(Yicai Global) Aug. 11 -- Hainan Airlines jumped by the daily trading limit after the Chinese carrier said an investigation into the company by China’s securities watchdog had ended with a CNY3 million (USD450,000) fine.

Hainan Airlines [SHA: 600221] closed up 5.3 percent, the exchange-imposed upper limit for companies at risk of delisting, at CNY1.38 (21 US cents).

The China Securities Regulatory Commission found that the airline failed to disclose related-party transactions and guarantees and other important information between 2018 and 2020, when it was owned by HNA Group, the Haikou-based company said in a statement yesterday.

Hainan Airlines was labeled ‘Special Treatment’ for the violation, and now that the investigation is over it can apply to remove that tag, it added, allowing the carrier to finally begin the private placement through which its new owner Fangda Group Industrial can inject capital.

At the start of last year, three listed companies under HNA revealed bankruptcy reorganization plans. At the time, they also said that the total amount of funds and undisclosed guarantees of affiliate parties was CNY100 billion (USD14.9 billion), CNY37.5 billion (USD5.6 billion) of which were tied to Hainan Airlines.

Last September, Fangda submitted the winning bid of CNY38 billion (USD6 billion) plus CNY3 billion (USD445 million) in risk relief funds for a controlling stake in Hainan Airlines. Before HNA’s reorganization plan began last year, the CSRC kicked off its probe.

According to its findings, Hainan Airlines was not independently managing financial funds before the reorganization. Capital flows and the signing of guarantee contracts between the carrier and affiliates were carried out under the organization and control of HNA.

Hainan Airlines expects to make a loss of more than CNY11.9 billion in the first half of the year. If its unaudited net assets remain negative in 2022, it would receive a delisting warning after the firm published its annual earnings report, it said earlier.

Editor: Futura Costaglione