Hainan Airlines 737-800. Photo: By Rob Finlayson.

Hainan Airlines Group is considering investing in financially troubled Malev Hungarian Airlines, according to an industry insider in China who said the Haikou-based carrier is in negotiations with the state-owned airline. If successful, HNA would become the first Chinese carrier to invest in a European airline.

HNA signed a LOI with MA to deepen its cooperation and sent a group to negotiate with the Hungarian carrier. "HNA is in talks with Malev now mainly owing to the promotion [of cooperation between the carriers] by the Hungarian government and the Chinese government," said the source, who pointed out that it may take "at least four to five months" to clear all hurdles to complete a deal.

Interestingly, HNA Chairman Chen Feng noted last week that the carrier is more interested in setting up a new airline in Hungary. HNA considered making a bid for MA in 2004. Ultimately, the carrier decided against the investment because HNA lacked a broad route network in Europe and it considered the financial risk to great. Meanwhile, Chen revealed that HNA is interested in a stake in Germany's Hochtief Airport.