January 10, 2013 / 12:01 PM / in 5 years

Cathay to open Hong Kong cargo terminal next month

HONG KONG, Jan 10 (Reuters) - Cathay Pacific Airways Ltd , the world’s largest international cargo airline, is to open its long-delayed HK$5.9 billion ($761 million) new cargo terminal at Hong Kong Internatonal airport next month, it said on Thursday.

Two years behind schedule, the terminal will open for business on Feb. 21 with Cathay itself the launch customer, boosting the efficiency and competitiveness of the world’s busiest airport for international cargo traffic, it said.

Construction of the terminal was suspended just after it started in September 2008 due to the global financial crisis and work only resumed in May 2010.

The terminal, which will increase the airport’s cargo handling capacity by 50 percent to 7.4 million tonnes, is still expected to make a loss in the first year of operation due to weak cargo demand, analysts said.

“In the short term, it will have pressure on the P and L (profit and loss account) because the utilisation of the new capacity will be low,” said Patrick Xu, an analyst at Barclays.

“In general, it is still a good investment. It really depends on how soon and how strong we would see a recovery in the cargo business,” he said.

Cargo revenue at Cathay accounts for about 25 percent of its total revenue and the investment could help lower costs in the long term, Xu added.

Air cargo traffic growth in 2013 is expected to be slow at 1.4 percent worldwide after an estimated 2 percent fall in 2012, the International Air Transport Association forecast last month.

Cathay’s cargo traffic is expected to rebound by 10 percent this year after an estimated 8 percent fall in 2012, Xu forecast.

In August last year the company reported its worst half-year loss since 2003 with cargo revenue down 7.6 percent at HKS11.9 billion and cargo traffic down by 9.8 percent at 754,000 tonnes.

However, shares in Cathay have already risen 3.6 percent so far this year, closing on Thursday at HKS14.74 after gaining nearly 7 percent in 2012. The Hang Seng index has gained 3 percent so far this year after a 23 percent gain in 2012. ($1=7.7520 Hong Kong dollars) (Reporting by Alison Leung; Editing by Greg Mahlich)

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