Ethiopian Airlines will acquire a 49 per cent stake in the new Chadian Airlines that is set to be launched in October.
The Ethiopian flag carrier has been in talks with Chad to establish the joint venture with the government retaining a 51 per cent stake.
Chadian Airlines will also serve as a base for Ethiopian Airlines' central Africa operations.
Chad is one of four countries that the airline has been negotiating with to set up carriers through joint ventures. The others are Equatorial Guinea, Guinea, and Djibouti.
Ethiopian Airlines already runs Togo-based Asky Airline where it holds a 40 per cent stake and Malawian Airlines where it has a 49 per cent shareholding.
In January, it acquired a 45 per cent take in Zambian Airways, which will be revived later this year after more than two decades.
Africa's largest airline by revenue and profit, according to the International Air Transport Association, also plans to set up a fully-owned new carrier in Mozambique.