The Pan-American Aviation Holdings Ltd.(PAAH) is to become a shareholder of Grand China Airline (GCA), a subsidiary of the Hainan Airlines, China's fourth largest airline company.

PAAH will buy 11 percent to 18 percent of the GCA's shares for 60 million to 100 million U.S. dollars, making it the second largest shareholder, according to a framework agreement that the two companies signed Saturday.

Hainan Airlines, a rocketing civil aviation company in China, has been restructuring its four subsidiaries to establish the GCA since 2002.

Before PAAH, the Soros Foundation and Hainan Provincial Government had invested respectively 25 million U.S. dollars and 1.5 billion yuan (about 190 million U.S. dollars) in GCA.

"We are planning to raise about 5 billion yuan (about 625 million U.S. dollars) and get GCA listed on Hong Kong Stock Exchange," said Chen Feng, chairman of Hainan Airlines, headquartered in Haikou, capital of China's southernmost Hainan Province.

Bharat Bhise, president of the PAAH, said the capital invested in GCA would be in place by the end of 2006.

Hainan Airlines has 113 aircraft, and operates 500 flights between more than 80 domestic cities and eight international routes from China to Japan, Korea, Singapore and Hungary.