Two China Eastern executives detained in probe
Two senior China Eastern Airlines executives have been detained by the Shanghai local government in an investigation that may be related to a probe into the company's 70 per cent-owned subsidiary China Cargo Airlines, an official at the carrier said.
China Eastern vice-presidents Wu Jiuhong and Tong Guozhao were taken away by the Shanghai authorities last week and are still being detained for investigation, the official at the company's investor relations department said.
The company, the country's third-largest carrier, would remove the two men from their positions and more details will be disclosed today, he said.
Mr Wu, 54, who has held his post since April 2002, is responsible for training crews and overseeing ground handling staff.
Mr Tong, 47, a qualified pilot who became vice-president in April last year, was China Cargo Airlines president for the first nine months of 2004. He was responsible at China Airlines for monitoring flight safety, including inspection of pilots.
It is believed that Mr Wu and Mr Tong are being investigated for the case related to China Cargo Airlines, the official said.
Four senior managers at China Cargo Airlines were taken into custody in August and questioned regarding commission rebates received by the cargo unit management from freight forwarders in return for lower rates for cargo space.
China Eastern has undergone a reshuffle in senior managerial levels over the past two months.
In September, the company's former party secretary was replaced by Li Jun, the deputy minister of General Administration of Civil Aviation of China.
The then-president, Lou Chaogeng was succeeded by Cao Jianxiong with effect from October 12.
The probe and reshuffle have raised questions the corporate governance at China Eastern, the third biggest mainland airline in terms of passenger numbers, and has cast a shadow on its talks over a possible equity acquisition by Singapore Airlines, an aviation analyst said.
China Eastern reported a first-half loss that widened to 1.7 billion yuan from 585 million yuan a year earlier.
China Cargo Airlines is a venture between controlling stake-holder China Eastern Airlines and China Ocean Shipping Group, the country's largest transport group.
China Eastern shares fell 1 per cent yesterday to HK$1.37.
