Cathay Pacific said Thursday it had sought approval from the Airport Authority to defer the completion of its new cargo terminal to mid-2013 at the latest due to the economic downturn.

A spokesman for the Hong Kong carrier said in a statement its subsidiary, Cathay Pacific Services, had signed an agreement with the authority Thursday to defer the project, originally set for opening in the second half of 2011. He added the deferral would not exceed 24 months under the agreement.

The decision was taken in response to market conditions brought about by the global economic crisis, he said.

"The deferral is aimed at better matching supply and demand in the airfreight business given the current market outlook," he said.

"It is also important for the company to maintain a strong balance sheet until the market strengthens."

Cathay added that it would compensate the authority for the deferral. It said the compensation amount was "fair and reasonable", but did not disclose the actual sum.

A spokesman for the authority said in a separate statement that it had accepted Cathay's proposal after assessing the change in demand forecast for air cargo services. He added that the deferral would not undermine Hong Kong's status as a leading regional and international air cargo hub.