(Yicai Global) Jan. 18 -- Eastern China's Wuxi has purchased a majority stake in Chinese low-cost carrier Ruili Airlines, turning it into a state-owned company amid the tourism sector's Covid-19-inflicted shake-up.

The city's State-owned Assets Supervision and Administration Commission has become the controlling shareholder of the Kunming-based aviation company, corporate information platform Tianyancha shows.

Wuxi Communications Industry Group, owned by the city government in Jiangsu province, has obtained a 57 percent stake in Ruili Airlines. Jingcheng Group, the original controlling shareholder, holds 13 percent of the total. Dong Lecheng, chairman of Yunnan province-based Jingcheng, has 30 percent of the equity.

After the Covid-19 pandemic hit China last year, three privately owned airlines have introduced state capital. Harbin's Longjiang Airlines teamed up with Jiangsu province, Kunming-based Air Travel joined hands with central Hunan province and Qingdao Airlines got some support from its local city government.

Many regional administrations have activated their plans of owning an airline now that many small and medium-sized aviation firms are dealing with diminished cash flows, Lin Zhijie, insider in China’s civil aviation sector, told Yicai Global. More carriers are expected to be restructured if the pandemic drags on, he added.

Last August, Wuxi Communications said it would acquire a majority stake in Ruili Airlines to accelerate the city's development as an aviation hub. It was planning to purchase a 51 percent stake in the regional budget carrier for over CNY6 billion (USD925 million). Based on that plan, Ruili Airlines would increase its routes to Jiangsu province and change its name to Sunan Ruili Airlines.

Editor: Emmi Laine