Air China, the nation's biggest international carrier, said it plans to form a cargo joint venture with its partner Cathay Pacific Airways in Shanghai in two months.

Air China is also planning to set up its east China branch before the end of the year in Shanghai, in a move to compete for the fast-expanding aviation market in Shanghai and nearby cities, the carrier said.

The group and its related firms are expected to hold 51 percent of the cargo joint venture to be set up in June, said Hu Pengbin, an official with Air China's planning and development department.

Hong Kong carrier Cathay Pacific and its related parties will take 49 percent in the company.

The venture is part of Air China's cooperation with Cathay Pacific announced last year in line with the cross-shareholdings agreement.

The new venture will be formed on the basis of Air China Cargo, Air China's existing cargo subsidiary, Hu said.

Air China is also in talks with the Shanghai Airport Authority to build a cargo terminal with the capacity to handle 1.2 million tons annually, he said.

Meanwhile, Air China plans to merge its Shanghai base and Zhejiang branch this year to form an east China branch. The branch is expected to hire 1,000 employees.

Air China is seeking to consolidate its presence in Shanghai, where China Eastern Airlines and Shanghai Airlines have dominated the market.

Air China will receive a total of 24 new passenger planes this year and become a Star Alliance member.