Swedavia, the state-owned company which runs 10 of Sweden's airports, said the investment will be done incrementally and will cover the next three decades. A record 20.7 million passengers travelled to or from Stockholm Arlanda Airport in 2013. However, Swedavia estimates that the figure will reach 35 million by 2040.
"Sweden's need for international flights is increasing continuously. We meet this now through an historic effort," said Swedavia CEO Torborg Chetkovich, in a statement.
The development will primarily affect Terminal 5, which handles the greatest number of international flights. Parking and baggage security will be increased and another pier will be built that can handle larger aircraft for long-haul destinations.
News agency TT reports that the number of employees at Arlanda will more than double, from 16,000 to 50,000.