Air China Ltd on Thursday said it plans to sell a 51 per cent stake in Air China Cargo to AVIC Capital for 2.44 billion yuan ($357.16 million), and would focus more on its passenger operations, reports Reuters.
China's flag carrier said in a statement that while Air China Cargo's profitability had improved, intensifying competition, exchange rate fluctuations and the complicated international trade situation had created many uncertainties.
"Therefore the sale of Air China Cargo is the company's strategic and rational response to the air cargo market's uncertainties, to strengthen the stability of the company's operations," it said.
After the deal, Air China will put more of its resources on its passenger aviation business to improve its competitiveness, it added.
Air China Cargo's other shareholders, including Hong Kong's Cathay Pacific Airways, have priority to purchase the stake or sell their shares with Air China, but the companies have yet to waive or exercise those rights, the company said, adding that the deal still has be approved by shareholders.
AVIC Capital is a financial services provider controlled by state-owned aerospace company Aviation Industry Corporation of China.
The deal comes as Beijing has been implementing mixed-ownership reforms of its government-run companies in an effort to revamp the country's bloated and debt-ridden state sector.
Last year, Air China's rival China Eastern Air Holding sold almost half of its freight unit to four firms including Legend Holdings and Global Logistic Properties (GLP) in what was then the Chinese aviation sector's first mixed-ownership reform deal.
