China's Okay Airways suspends flights for 1 month

SHANGHAI, China - Chinese private airline Okay Airways will suspend flights for one month, beginning in mid-December, a company spokesman said Thursday, amid reports the financially troubled carrier is embroiled in a dispute with its controlling shareholders.

The passenger flight suspension will begin Dec. 15, Okay Airways spokesman Li Wei confirmed in a phone interview.

"It's because our shareholders have conflicting opinions about the business," Li said.

Staff at Shanghai-based Junyao Group Co., Okay's controlling shareholder and partner airline, refused comment.

Loss-making Okay Airways, based in the northeastern city of Tianjin, and the Junyao Group agreed in March 2006 to share personnel, routes, marketing and managerial expertise as they struggled for a footing in China's intensively competitive air transport market.

Relations between the carrier and Junyao have become increasingly rocky.

Junyao recently dismissed Okay's president, Liu Jieyin, the official Xinhua News Agency reported Thursday, citing Wang Junjin, who is chairman of both Junyao and Okay.

It said that Wang had promised not to cut jobs or reduce salaries during the one-month flight suspension. Flights were due to resume in mid-January, just ahead of the Lunar New Year peak travel period.

Okay Airways became China's first private carrier in 2005. The airline has 11 planes and flies more than 20 domestic passenger routes. Its cargo operations are a local partner of Fedex Corp.

Faltering demand due to the economic slowdown has stricken all of China's airlines, with several state-run carriers seeking huge bailouts to weather the crisis.

But China's handful of private carriers, which all began operations in the past several years, cannot count on such government support.

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