Singapore Airlines is believed to be eyeing an increased stake in Virgin Australia, above its current 20%, through a bid for the 19.8% shareholding of China's HNA Group.

Nanshan Capital, which also controls about a fifth of Virgin Australia’s shares, is also said to be interested in HNA's stake as the Chinese conglomerate offloads non-core assets to reduce debt, according to people familiar with the matter.

HNA's stake could attract bids from existing shareholders in the company as well as other airlines and investment funds if HNA decides to pursue a sale, the people said, asking not to be identified because the deliberations are private.

While the group is open to offers, it isn’t actively working on selling its holding, one of the people said.

Virgin Australia has a market value of about $1.9 billion after its shares dropped about 20% this year through Thursday, which saw the airline report a pre-tax profit of $109 million – its best result in a decade – but formally declare a $653 million loss due to "accounting adjustments" including deferred tax assets and a $121 million write-down in the value of its international business.

More than 90 percent of Virgin Australia’s shares are controlled by five investors, according to the company’s last annual report. In addition to HNA, Singapore Airlines and Nanshan, they include Etihad Airways with a 21% stake and Richard Branson's Virgin Group at 10%.

A representative for HNA didn’t immediately have a comment. Representatives for Virgin Australia and Singapore Airlines declined to comment on speculation. Nanshan didn’t immediately respond to calls and and email.

HNA is selling off assets after racking up one of China’s biggest corporate debt loads in a global acquisition spree. It sold out of the Hilton Worldwide Holdings Inc. and its stake in NH Hotel Group. The Chinese company also agreed to sell the Radisson hotel chain this year, as well as a stake in aircraft leasing firm Avolon Holdings.