Air China has become the majority stakeholder in Shenzhen Airlines, after it purchased additional capital in the company with 682 million yuan ($100 million).
The acquisition increases the flag carrier's stake in Shenzhen Airlines to 51% from 25%, and its share of the airline's registered capital to 414 million yuan from 75 million yuan, Air China tells the Hong Kong stock exchange.
Air China's chairman Kong Dong said earlier this month that the airline was interested in taking over Shenzhen Airlines, and was conducting an audit of its assets.
In December 2009, Air China took over Shenzhen Airlines' management after its major shareholder Li Zeyuan was taken by the police for questioning.
Air China says its acquisition of a majority stake in Shenzhen Airlines "would be more conducive to the business cooperation" between the two carriers.
It would also help improve their respective international and domestic networks, and "consolidate their market positions in the Peal River Delta region", says Air China.
After the transaction, Li's company Shenzhen Huirun Investment's stake, in Shenzhen Airlines, was reduced to 24% from 65%.
Shenzhen state-owned Total Logistics' stake grew to 25% from 10%, after the logistics firm purchased an additional stake for 348 million yuan, says Air China.