Home' Asian Aviation : AAV April 2010 Contents Airline News
Air China will invest 682.1 million yuan
(US$100 million) to acquire an additional
26 percent of Shenzhen Airlines, raising its
total stake in the privately owned carrier to a
majority 51 percent.
China Total Logistics, a subsidiary of
Shenzhen International Holdings (SIHL) will
also invest 348 million yuan to increase its
stake in the airline to 25 percent from 10
Air China is to buy the additional shares
from Shenzhen Huirun Investment (SHI),
which currently holds 65 percent of Shenzhen
Air. The same company will sell another 15
percent stake to SIHL. After the transactions
are completed, SHI's stake in Shenzhen Air will
be reduced to 24 percent.
Control over Shenzhen Airlines will give
Air China a better footing in southern China,
helping the carrier compete with Guangzhou-
based China Southern Airlines in the Pearl
River Delta, China's manufacturing hub.
According to an Air China official in Beijing,
the carrier plans to make Shenzhen Bao'an
International Airport its fourth hub in the
country. The other three are Beijing Capital
International Airport, Shanghai Pudong Airport
and Chengdu Shuangliu International Airport
in southwest China.
Financially troubled Shenzhen Airlines is the
fifth-biggest Chinese carrier by fleet size, with
109 aircraft, comprising a mix of Airbus A320
and Boeing 737-family single-aisle jetliners. The
airline posted a loss of 863.7 million yuan
Air China Vice-President Fan Cheng has
been appointed to manage the operations
of Shenzhen Air. It is not clear whether
Fan's appointment is permanent.
Shenzhen Airlines will retain its brand
after Air China takes control. The national
carrier's control of Shenzhen Airlines is in
line with the Civil Aviation Administration
of China's (CAAC) plan to encourage the
bigger Chinese carriers to take control of
In January, China Eastern Airlines took
control of Shanghai Airlines, while last year
Chengdu-based Sichuan Airlines took control
of United Eagle Airlines after raising its stake to
76 percent from 20 percent. Sichuan Airlines
paid 200 million yuan for the additional 56
percent shareholding and renamed United
Eagle as Chengdu Airlines.
The consolidation of China's airline industry
started in early 2001. -- William Dennis
Malaysia's third low-cost carrier, SilverFly,
has started operations using Sultan Azlan
Shah Airport in Ipoh, 235km north of Kuala
Lumpur as its base.
Operating a fleet of two ATR72-500
turboprop airliners leased from Berjaya Air,
the start-up carrier's initial network covers
Singapore, Subang, Medan and Kota Baru,
on the east coast of peninsular Malaysia.
The airline is owned by Silver Fly Smile Tours,
which was established in September last year.
The country's other two LCCs are Subang-
based FireFly, a wholly-owned subsidiary of
Malaysia Airlines, and AirAsia.
According to SilverFly's executive chairman
Hasim Othman, the carrier plans to fly to
more destinations on the peninsula at a later
SilverFly is the second airline to operate
on the Ipoh-Singapore route after FireFly.
Subang-based Berjaya Air is a Malaysian
carrier that serves to tourist destinations in
the region. -- William Dennis
Third Malaysian LCC
Tianjin Datian W Group has acquired a
71.4 percent stake in Beijing Okay Traffic
and Energy Investment Co (OTEIC) for 200
million yuan (US29.31 million) to take control
of Okay Airways, the first private airline in
China. The shares were bought from the
OTEIC holds a 63 percent stake in Okay
Airways. The move is intended to put an end
to squabbling among shareholders that has
plagued the airline for the last four years.
The internal tensions began shortly after
Juneyao acquired its stake in OTEIC in
February 2006. The company paid only 89
percent of its promised investment, leading
to a dispute between Juneyao, which has
businesses in aircraft ground handling,
food and property, and the other four
shareholders of Okay Airways.
The Civil Aviation Administration of
China (CAAC) suspended Okay Airways
operations on 6 December 2008, saying
that the airline should settle its internal
disputes without delay.
Skeleton operations began again on
24 January 2009. But despite the carrier
resuming normal passenger operations
eight days later, the in-fighting continued.
Freighter services resumed on 4 July last year.
Based at Tianjin Binhai International
Airport, Okay Airways was set up in June
2004. It received its air operating certificate
from the CAAC in February 2005 and
launched its first flight to Changsha on 11
March that same year.
In August 2005 Korean Air and another
unidentified Korean company signed a letter
of intent to acquire a combined 49 percent
stake in the carrier. The proposed deal did
not materialise, as negotiations over the issue
of management control of Okay Airways
ended in a deadlock.
Okay Airways currently operates a fleet of
nine aircraft -- four Boeing 737-800s, one
737-500, one Xian MA60 turboprop and
three 737-300F freighters. -- William Dennis
Tianjin Datian acquires 71.4 percent of
budget carrier Okay Airways
Air China to take majority control of Shenzhen Airlines
Shenzhen Airlines operates the fifth biggest fleet in China,
including both Boeing and Airbus single-aisle types.
12 AsianAviation | APRIL 2010
Links Archive AAV March 2010 AAV May 2010 Navigation Previous Page Next Page