Air China is in initial talks to buy all the shares it does not already own in its cargo venture with the parent of Beijing Capital International Airport, an Air China executive said on Wednesday.

If the deal goes through, Air China would increase its stake in Air China Cargo to 100 percent from the current 76 percent, the executive, who asked not to be identified because she was not authorised to reveal the talks to the media, told Reuters.

We have had discussions with Beijing Airport to take over its 24 percent stake in Air China Cargo, but we have not made any substantial progress so far, the executive said.

In January, Air China signed a deal to buy a 25 percent stake in the cargo venture for 857 million yuan ($119.9 million) from CITIC Pacific, boosting its stake to 76 percent as part of an effort to strengthen its core business.

The parent of Beijing Airport intends to sell out of the air cargo venture because it considers the business to be non-core, the executive said.

Some analysts also linked Air China's growing interest in the cargo venture to its intention to form a strategic partnership with smaller rival China Eastern Airlines.

Earlier this year, Air China's parent China National Aviation Corp (CNAC) proposed a strategic partnership between Air China and China Eastern, after China Eastern's minority shareholders blocked Singapore Airlines' plan to buy a stake in China Eastern for $920 million.

CNAC said the proposed alliance would involve a broad tie-up between the two airlines' operations, including their cargo businesses.

China Eastern has said it remained committed to a deal with the Singaporean company. ($1=7.148 Yuan) (Reporting by Fang Yan; Editing by Edmund Klamann)

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