Another Shenzhen arrest leaves airline control up for grabs
Tuesday March 9, 2010
Shenzhen Airlines CEO Li Kun was arrested Saturday for alleged financial irregularities, allowing Air China to deepen its involvement in the country's fifth-largest carrier through the appointment of Shenzhen vice chairman and former CA VP Fan Cheng as acting CEO.
Li formerly was vice GM of China Southern Airlines and became CEO of ZH in 2005 following its privatization. Li Zeyuan, who outbid CA and purchased a 65% share of Shenzhen at that time, then was arrested under similar circumstances last November. Li Zeyuan's legal trouble prompted a tussle for control of ZH between CA and China Southern Airlines
(ATWOnline, Jan. 8).
CA currently holds 25% of ZH and has been angling to increase its share for some time. Following Le Zeyuan's arrest, CA named Fan as ZH's vice chairman and Finance Director Li Youqiang to the same role at Shenzhen.
Industry analysts have said that Li Zeyuan's stake may be split between CA and the Shenzhen municipal government, which now holds 10% of the airline. It has been reported that the government also is keen to increase its participation ZH. Vice Mayor Zhang Siping noted at the end of last year that the "Shenzhen municipal government will support Shenzhen Airlines, as always, no matter what. It won't change that
Shenzhen will remain an independent company and there won't be big layoffs."
by Katie Cantle