(Yicai Global) Sept. 30 -- Debt-laden Longjiang Airlines, China's smallest airline with a fleet of just five aircraft, has been bought by a Beijing-based investment consulting firm for CNY806 million (USD119 million) at the country's first private airline auction held today.

Beijing Shengda Gold Industry Investment Consulting acquired a 98 percent stake in Longjiang Airlines for almost two and a half times the starting price of CNY330 million and nearly double the CNY411 million court evaluation, according to the online bidding transaction information.

The price probably only covers the value of the firm's business license, said civil aviation industry expert Lin Zhijie. Aviation business licenses have become scarce because of the administration's strict control on access to the industry in recent years.

Shengda Gold probably attended the auction as Longjiang Airlines' creditor, another industry insider told Yicai Global. Longjiang Airlines has total assets of CNY1.2 billion (USD176.2 million) and liabilities of CNY820 million. The firm has run up more than CNY350 million in net losses over the past three years.

Airlines are hemorrhaging cash due to the severe downturn in the travel sector caused by the Covid-19 pandemic, Lin said. Many small and medium-sized carriers will participate in mergers and acquisitions if the virus does not recede, he added.

Editors: Dou Shicong, Kim Taylor