AIR China and Cathay Pacific are organising a 50-50 Shanghai joint venture that aims to be the mainland's biggest airfreight enterprise after it starts operations in the second quarter.

"The establishment of the joint venture with Cathay will lay a solid foundation for our cargo business," said Air China vice president Fan Cheng as reported in the UK's Aircargo magazine.

"We are now busy preparing for the joint venture programme and hope to realise practical progress in the cargo business partnership with Cathay in the first half of 2007," Mr Fan said.

The report also said that Air China had also been in talks with China Eastern Airlines for more than half a year to create an air cargo conglomerate by merging freight units.