China National Aviation Holding Co, the parent company of Air China, has been in talks with Wuhan-based East Star Airlines to acquire all or part of the private carrier in a bid to strengthen its presence in central China, reported China Daily.
A source from East Star was reported as saying that the private carrier had long suffered from cashflow problems and had previously been in talks with other airlines. It started business in 2006 and operates about 20 routes from Wuhan, capital of Hubei province. The airline is owned by China East Star Group, which is involved in tourism and real estate business and is one of the largest private enterprises in Hubei.
Chinese private airlines have fared particularly badly since the start of the global economic downturn. Okay Airways, China's first private airline, suspended services in December due to an internal management dispute. Another private carrier in Sichuan province, United Eagle Airlines, grounded two jets in November due to rising losses. State-owned airlines have performed better, although Air China’s passenger numbers fell 1.7 per cent in 2008 to 34.2m, its first decline in five years. Its cargo and mail volume dropped 3.8 per cent to 898,962 tons.
Wuhan hopes to become an air transport hub in central China. The airport transported nearly 10m passengers in 2008, up from 6m in 2006.