China's HNA Aviation Group, which owns China's fourth largest airline Hainan Airlines, is set to buy a 13 percent stake in Australia's airline company Virgin Australia for an estimated $159 million. HNA plans to further increase its share to 19 percent in the Australian company.

Virgin Australia said it would use the newly-raised capital to expand its share in China's growing aviation market. Virgin Australia's Chief Executive Officer John Borghetti sounded upbeat about the advantages of this deal for his company.

Like Us on Facebook

"The alliance will see us leverage the opportunities offered by China as well as the synergies of HNA's comprehensive aviation supply chain," Borghetti said.

He added that after the deal, the company plans to initiate more flights to-and-from China. He said that the destinations are still being finalized, but named Beijing and Hong Kong among them.

The HNA deal comes amid a report that Air New Zealand, the largest stakeholder in Virgin Australia, is selling a part or its entire 26 percent stake in the company. The other stakeholders in the Australian-based company are Etihad Airlines, Singapore Airlines, and Virgin Group.             

Over the last few quarters, market analysts have been raising concern over Virgin Australia's mounting debt and financial losses.

The HNA deal is widely seen as part of company's effort to cut its debt. Virgin Australia has said in its statement that HNA Aviation Group is supportive of its debt and capital restructuring program.

Tagschina, HNA Aviation Group, Hainan Airlines, Virgin Australia, Australia, China and Australia