China's largest private airline operator will buy 13 per cent of Virgin Australia in a deal the Australian airline says will help it capitalise on the growing Chinese travel market.
While analysts praised the strategic value of the deal, questions remain about how much capital Virgin needs to raise to support its growth strategy and how it will manage five airline shareholders.
Virgin and HNA Aviation Group will fly directly between Australia and a number of Chinese cities starting next year, and will co-ordinate code-sharing, frequent flyer programs and lounge access. 
HNA Aviation, which is part of the HNA Group conglomerate, will invest $159 million in Virgin as part of the deal, and plans to increase its stake to 19.99 per cent over time.
Virgin Australia chief executive John Borghetti said China was Australia's fastest-growing source of tourists, growing at about 18 per cent a year since 2010.
"This is a big coup," he said. "For such a large company as HNA to recognise the potential of Virgin Australia, and for that matter the potential of Australia, is enormous.
"This sets us up for very, very good growth going forward in that very lucrative inbound, but also outbound, traffic between Australia and China."
Mr Borghetti said he hoped Chinese flights would start in the first half of 2017, but had not yet decided whether it would do so with its existing fleet of A330s and Boeing 777s or with other aircraft. He noted HNA owns Bohai Leasing, one of the world's largest aircraft leasing companies.
Mr Borghetti said at least eight flights a week would depart from major Chinese cities to Australia and mentioned Beijing and Hong Kong as attractive options.
HNA controls Hainan, China's fourth-largest airline, and a number of budget airlines, and carries more than 77 million passengers a year on 700 routes between 200 destinations within China and abroad.
Rival Qantas Airways has codesharing arrangements with China Southern and China Eastern that funnel a lot of Chinese passengers on to its domestic network. Virgin hopes for a similar outcome with the HNA-owned airlines.
HNA will be able to nominate one director to Virgin's board after the investment, which will need the approval of Chinese regulators.
The Chinese company will pay 30Â¢ for each Virgin share, which is 7.1 per cent above Monday closing price. Virgin's share price jumped 5.3 per cent to 29.5Â¢ after the announcement.
Air New Zealand's 26 per cent stake in Virgin will be diluted to 22.5 per cent by the deal. An analyst, who asked not to be named, said the strategic deal with NHA to fly in and out of China would make it hard for Air New Zealand to sell its Virgin shares, because potential buyers like China Southern could no longer be offered a similar arrangement.
Air New Zealand did not know about the HNA deal before it was announced to the public on Tuesday because CEO Christopher Luxon quit Virgin's board in   March after failing to unseat Mr Borghetti.
Virgin's other major shareholders will also be diluted: Etihad will fall from 25.1 to 21.8 per cent and Richard Branson's Virgin Group will fall from 10 per cent to 8.7 per cent.
Key points
The pair will co-ordinate code-sharing, frequent flyer programs and lounge access.
HNA Aviation will invest $159 million in Virgin as part of the deal.