Hong Kong Plans to Spend US$580 Million to Expand Airport

New parking stands for cargo airport, plus new passenger concourse planned


HONG KONG - Hong Kong plans to spend 4.5 billion Hong Kong dollars (US$580 million) to expand its airport over the next four years to cope with rising numbers of passengers, the Airport Authority said Thursday.

The announcement comes before the airport's possible privatization, and analysts said the expansion, which will be funded internally, could make the airport's assets more attractive.

For this year, Airport Authority Chief Executive David Pang said the body has set aside HK$730 million (US$94 million) for the expansion plans, which are scheduled for completion by 2010.

Of the HK$4.5 billion (US$580 million) investment, some HK$3 billion (US$387 million;) will be earmarked for airfield expansion projects, which include a new satellite concourse beside the passenger terminal that could accommodate 10 narrow-body aircraft.

The authority also plans to add 10 new parking stands for cargo aircraft.

The remaining HK$1.5 billion (US$193 million) will be used to enhance existing facilities at the terminal building, such as increasing the number of immigration counters, transfer desks and departure security channels, the airport authority said.

Hong Kong International Airport can handle 45 million passengers annually. In 2005, 40.7 million passengers passed through the facility, up 9 percent from the previous year, while cargo traffic rose 10 percent to 3.4 million metric tons (3.8 million short tons).

The airport operator is projecting 50 million passengers and 4.3 million metric tons (4.8 million short tons) of cargo will pass through the airport annually by 2010, Pang said.

Alan Lam, an analyst at Guotai Junan Securities Ltd., said the investment may help an eventual public share float.

"This will definitely boost the attractiveness of the airport's assets for a future share listing," said Lam. "With a good financial position, the expansion plan looks quite reasonable."

Hong Kong's government had intended to list shares of the Airport Authority in 2005, but the plan was delayed until this year because of market conditions.

The government, which has said it will retain a majority stake in the airport after its listing, hasn't indicated when it will proceed with the privatization.

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Jeffrey Ng is a correspondent for Dow Jones Newswires.

[Associated Press WorldStream -- 01/27/06]