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CHINA> National

National

Debt-laden East Star Airline to get $73M fund

(Xinhua)
Updated: 2009-06-23 23:35

WUHAN: East Star Airline, a debt-laden private carrier based in central China's Wuhan City, is expected to receive funding of more than 500 million yuan (US$73 million) that might help it resume operation, local authorities said Tuesday.

The carrier was shut down more than three months ago.

Shanghai YuField Industrial Co. Ltd. will lead a group to invest the money in two phases for a stake of at least 85 percent in East Star, which began bankruptcy proceedings on March 30 after six creditors sent applications for its bankruptcy, according to the Communications Commission of Wuhan City, capital of Hubei Province.

The funding deal will be carried out after it is approved by the local court and the creditors, said Qin Shizhang, spokesman of the commission.

Under the plan, the company will pay overdue wages to its employees after it resumes flying, Qin said.

East Star was formed in May 2005 together with three other companies with a registered capital of 80 million yuan and started business operation in the following year. It run about 20 domestic routes in and out of Wuhan.

Authorities ordered its flights grounded on March 15 as it had debts of more than 500 million yuan due to poor management.

The carrier failed to pay leasing fees for its aircraft.

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