Why did Eastern Star Airlines go bankrupt?

Due to poor management and the impact of the financial crisis, it began to default on huge debts at the end of 2008, which even affected flight safety.

1. Superficial reasons

In 2008, aviation fuel prices soared. East Star Group’s main businesses, tourism and real estate, were hit hard by the financial crisis. Many domestic and foreign airports and the American GECAS When the Liu family's foreign companies and financial institutions sought repayment from East Star, East Star Group's capital chain was broken, merger and acquisition negotiations with AVIC broke down, and the company was forced to ground its flights.

The financial situation of East Star Airlines has become very pessimistic in 2009. From the launch of East Star Airlines in 2005 to the beginning of 2009, it has never paid any fees including aircraft landing fees, passenger transit fees, and house rental fees. For expenses and other expenses, East Star Airlines probably owes a total of 60 million yuan. In addition to Hubei Airport, Hangzhou, Shenzhen, Yunnan Airport, China National Aviation Oil, etc. also claimed that East Star Airlines owed huge debts.

On September 12, six companies including GECAS from the United States that took the initiative to show their favor to East Star Airlines hired lawyers in Beijing to apply to the Wuhan Intermediate People’s Court as creditors to enforce the bankruptcy of East Star Airlines. Wuhan City held a special meeting and revealed that East Star Airlines had lost 500 million yuan.

2. Fundamental reasons

The tight financial chain is the initial and fundamental reason for the series of incidents in Dongxing.

Lan Shili’s niece Lan Jianmin broke the news that the bankruptcy of East Star Airlines Co., Ltd. (hereinafter referred to as East Star Airlines) “was caused by Yuan Shanla’s selfish desires. In order to recover the money lent to Lan by the underworld loan shark group, Shili's debt was behind the scenes and he was behind the sale of East Star Airlines at a low price. The 'death' of East Star Airlines was directed by Yuan Shanla, the man behind the scenes.

Yuan Shanla forced Lan Shili's niece to report to the underworld. The leader of the organization, Xie Xiaoqing, borrowed money at high interest rates. This was a loan that would send East Star Airlines to hell. From 2007 onwards, East Star Airlines' capital chain became increasingly exposed, and Lan Shili began to negotiate with Goldman Sachs.

However, before East Star Airlines had completed the process of multiple approval departments, the financial crisis suddenly struck. Goldman Sachs itself was unable to protect itself, and the cooperation came to nothing. East Star began to look for funds everywhere, and faced the risk of breaking the capital chain.