OK Air in stormy times

At the start of December, Okay Airways, China’s first privately owned airline, suspended all passenger services, stranding thousands of travellers and ending a brief and unprofitable chapter in the country’s aviation history.

(It hopes to start operating again but is not sure of the date.)

China still has at least 23 airlines operating domestically, including a variety of start-up private carriers and smaller players controlled by regional governments.

But many analysts expect that number to shrink rapidly as losses mount and the government pushes for consolidation, which will ultimately benefit the state-owned players — China Eastern, Air China and China Southern — known collectively as the ‘big three’.

China Eastern and China Southern have already received RMB7 billion ($1 billion) and RMB3 billion respectively from the government to balance falling passenger numbers and huge hedging losses from the plummeting price of oil.

State-controlled Hainan Airlines has also received RMB500m, according to state media. Industry insiders expect Air China to get as much as RMB10 billion from the government to help it through the hard times.
Source: Financial Times

   Shanghai Airlines

A merger between China Eastern Airlines and Shanghai Airlines is possible as it is reported the idea has strong support from the Chinese central and local governments.

The suggestion is that Shanghai Airlines will first get a capital injection from the Shanghai government and then to buy into China Eastern Airlines. Reports from as early as July 2008 suggested the steps towards this integration were taking place.

What makes the whole idea less than certain is the global financial turmoil and downturn of the civil aviation sector. Both Shanghai Airlines and China Eastern Airlines have incurred major losses in the third quarter of this year.

Total net losses of China Eastern Airlines reached RMB2.292 billion in the first nine months of the year. China Eastern Airlines plans to raise RMB7 billion ($1 billion) by selling shares to its state-owned parent company, more than double the amount originally planned, to help it weather a financial crisis.

The money raised will be used to increase the company’s cash balances.
Source: Trading Markets and New York Times

      First woman pilot with
      China Southern

Liu Yu Huan is now a captain in its China Southern Airlines A320 fleet, becoming the first female captain at China Southern.

Liu Yuhuan, who was an air force pilot, comes from a family of pilots. She began flying in 1991 and is rated in a range of aircraft. Her mother was an air-force pilot. This mother and daughter team is unique in the history of Chinese aviation.

Liu came to China Southern Airlines at the end of 2003 from an impressive air force career.  Now she has passed the pilot evaluation, and became captain.

After the evaluation, she said, ‘I am confident that I am competent to be a captain, having passed through rigorous training and examinations — but this is just the beginning – there will more challenges and more responsibility in future.’
Source: China Civil Aviation Report

Shenyang Aviation Company (SAC)

The SAC Commercial Aircraft Company under AVIC has acquired AS9100 Quality Certification from the UL-CCIC Company, an international aviation quality certification agency.

The certification means that this commercial aircraft manufacturing enterprise, which only started independent operation in July, has been authorized to enter the international aviation and aerospace manufacturing market.

According to the UL-CCIC, one of the authoritative international quality certification agencies, so far it has issued AS9100 Quality Certification to over 10 aviation manufacturing enterprises in China, and a further 30 enterprises are applying for the certificate.

Probably something over 100 aviation manufacturing enterprises in China have passed the AS9100 Quality Certification test which is a strong indication of how China’s aviation manufacturing industry is making its way into the international market.
Source: English People’s Daily Online

             Blue Sky Aviation

Aerospace Products International(API), a wholly-owned subsidiary of First Aviation Services and a supplier of distribution and supply chain services for the aviation industry, has announced a general term agreement with Hu Bei Sky-Blue International Aviation Academy.

Under the agreement API will provide the privately-owned academy, which is located in Wu Han, Hunei Province, China, with all consumables, parts and logistics services to support its operations.

Sky-Blue Aviation is reportedly one of the first flight training academies in China and the first commercial pilot training organization in central China.

API has previously provided inventory management programmes for Lufthansa’s Airline Training Center in Arizona and MidEast Aviation Academy in Amman, Jordan.
Source: Trading Markets

                    Kiev

China’s Hainan Airlines has announced it will launch a new route from Beijing to Ukraine’s capital of Kiev at the beginning of next year.

Zhang Ning, the company’s representative in Kiev, told a news briefing that passengers would be able to take a flight between the two cities on Tuesday and Saturday starting February 10, 2009.

He also said, ‘Flight frequency would be increased later.’

The airline will use Airbus A330-200 aircraft, which has 222 seats with 36 business-class seats.
Source: China View

          China Eastern Airlines

China Eastern Airlines said the plan to swap shares in exchange for cash from its parent would be significantly adjusted. Its domestic A shares were halted from trading in Shanghai until December 30.

The share placement was part of an RMB3 billion ($439 million) aid package that the group had received from the government. Rival China Southern Airlines also received a similar lifeline from the government.

Shanghai-based China Eastern, the mainland’s second-biggest air carrier by market value, said in a statement to the Shanghai Stock Exchange that parent China Eastern Air Holding intended to make material adjustments to the plan to subscribe for A shares in China Eastern, but gave no further details.

The China Business News reported the government may double its planned capital injection in China Eastern to RMB6 billion.

Ma Ying, analyst at Haitong Securities, said, ‘China Eastern is cash-strapped and has operational difficulties, so the planned cash injection would be crucial to the company’s survival. The difficult situation is the result of many factors, including bad market conditions and poor management.’

Earlier this year, China Eastern shareholders rejected a plan to sell a stake to Singapore Airlines.
Source: Reuters

China Airlines has announced that it is offering discounts on cross-strait economy-class flights between the mainland and Taiwan. Passengers can avail a 30% discount on flights from Taiwan to Shanghai, Beijing, Guangzhou, Nanjing, Shenzhen and Hangzhou.

In addition, China Airlines (CAL) is lowering fuel surcharges.

CAL is also offering discounted fares for passengers who buy economy-class tickets through the CAL website or through CAL ticketing counters in Taiwan.

Passengers who obtain tickets and make payments through the CAL website can earn an extra 5% discount.

The fares are reported to be lower than they were in August 2008.
Source: Logistics Business Review

China’s first domestically developed regional aircraft, the ARJ21-700, has started applying for domestic certification and is expected to complete the process in 2010.

The Ministry of Industry and Information Technology said this in a statement displayed on its website.

The 90-seat jet successfully completed its maiden test flight last month.

The plane is manufactured by Commercial Aircraft Corporation of China, an arm of the country’s newly created aviation giant China Aviation Industry Corp, which aims to challenge Boeing and Airbus at some indeterminate time in the future.

The U.S. Federal Aviation Administration opened an office in Shanghai last year with the goal of helping Chinese aircraft obtain certification and assist with other safety issues. Which could also boost U.S. aviation related sales in China.

Global regulators often follow the FAA on safety issues, and certification by the U.S. regulator will be a crucial step for any new airliner eyeing global sales.

China has secured 208 orders for the jet — due to start commercial delivery within 18 months, but the vast majority are from domestic airlines — including five firm orders from General Electric’s (GE.N) aircraft leasing arm.
Source: Reuters

             China Eastern
      counter at Beijing airport

According to state media the parent of China Eastern Airlines plans to seek another RMB10 billion ($1.5 billion) in government aid in addition to an earlier RMB3 billion bailout.

The Securities Daily, citing an unnamed source, reported that China Eastern Air Holding is having internal discussions on the details of the extra aid package bid.

The paper said the company, the nation’s third-largest carrier, needed the money to make up for operational costs and losses on fuel hedging contracts.

Luo Zhuping, a spokesman of Shanghai-based China Eastern, declined to comment on the report, saying ‘the issue is too sensitive’.

Earlier China Eastern and China Southern both announced plans to issue more shares to their parents in exchange for a RMB3 billion capital injection from the government.

China’s aviation industry has had a bad year, as travel demand has slumped amid the global financial crisis. China Eastern posted an RMB2.3 billion loss in the first nine months.
Source: AFP