TAX NEWS - June 2010

Germany Tax: Air Berlin Says Departure Tax to Cost 200 Million Euros a Year

June 11 (Bloomberg) -- Air Berlin Plc, Germany's second- largest carrier, said a government proposal to introduce a flight-departure tax in the country will cost the airline as much as 200 million euros ($243 million).

"We would have to pass on the costs to our passengers," Chief Executive Officer Joachim Hunold said in an interview in Dusseldorf today. "A four-person family would have to pay an additional 60 to 70 euros for its holiday trip."

The fee, aimed at raising 1 billion euros per year, is part of an 80 billion-euro savings program that Chancellor Angela Merkel announced this week. For Air Berlin, which lost 93 million euros in the past two years, the additional cost from the measure would be in a range of 180 million euros to 200 million euros, Hunold said.

Air Berlin, based in the German capital, fell as much as 1.2 percent and traded 0.2 percent, higher at 3.52 euros as of 12:47 p.m. in Frankfurt. The stock has slid 5.9 percent this year, valuing the carrier at 301 million euros. Deutsche Lufthansa AG is Germany's largest carrier.

The International Air Transport Association said June 8 that the tax will delay a return to profit for airlines in Europe, the only region for which it forecasts a loss in 2010.

The fee will be paid by flyers leaving Germany via its airports and the amount will depend on the plane's noise level and fuel usage, according to a government proposal.

Air Berlin will be able to increase earnings before interest and taxes from last year's level, Hunold said.

The carrier has no plans to place new orders for planes, the CEO said.