SAS — Interim / Quarterly Report 2021

May 27, 2021

Q2 2021 - A QUARTER DOMINATED BY THE ONGOING PANDEMIC

Q2 2021 - A QUARTER DOMINATED BY THE ONGOING PANDEMIC

FEBRUARY 2021-APRIL 2021

· Revenue: MSEK 1,932 (5,264)

· Income before tax (EBT): MSEK -2,361 (-3,722)

· Income before tax and items affecting comparability: MSEK -2,361 (-3,714)

· Net income for the period: MSEK -2,433 (-3,470)

· Earnings per common share: SEK -0.35 (-9.15)

SIGNIFICANT EVENTS DURING THE QUARTER

· The Board of SAS appointed Anko van der Werff as President and CEO. The

Board concurrently appointed Karl Sandlund, Chief Commercial Officer at SAS, as

acting President and CEO.

· SAS secured financing for the majority of its aircraft deliveries until the

second quarter of 2022.

SIGNIFICANT EVENTS AFTER THE QUARTER

· SAS has ensured that there is support from the main owners, the Governments

of Denmark and Sweden, to gain access to a credit facility amounting to SEK 3.0

billion.

NOVEMBER 2020-APRIL 2021

· Revenue: MSEK 4,214 (14,971)

· Income before tax (EBT): MSEK-4,297 (-4,809)

· Income before tax and items affecting comparability: MSEK -4,309 (-4,792)

· Net income for the period: MSEK -4,483 (-4,331)

· Earnings per common share: SEK -0.64 (-11.49)

COMMENTS BY THE CEO

New coronavirus cases remained high during the quarter, resulting in strict

travel restrictions and low demand for flights. Focus for the quarter has been

on lowering SAS' costs, preserving liquidity and further strengthening SAS'

future competitiveness. The increase in vaccination rates provides some hope for

the relaxation of restrictions, and an increase in demand ahead of the important

summer season.

CONTINUED NEGATIVE IMPACT FROM THE PANDEMIC

Even if the number of people vaccinated is growing globally, high numbers of new

cases and strict travel restrictions continue to impact society and slow

recovery for the airline industry. Demand remained low during the second quarter

and the number of passengers fell 2.4 million year-on-year, and was down 140,000

on the previous quarter.

SAS is continuing to successfully adapt production to the prevailing

circumstances, which is reflected with an unchanged load factor compared with

the previous quarter. As a direct consequence of fewer passengers, revenue

fell SEK 3.3 billion (-63%) year-on-year and SEK 350 million (-15%) compared

with our first quarter.

Weak demand makes it necessary to continue to adapt operations and reduce

costs to offset the substantial loss of revenue. This has resulted in costs

being SEK 4.6 billion (down: -54%) lower year-on-year and almost SEK 0.5

billion (down: -11%) lower than in the previous quarter. Despite the loss for

the quarter amounting to SEK 2.4 billion, SAS posted an improved EBIT for the

first time since the pandemic's outbreak, both year-on-year and compared with

the previous quarter.

Another prioritized area is to secure liquidity for when demand once again

normalizes. Through active efforts to improve operational cash flow in parallel

with SAS securing a number of major financing transactions, cash at the end of

the quarter amounted to SEK 4.4 billion. Down only SEK 300 million compared with

the end of the first quarter. Moreover, SAS has secured financing for the

majority of its aircraft deliveries until the second quarter of 2022.

PENT-UP DEMAND AHEAD OF THE IMPORTANT SUMMER SEASON

Infection, delayed vaccinations and continued stringent travel restrictions have

led to a slower than hoped for recovery. However, SAS is ready to welcome our

customers back on board as travel restrictions ease ahead of the important

summer season. For the summer, SAS is opening 180 direct routes and also

increasing capacity on domestic routes within the Scandinavian countries. After

the quarter ended, we also announced an extended partnership with Airtours over

the next four years, starting in the summer of 2021 and corresponding to a value

of approximately SEK 800 million.

To reduce uncertainty when booking flights, SAS is offering more flexible ticket

rules and generous rebooking alternatives. We are also now launching SAS Travel

Ready Center, a digital tool, to make it easier for passengers to access

information about current travel restrictions concerning their destinations and

to upload necessary travel documents.

Together with an increased belief in relaxed restrictions and a number of

positively received campaigns, these activities have increased forward bookings

for the summer and autumn, albeit from lower levels compared with what is

typical for this time of the year.

Customers' booking patterns have also changed during the pandemic. Many

customers are now increasingly choosing to book their tickets much closer to

their travel dates, which makes it difficult to predict demand during the

summer. The most crucial factor for an airline industry recovery is the

relaxation of travel restrictions. Since the rates of infection and vaccinations

are decisive in this regard, SAS is carefully following vaccination trends

across the world.

The prevailing uncertainty means that access to liquidity is essential for all

airlines. SAS has therefore ensured that there is support from the major

shareholders, the Governments of Denmark and Sweden, to gain access to a credit

line facility amounting to SEK 3.0 billion. The aim of credit line facility is

to create a liquidity buffer as a complement to other ongoing activities at SAS

to reduce costs and strengthen liquidity.

ADAPTATION TO CHANGED MARKET CONDITIONS

SAS expects significantly changed market conditions following the pandemic, with

a greater number of leisure travelers and even more intense competition.

Retaining our position as market leader in Scandinavia following the pandemic

will require SAS to continue to adapt operations to future market conditions.

During the pandemic, SAS has streamlined all aspects of its operations, reduced

the number of employees, entered into new collective agreements to increase

productivity and reached agreements concerning frozen salary levels. These

necessary measures have had a substantial impact and reduced personnel expenses

almost 35% year-on-year. Moreover, we have negotiated agreements with suppliers,

which has resulted in deferred payments, lower costs and a higher variable

component in relation to fixed costs.

However, there will be even greater requirements for efficiency and seasonally

adapting operations moving forward. Access to flexible and suitable production

is required to be able to offer a complete network and a timetable adapted to

Scandinavian requirements for business, leisure and regional destinations.

Accordingly, SAS is continuing to develop its operational model that has proved

successful in the past few years.

SAS has signed a new collective bargaining agreement for pilots and cabin crew

with the Danish union FPU which is a part of FH (The Danish Confederation of

Trade Unions). The new agreement means that SAS can establish a complementary

base in Copenhagen. With the agreement, SAS improves the flexibility and

seasonal adaptations required to maintain its leading position in Scandinavia.

As a first step, SAS intends to create new workplaces in Denmark instead of

reopening the base in Malaga that closed earlier as a direct result of the

pandemic. The new Danish operation will be established using our European

operating license, which guarantees a quick and cost-efficient start of

operations.

SAS remains committed to its ambitious sustainability target of reducing carbon

emissions 25% already by 2025 compared with the base year 2005.  In the short

term, an accelerated phase-out of older aircrafts means that the share of new,

fuel-efficient aircraft in the fleet is rapidly increasing. This is also having

a direct impact on our emissions reporting, where carbon emissions per available

seat kilometer decreased more than 10% year-on-year. During the quarter, we also

secured a minimum of 20% of our planned need of sustainable aviation fuel until

To conclude, on behalf of the Board of Directors and all the employees at SAS,

myself included, I would like to thank Rickard Gustafson, who held the position

as President and CEO of SAS with a great level of commitment for a decade.

Rickard applied a good leadership culture in his leadership of the company

through the necessary change process applicable for SAS and the airline industry

as a whole. We wish him every success with his new assignment. At the same time,

I would like to wish Anko van der Werff a warm welcome as SAS' new CEO in July.

I would also like to thank all of my colleagues at SAS for their commitment and

endeavors as well as our customers for all their support. As Scandinavia's

leading airline, we look forward to being able to welcome our passengers back on

board.

Karl Sandlund

Acting President and CEO, Stockholm, May 27, 2021

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 27 May 2021 at 8:00 a.m.

CEST.