(Yicai) July 1 -- Shares of Hainan Airlines Holding surged by their daily limit after the operator of China’s fourth-largest carrier secured a financial lifeline from its controlling shareholder. The capital injection of as much as USD10 million is intended to bolster the firm’s stock price and avert the risk of a stock market delisting.

The shares [SHA: 600221] climbed 9.8 percent to close at CNY1 (US 14 cents) each in Shanghai today, after falling close to CNY1 on June 28. Under Chinese securities regulations, if a stock’s closing price is below CNY1 for 20 straight trading days, mandatory delisting ensues.

American Aviation, an entity acting in concert with controlling shareholder Fangda Group Industrial, bought 2.6 million of Hainan Airlines' B shares, and will buy more over the next six months, spending between USD5 million and USD10 million, the Haikou-based carrier said yesterday. B shares are US dollar-denominated securities issued by Chinese mainland-listed firms.

The B-shares of Hainan Airlines [SHA:900945] hit the 10 percent limit-up for the second trading day to close at USD0.15 today. On June 28, it slumped 10 percent to USD0.11 before bouncing back.

Fangda took charge of HNA Group's aviation businesses, including Hainan Airlines and Grand China Air, by participating in the troubled conglomerate's bankruptcy and restructuring in 2021. Fangda and its affiliates own about 43 percent of Hainan Airlines.

The airline has been improving its profitability this year in the wake of the Covid-19 pandemic. First-quarter net profit was CNY687 million (USD94.5 million), a more than four-fold jump from a year ago, while revenue rose 33 percent to CNY17.6 billion (USD2.4 billion). It returned to the black last year, posting a CNY311 million (USD42.8 million) profit.

Editors: Dou Shicong, Emmi Laine