Financial and management problems are forcing Okay Airways to suspend passenger flights from Dec. 15 to Jan. 15, announced the company's chairman of the board, Wang Junjin on Dec. 3.

The civil aviation authority has already approved Wang's application for suspension. He said Okay Airways' cargo business, which partners with FedEx, will not be affected.

The privately-owned carrier operates 20-plus domestic passenger routes in Tianjin, Changsha, Hefei, Kunming, Harbin, Hangzhou, Haikou and Sanya.

Wang promised that the company would not lay off workers during the suspension.

The company's passenger flight business employs about 800 people, according to the company's spokeswoman, Han Jing.

She said the passenger sector accounted for 80 percent of the company's business.

"The business suspension may break the company's capital flow, and force the company into bankruptcy liquidation," she said.

Shanghai-based JuneYao Group through the Beijing Transport Energy Shareholding Co. owns 63 percent of the airline.

Wang, who is also chairman of JuneYao, said the board decided to replace Liu Jieyin as president of Okay Airways. He will be transferred to another post.

Wang did not say when this decision was made or where Liu will be moved to. His replacement has not yet been made.

However, Liu told Xinhua that the suspension decision was unilaterally made by the company's largest share holder of JuneYao without consulting other shareholders.

"The chairman said the management problem raised the flight safety concerns in his flight suspension application. However, the current problem is the lack of capital support from JuneYao, which hampered the airline's business growth," said Liu.

The chairman said, "The company will use the suspension period for internal adjustments, which will hopefully help make a fresh start for the beginning of next year."

He said the company plans to resume flights before the upcoming Spring Festival in January as that is a popular time for travel in the country.

Okay Airways became China's first private carrier in 2005. It has a fleet of five Boeing 737 passenger jets, three Boeing 737 cargo planes, one China-made Xinzhou-60 and two Yun-8 cargo planes.

The private carrier sent a market signal for an expansion in February last year, when it signed a framework purchase agreement with China No. 1 Aviation Industrial Group for 30 Xinzhou-60 aircraft. The company declined to say how the current problem would affect the order.

Okay Airways had projected the 2008 passenger handling volume at 1.2 million at the beginning of this year. However, its volume in the first nine month only reached 710,000.

Besides Okay Airways, China's fledgling private airlines include Juneyao Airlines, East Star Airlines, Spring Airlines and United Eagle Airlines. The companies engaged in talks this year to cope with the market slowdown, but there was no agreements reached.

Photograph: Several Okay Airways' aircraft were parked at Tianjin Binhai International Airport on May 4, 2008. Photo by CARNOC.com message board member.