Air China is planning to raise CNY12bn ($1.9bn) through private placement of new shares, to fund the purchase of 15 Boeing 787 Dreamliner aeroplanes.
Based on list prices, the deal for 15 787s is estimated to be worth around CNY24bn ($3.94bn).
Air China expects the new aircraft to join its fleet in 2016, and plans to operate them on long-haul routes to North America and Europe.
The airline intends to sell the new shares to around ten investors, including its parent China National Aviation Holding, at a 21% discount to its closing price of CNY15.36 on 29 June, reported Bloomberg.
Proceeds from the placement will also be used to upgrade the airline's e-commerce capabilities and install inflight Wi-Fi services, among others.
Chinese airlines are accelerating their expansion plans to meet the increasing air travel demand in the region, primarily from the middle-class segment.
"China is expected to surpass North America as the biggest aviation market in the next 20 years."
Earlier this month, China Eastern Airlines agreed to buy 50 Boeing next-generation 737-800 aircraft for around $4.6bn.
The airline had raised $450m by selling a stake to Delta Air Lines, and plans to raise as much as CNY15bn ($2.46bn) through private placement of shares.
Other domestic airlines, including Spring Airlines and Juneyao Airlines, are looking to raise funds for expansion.
According to Boeing's 2014 China Current Market Outlook report, China is expected to surpass North America as the biggest aviation market in the next 20 years.
Chinese operators are estimated to buy around 6,020 aircraft worth around $870bn.