Special Report: Global Financial
SHANGHAI, Dec. 4 (Xinhua) -- Financial and management problems are forcing OK Air to suspend passenger flights from Dec. 15 to Jan. 15, announced the company's chairman of the board, Wang Junjin on Wednesday.
The civil aviation authority has already approved
Wang's application for suspension. He said OK Air's cargo business, which
partners with Fedex, will not be affected.
The privately owned carrier operates 20-plus domestic
passenger routes in Tianjin, Changsha, Hefei, Kunming, Harbin, Hangzhou, Haikou
Wang promised that the company would not lay off
workers during the suspension.
The company's passenger flight business employs about
800 people, according to the company's spokeswoman, Han Jing.
She said the passenger sector accounted for 80
percent of the company's business.
"The business suspension may break the company's
capital flow, and force the company into bankruptcy liquidation," she said.
Shanghai-based Junyao Group through the Beijing
Transport Energy Share-holding Co. owns 63 percent of the airline.
Wang, who is also chairman of Junyao, said the board
decided to replace Liu Jieyin as president of OK Air. He will be transferred to
Wang did not say when this decision was made or where
Liu will be moved to. His replacement has not yet been made.
However, Liu told Xinhua that the suspension decision
was unilaterally made by the company's largest share holder of Junyao without
consulting other share holders.
"The chairman said the management problem raised the
flight safety concerns in his flight suspension application. However, the
current problem is the lack of capital support from Junyao, which hampered the
airline's business growth," said Liu.
The chairman said "the company will use the
suspension period for internal adjustments, which will hopefully help make a
fresh start for the beginning of next year."
He said the company plans to resume flights before
the upcoming Spring Festival in January as that is a popular time for travel in
OK Air became China's first private carrier in 2005.
It has a fleet of five Boeing 737 passenger jets, three Boeing 737 cargo planes,
one China-made Xinzhou 60 and two Yun-8 cargo planes.
The private carrier sent a market signal for an
expansion in February last year, when it signed a framework purchase agreement
with China No. 1 Aviation Industrial Group for 30 Xinzhou 60 aircraft. The
company declined to say how the current problem would affect the order.
OK Air had projected the 2008 passenger handling
volume at 1.2 million at the beginning of this year. However, its volume in the
first nine month only reached 710,000.
Besides OK Air, China's fledgling private airlines
include Juneyao, East Star, Air Spring and EU Air. The companies engaged in
talks this year to cope with the market slowdown, but there was no agreements