Air China Ltd has received approval from the central government for its stake deal with Hong Kong's Cathay Pacific Airways, state media reported.

Air China was granted approval by the State Council, or cabinet, the China Securities Journal reported, citing Air China chairman Li Jiaxiang.

Under a deal reached in June, Cathay Pacific and Air China plan to invest a combined 9.49 bln hkd in bringing their respective stakes in the other company to 20 pct and 10.16 pct.

The two companies will step up cooperation and their boards will include directors nominated by the other company, Li was quoted as saying. (1 USD = 8.00 Yuan)