BEIJING, June 14 -- EVA Airways Corp, Taiwan's second-largest airline, said it will buy 25 percent of a cargo joint venture with Shanghai Airlines, to tap the mainland's fast growing air freight market.

The Taiwanese carrier will pay US$3.88 million for the shares in Shanghai Airlines Cargo International Co, which Shanghai Airlines holds a 55 percent stake, EVA said in an announcement to the Taiwan Stock Exchange yesterday.

The investment application is pending approval by Taiwan authorities.

"Investment in the new cargo venture can help complement each other's business," said K.W. Nieh, a spokesman for EVA.

"Cargo from the mainland can be transferred through Hong Kong or Macau to EVA's network," he said.

The deal can also help build EVA's global sea-air intermodal strategic logistics network, EVA said in a statement.

With a registered capital of 124.05 million yuan (US$15.5 million), the Shanghai Airlines cargo joint venture will use Shanghai Pudong International Airport as its base.

The venture will focus on international cargo and launch its maiden flight at the end of this month or early July, said Xu Junmin, board secretary of Shanghai Airlines, China's fifth-largest carrier.

In an earlier deal, two overseas strategic investors - Sino Prime Ltd and Juniper Estate B.V. - agreed to a 25 percent and 20 percent stake respectively in the new carrier.

Sino Prime will sell its stake to EVA, Xu said.

The Chinese mainland's economic boom has led to big demand for air transport and created opportunities for freight carriers, EVA said.

An increasing number of domestic and overseas investors are trying to tap the market, which is predicted to grow at least 11 percent annually in the next 10 years.

China Airlines, Taiwan's biggest carrier, has acquired a 25 percent stake in Shanghai-based Yangtze River Express Airlines, a cargo unit of Hainan Airlines.

(Source: Shanghai Daily)