The eventual part-privatisation of the Airport Authority is to go ahead.

Financial Secretary Henry Tang announced today that the Government intended to proceed with the move.

"The Government has decided to commence work immediately in preparation for the privatisation project, and will shortly appoint a financial adviser to assist in the process," Mr Tang said.

"The Government will work out, in close consultation with key stakeholders involved, the main issues including the legal and regulatory framework required for privatising the Airport Authority."

The required laws will be tabled at the Legislative Council in the first half of 2004 and, subject to its enactment and the availability of suitable market conditions thereafter, an initial public offering of Airport Authority shares will be offered.

Airport Authority Chairman Dr Victor Fung welcomed the announcement, saying: "The Initial Public Offering plan marks an important milestone in the authority's history. Privatisation will reinforce the authority's first class airport operations under market discipline and further strengthen the airport's continued development as an international aviation hub.

"The airport is an important engine for economic development. The people of Hong Kong have entrusted us with this precious asset and it is our responsibility to maximise its returns so we all can be proud of it."

Authority Chief Executive Officer Dr David Pang said it has always operated on prudent commercial principles and has enjoyed steady growth in profits in the past three years with increased turnover and improved productivity.

"Privatisation generally takes about 18 months to prepare. The authority would be working closely with the government in all the legal and financial aspects of the privatisation process," he said.

"When successfully listed on the stock exchange, shares of the privatised authority will also help enhance the attractiveness of our stock market to investors.

"A privatised authority will represent another key step forward in the Government's privatisation programme following listing of the MTR Corporation on the stock exchange in October 2000."

As part of the Asset Disposal Programme announced in the Budget on March 5, proceeds from the initial public offering of the Airport Authority will also help bridge the shortfall in capital revenues forecast for the medium term.