SAS — Earnings Release 2019

May 28, 2019

Quarter negatively impacted by pilot strike

Quarter negatively impacted by pilot strike

FEBRUARY 2019-APRIL 2019

· Revenue: MSEK 10,187 (9,916)

· Income before tax (EBT): MSEK -1,216 (-488)

· Income before tax and items affecting comparability: MSEK -1,211 (-309)

· Net income for the period: MSEK -933 (-349)

· Earnings per common share SEK -2.44 (-1.0)

· Income before tax negatively affected by strike MSEK -430

· In the light of the strike and the macro development, the outlook is revised

as it will be challenging to reach a positive result before tax and items

affecting comparability in fiscal year 2019

SIGNIFICANT EVENTS DURING THE QUARTER

· 2,700 flights cancelled and 270,000 passengers affected by the pilot strike

· Convertible bond repaid at nominal value of MSEK 1,574

· 44% of passenger-related CO2 emissions compensated during the quarter

NOVEMBER 2018-APRIL 2019

· Revenue: MSEK 19,721 (18,894)

· Income before tax (EBT): MSEK -1,792 (-773)

· Income before tax and items affecting comparability: MSEK -1,935 (-694)

· Net income for the period: MSEK -1,402 (-598)

· Earnings per common share: SEK -3.69 (-1.88)

COMMENTS BY THE CEO

The pilot strike at the end of the second quarter added to the challenges

already faced by SAS from a competitive market, increasing jet fuel price and a

weakening Swedish krona. In addition, we see decreased demand for domestic

travel especially in Sweden. These factors highlight the importance of continued

strong focus on improving our efficiency, flexibility and sustainability

efforts.

The strike between 26 April and 2 May resulted in some 4,000 canceled flights

affecting more than 370,000 passengers. I apologize to all of our customers

affected by the traffic disruptions during this extraordinary event. The total

impact on income before tax of the strike is estimated at MSEK 650, of which

MSEK 430 relate to the last five days of the second quarter.

Earnings before tax came in at MSEK -1,216, a decrease of MSEK 728 compared to

same quarter last year. The result was negatively impacted by the strike,

increasing fuel price and a continued weakening of the Swedish krona. Excluding

these effects, the result would have been comparable to the same quarter last

year, which was one of the strongest second quarter in SAS' modern history.

Even though the result is far from satisfying, we are encouraged by certain

underlying trends. The investments we have made in our customer offering are

paying off with higher revenue per passenger and an increase in ancillary

revenues. Furthermore, we are maintaining our market share in a market

characterized by increased competition and lower demand on Swedish domestic

routes. We also continue to rank high in terms of punctuality and have noted

increased interest in our premium offerings (Plus and Business). Our efforts are

also reflected in enhanced customer satisfaction ratings across all our

production platforms.

However, the combination of soft economic indicators, increasing jet fuel price

and the weak Swedish krona outweigh the positive underlying momentum. Therefore,

we need to increase the pace of transformation to adapt our company to the

current market conditions and secure future profitability.

NEW PILOT AGREEMENT PROVIDING STABILITY

The new three-year collective bargaining agreements with the pilot unions in

Denmark, Norway and Sweden give us the stability and time to continue our

transformation efforts. In total, the net pilot cost across Scandinavia

increases with approximately 5.4% over the three-year period and includes

productivity improvements that to some extent mitigate increased compensation

and other costs.

Although I would have preferred to avoid the disruption in our operations, I am

pleased to see that proper planning, digital investments and engaged employees

made a huge difference during the strike. We mobilized and trained a team of

nearly 400 administrative colleagues that answered queries and helped our

customers with rebooking.

As a result of the effective communication with our customers, we avoided a

situation in which a large number of passengers would have showed up and gotten

stranded at the airport. However, in order to help the customers who did arrive

at the airport, we mobilized nearly 1,100 of our staff equipped with over 300

tablets to help customers. Walking the floors in the terminals and leveraging

our newly launched disruption module, we were able handle large numbers of

rebookings efficiently.

TOWARDS MORE SUSTAINABLE AIR TRAVEL

We are continuing to push for more sustainable air travel. As proof that we are

moving in the right direction, SAS was recently ranked the most sustainable

brand within aviation in Sweden for the 9th consecutive year, according to

Sustainable Brand Index. According to the same survey, SAS was also rated the

most sustainable aviation brand in Denmark.

Looking ahead we strive to stimulate large scale biofuel production and engage

in the development of the next generation aircraft. Both activities aim to

significantly reduce the carbon footprint caused by aviation.

During the quarter, SAS together with Swedavia and the research institute RISE

launched a common path towards increased production of biofuels. Current global

production is insufficient. Therefore, it is essential that large scale

production of biofuels is established for SAS to reach its goal of using biofuel

equivalent to the total consumption of all domestic SAS flights by 2030.

SAS and Airbus recently signed a memorandum of understanding on a joint research

partnership for future aircraft - partially or fully electrically powered. The

purpose with the partnership is to increase know-how in terms of operations,

infrastructure and challenges linked to the introduction of hybrid and electric

aircraft in commercial traffic. This advances our ambitious sustainability work

even further, and I am proud that Airbus has chosen SAS as its partner for this

important project aiming for zero emission aircraft.

Until technology has evolved and large-scale biofuel production is in place, we

continue our efforts within the technology available today to reduce our carbon

emissions. This includes continued investments in new aircraft that combine

efficiency gains with sustainability gains, thereby reducing the fuel

consumption and emissions by 15-18 per cent.

In order to address the CO2 emissions that we still cannot eliminate, we have

introduced carbon offsetting for all our EuroBonus members in February this

year. As of the end of this quarter, we had compensated for over 3.4 million

journeys with SAS, representing 44% of passenger-related CO2 emissions.

OUTLOOK

Since our Q1 report, several developments have negatively impacted our earnings.

These include the pilot strike, as well as an increased jet fuel price and

continued depreciation of the Swedish krona against the US dollar and the euro.

Accordingly, it will be challenging to reach a positive result before tax and

items affecting comparability, as stated in our previous outlook. See page 5 for

further detail.

Our liquidity remains strong, but in the light of the challenges we are facing

we cannot afford to rest on our laurels. Instead, SAS will continue with its

strong focus on strategy execution and transformation efforts to be prepared for

the future.

Finally, I want to thank you for your interest in SAS and I look forward to

welcome you onboard one of our daily 800 flights!

Stockholm May 28, 2019

Rickard Gustafson,

President and CEO

This information is information that SAS AB is obliged to disclose pursuant to

the EU Market Abuse Regulation and the Securities Markets Act. The information

was submitted by Michel Fischier for publication on 28 May 2019 at 8:00 a.m.

CEST.

SAS carries more than 30 million passengers annually and is Scandinavia's

leading airline with more than 800 daily flights on 272 routes to 123

destinations in Scandinavia, Europe, USA and Asia. SAS is a member of Star

AllianceT and can together with our partner airlines offer more than 18,800

daily flights to over 1,300 destinations in 193 countries. For more information,

visit www.flysas.com.