Air China and Cathay Pacific are extending their cooperation by establishing a joint venture ground handling company in Shanghai.

In partnership with Shanghai Airport Authority and Shanghai International Airport Co., the two carriers said handling services would be offered from both Shanghai Pudong International Airport and Shanghai Hongqiao International Airport in the third quarter of this year subject to approvals from relevant Chinese government authorities.

Air China and Cathay Pacific's wholly owned subsidiary Hong Kong Airport Services will hold 24 and 25 percent of the new joint venture company, Shanghai International Airport Services Co., Limited. It will be 41 percent owned by Shanghai International Airport Co., Ltd, and 10 percent by Shanghai Airport Authority, which is the majority shareholder of Shanghai International Airport Co., Ltd.

Apart from a major cash injection from the two airlines, Cathay Pacific will also provide strategic management support to the joint venture company, while the Shanghai airport companies will provide cash and ground service equipment.

Last year Cathay and Air China established the jointly owned international freighter operation Air China Cargo, also based in Shanghai.