The founding ceremony of Chengdu Airlines is expected to be held on January 22, Chengdu Daily reported on Tuesday.

Chengdu Airlines was developed on the basis of one of China's first private carriers – the United Eagle Airlines.

Founded in 2004, the Chengdu-based United Eagle Airlines has met a serious of business predicaments in severe market competition and it was reorganized in last October with Commercial Aircraft Corporation of China (COMAC), Sichuan Airlines Group, and Chengdu Communications Investment Group as its three shareholders.

All the three shareholders are state-owned enterprises, which means private capital was completely withdrawn from United Eagle and the carrier becomes a state-owned. The registered capital of the new airline will also be increased to 680 million yuan ($100 million)?from the current 380 million yuan ($56 million).

The three also decided to use the name "Chengdu Airlines" to replace the current name "United Eagle Airlines" when signing the restructuring agreement last October.

Chengdu?Airline will feature on using indigenously-made aircraft, eyeing regional routes in the west part of China. It also has ambitious plans to further extend its route network around the country and purchase China-made large aircraft C919, according to earlier media reports.

Chengdu Daily also said in its report the new Chengdu Airlines will be the first carrier to have ARJ21-700, the first indigenously-made passenger jet of China, in its fleet.

The United Eagle Airlines, the predecessor of Chengdu Airlines, ordered 30 ARJ21-700 regional airliners manufactured by COMAC, one of the new Chengdu Airlines shareholders, last October, just after signing its restructuring agreement.

The first ARJ21-700 will be delivered to Chengdu Airlines before the end of 2010 at the earliest, the report said.

Statistics show by November 2009, the United Eagle Airlines' fleet comprised an A320 (hired from Sichuan Airlines) and six A319 jetliners.

2009 is not an easy year for China's private airlines: Debt-laden East Star Airlines went bankrupt in August; 18 senior pilots resigned from Okay Airways, which has just resumed its passenger operations last January.

Meanwhile, the capital injections from regional governments and state-owned enterprises also prevailed in the past year.

Except for the restructuring of United Eagle Airlines, Yunnan Provincial government injected 290 million yuan ($42.7 million) to Lucky Air and obtained 32 percent of its shares in last June.

Kunpeng Airlines gained the investment from Henan provincial government and changed its name to "Henan Airlines". Grand China Express also chose to cooperate with local authorities in Tianjin and was rechristened "Tianjian Airlines".

Financial strain is believed to be the biggest problems private airlines facing in China.

No matter what business models they choose, it is still a tough work for private carriers to gain a toe-hold in?China's aviation?market.