HONG KONG—Cathay Pacific Airways Ltd., Asia’s third-largest air-freight carrier, will invest HK$4.8 billion ($618 million) in a cargo terminal at Hong Kong airport, as China’s surging exports boost air-freight traffic.

The facility will be able to handle 2.6 millions tons of cargo a year, when it opens in the second half of 2011, the carrier said in a Hong Kong stock-exchange statement last week. The company also pledged to sell its 10-percent stake in Hong Kong Air Cargo Terminals Ltd., the city’s biggest air-freight handler.

Cathay Pacific wants its own terminal to cut handling costs as increasing competition from Singapore Airlines Ltd., FedEx Corp. and other air-cargo carriers crimps freight margins. World air-cargo traffic will probably expand 6.1 percent a year until 2026, led by Asia’s surging exports, according to Boeing Co.

“Cathay made a sensible decision,” said Kenny Tang, director at Tung Tai Securities Co. “Growth in Hong Kong’s air-cargo will continue to be strong as Chinese cities still have limited international routes.”

Cathay Pacific will aim to handle other carriers’ cargo at the terminal, which was approved by Airport Authority Hong Kong under a 20-year agreement.

The facility will give Hong Kong airport “a much-needed boost to contend with increasing competition from other airports in the region,” Cathay Pacific chief executive officer Tony Tyler said in an e-mailed statement.

Hactl, which operates a 3.5-million- ton capacity cargo terminal in Hong Kong, opposed Cathay’s plans to build its own facility in 2006, saying it could “stifle competition.”

The terminal will boost the total freight capacity at Hong Kong, the world’s busiest international cargo airport, to 7.4 million tons a year, Airport Authority said in a statement on its web site. The airport’s cargo volume rose 4.5 percent last year to 3.74 million tons.

More than 1,700 staff will work at the terminal, city-owned Airport Authority said, citing the airline. The airport handled goods worth more than HK$1.9 trillion last year, equal to 35 percent of the city’s external trade, the airport operator added.

Cathay Pacific said in June 2006 that it wanted to build a cargo terminal with a capacity of as much as 5 million tons, which would rank as the world’s biggest. The carrier has 18 new freighters due for delivery over the next four years.

Hactl’s other owners include Jardine Matheson Holdings Ltd., Swire Pacific Ltd., Wharf (Holdings) Ltd. and Hutchison Whampoa

Ltd. Swire is Cathay Pacific’s largest shareholder. (Bloomberg)

DP World to expand Chinese capacity

SHANGHAI—DP World Ltd., the Dubai-controlled port operator, aims to boost its container-handling capacity in China by 30 percent this year because of the country’s surging trade growth.

HONG KONG—Cathay Pacific Airways Ltd., Asia’s third-largest air-freight carrier, will invest HK$4.8 billion ($618 million) in a cargo terminal at Hong Kong airport, as China’s surging exports boost air-freight traffic.

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