Swedish air tax may adversely impact SAS' revenues

Scandinavian Airlines' Swedish operations could see a 5 to 6 percent drop in revenues if a proposed environmental tax on airline travel is brought in, its chief executive reportedly recently told media.

According to media, Sweden's Social Democratic government has proposed an extra SEK100 Swedish kronor or US$12.44 on flights from Swedish airports from May 2006 to encourage more environmentally friendly energy use. "My best bet is a drop of 5-6 percent in overall revenue for SAS Sweden if the tax is imposed. But it could be more or less," Jorgen Lindegaard reportedly said. The chief executive reportedly said the extra levy was likely to bring down passenger numbers, especially in the Swedish market where an extra SEK100 each way on the ticket price might make people choose other forms of transport. For flights within Sweden the drop in revenue could be up to 15 percent, Lindegaard told media.
   
As per the information available, SAS Sweden, the unit for flights within Sweden and to European destinations, posted a loss before interest and tax (EBIT) of SEK353 million (USD$43.9 million) in the first nine months of 2005, on total revenues of SEK5.7 billion (USD$708.8 million). The SAS Group posted EBIT of SEK703 million (USD$87.4 million) on revenues of SEK45.6 billion (USD$5.67 billion).