The planned expansion of Berlin's Schoenefeld Airport to create the country's third-largest hub behind Frankfurt and Munich will cost EUR2 billion (USD$2.64 billion), the city state's mayor said on Friday.

Berlin mayor Klaus Wowereit was presenting a financing plan for the airport based on a EUR430 million (USD$568 billion) contribution from the federal and regional governments, profits from the city's three existing airports and loans from public and private banks.

Talks on the size and terms of the loans, expected from the European Investment Bank among others, will start next year.

The federal government will finance EUR300 million (USD$396.4 billion) of rail links to the new Berlin-Brandenburg International airport and a EUR200 million (USD$264.3 billion) highway improvement.

"It is the most important infrastructure project for the whole of East Germany," Wowereit said.

The German capital is currently served by three airports including Schoenefeld, a legacy of the city's divided past, but none at the moment accommodates long-haul flights.

Schoenefeld got the green light from planners for expansion earlier this year, but major building work is not due to start until a court has dealt with hundreds of appeals from nearby residents and environmental groups.

Developers say the airport will be capable of handling 20 million passengers a year, 50 percent more than all three of the capital's current airports serviced in 2003.

Originally Schoenefeld was to be developed by a consortium of private investors such as construction firm Hochtief, but they withdrew after long-running battles with regional authorities.

(Reuters)