China Southern and HNA Group's Hainan Airlines are both viewed as logical buyers of Air New Zealand's 25.9% stake in Virgin Australia, having approached local investment bankers about representing their interests, according to an AustralianFinancialReview report.
China Southern is the biggest carrier between Australia and China. It has a codeshare deal with Qantas but that partnership has taken the backseat to an alliance between Qantas and Shanghai-based rival China Eastern.
A stake in Virgin would give China Southern exposure to the tourism boom via Virgin's domestic network and could also help it funnel more traffic through its Guangzhou hub.
Hainan is part of the cashed-up HNA Group which is expanding globally. HNA controls Hong Kong Airlines, which cannot fly to the main ports in Australia because Cathay Pacific has tied up all of the flights per week allowed under an air services agreement between Australia and Hong Kong.
A new entrant onto the crowded Virgin register could only buy an initial 19.9 per cent, but it could enter into a financial arrangement that allows it to "creep" up over time.
UBS-advised Virgin has not set up a data room to assist Credit Suisse-advised Air NZ with the sale of its stake, but there are suggestions Virgin has reached out to alliance partner Delta Air Lines to see if it wants to join the register.
Singapore Airlines, which is a major shareholder in Virgin alongside Air NZ, Etihad Airways and Virgin Group, is believed to be monitoring the situation very closely.
Singapore is the only party likely to make a full takeover bid for Virgin on its own (teaming with Etihad is another option), but whether it does so could depend on the buyer of the Air NZ stake.
Singapore is likely to be far more relaxed about Delta or United Airlines buying the shares and keeping the status quo intact than it is about a Chinese rival that threatens its Changi hub joining the register.
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