United Eagle Airlines, China's first approved private air company, has been taken over by the state-owned Sichuan Airlines, a company spokesman confirmed on Friday.
Sichuan Airlines has injected 188 million yuan (27.5 million US dollars) into the private air company to expand its shares to 76 percent from 20 percent, said the spokesman Cai Chao.
United Eagle, headquartered in Chengdu, capital of west China's Sichuan Province, became the first private air company approved by China's aviation authority in February 2004, though another private air company, East Star, based in central China's Wuhan City, flew the first flight by a private airlines in China in May 2006.
United Eagle has suspended 14 of its total 23 domestic passenger routes since January this year due to management problems.
Sichuan Airlines has yet announced who will chair the board in the United Eagle.
"United Eagle was affected by the May 12 Sichuan earthquake last year, which was followed by the rising price of airline fuel and the global financial downturn," said Li Haiying, former general manager of United Eagle.
Li, also executive president of Sichuan Airlines, took the office as the general manager of United Eagle in 2007, after Sichuan Airline injected 20 million yuan into the private air company to take the 20 percent shares.
A statement given by the Sichuan Airport Group in December last year has already shown United Eagle was 30.45 million yuan (4.455 million US dollars) in debt. Most of that figure came mostly from default money for land use and ground agent services between March 2007 to October 2008.
"If United Eagle failed to pay the due fees, Sichuan Airport Group will gradually stop providing services such as VIP rooms and boarding," the statement read.
All Chinese private airlines have been grappling with the shortage of capital, which has been deteriorated by the current economic slowdown.
In addition to United Eagle, two other firms Ok Air and East Star were ordered by China's aviation authority to suspend flights earlier this year because of prolonged financial and management problems.
(Xinhua News Agency March 20, 2009)
