SAS — Interim / Quarterly Report 2022

May 31, 2022

Q2 2022: RAMP-UP AND TRANSFORMATION OF SAS CONTINUE

Q2 2022: RAMP-UP AND TRANSFORMATION OF SAS CONTINUE

SAS continues the ramp-up and has during the quarter seen the highest number of

passengers since the pandemic started. Meanwhile, the work with the necessary

transformation plan, SAS FORWARD, continues.

The plan was presented when the Q1 results were released on February 22 and is

designed to secure long-term competitiveness. It will allow SAS to effectuate a

deleveraging of its balance sheet while substantially improving its liquidity

position. In addition to reducing the cost structure and improve efficiencies,

SAS is seeking to convert approximately SEK 20 billion of debt and hybrid notes

into common equity and will also seek to raise not less than SEK 9.5 billion in

new equity capital. The success of the plan depends upon SAS attracting

potential new capital from the capital markets and other sources and upon SAS

fully achieving the targeted SEK 7.5 billion annual cost reduction by fiscal

year 2026.

Earnings before tax ended at negative SEK 1.6 billion for the quarter and the

cash balance at the end of the quarter was SEK 8.5 billion.

FEBRUARY 2022-APRIL 2022

· Revenue: MSEK 7,048 (1,932)

· Income before tax (EBT): MSEK -1,557 (-2,331)

· Income before tax and items affecting comparability: MSEK -1,613 (-2,331)

· Net income for the period: MSEK -1,520 (-2,410)

· Earnings per common share: SEK -0.21 (-0.35)

SIGNIFICANT EVENTS DURING THE QUARTER

· SAS presented a comprehensive transformation plan: SAS FORWARD. A successful

implementation of the plan will secure long-term competitiveness and improved

financial strength

· The SEK 3,000 million credit facility secured with the main owners in 2021

was drawn

· Erno Hildén was appointed as Executive Vice President and CFO

SIGNIFICANT EVENTS AFTER THE QUARTER

· The aftermath of the COVID-19 pandemic has led to most of the airline

industry experiencing difficulty in rebuilding operations. This has led to SAS

reducing its summer program by 4,000 of a total of 75,000 flights

NOVEMBER 2021-APRIL 2022

· Revenue: MSEK 12,593 (4,214)

· Income before tax (EBT): MSEK -4,154 (-4,246)

· Income before tax and items affecting comparability: MSEK -4,234 (-4,258)

· Net income for the period: MSEK -3,962 (-4,443)

· Earnings per common share: SEK -0.55 (-0.63)

QUARTERLY RESULTS ARE IMPROVED AS A RESULT OF RAMP-UP

Looking back at the second quarter, we can see that demand improved as travel

restrictions were eased. Passengers flying with SAS increased 28% compared to

the previous quarter and the flown load factor reached approximately 67%, up 11

percentage points compared with the earlier quarter. Our capacity was increased

by 3% compared to the first quarter. The transformation of SAS has to continue

to adapt to the new market conditions in order to be able to remain flexible,

competitive and financially strong for the long-term future. Earnings before tax

ended at negative SEK 1.6 billion, an improvement of SEK 1.0 billion compared

with last quarter, or a SEK 0.7 billion improvement year-on-year. Ticket sales

continue to increase ahead of the summer period and SAS is targeting 80%

capacity deployment compared to summer 2019.

Cost reductions across all of SAS remain in focus to secure our cost

competitiveness. Total operating expenses during the quarter ended at SEK 7.8

billion and total operating revenue landed at SEK 7.0 billion for the quarter.

Total revenue increased 27% compared with the first quarter, an improvement of

approximately SEK 5.1 billion compared with last year, but still 31% below the

second quarter in 2019, which was unaffected by COVID-19.

The cash balance at the end of the quarter was SEK 8.5 billion. At end of the

first quarter of FY2022 the cash balance was SEK 3.4 billion. Operational cash

flow during the quarter amounted to SEK 2.5 billion, compared with SEK -1.4

billion for the same period last year.

UPDATE ON SAS PROGRESS ON TRANSFORMATION PLAN

Despite this positive development, SAS continues to face substantial structural

cost challenges while also facing growing competition with substantially lower

cost structures than SAS. SAS also incurred substantial additional debt during

the pandemic that added to its pre-COVID highly leveraged balance sheet. In

addition, recent macroeconomic changes (including fuel and exchange rates) and

geopolitical events are limiting operations and create additional costs. Given

these factors, the SAS Board has concluded that a substantial restructuring is

needed to enable SAS to become profitable by implementing SAS FORWARD.

Key Elements of SAS FORWARD

· Reducing the annual costs by SEK 7.5 billion

· Redesigned fleet, network and product offerings

· Digital transformation

· Positioning SAS as the leader in sustainable aviation

· Operating platform acceleration

· Strengthening SAS' balance sheet by deleveraging and raising new capital

Debt-to-equity conversion and equity raise

SAS is seeking to convert approximately SEK 20 billion of existing debt and

hybrid notes into common equity, of which a majority is on-balance sheet debt

and hybrid instruments (state hybrid notes, commercial hybrid notes, lease

liabilities, Swiss bonds and term loans from states and commercial banks) and

some relates to maintenance contract obligations and other executory contract

obligations. The contemplated conversions are designed to strengthen the balance

sheet and significantly reduce the debt-burden being carried in order to relieve

SAS from elevated financial costs that currently weigh on profitability, and to

position SAS for future growth.

In addition to debt conversions, SAS is looking for alternatives to raise new

equity. SAS will seek to raise not less than SEK 9.5 billion in equity capital.

The planned SEK 9.5 billion or more equity raise is expected to provide

sufficient liquidity to fund operations through the full implementation of SAS

FORWARD and the recovery in passenger demand post COVID-19. It is currently

expected that a significant share of such new equity will likely be sought from

new investors.

The new equity capital and debt-to-equity conversions contemplated as part of

SAS FORWARD will entail substantial dilution to existing shareholders.

Labor discussions

SAS continues to pursue negotiations with all of its organized labor groups as a

means of achieving a consensual outcome with respect to labor's share of the

burden sharing program. Notably, the requested labor concessions are an

important element of SAS achieving a competitive and sustainable business model,

but in aggregate represent less than 20% of the targeted annual cost

improvements. An agreement with organized labor groups is a condition of SAS

FORWARD and it will not be possible to raise new capital or secure the future of

the airline without labor burden sharing.

Update on discussions with stakeholders

Discussions are currently ongoing regarding stakeholders' participation and

acceptance of burden sharing. Given the limited progress made so far, there can

be no guarantees that SAS FORWARD will be successfully completed. In the event

that the expected burden sharing, debt conversions, and new capital raise are

not completed as planned, SAS will not be able to support its existing capital

structure and current liquidity levels and it cannot be ruled out that SAS could

become unable to meet its obligations over the longer term as they fall due.

Implementation processes

SAS FORWARD involves complex multiparty negotiations. As is usual in a

restructuring process, it is possible that SAS may seek to utilize one or more

court restructuring proceedings designed to assist in the resolution of SAS's

financial difficulties and help implement parts of SAS FORWARD.

Finally, it should be noted that the completion of the cost reduction programs,

the debt-to-equity conversions, the fleet restructuring and the significant

equity capital raise are subject to uncertainty and there can be no guarantee of

success in such efforts by SAS. Further, the transactions envisaged are subject

to various conditions including EU Commission and other state aid approvals and

other regulatory clearances and various stakeholder approvals, which have not

yet been obtained.

POSITIVE MARKET DEVELOPMENT TOWARD THE SUMMER SEASON

SAS continues the ramp-up and has during the quarter had the highest number of

passengers since the pandemic started. We have recently experienced positive

market development and strong ticket sales ahead of the important summer season.

SAS and Apollo (a provider of charter travel services to and from the Nordic

market) also signed an agreement during the quarter, concerning summer charter

flights, within the framework of their three-year collaboration. Flights will

depart from around 20 locations in Sweden, Norway and Denmark and fly to around

30 Mediterranean destinations.

The SAS traffic program and capacity are increased according to customer demand,

but there are constraints to the growth of traffic, as effects of the pandemic

linger on. The whole airline ecosystem has difficulties ramping up, which also

has an implication on SAS. We foresee challenges during summer relating to

everything from airports and ground staffing to crew training bottlenecks such

as availability of training instructors, and we also see continued delayed

aircraft deliveries. In order to minimize the risk of disruption and create more

stability for the upcoming summer travels, SAS has made adjustments to the

traffic program during June to August, after the quarter ended.

SAS aims to be a global leader in sustainable aviation and during the quarter we

launched the Travel Pass Biofuel, a punch card for corporate customers who

regularly travel to the same destination and want to include biofuel to reduce

the climate impact of their trips.

LOOKING AHEAD

We see a pent-up demand for traveling and underlying demand is healthy, both for

business and for leisure travel. However, we still remain cautious due to the

prevailing uncertainties. Traffic to and from Asia remains affected by remaining

COVID-19 restrictions as well as the geopolitical situation.

I am grateful for the hard work my colleagues at SAS are delivering, to ensure

that we take care of our customers in the best possible way. Together we are

working our way through these challenging times and we welcome our customers on

board our aircraft.

Anko van der Werff

President and CEO

Stockholm, May 31, 2022

SAS' Q2 2022 teleconference

A teleconference and webcast for investors, analysts and media will be held at

10.00 AM (CET) on Tuesday, 31st of May 2022.

Anko van der Werff, President & CEO, Erno Hildén, Executive Vice President &

CFO, will present and comment on the report.

The presentation will be held in English via telephone or https://edge.media

-server.com/mmc/p/9s7iqpeh

No advance notification is necessary.

Dial-in details for the conference call:

DK: +45 354 455 77

FI: +358 981 710 310

NO: +47 235 002 43

SE: +46 8 566 426 51

UK: +44 3333 0008 04

Pin: 94 31 68 01 #

The presentation and the report will be available on https://www.sasgroup.net

after the publication.

For further information, please contact:

SAS press office: +46 8 797 29 44

SAS, Scandinavia's leading airline, with main hubs in Copenhagen, Oslo and

Stockholm, is flying to destinations in Europe, USA and Asia. Spurred by a

Scandinavian heritage and sustainable values, SAS aims to be the global leader

in sustainable aviation. We will reduce total carbon emissions by 25 percent by

2025, by using more sustainable aviation fuel and our modern fleet with fuel

-efficient aircraft. In addition to flight operations, SAS offers ground

handling services, technical maintenance and air cargo services. SAS is a

founder member of the Star AllianceT, and together with its partner airlines

offers a wide network worldwide. Learn more at https://www.sasgroup.net

This is information that SAS AB is obliged to make public pursuant to the EU

Market Abuse Regulation. The information was submitted for publication by Louise

Bergström at 08:00 CET on May 31, 2022.

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