BEIJING, May 15 (Xinhua) -- China Southern Airlines confirmed on Tuesday that it was in talks with Air France to explore the possibility of establishing a joint-venture cargo airline.

    A statement released by the company stressed that discussions were at an early stage and as yet, no solid agreement had been reached.

    Analysts believe that China Southern prefers European and American airline companies as its partners due to its hopes of promoting sales of cabin space for cargo planes on their way back to China from abroad.

    Xu Jiebo, vice general manager of China Southern, told the Shanghai Securities News last year that his company was seeking cooperation with Air France-KLM and other Sky Team member airlines.

    A foreign company is allowed to possess a 25 percent stake, at most, in a Chinese airline and China Southern, "Surely hopes the foreign investor will hold the biggest possible share if the negotiation turns out to be successful," the newspaper cited Xu assaying.

    As one of the three largest Chinese airline companies, China Southern is the only one that does not have a cargo transport unit-- China Eastern and COSCO Group established China Cargo Airlines in 1998, while Air China set up Air China Cargo in 2003.

    In 2004, Shenzhen Airlines established Jade Cargo International with Lufthansa Cargo and DEG.

    The joint-venture has proved to be fierce competition for China Southern in south China's market for air cargo transport.