SAS — Earnings Release 2021

Feb 25, 2021

CONTINUOUS NEGATIVE IMPACT FROM THE ONGOING PANDEMIC

CONTINUOUS NEGATIVE IMPACT FROM THE ONGOING PANDEMIC

NOVEMBER 2020-JANUARY 2021

· Revenue: MSEK 2,282 (9,707)

· Income before tax (EBT): MSEK -1,936 (-1,087)

· Income before tax and items affecting comparability: MSEK -1,948 (-1,078)

· Net income for the period: MSEK -2,050 (-861)

· Earnings per common share SEK -0.28 (-2.33)

SIGNIFICANT EVENTS DURING THE QUARTER

· Rickard Gustafson announced his decision to leave SAS after ten years. He

will leave the company by July 1, 2021.

· SAS and Apollo have extended their charter partnership in the form of a

three-year contract valued at SEK 3.4 billion.

· SAS contracted and utilized a new NOK 1.5 billion credit facility with a

three-year tenor that is guaranteed in full by the Norwegian Export Credit

Guarantee Agency.

COMMENTS BY THE CEO

The pandemic continues to have a severe negative impact on the whole aviation

industry. An increase in number of cases has led to more stringent travel

restrictions, with a consequent reduction in demand during the quarter and

stalled recovery for the entire travel industry. However, the development of

vaccines and vaccination programs provide hope that restrictions will ease and

that we will see an increase in travel toward summer 2021.

QUARTERLY EARNINGS NEGATIVELY IMPACTED BY THE PANDEMIC

The quarter was marked by increased cases and growing concern for new mutations

of the coronavirus, resulting in even more stringent travel restrictions across

the world. In general, restrictions are currently more stringent than they were

in spring 2020.

The prevailing circumstances mean that SAS is continually forced to adapt

capacity and departures to meet weak and volatile demand. Capacity for the

quarter declined 75% year-on-year and 29% compared with the previous quarter.

Passenger numbers were down 5.3 million year-on-year and down 900,000 compared

to the previous quarter.

The negative traffic trend has resulted in revenue of only SEK 2.3 billion, a

year-on-year decline of SEK 7.4 billion. At the same time, SAS has succeeded in

offsetting the majority of the revenue loss by reducing costs, which are almost

60% lower year-on-year. However, the cost savings have not fully compensated for

the loss of revenue, and earnings for the quarter amounted to SEK -1.9 billion,

which is down SEK 0.8 billion compared with last year.

SAS' ability to manage liquidity is crucial for the company's ability to safely

navigate the ongoing pandemic, and liquidity amounted to SEK 4.7 billion at the

end of the quarter. As planned, SAS has pulled together to ensure that customers

are reimbursed for canceled travel, which amounted to SEK 2.1 billion during the

quarter. Moreover, we have also had one-time disbursements amounting to around

SEK 0.7 billion pertaining to postponed payments from 2020 and restructuring

initiatives. To strenghten liquidity SAS utilized a credit facility of NOK 1.5

billion, which is entirely guaranteed by the Norwegian Export Credit Guarantee

Agency (GIEK), during our seasonally weakest period.

ADAPTED CUSTOMER OFFERING BASED ON PREVAILING CIRCUMSTANCES

We have noted a pent-up need to travel moving forward, and as vaccinations gain

global momentum, it should be possible to ease the current travel restrictions

thus making it possible to travel again. Pending this, SAS is preparing to

reopen 180 direct routes for the summer, mainly within Scandinavia and Europe,

provided that the prevailing travel restrictions will allow people to travel.

To reduce uncertainty about booking, SAS has introduced even more flexible

ticket rules and rebooking alternatives. As always, no restrictions apply for

rebooking or cancelling our Plus tickets. In addition, our other international

tickets can now also be rebooked free of charge up to three days prior to

departure. If travelers prefer to cancel they can choose to receive a SAS Travel

Voucher which is valid as payment on all SAS destinations. For domestic journeys

in Sweden, Norway and Denmark, a SAS Go Flex ticket is now available, which

allows rebooking up to one hour before departure at no additional cost. For

customers who choose to pay for their tickets with EuroBonus points, free

cancellation applies up to 24 hours before departure as usual. Moreover, SAS is

now in-phase with refunding customers for canceled journeys, which means that

the company is once again meeting the seven-day refund requirement period for

canceled flights, which provides our customers with an extra element of

security. Following the implementation of these initiatives, we have also

conducted a number of well-received campaigns with increased bookings mainly for

the summer and autumn, albeit from low levels compared to the norm for this time

of year.

Air freight has filled an important function during the pandemic and has also

developed to an increasingly important supplement to lost passenger revenue,

particularly in terms of SAS' intercontinental flights. Many corporate customers

are also in great need of securing important logistics flows for their

operations in which SAS actively participates. For example, SAS Cargo

established air bridges during the quarter within Europe and to South America

for components for two major industrial companies.

In January, SAS signed an agreement with Apollo to extend their existing

partnership for three years, with the possibility of extension by an additional

two years. The agreement concerns charter traffic from Denmark, Norway and

Sweden to destinations within Europe, corresponding to a value of approximately

SEK 3.4 billion in the first three years.

CONTINUED WORK WITH RESTRUCTURING OPERATIONS

SAS has implemented a number of measures during the quarter to dimension

operations to the prevailing demand and to position the company for the expected

market conditions following the pandemic.

Continual adjustment and adaptation of the traffic program has reduced SAS'

variable costs by over 70%. The major redundancy process corresponding to

approximately 5,000 positions was completed, while SAS continues to use

temporary lay-offs throughout Scandinavia. These unfortunate, but necessary

measures have had a substantial impact and reduced personnel expenses almost 45%

year-on-year.

To further strengthen SAS' ability to adapt seasonally and increase productivity

and long-term competitiveness, talks are continuing with all labor unions within

the SAS Group. New agreements have been signed for some of our Norwegian

personnel during the quarter, and agreements have also been made concerning

frozen salary levels for several employee groups.

Additionally, SAS has renegotiated a large number of supplier agreements,

resulting in postponed payments of almost SEK 700 million in 2021, further

strengthening SAS' financial preparedness.

As previously announced, SAS has postponed deliveries of new aircraft from

Airbus and accelerated the phase-out of older and less fuel-efficient aircraft,

thereby strengthening our short- and long-term liquidity. In the last three

months, we have phased out or sold five Boeing 737 aircraft and simultaneously

taken delivery of three new Airbus A320neo aircraft.

The accelerated transition to new, fuel-efficient aircraft also means that we

are reducing our emissions and advancing toward our environmental goals. Over

the last twelve months, total carbon emissions have declined 74%. The majority

of this decline is related to reduced traffic, but also the use of new, more

fuel-efficient aircraft, which has contributed 2.1 percentage points. Moreover,

we recently expanded our future delivery undertaking with Gevo, to secure a

minimum of 20% of our planned consumption of sustainable aviation fuel in 2025.

LOOKING AHEAD

A high vaccination rate is the most decisive factor for the authorities'

willingness to ease travel restrictions and thus allow for the recovery of the

airline industry. As such, SAS is monitoring global vaccination developments

closely in order to be ready to quickly increase capacity when conditions

permit. However, demand is most likely to remain highly limited in the

foreseeable future, but we expect demand to reach more normalized levels in

The passenger mix will have an increased share of leisure travelers in the

future, which places even greater requirements on flexibility and seasonal

adaptations to our operations. Through its customer offering, fleet renewal,

sustainability work and operational model, SAS is well-positioned for the market

that will be formed following the pandemic. Thanks to our operational model and

the associated production units within this model that SAS has developed in the

last few years, SAS has a strong competitive position for the future. The model

enables SAS to offer a complete network and a timetable adapted to Scandinavian

requirements for business, leisure, and regional destinations through access to

flexible production resources fit for purpose.

I would like to express my gratitude once more to all of my colleagues at SAS

for their commitment and hard work during this difficult time. I would also like

to thank our customers for the confidence they show in us as Scandinavia's

leading airline. We are all looking forward to soon having the pleasure of

welcoming our travelers on board!

Rickard Gustafson,

President and CEOStockholm, February 25, 2021

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

the EU Market Abuse Regulation. The information was submitted by Michel Fischier

for publication on February 25, 2021 at 8:00 a.m. CET.