China's civil aviation authority has grounded privately-owned East Star Airlines after it failed to pay money owed to GE Commercial Aviation Services (GECAS) which leases aircraft to the Wuhan-based airline.
The Wuhan Government says in a statement that the Civil Aviation Administration of China (CAAC) grounded East Star as of midnight on 14 March at the behest of the Wuhan Government.
The airline was grounded because it is incapable of making payment on money that it owes and its internal management is weak, says the Government.
It says GECAS has tried unsuccessfully on several occasions to get East Star to stop falling behind on lease payments and that GECAS is now taking legal action against the airline.
The CAAC confirms in a statement of its own that it grounded the carrier as of midnight on 14 March.
Arrangements have been made to have other airlines take over its 20 routes in an effort to minimise inconvenience to passengers, it adds.
Officials at East Star declined to comment when contacted by ATI today.
ATI reported in July last year that East Star was experiencing financial problems.
According to Flight's ACAS database the airline has a fleet of nine Airbus A320-family aircraft, all on lease from GECAS.
It launched operations in May 2006 and its owner is Wuhan-based travel agency conglomerate China East Star Group.
In January Air China said its parent company was in negotiations to buy some or all of East Star but no deal has yet to be announced.
Source: Air Transport Intelligence news
