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Airline chief may have tried to flee big debt

THE president of one of China's struggling private air carriers, East Star Airlines, has been detained by police while allegedly trying to flee the country to evade huge debts, a popular financial magazine and other reports said yesterday.

Police caught Lan Shili, president of East Star, at the airport in Zhuhai in southern China, and escorted him back to the central city of Wuhan, where the private airline is based, Caijing magazine reported, citing unnamed sources.

East Star is one of several private carriers that are struggling for survival.

Authorities ordered East Star flights grounded last Saturday after the carrier failed to pay plane rental fees to US-based GE Commercial Aviation Services, General Electric's aircraft leasing company, according to the Wuhan city government.

A company's public affairs staffer said yesterday they were trying to locate Lan.

East Star recently became a takeover target of Air China, the country's main carrier. Lan objected to the plan but was stymied over how to repay East Star's debts of 500 million yuan (US$73.3 million), Caijing said.

Air China, which has sought to acquire regional airlines with bases in cities where it faces strong competition from other big carriers, was interested in East Star's hub in Wuhan.

Wuhan city officials met earlier this week and endorsed the takeover plan as the only way to handle the airline's debts, the National Business Daily reported, citing Wuhan city spokesman Tan Shizhang.

East Star, set up in 2006, was operating about 20 domestic routes from Wuhan.

Meanwhile, another private carrier, United Eagle Airlines, said it accepted a 188-million-yuan capital injection from state-owned Sichuan Airlines, which as a result gained a controlling 76 percent stake in United Eagle.


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