Shanghai Airlines is seeking to raise much needed capital from the Shanghai city government, a 35% stake owner of the carrier, it has been reported.

The official Shanghai Securities News quoted chairman Zhou Chi as saying earlier this week that the airline was applying for the cash in order to reduce its debt.

Shanghai Airlines posted a net loss of $60.5 million in the first nine months of 2008 and made losses on its oil hedging.

Shanghai Airlines was commenting on local media reports that it had sought a cash injection from the Shanghai government to help cut its debt ratio, which now stands at between 85% and 90%, according to the official China Securities News.

Source: Routes News