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“Civil aviation is sensitive to economic cycles andis quickly affected when the economy weakens.In addition, if the climate change debate influencespeople’s willingness to fly, it is important for us toquickly be able to take steps to offset any downturnin travel.”Lars RekkeLFV’s economic situation continued todevelop favourably during 2007. Operatingprofit exceeded that of the previousyear and amounted to SEK 816 M.LFV’s pension liability increased by morethan SEK 1 billion. This means that on anet basis, the income statement showeda deficit. The reason is that the NationalGovernment Employees Pensions Boardchanged its actuarial principles for makingpension provisions. This did notaffect our fundamental trend of earnings,but our equity/assets ratio fell to 19 percent. Our target for the equity/assetsratio is 25 per cent and now we will notreach that level until 2010.Expanded security screening resultedin both higher expenses and revenue. Itis a high-priority task to speed up theflow of passengers. At our larger airports,the number of security screening laneswas increased to shorten waiting times.The air traffic controller agreementsigned last summer boosted expensesbut ensures that LFV can offer the capacitythat the market demands. Aside fromthese two areas, the trend of expenseswas favourable.Close collaboration with regionalauthoritiesDuring 2007 the total number of passengersat LFV’s airports continued toincrease. Among the airports with thelargest increases, Kiruna and Visby areworth noting. LFV has invested moneyin efforts to stimulate inbound tourismat both these airports. British touristscan fly non-stop to Kiruna, and duringthe summer there were 14 routesto Visby. During 2008, LFV will againset aside money for projects that attractmore foreign tourists to Sweden. Thiswork will take place in close collaborationwith regional authorities and thelocal tourist industry.LFV also participates in the “SwedishCities” campaign to increase the numberof visitors to our major cities. This is apartnership with the cities of Stockholm,Gothenburg (Göteborg) and Malmö, aswell as the tourism organisation VisitSweden. Göteborg Landvetter Airportplays an important role in the Gothenburgregion’s efforts to attract largeevents, such as the European Championshipsin Athletics. Aside from a newlycompleted parking structure, the airportis now beginning to build a new arrivalhall. Göteborg City Airport, which ispartly owned by LFV, also plays a keyrole in the attractiveness of the Gothenburgregion.LFV is working intensively with regionalauthorities to expand and improve its collaboration.Growth regions are an importantsuccess factor for our airports. Forregions, good accessibility by air is vital,both for the business community and thehospitality industry. Interest in good airtraffic availability has been powerfullydocumented in the official responses ofvarious organisations to the recentGovernment-appointed Airport Inquiry.Improvements for our customersTo LFV, it is important to satisfy thegrowing demand for civil aviation. Thisapplies to passengers, but also to cargo.During 2007 an air cargo terminal wasinaugurated at Malmö Airport, and newcargo facilities are under constructionat both Göteborg Landvetter and Stockholm-ArlandaAirports.The airport capacity needs of passengershave largely been satisfied. LFVsees no needs for major capacity-raisinginvestments over the next severalyears. At Stockholm-Arlanda, the expansionof Pier F was completed and a newproject related to the Central Buildingbetween Terminal 5 and Pier F began.A new parking structure at Landvetterwent into service in January 2008, as didthe expanded arrival hall at Åre ÖstersundAirport.Sweden placed the new Eurocat airtraffic management system in servicein 2005. The system can handle a largernumber of airspace movements andallows straighter flight paths. This bothsaves fuel and spares the environment.Denmark successfully placed similar systemsin service at the end of 2007. Commonsystems increase the potential forairspace harmonisation. Together withseveral other countries in northernEurope, we are working to lower developmentcosts and increase technical andoperational collaboration.LFV has an agreement with theCity of Stockholm on continued aviationoperations at Stockholm-Brommauntil 2038. Regional bodies have shownsupport for this airport, located closeto central Stockholm. The fact that thenumber of passengers there rose by 10per cent during 2007 shows that manypeople share this attitude. The length ofthe agreement will facilitate long-term2> LFV 2007 < Comments of the Director General