• News
  • China's East Star bankrupt after court rejects investment plans

China's East Star bankrupt after court rejects investment plans

Chinese carrier East Star Airlines has gone into bankruptcy after a Chinese court rejected a plan to revive the Wuhan-based carrier.

State-run news media, citing a statement by the Intermediate People's Court in Wuhan, say the court has announced East Star bankrupt.

The report says the court rejected a restructuring plan by China Equity and the airline's parent East Star Group.

China Equity had promised to inject 200 to 300 million yuan ($29-44 million) into East Star. However, the court said the plan "was infeasible and failed to meet conditions for a legal restructuring" because China Equity failed to disclose where it would get the money.

East Star was launched in 2005 with the backing of East Star Group, a large Chinese travel agency. In March this year, the Civil Aviation Administration of China (CAAC) grounded East Star at the behest of the Wuhan Government.

The Wuhan Government said at the time that the airline was incapable of making payment on money it owed, and its internal management was weak.

GE Commercial Aviation Services (GECAS) had tried unsuccessfully on several occasions to get East Star to stop falling behind on lease payments, it added.

According to Flightglobal's ACAS database, East Star had a fleet of nine Airbus A320-family aircraft, all on lease from GECAS.

China's state-run People Daily says East Star's assets at the end of 2008 totalled 630 million yuan, but its debts were more than one billion yuan.

Related Content