Air China has been negotiating with Cathay Pacific to set up the venture in Shanghai since 2006. It is expected to begin operation by June 30, Huang Bin, Air China's board secretary, said in November.

Earlier media reports have said Air China will have a controlling 51 percent stake in the joint venture, while Cathay Pacific will hold a 49 percent stake.

Despite the sluggish international air cargo market, the joint venture will benefit from Shanghai's expanding cargo demand over the mid- to long-term, Li Lei said.

Shanghai Pudong International Airport currently handles over 60 percent of China's international air cargo and is the world's fastest-growing airport for cargo handling. Foreign carriers control over 70 percent of the international cargo market in Shanghai.

Li Jiaxiang, director of the Civil Aviation Administration of China (CAAC), said last week that the government would encourage air cargo industry growth and aims to create one of the world's top five cargo carriers by 2030.

Chinese airlines posted a total net profit of 212 billion yuan last year, a huge improvement over a record 28 billion yuan loss in 2008, the CAAC said.

China Eastern said on Saturday that it expects to post an annual net income for last year compared with a net loss for 2008.

Shares of Air China jumped 4.6 percent to close at 11.09 yuan in Shanghai yesterday, the highest close since June 2008. China Eastern added 5.1 percent to 6.65 yuan and China Southern climbed 4 percent to 6.44 yuan.