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Flag-carrier Air China has bought a 20 percent stake in regional company Shandong Airlines and has also taken a 26 percent stake in the parent company, Shandong Aviation Group (SAG), according to company officials.

Wang Youngsheng, spokesman for Air China , would not disclose how much the airline paid for the equity.

Shandong Aviation Group previously held a 64.8 percent stake in the listed airline.

After the deal, the group will remain the largest shareholder with a 47.9 percent stake, while Air China will be its second largest shareholder, with a 36.84 percent interest, according to Beijing Business Today.

Shandong Airlines asked for its shares to be suspended for one day on the Shenzhen stock market Monday pending a major announcement Tuesday.

Company officials declined to elaborate on the transaction, saying more details will be released Tuesday.

Its parent SAG was jointly owned by several state-owned enterprises, with Shandong Province Economic Development Investment Co. its controlling shareholder with a 79.07 percent interest.

Shandong Airlines was left out of the restructuring of the Chinese airline industry in late 2002, which resulted in the formation of three major airline groups -- Air China , China Southern Airlines and China Eastern Airlines.

Industry analysts said the alliance would enable Air China to grab more market share amid intense competition among the big three airlines to carve up the domestic aviation market.