Sinotrans: Board Of Grandstar Cargo Airlines OKs Plan To Liquidate Carrier
05/22/2012| 11:16pm US/Eastern
-- Sinotrans: Board of Grandstar Cargo Airlines approves plan to liquidate the carrier
-- Korean Air: Liquidation of Grandstar is inevitable owing to low demand, high costs
(Adds Korean Air comments in fourth, fifth paragraphs)
By Jeffrey Ng and Kyong-Ae Choi
Chinese shipper Sinotrans Ltd. (0598.HK) said Wednesday that the board of Grandstar Cargo International Airlines, a freight forwarder jointly owned by a unit of Sinotrans and Korean Air Lines Co. (003490.SE), has approved plans to liquidate the carrier amid mounting losses and lackluster prospects in the air-freight market.
Sinotrans said Grandstar Airlines, which has already suspended flight operations, had a net loss of CNY340.1 million in 2011, widening from losses of CNY20.7 million in 2010 and CNY94.3 million in 2009.
According to its website, Tianjin-based Grandstar Airlines was founded in December 2007 as a joint-venture cargo airline 51%-owned by Sinotrans Air Transportation Development Co. (600270.SH) with 25% held by Korean Air, South Korea's biggest airline by assets. Financial companies Hana Capital Co. and Shinhan Capital Co. own the remainder.
Korean Air said Wednesday the liquidation of Grandstar was an inevitable decision owing mainly to low cargo-carrying demand and higher costs from rising oil prices.
"Despite possible losses from the liquidation, we regard partnership with Sinotrans as a valuable asset and plan to continue to seek new business opportunities in China, including expansion of routes," South Korea's flag carrier said in an emailed statement.
The airline started operations in 2008 with one Boeing 747-400 freighter serving European destinations. The airline launched flights to Seoul from Tianjin in July last year and had plans to add two more aircraft, according to the website.
-By Jeffrey Ng and Kyong-Ae Choi, Dow Jones Newswires; 822-3700-1903; firstname.lastname@example.org