SAS

Q1 2024: SAS reaches milestones in the Chapter 11 process and prepares for a busy summer season

I am pleased to conclude a busy first quarter and winter season for SAS, marked

by increased passenger volumes, and several exciting new projects and

destinations. We are pleased to see that more and more people choose to travel

with SAS, which clearly confirms that our?ramp-up efforts continue to be

successful.

We are getting ready for the summer season, during which SAS will fly to over

130 destinations in more than 40 countries. We have added frequencies to popular

destinations across Europe, and nine new European destinations. We will also

increase flights to North America and Asia in the summer program by adding

flights to popular destinations such as New York and Tokyo. Furthermore, we have

expanded the summer program to include Atlanta in the North American network,

with daily direct flights throughout the summer season. We look forward to

flying our passengers to their summer destinations.

SAS aims to be a driving force in sustainable aviation and in January, we

announced a new collaboration with Airbus, Swedavia, Vattenfall and Avinor, to

jointly investigate the feasibility of infrastructure for hydrogen-fueled

aircraft at airports in Norway and Sweden, with the goal to develop a framework

for the rollout of hydrogen-powered flights. This partnership is an important

step in driving the transition towards achieving net-zero emissions.

We are making steady progress in our Chapter 11 process in the US and in

reaching our overall targets in the SAS FORWARD plan. In November, we entered

into an investment agreement with the winning bidder consortium in our exit

financing solicitation process, consisting of Castlelake, Air France-KLM and

Lind Invest, together with the Danish state. The agreement entails a total

investment in the reorganized SAS corresponding to approximately SEK 13.2

billion. We currently aim to receive approval by the US court for the Chapter 11

plan in the first quarter of 2024, followed by regulatory approval and a likely

Swedish company reorganization at the SAS AB level. As a result of that process,

we repeat the expectation that there will be only a modest recovery for general

unsecured creditors, no recovery for subordinated creditors and no value for SAS

AB's existing shareholders, and that all of SAS AB's common shares and listed

commercial hybrid bonds will be cancelled, redeemed and delisted, in connection

with emergence from the Chapter 11 process. Any payment of recoveries to

creditors will be made only after the completion of the transaction and the

fulfilment of any conditions for payment to creditors. We currently expect to

emerge from the restructuring proceedings around the end of the first half of

NOVEMBER 2023 - JANUARY 2024

· Revenue: MSEK 8,923 (7,896)

· Income before tax (EBT): MSEK -1,070 (-2,449)

· Income before tax and items affecting comparability: MSEK -1,032 (-2,451)

· Net income for the period: -1,453 (-2,709)

· Earnings per common share: SEK -0.20 (-0.37)

SIGNIFICANT EVENTS DURING THE QUARTER

· On Nov. 4, SAS entered into an investment agreement with the winning bidder

consortium and a DIP term loan agreement with?Castlelake.

· On Nov. 15, SAS repaid its original DIP term loan.

· On Nov. 29, the European Commission announced that the recapitalization of

SAS in 2020 complied with state aid rules and was thereby approved.

· On Jan 2, SAS announced over 130 destinations in more than 40?countries for

the summer season 2024.

· On Jan. 23, SAS published updated financial projections for the reorganized

SAS. SAS currently targets to receive court approval of the Chapter 11 plan in

the first quarter of 2024 followed by regulatory approval and a likely Swedish

company reorganization at the SAS AB level. SAS currently expects to complete

the restructuring proceedings around the end of the first half of 2024.

· SAS expects that there will be only modest recovery for general unsecured

creditors, no recovery for subordinated unsecured creditors and that there will

be no value for SAS AB's existing shareholders upon emergence from the

restructuring process. All?of SAS AB's common shares and listed commercial

hybrid bonds are expected to be cancelled, redeemed and delisted.

SIGNIFICANT EVENTS AFTER THE QUARTER

· On Feb. 5, SAS filed a second amended Chapter 11 plan and a related

disclosure statement with the US court. The Chapter 11 plan obtains support of

the Official Committee of Unsecured Creditors.

OUTLOOK

· The first quarter interim report includes financial projections on page 10.

QUARTERLY RESULTS

We observed continued healthy passenger demand through the first quarter with

the total number of passengers up 6.3 percent compared with the same period last

year. Year-on-year, our RPK increased 13.3?percent, while capacity increased 9.3

percent. Our?flown load factor for the quarter was 71.8 percent, up 2.6

percentage points compared with the same period last year.

The increase in passenger demand and capacity led to a year-on-year increase of

13 percent in our total operating revenue, which landed at SEK 8.9 billion for

the quarter. Earnings before tax ended at a negative SEK 1.1 billion,

representing a year-on-year improvement of SEK 1.4 billion.

Cost reductions across the business remain in focus to secure our cost

competitiveness, and total operating expenses for the quarter ended at SEK 10.1

billion. Many of the cost efficiencies of the SAS FORWARD plan are ramping up

over time, and some have been implemented but cannot be recognized in our

financial results until after emergence from Chapter 11, including cost savings

from the fleet restructuring.

The cash balance at the end of the quarter was SEK?5.3?billion. Cash flow from

operating activities during the quarter amounted to an outflow of

SEK?38?million.

NEW ROUTES AND DESTINATIONS

As part of SAS' strategy to strengthen our offering for Scandinavian travelers,

and to adapt to the relative increase in demand for leisure travel, SAS has

announced several new routes during the quarter. We are getting ready for the

summer season, and in early January we were pleased to announce that SAS will

fly to over 130 destinations in more than 40 countries this summer. We have

added frequencies to popular destinations across Europe, and we have added nine

new European destinations, including direct flights to Ibiza, and Tivat on the

coast of Montenegro, among others. We will also increase flights to North

America and Asia in the summer program by adding frequencies to popular

destinations such as New York and Tokyo.

We have also expanded the summer program to include Atlanta in the North

American network, with daily direct flights throughout the summer season. With

almost 94 million passengers passing through in 2022, Hartsfield-Jackson Atlanta

International Airport is the world's busiest and most efficient airport. Cargo

transportation is expected to play an important role for this route, partly

because of its proximity to the Port of Savannah, the largest and fastest

-growing container terminal in America. This also means an expanded offering for

SAS passengers, who can look forward to reaching several new and exciting

destinations across the Southern USA, Caribbean and Latin America, all

conveniently accessible from Atlanta.

Furthermore, SAS has added frequencies between Stockholm and Skellefteå, due to

the increasing growth in the Skellefteå region. From April 8, SAS will offer new

frequencies on the busiest business travel days. Expanded air traffic plays a

crucial role in the region's ongoing expansion, and we are proud to provide

businesses and residents of Skellefteå with opportunities to connect with the

world.

In February, after the end of the quarter, we launched the concept Destination

Unknown, which entails SAS inviting EuroBonus members to embark on a mysterious

journey. On April 5, SAS EuroBonus members will meet at Copenhagen Airport ready

to board a mystery trip. The travelers are invited to explore the concept of

flying to an unknown destination and join a unique adventure curated by SAS. We

were pleased to be met by great interest for this concept, and more than 1,000

members signed up for the chance to embark on the mystery journey within

minutes. The allure of the unknown destination will keep travelers on the edge

of their seats throughout the flight until the destination is revealed. All

Destination Unknown tickets are biofuel?tickets.

SAS was also awarded a three-year contract extension with Equinor in February,

for both domestic and international travel. The contract with Equinor represents

a significant contribution to SAS' passenger volume in Norway. SAS was chosen on

the basis of an extensive network, attractive timetable, commercial terms and

one of Europe's most modern fleets. We are delighted that Equinor once again

have chosen SAS as their preferred carrier for business travel, demonstrating a

continued confidence in us for the next three years.

UPDATE ON SAS' TRANSFORMATION PLAN

We launched our comprehensive business transformation plan SAS FORWARD in

conjunction with the publication of the first quarter report for FY 2022, in the

end of February 2022. The aim of the plan is to secure long-term competitiveness

for SAS in the global aviation industry. On July 5, 2022, to accelerate the

implementation of SAS FORWARD, we announced that we had voluntarily filed for

Chapter 11 in the US, a wellestablished and flexible legal framework for

restructuring businesses with operations in multiple jurisdictions. Through this

process, we aim to reach agreements with key stakeholders, restructure the

company's debt obligations, reconfigure our aircraft fleet and emerge with a

significant capital injection.

During the quarter, in November, we entered into an investment agreement with

the winning bidder consortium in our exit financing solicitation process,

consisting of Castlelake, Air France-KLM and Lind Invest, together with the

Danish state. The agreement entails a total investment in the reorganized SAS

corresponding to approximately SEK 13.2 billion, including approximately SEK 5.2

billion in new unlisted equity and approximately SEK 8 billion in secured

convertible debt. As part of the transaction, we have also secured new Debtor-in

-Possession ("DIP") financing of SEK 5.5 billion from Castlelake. The funds from

the new DIP financing agreement are being used for, among other things,

refinancing SAS' original DIP term loan, increasing liquidity, and supporting

SAS' path to exit from its voluntary restructuring proceedings. The refinancing

of SAS' original term loan was completed in November.

As part of the transaction, SAS also intends to eventually exit the Star

Alliance and join the SkyTeam Alliance, of which Air France-KLM is a founding

member. Through the completion of this process and the opportunities presented

by being part of SkyTeam, we will be able to further enhance SAS' offerings for

the benefit of our colleagues, customers and communities. This is a truly

exciting step for SAS. However, it is important to note that nothing is changing

as of now. SAS is still part of Star Alliance and our EuroBonus members will

continue to enjoy their usual benefits when flying on our partner airlines.

Members can continue to accrue and redeem points - just like today, and their

benefits when they fly with SAS will not be impacted. The agreed exit

transaction remains subject to approval in connection with the confirmation of

our Chapter 11 plan of?reorganization.

On February 5, 2024, SAS filed a second amended Chapter 11 plan and related

disclosure statement with the US court. SAS also announced expected recoveries

for creditors in the Chapter 11 process and that the Official Committee of

Unsecured Creditors supports the Chapter 11 plan. The Chapter 11 plan and the

disclosure statement remain subject to further amendments and court approval.

We currently aim to receive approval from the US court for the Chapter 11 plan

in the first quarter of 2024, followed by regulatory approval and a likely