CORRECTED-Air China plans to sell cargo venture stake to sister unit for $357 mln

(Corrects throughout to say sale is to Air China’s sister unit, not AVIC Capital. Also removes reference to AVIC Capital in paragraph 6)

SHANGHAI, Aug 30 (Reuters) - Air China Ltd on Thursday said it plans to sell a 51 percent stake in Air China Cargo to a sister unit for 2.44 billion yuan ($357.16 million), and would focus more on its passenger operations.

China’s flag carrier said in a statement that while Air China Cargo’s profitability had improved, intensifying competition, exchange rate fluctuations and the complicated international trade situation had created many uncertainties.

“Therefore the sale of Air China Cargo is the company’s strategic and rational response to the air cargo market’s uncertainties, to strengthen the stability of the company’s operations,” it said.

After the sale to the unit, which it said was fully-owned by Air China’s controlling shareholder China National Aviation Holding Company, Air China will put more of its resources on its passenger aviation business to improve its competitiveness, it added.

Air China Cargo’s other shareholders, including Hong Kong’s Cathay Pacific Airways, have priority to purchase the stake or sell their shares with Air China, but the companies have yet to waive or exercise those rights, the company said, adding that the deal still has be approved by shareholders.

The deal comes as Beijing has been implementing mixed-ownership reforms of its government-run companies in an effort to revamp the country’s bloated and debt-ridden state sector.

Last year, Air China’s rival China Eastern Air Holding sold almost half of its freight unit to four firms including Legend Holdings and Global Logistic Properties (GLP) in what was then the Chinese aviation sector’s first mixed-ownership reform deal. ($1 = 6.8316 Chinese yuan)

Reporting by Brenda Goh; Editing by Sunil Nair