Taiwan's largest airline will buy stake in Chinese air cargo carrier

China Airlines Ltd., Taiwan's largest airline, said Monday it will jointly buy a combined 37 percent stake in mainland Chinese air cargo carrier Yangtze River Express Airlines Co. with the island's two major shipping companies.

The deal marks China Airlines' latest effort to tap into the mainland's rapidly growing cargo market, after it failed to close a deal to buy a 25 percent stake in another Chinese cargo airline after four years of negotiations.

The plan still needs the approval of the governments of Taiwan and China.

A tie-up with a Chinese carrier is the only way China Airlines can enter the China market, as China and Taiwan, which split amid civil war in 1949, have never agreed on the establishment of regular direct transport links.

Despite political tensions, Taiwan and China have close commercial relations. Taiwanese companies have invested more than US$100 billion (Ђ83.3 billion) in the mainland since the early 1990s and trade between the sides now exceeds US$60 billion (Ђ50 billion) annually.

The Taiwanese airline said Monday it plans to pay US$39 million (Ђ32.5 million) for a 25 percent stake in Yangtze River Express, a wholly owned unit of China's Hainan Airlines Group.

Taiwan's Economic Daily News reported Monday the three Taiwanese firms will join hands with Cargolux Airlines International S.A. of Luxembourg to buy a combined 49 percent stake in Yangtze River.

China Airlines' Sun declined to comment on Cargolux's involvement; Cargolux's Director of Communications Marc Schonckert wasn't immediately available for comment.

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