Air China Ltd<601111><0753>, the country's flagship airline, will take a 51% stake in a cargo venture with Hong Kong-based Cathay Pacific Airways Ltd<0293>, a Chinese airline executive said on Monday, Reuters reported.

Cathay Pacific, the largest airline in Hong Kong, will take the remaining 49% stake in the Shanghai-based JV, which is expected to be finalized in the first half of next year.

The two carriers will provide 10 Boeing 747-400 freighters to the JV, which will be launched before the opening of the 2010 Shanghai World Expo. The JV is expected to help the two carriers better compete with China Eastern Airlines Ltd<600115><0670> in Shanghai, the country's major air hub.

Air China and Cathay Pacific are still in discussions about the JV and has not finalized such financial details as the total investment of the venture and the size of its fleet.

Air China revealed the plan to set up the cargo JV in August, after it raised its stake in Cathay Pacific to 29.99%.

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