We reported earlier this month on Norwegian Air Shuttle’s close shave with bankruptcy. The central theme of the escape plan for the low-cost carrier was to convert huge amounts–£950 million to be exact—of debt into equity. The overall plan required approval by the creditors, and if that was obtained, then it would unlock an NK3 billion (£230 million) rescue package from the Norwegian government.

Today it comes to light that the Chinese government now owns a healthy chunk of that equity.

The debt/equity swap is intended to boost the amount of ownership of the airline by its creditors and so avoid having to pay back (at least most of) the debt, since naturally, Norwegian isn’t earning any money worth mentioning. Aircraft lessors were owed a large portion of that debt.

The massive number of shares created diluted the original ownership of the airline enormously and caused an expected plunge in the price of the shares—which hasn’t completely recovered.

But the main story is the lessors, now proud part-owners of the airline. One is the Irish Aercap which leases many of the Dreamliners to Norwegian. Aercap now owns almost 16% of the carrier.

Another is BOC Aviation headquartered in Singapore, which is controlled by Sky Splendor Ltd, which is controlled by the Bank of China and ultimately by the People’s Republic of China.

So, if you like the Chinese Communist Party has a 12.7% ownership of the share capital and voting rights of the airline.

Nevertheless, the future is still hazardous for Norwegian. The CEO Jacob Schram has said that it would be in ‘hibernation mode’ for the remainder of this year and that full operations won’t resume until 2022.

12.7% of Norwegian doesn’t amount to pocket change for the Bank of China. Even so, China didn’t become the second-biggest economy in the world by making lousy investment decisions.

Good capitalists, these communists.

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