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Chen Feng, the founder of Hainan Airlines, has stepped down from his post as chairman and director  in a move market observers said  would facilitate the initial public offering of Grand China Airlines,  the carrier's controlling shareholder.
Mr Chen will remain chairman of Grand China Air, said Hainan Airlines yesterday.
'Chen Feng is the director of some  subsidiary companies of Grand China Air which will  raise questions of conflict of interest when it goes public,' an industry veteran said.
Grand China Air, which is considering a US$2 billion  share sale in the Hong Kong stock market,  would be incorporated next year, Mr Chen told mainland media on October 19.
Grand China Air  would comprise Hainan Airlines, Changan Airlines, Xinhua Airlines, Shanxi Airlines, Meilan Airport, Hong Kong Airlines and Hong Kong Express Airways,  market sources said.
A spokesman for Hainan Airlines said the resignation of Mr Chen  was the result of normal reorganisation and  in line with the group's next stage of development.
Mr Chen led the incorporation of Hainan Airlines in 1990 when he was working for the Hainan provincial government supervising the restructuring of the state-owned airline.
He became the carrier's chairman  in 2000 and initiated the acquisition of other regional  carriers, such as Changan Airlines, Xinhua Airlines and Shanxi Airlines, between 2000  and 2002.
After combining  the airlines' operations and aggressively expanding  its fleet, Hainan Airlines became the fourth-largest carrier in the mainland in 2002.
The  carrier made news internationally when investor George Soros invested US$25 million in the airline in 1994 and another US$25 million in 2005 for a total stake of 10 per cent.
From a starting capital of 10 million yuan   in 1993, Hainan Airlines' assets have grown to 35.7 billion yuan. As of September this year,  it operated  129 aircraft serving about 500 routes.
In the first nine months of this year, the company's net profit  leapt 67 per cent to 418.6 million yuan.
At the request of Grand China Air, the airline will cut number of directors  to seven from nine. Meanwhile, Mr Chen and three other directors resigned,  according to a  filing with the Shanghai exchange.
The State-owned Assets Supervision and Administration Commission of Hainan holds 40.65 per cent  of Grand China Air.



Chen exits as Hainan Air chief amid move to list parent Grand China