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Air China's parent to buy East Star

By Lu Haoting (chinadaily.com.cn)
Updated: 2009-01-13 15:26

China National Aviation Holding Co (CNAHC), the parent company of Air China, said it is in talks with Wuhan-based East Star Airlines to acquire all or part of the private carrier's stakes.

CNAHC is making "preliminary communication" with East Star Airlines about the share sale, the State-owned aviation group said in a statement to the Hong Kong Stock Exchange late Monday night.

CNAHC sent representatives to East Star Airlines last week to conduct audits and investigations for the acquisition, a source from the private carrier told China Daily on Tuesday.

"East Star Airlines has been plagued by cash flow problems for a long time. We have been in talks with several other airlines before, but no agreement has been reached," the source said on condition of anonymity.

East Star Airlines, the fourth private carrier in China, launched its maiden flight in 2006. It operates about 20 routes from Wuhan, capital of Hubei province, with nine leased Airbus A320 family aircraft.

The airline is owned by China East Star Group, one of the largest private enterprises in Hubei. The company is mainly involved in tourism and real estate business. Its chairman, Lan Shili, was ranked 136th on Forbes magazine's annual "China Rich" list last year, down from 70th in 2005.