-strapped private carrier based in the central city of Wuhan, to halt operations.
Rocketing debt led another private airline, OK Air to suspend its flights for several months from December.
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