Lufthansa’s financially troubled freight venture with Shenzhen Airlines has been dissolved with Shenzhen based cargo airline Jade Cargo International Ltd ceasing operations.

The airline was shut down after shareholders failed to agree on restructuring. According to a Lufthansa Cargo spokesman: “Due to the ongoing weak demand for air cargo services to and from China, the restructuring of Jade Cargo could not be successfully concluded.” Therefore “In view of the latest developments, the board of directors has decided to voluntarily dissolve the company subject to all required government approvals for this process. All efforts will be made to minimise the impact on stakeholders.”

Lufthansa Chief Executive Christoph Franz said tough freight conditions in the world’s second largest aviation market had led to the decision. With Lufthansa’s 25% stake in the venture Franz said: “We are a minority shareholder, but the shareholders all together agreed that we will dissolve the company.” The other shareholders are Shenzhen Airlines (51%), and German Investment Firm DEG (24%).

In March a salvage venture with Chinese firm UniTop failed, with the company abandoning plans to acquire and restructure the airline.

Established in 2004, Jade Airlines had been grounded since 31 December 2011 owing to lack of demand, and while discussions took place between the owners. It had operated cargo services to Asia, Africa and Europe with a fleet of six Boeing 747 Freighters.

With a debt of CNY4 billion ($628 million), Jade Cargo reported a net loss last year of CNY16 million.

In 2011, Lufthansa experienced a loss of almost 16 million euros ($21.2 million) as a result of the venture.

Other carriers such as Tianjin based Grandstar Air Cargo which is co-owned by Sinotrans Air Transportation Development Co. and Korean Air Cargo, are expected to follow suit. The airline lost $53 million last year and has suspended operations.

Factors such as the European economic crisis and the resulting decrease of imported goods are to blame for lack of airfreight demand, with export growth from China slowing significantly and imports in the country also decreasing.