The parent company of Air China, the country's top carrier, is expected to file a proposal within two weeks to buy a stake of China Eastern Airlines, Chinese media reported on Thursday.
On Tuesday, China Eastern's minority shareholders overwhelmingly voted down a rival proposal for Singapore Airlines and Singaporean investment agency Temasek to buy 24 percent of China Eastern for $920 million.
Two official Chinese newspapers, both citing an Air China executive, reported that Air China would "keep its promise" to purchase Hong Kong-listed shares of China Eastern at a price no less than HK$5 apiece.
The parent company of Air China will submit a proposal to China Eastern to buy into the Shanghai-based airlines company within two weeks, the Shanghai Securities News reported, without providing further details.
But the official China Securities Journal reported that Air China may propose that the two Chinese airlines should swap some of their stock as part of the deal.
The Singapore Airlines and Temasek deal, announced in September, had received Chinese government approval and was meant to be a key part of China's efforts to modernize its aviation industry by bringing in foreign expertise and branding.
The shareholders' rejection was widely expected after the parent firm of Air China had earlier said it was prepared within two weeks of the shareholder meeting to make a higher bid. Air China's partner Cathay Pacific, an arch-rival of Singapore Airlines, said it would consider joining such a bid.
If successful, Air China would also unite the business operation of its international flights with China Eastern as well as its cargo business, the China Securities Journal reported without giving details.
But the Air China executive also told the China Securities Journal that the Beijing-based airline did not aim to acquire or merge with China Eastern but expected to team up with the smaller rival to jointly develop business.
Shares of Air China and China Eastern both rallied Thursday. Some analysts speculated that would trigger a bidding war with SIA and Temasek.