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Okay Airways may face flight suspension again

By Zhang Jiawei (chinadaily.com.cn)
Updated: 2009-07-08 16:06

Okay Airways, China's first private air carrier, has received a written notice from regulators urging it to settle down its internal disputes, which may put flight safety at risk, as soon as possible, triggering rumors that the firm's business could be suspended again, the Beijing-based Jinghua Times reported Wednesday.

The Tianjin-based airline halted passenger services on Dec 6, 2008 due to an internal management dispute. It resumed seven of its flights on Jan 24 this year, and didn't fully restore its normal services until Feb 1.

But the disputes that grounded its flights have never been resolved, according to an official with the North China regional office of the Civil Aviation Administration of China.

"Disputes that had existed among its shareholders before the last suspension of its flights haven't been fully resolved even now," the official told the newspaper.

The regulator sent Okay a written notice last week, asking the carrier to submit a report on its safety management system and solutions to related problems.

Liu Jieyin, founder and former president of Okay, said regulators may "partially or even fully suspend Okay's business" if its shareholders cannot bury the hatchet and improve the asset condition of the debt-laden carrier.

Related readings:  China's nascent low-cost airlines  Okay Airways to resume passenger service on Jan 24  Budget airlines to spread wings abroad  Dispute grounds Okay Airways passenger flights

According to a report by Wednesday's Beijing Business Today, International Lease Finance Corp, the jet-leasing company, has taken Okay to a Beijing court, demanding the airline to pay back debts amounting to 75 million yuan ($11 million).

"Any company that demands debt repayment on short notice may put Okay to death, so to speak." Liu told Jinghua Times.

The biggest problem for Okay was that it lacked a unified core leading team, Liu added.

However, Wang Junjin, chairman of Juneyao Group, the airline's largest shareholder, said the carrier is running well and striving for the better.

"Okay made a written reply (to the regulator) on July 2, but haven't got any feedback yet," Wang was quoted by the Jinhua Times as saying. As cargo flights were resumed on July 4, Wang said chances are "we can even make some profits" in July or August.

Wang said talks on inviting strategic investors are ongoing and there could be a result by August. The rumor on Okay's troubles were "ill-motivated", he added.

According to Liu, no progress has been made in introducing the Tianjin municipal government as a strategic investor owing to divided opinions on the Junyao side.