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Eagle air bought up by Sichuan Airlines

UNITED Eagle Airlines, the first private air company on Chinese mainland, has been taken over by state-owned Sichuan Airlines, a company spokesman confirmed yesterday.

Sichuan Airlines has injected 188 million yuan (US$27.5 million) into the private airline to expand its stake to 76 percent, from 20 percent, said the spokesman Cai Chao.

United Eagle, headquartered in Chengdu, capital of Sichuan Province, became the first private air company approved by China's aviation authority in February 2004, though another private air company, East Star, flew the first flight by a China mainland private airline in May 2006.

United Eagle has suspended 14 of its total 23 domestic passenger routes since January due to management problems.

Sichuan Airlines has yet to announce who will chair the board of United Eagle.

"United Eagle was affected by the May 12 Sichuan earthquake last year, which was followed by the rising price of aviation fuel and the global financial downturn," said Li Haiying, former general manager of United Eagle.

Li, also the executive president of Sichuan Airlines, took up office as the general manager of United Eagle in 2007, after Sichuan Airlines agreed to pay 20 million yuan for a 20-percent stake in the private carrier.

Sichuan Airport Group in December said United Eagle was 30.45 million yuan in debt, most of which came from default money for land use and ground agent services between March 2007 to October last year.

All Chinese private airlines have been grappling with a shortage of capital, exacerbated by the current economic slowdown. 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.


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