Air China, Cathay Pacific to set up China's biggest cargo JV

Oct. 29, 2009 (China Knowledge) - Air China Ltd<601111><0753>, the country's flagship airline, and Hong Kong's largest carrier, Cathay Pacific Airways Ltd<0293>, plan to jointly set up what will be the country's biggest cargo joint venture in Shanghai, the Shanghai Daily reported on Wednesday.

Air China will take a 51% stake in the JV, while the remaining 49% will go to Cathay Pacific. The two carriers aim to launch the JV before the opening of the 2010 Shanghai World Expo, but the plan still needs approval from regulators, Kong Dong, chairman of Beijing-based Air China, said yesterday.

Shanghai handled 3 million tons of cargo in 2008, overtaking Hong Kong as the country's biggest cargo market, said Kong.

The JV is expected to help the two carriers better compete with China Eastern Airlines Ltd<600115><0670><CEA> in Shanghai, the country's financial hub.

In August, Kong revealed the plan to set up the cargo JV in Shanghai following the company's move to increase its stake in Cathay Pacific to 29.99%.

Air China Tuesday said its net profit in the third quarter totaled RMB 885.3 million, compared with a net loss of RMB 1.94 million a year earlier.