BEIJING (Reuters) - China's HNA Group [HNAIR.UL], the aviation-to-financial services conglomerate that is facing a severe cash crunch, received an important lifeline on Friday from China Citic Bank Corp (>> Bank of China Ltd), which extended the group a 20 billion yuan (2.29 billion pounds) credit facility.

The facility is intended to help HNA Group in its "strategic transformation", along with the development of Hainan's aviation industry, HNA Group said in a statement.

Citic Bank president Sun Deshun and HNA Group chief executive officer Adam Tan were pictured at a signing ceremony in Beijing.

The agreement represents a shift from two months ago, when Citic Bank expressed concern about HNA's liquidity problems, including repayment of a commercial acceptance bill. Citic Bank said in a statement at the time that it was working with HNA Group to resolve the issue.

Friday's announcement also said Citic Bank expressed confidence in HNA Group and believed "both parties can establish a more stable and lasting strategic partnership".

HNA Group is facing a liquidity squeeze that has prompted the conglomerate to initiate a widespread restructuring, selling real estate and shares, after a $50 billion spending binge left it with massive debts.

HNA told major bank creditors last month that the group is facing a potential cash shortfall of at least 15 billion yuan in the first quarter of the year.

Scrutiny of the group's ability to repay its borrowing is widespread, and even a missed pre-payment on a 1.7 billion yuan trust loan earlier this week drew widespread attention.

On Friday, HNA Group (International), an offshore investment arm, announced in a separate statement that it had made interest payments of $9 million on its $300 million bond due 11 days early in order "to avoid potential disruption due to the Lunar New Year holidays".

In a separate announcement on Friday, HNA's flagship Hainan Airlines Holding Co (>> Hainan Airlines Holding Co Ltd) told the Shanghai Stock Exchange that a major company reorganisation would involve the purchase of major aviation assets, including maintenance and flight training facilities, as well as hotels.

A deal has not been finalised, and the company said it is continuing to work with financial consultants and other intermediaries.

Hainan Airlines is one of seven mainland stocks that have been suspended from trading due to the group's restructuring activities.

(Reporting By Matthew Miller, editing by David Evans)

By Matthew Miller