China's Kunpeng to be first to fly ARJ21

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Shenzhen Airlines' regional arm Kunpeng Airlines will be the first to fly China's new regional jet, the ARJ21.

The first operator was originally supposed to be Shandong Airlines but a senior source at Shenzhen Airlines says its regional carrier Kunpeng aims to take delivery of its first ARJ21 in late 2010 and it, rather than Shandong, will be the first to operate the aircraft.

A source in Shandong Airlines' Jinan headquarters also confirms it is no longer the launch operator for the ARJ21.

The move came after Shandong underwent a management change, says the source, adding that the new management "put this request to the manufacturer that we don't want to be the launch" operator.

Shandong still plans to operate ARJ21s eventually, adds the source, who was unable to say when it will receive its first example.

Kunpeng's move to be the first to operate the ARJ21 has implications for rival aircraft-maker Embraer.

The source at Shenzhen says Kunpeng operates three Embraer E-190s and is due to receive a fourth this month, a fifth in May and three more in this year's second half.

Kunpeng last year signed a firm order for five E-190s and said at the time it planned to eventually buy 50 in total but was waiting on Chinese Government approval to order more.

The source says the airline still plans to keep adding E-190s but because it is getting ARJ21s it will delay later E-190 deliveries.

In December 2007 Shenzhen Airlines' chairman Li Kun signed an agreement - on behalf of Kunpeng Airlines - for the order for 50 ARJ21s and options for 50 more.

The signing was done during a nationally televised roll-out of the ARJ21.

Besides E-190s, Kunpeng also had five Bombardier CRJ200s it was leasing from US airline company Mesa Air Group but the source says Kunpeng has since returned these.

Mesa is a major shareholder in Kunpeng but it announced last year it would be selling its shares to majority owner Shenzhen Airlines.

The Shenzhen source says the two sides have already signed a letter-of-intent regarding the sale. The "final contract will be signed shortly, sometime within this month", adds the source.

Mesa Air Group controls 49% of Kunpeng via two companies registered in China. Shenzhen Airlines has majority control with 51%.

Executives from ARJ21's manufacturer, Commercial Aircraft Corporation of China (Comac), were not immediately available for comment.