COMAC becomes largest shareholder of UEAir

14:12, October 19, 2009      

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Commercial Aircraft Corporation of China (COMAC), Sichuan Airlines Group (Sichuan Airlines) and Chengdu Communications Investment Group on October 15 signed an official cooperation agreement on the shareholder restructuring of United Eagle Airlines Company (UEAir). According to the agreement, the three parties will purchase shares in and increase the capital of UEAir. Following the restructuring, UEAir's equity capital will more than double from 300 million yuan to 680 million yuan, in which COMAC will hold a 47.96 percent stake, while Sichuan Airlines and Chengdu Communications Investment Group a 40.97 percent and 11.07 percent stake respectively.

Meanwhile, COMAC also announced that it has signed an agreement with UEAir to supply 30 ARJ21-700 model regional aircraft and start deliveries of these aircraft next year. To date, there have been 240 orders for ARJ21 jet.

UEAir was one of China's first private airlines, and later Sichuan Airlines became its largest shareholder with a 76.2 percent stake. Prior to the restructuring of its shareholders, Sichuan Airlines injected funds into UEAir on three separate occasions. In November 2006, Sichuan Airlines bought a stake in UEAir through a capital and stock increase; in July 2007, it invested an extra 20 million yuan in UEAir to secure the management rights; in March 2009, Sichuan Airlines invested an additional 200 million yuan to take a controlling stake in UEAir.

The initial objective of UEAir's development plan is to complete the integration of resources with Sichuan Airlines and mainly use the ARJ21 series and Airbus 320 aircraft to establish a network of flights with the city of Chengdu serving as the hub. In the medium term, the goal is to develop a regional network covering the entire country on the basis of its western regional network; and the long-term strategic orientation is to mainly use the ARJ21 and C919 series of aircraft to establish a flight network covering Southern and Southeast Asia on the basis of the domestic network.

Analysts pointed out that after the deal, UEAir will act as a platform to help COMAC realize the overall commercialization of the ARJ21 jets. Inconvenient transportation to China's western regions, rich airport and tourism resources and Chengdu's central location and placement as a entry point to the western regions all provide a sound environment for the ARJ21 series of aircraft to make Chengdu its development base and have its flights cover the second-tier cities of Yunnan, Guizhou, Hunan, Shannxi, Gansu and other domestic provinces, as well as the Southeast Asian market.

By People's Daily Online
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