Cathay Pacific Airways Ltd , Hong Kong’s dominant air carrier, has resumed development of a HK$5.5 billion ($707 million) air cargo terminal in Hong Kong, the company’s chairman said.

“The main contract for this development has been let and we are on schedule for opening in 2013,” Chairman Christopher Pratt told reporters in Hong Kong. He added that by that time the company’s cargo fleet would have added another 10 Boeing 747-8 aircraft.

In January 2009, Cathay said completion of the cargo project would be delayed for 24 months because of the global financial crisis.

Cathay said its passenger numbers in April fell 3.6 year on year to 2.17 million because of disruption caused by the volcano ash cloud in Europe. It cancelled 79 passenger flights to Europe and delayed 14 other flights because of the ash cloud, affecting more than 20,000 passengers.

Cathay also cancelled 21 cargo flights, but cargo and mail volume rose 24.1 percent to 152,808 tonnes last month over the low base of the previous year.

Pratt said Cathay had finalized plans with Air China for a joint venture cargo airline. Cathay has a 49 percent interest in the $474 million venture to tap growth in China’s Yangtze River Delta region.

The venture could give Air China and Cathay a foothold in Shanghai, a major air hub, and help them compete more effectively with China Eastern Airlines , which has roughly half of the Shanghai market after it merged with Shanghai Air.

Cathay said that it expected strong results for the first half of 2010 on improved premium passenger and cargo revenues, despite higher fuel prices. The company’s trading position was particularly strong in its cargo business, the company said.

“Our results would be adversely affected, and very quickly so, by a significant increase in fuel prices or any return to the recessionary economic conditions of 2008 and much of 2009,” Pratt cautioned.

Cathay posted a net profit of HK$3.88 billion for the second half of 2009, its best six-month earnings in two years, as gains from asset sales and fuel-hedging helped reverse losses posted a year earlier.

Cathay is a unit of Swire Pacific Ltd and is 29.9 percent held by Air China. (Reuters)