(Yicai Global) Dec. 23 -- Fangda Group Industrial, a Chinese conglomerate that purchased a controlling stake in Hainan Airlines Group a year ago, intends to inject nearly CNY10.9 billion (USD1.6 billion) into the loss-making aviation company, the largest financial support in the Chinese aviation industry in recent years, to prepare for the sector's recovery.

China's main securities regulator has approved the private placement plan of Hainan Airlines, the southern Chinese aviation firm said in a statement yesterday.

Hainan Airlines will issue nearly 10 billion shares to Hainan province-based Hanwei Investment, a unit of HNA Airlines Group, to supplement liquidity while strengthening its main business. HNA Airlines Group is part of Liaoning province-based Fangda after an acquisition last December.

The aviation industry should prepare for the civil aviation market to recover as the recent hardships are coming to an end, The Paper reported, citing Fang Wei, chairman of Fangda. The chief was talking at a meeting recently, disclosing details of HNA Airlines Gourp's fleet, information technology, safety, and services.

Bankrupt conglomerate HNA Group transferred control of its flight operators, including HNA Airlines Gourp and Hainan Airlines, to Fangda on Dec. 8, 2021. At that point, Fangda invested CNY38 billion in HNA's main business and further provided CNY3 billion (USD429.6 million) for risk mitigation.

After the newest transaction, Hanwei will become the largest shareholder of Hainan Airlines as its shareholding will rise to 24.4 percent from 1.7 percent. Hainan Fangda Aviation Development will be the second-largest shareholder with a stake of 9.7 percent, down from the previous 12.6 percent.

The pandemic has only added to the aviation company's issues. Hainan Airlines earned CNY7.7 billion (USD1.1 billion) in revenue in the third quarter, down 14 percent from a year ago. Its net loss widened to CNY8 billion from CNY2.6 billion.

Hainan Airlines [SHA: 600221] closed 0.6 percent lower at CNY1.82 (US 60 cents).

Editor: Emmi Laine, Xiao Yi