Air China and Cathay Pacific will set up their planned cargo joint venture in Shanghai this year. The company will handle exports passing through Shanghai to Hong Kong, said Air China Vice President Fan Cheng, adding that the two companies have almost finished their evaluation of asset values for the joint venture and are now talking about how to operate and develop the proposed business. The two airlines own shares in each other.

East Star Airlines has become the first Chinese airline to go bankrupt. A court in Wuhan, the central city where the four-year-old private carrier is based, has rejected a restructuring plan for the company. At the end of 2008 its debts exceed 1 billion yuan (US$145 million), while assets amounted to 629.6 million yuan, says the People’s Daily newspaper. Chinese state airlines have also been insolvent, but the possibility of their liquidation has never been raised.

Air China posted a 2.88 billion yuan (US$422 million) profit for the first half of the year, supported by 1.45 billion yuan in gains from fuel hedging. The company dropped its forecast for full-year passenger numbers to 39.7 million from 40.1 million, and cargo to 967,000 tons from 1.01 million tons. Sales for the first half were down 12.7%. Profit was 2.5 times as high as that of a year earlier.