SHANGHAI - Air China Ltd. has received central government approval to raise its stake in Cathay Pacific Airways Ltd. , an official newspaper reported on Friday, paying about US$693 million to double its 10 percent stake in the world's seventh most valuable airline.

The state-run China Securities Journal quoted Li Jiaxiang, president of Air China, as saying China's State Council, or cabinet, had approved the higher stake.

Under a deal reached in June, Air China would pay HK$5.39 billion (US$693 million) for a 10 percent stake in Cathay, which would double its stake in Air China to 20 percent.

The two airlines plan to intensify their cooperation, and the directors of the two companies will also join the other side's board, Li was quoted as saying at a news conference.

Beijing-based Air China, the country's top airline, said on Wednesday first-half earnings fell 23 percent as high fuel costs outstripped strong passenger and cargo growth.