CAAC granted a public air transport enterprise operating license to HNA Group for its Grand China Air entity, bringing the Hainan Airlines parent one step closer to launching its new carrier, Air Transport World (ATWOnLine) reported. It added that the new airline will combine Hainan along with Xinhua Airlines, Changan Airlines and Shanxi Airlines, which will create the country’sfourth-largest commercial carrier.

HNA Group president Chen Feng called the license “an important milestone.” It follows the April award of GCA’s general aviation business license. Chen said Grand China now will work toward merging the four carriers, raising CNY5 billion ($654.9 million) in capital and listing the new company on the Hong Kong Stock Exchange, possibly by year end.

HNA currently holds 60 percent of Xinhua, 93.75 percent of Shanxi and 81.16 percent of Changan. An internal source told ATWOnline that Grand China Air Holding will purchase the remaining outstanding shares of the three airlines “very soon.”

GCA, to be based in Beijing, has registered capital of CNY3.09 billion. State-owned Hainan Development Holding holds 48.6 percent with a CNY1.5 billion investment while HNA Group and Starstep Ltd. hold 19.1 percent and 18.6 percent respectively. Minority shareholders are Yangtze River Investment Holding (8.1 percent) and Hainan Qixing Investment (5.3 percent).

Industry analysts have pointed out that HNA’s asset liability rate, which has been as high as 94.3%, would mitigate its ability to raise funds for fl eet expansion. Launching GCA and listing in Hong Kong will allow it to attract more strategic investors while evading certain fi nancial risks.

HNA currently holds 9 percent of the domestic air transport market that is dominated by Air China, China Southern Airlines and China Eastern Airlines.