Hong Kong  - Cathay Pacific Airways on Friday announced it was putting a 4.8-billion-Hong-Kong-dollar (620-million-US-dollar) project for a new Hong Kong cargo terminal on hold because of the economic downturn which has hit profits, cargo and passenger numbers.

A spokesman said that the Hong Kong Airport Authority had agreed to let its subsidiary company Cathay Pacific Services Ltd defer the completion of the new terminal by two years to mid-2013.

It comes just four months after the airline held its groundbreaking ceremony on the 10-hectare site of the terminal which was scheduled for completion late 2011.

"The decision... was taken in response to market conditions brought about by the global economic downturn," the company said in a statement.

"The deferral is aimed at better matching supply and demand in the airfreight business given the current market outlook. It is also important for the company to maintain a strong balance sheet until the market strengthens."

The move follows months of bad news for the airline, which has been hit by declines in cargo and passengers.

Last August, the airline posted an interim loss of 663 million Hong Kong dollars (85 million US dollars) and recently issued a second profit warning for its full results for 2008.

In December, cargo carried by Cathay Pacific and its sister airline Dragonair fell 23 per cent compared to December 2007.

Passenger numbers fell 0.3 per cent, despite a 4.7 per cent increase in passenger capacity.

A spokesman said Friday that the airline was confident about the future of Hong Kong as an international air cargo hub.

"Cathay Pacific remains fully committed to building and operating the third cargo terminal," the spokesman said.

The spokesman added its subsidiary had agreed to compensate the Airport Authority a "fair and reasonable" amount for the deferral of the project.

Cathay Pacific Services Ltd was granted the franchise to design, build and operate the new terminal under a 20-year agreement. (dpa)