Shenzhen Airlines Head Steps Down

Air China's Fan Cheng is appointed as acting president, rising speculation that the flag carrier is paving the way to take over the smaller carrier.

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(Caixin Online) Li Kun, president of Shenzhen Airlines, China's fifth largest carrier, has been removed from his post and is currently under investigation by the public security department on suspicion of "economic crimes."

Fan Cheng, vice-president and Communist party secretary for Shenzhen Airlines has been chosen to fill Li's position. Fan is also a vice-president at Air China, the national carrier and the second-largest shareholder in Shenzhen Airlines.

A source close to the situation said that the investigation of Li Kun is related to the case of Li Zeyuan, Shenzhen Airline's senior advisor and majority shareholder, detained last November on alleged wrongdoing. The source also mentioned Li Kun's signatures on some questionable contracts.

The reasons for Li Zeyuan's detention haven't been specified. But an earlier report from the Economic Observer said that the case may be related to Li Zeyuan's misconduct in his 2005 buy-out of a 65 percent stake in Shenzhen Airlines.

Li Kun was appointed as vice chairman and president of Shenzhen Airlines in late 2005. He was a former executive of China's largest carrier China Southern.

Fan's replacement of Li has raised market speculation that Air China is paving its way to take over Shenzhen Airlines. Kong Dong, Air China's chairman, said last week that Air China has been eager to takeover Shenzhen Airlines. Air China currently holds a 25 percent stake in the smaller rival.