SAS — Interim / Quarterly Report 2023

Feb 24, 2023

Q1: Strengthened passenger demand and steady progress with our transformation plan

Q1: Strengthened passenger demand and steady progress with our transformation plan

We are pleased that so many passengers are returning to SAS. Passenger demand

continued the strong trend during the first quarter. SAS' total number of

passengers grew by 48 percent compared to the same period last year. Our flown

load factor of 69.3 percent was at pre-pandemic levels of 69.5 percent for the

first quarter in FY2020. At the same time, our currency-adjusted passenger yield

increased almost 7 percent compared to the first quarter in 2022.

Due to our normal seasonality, the winter season is slower with relatively lower

passenger numbers. Economic uncertainties with increasing interest rates and

cost inflation are likely to affect the travel industry going forward but the

overall underlying demand for travel remains healthy and continues its strong

trend. We continue to prepare for a busy summer season in 2023 with an expected

increased demand and capacity to match. During the quarter, we announced that we

will open 20 new routes for the summer of 2023. This means that we will have a

total of more than 5 000 weekly flights to over 100 destinations this summer. We

look forward to welcoming our passengers on board.

SAS continues to make steady progress in our chapter 11 process in the U.S and

in reaching our overall targets in the SAS FORWARD plan. During the quarter, we

concluded our aircraft lessor negotiations having reached agreements with 15

lessors representing 59 aircraft. Through these agreements, we expect to achieve

our targeted cost reductions related to annual aircraft lease and financing

costs. We are engaging with different stakeholders as part of the next phase of

the chapter 11 process, which includes launching an equity solicitation process

to obtain the capital necessary to strengthen the balance sheet in line with the

SAS FORWARD objectives and working to build consensus for a plan of

reorganization.

We are grateful to the stakeholders who are working constructively with us. We

look forward to continuing that collaboration to succeed with SAS FORWARD and to

becoming a competitive and financially strong airline.

NOVEMBER 2022-JANUARY 2023

· Revenue: MSEK 7,896 (5,545)

· Income before tax (EBT): MSEK -2,449 (-2,597)

· Income before tax and items affecting comparability:  MSEK -2,451 (-2,621)

· Net income for the period: MSEK -2,709 (-2,442)

· Earnings per common share: SEK -0.37 (-0.34)

SIGNIFICANT EVENTS DURING THE QUARTER

· On January 13, SAS concluded its lessor negotiations as part of the chapter

11 process. SAS reached agreements with a total of 15 lessors, representing 59

aircraft.

· SAS continues to work towards meeting certain conditions under the DIP term

loan agreement to access the second tranche of the DIP financing as soon as

possible during the second quarter of fiscal year 2023 (February-April 2023).

· SAS currently aims to complete its court-supervised process in the US during

the second half of 2023, the implementation of which is likely to entail

additional legal proceedings in other jurisdictions than the US. As a result,

there is no assurance that there will be any recovery for the shareholders of

SAS AB. SAS expects that its operations will be unaffected by such legal

proceedings and that SAS will continue to serve its customers as normal.

OUTLOOK

· SAS reiterates its projections for FY2023 and is reviewing its longer-term

projections for fiscal years 2024-2026. See more on page 9 in the report.

QUARTERLY RESULTS

SAS noted strong passenger demand during the first quarter. The total number of

passengers increased by 48 percent compared to the same period last year. Our

RPK increased by 46.3 percent while capacity increased by 18 percent, compared

to the same period last year. Our flown load factor of 69.3 percent was at pre

-pandemic levels of 69.5 percent for Q1 FY2020.

Income before tax (EBT) ended at negative SEK 2.4 billion, representing a year

-on-year improvement of SEK 0.1 billion. Jet-fuel prices continue to bring

strong headwinds for our business.

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

competitiveness. Total operating expenses during the quarter ended at SEK 10.5

billion. Total operating revenue landed at SEK 7.9 billion for the quarter, a

year-on-year improvement of approximately SEK 2.4 billion, but still 18.6

percent below the first quarter of FY2020, which was unaffected by Covid-19.

The cash balance at the end of the quarter was SEK 5.3 billion. Operational cash

flow during the quarter amounted to an outflow of SEK 1.7 billion, compared with

an outflow of SEK 0.1 billion for the same period last year.

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. The plan aims to strengthen our

financial position and achieve a sustainable cost structure with an annual cost

reduction of approximately SEK 7.5 billion. As part of SAS FORWARD, we also plan

to raise at least SEK 9.5 billion in new equity and convert SEK 20 billion of

debt into equity. To accelerate the implementation of SAS FORWARD, SAS

voluntarily filed for chapter 11 in the U.S. on July 5, 2022. Chapter 11 is a

well-established and flexible legal framework for restructuring businesses with

operations in multiple jurisdictions. Through this process, SAS aims to reach

agreements with key stakeholders, restructure the Company's debt obligations,

reconfigure its aircraft fleet, and emerge with a significant capital injection.

During the first quarter, SAS continued to make steady progress in the chapter

11 process and in reaching our overall targets in the SAS FORWARD plan. During

the quarter, we concluded the lessor negotiations as part of the chapter 11

process. In total, we reached agreements with 15 lessors, representing 59

aircraft. The amended lease agreements are subject to the plan of reorganization

in the chapter 11 process being confirmed and becoming effective. Through the

amended lease agreements, we expect to achieve the targeted annual cost savings

of at least SEK 1.0 billion in reduced aircraft lease expenses and annual cash

flow items relating to aircraft financing, as part of the SAS FORWARD plan.

During the quarter, we received approval from the U.S. court for the 5.5-year

collective bargaining agreements with SAS Scandinavia Pilots' unions, which were

negotiated in July last year. We also reached a new collective bargaining

agreement with the labor unions in Norway, with duration until March 31, 2024, a

necessary step to ensure continued progress of the SAS FORWARD plan.

After the quarter ended, SAS reached a multiyear agreement renewal with Amadeus,

one of our key travel technology providers. The agreement will deliver

efficiency within Distribution & IT, in line with our targets in the SAS FORWARD

plan, whilst keeping SAS at the forefront of technology evolutions.

NEW ROUTES AND DESTINATIONS

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

and to adapt to the relatively increased demand for leisure travel, SAS has

announced several new routes during the quarter. In December, we announced that

we are opening 20 new routes for the summer of 2023. This means that we will

have a total of more than 5 000 weekly flights to over 100 destinations this

summer. The new summer program includes more than 200 routes, and the number of

flights will continue to rise on major domestic, Scandinavian and international

routes. We look forward to a busy summer and to welcoming our passengers on

board.

US destinations continue to generate demand for more and frequent departures and

we announced two new intercontinental routes from Gothenburg and Aalborg to New

York during the quarter. The flights will operate throughout the summer 2023

season and will return for the summer 2024 program. We also launched a new route

from Copenhagen airport to John F. Kennedy International Airport in New York

during the quarter, with five weekly flights from Copenhagen ramping up with

daily flights for the summer schedule. Since December 2022, SAS also offers more

frequent departures between Copenhagen Airport and Shanghai Pudong International

Airport.

STAR ALLIANCE NAMED THE WORLD'S LEADING AIRLINE ALLIANCE - THIRD CONSECUTIVE

YEAR

In November, Star Alliance was named the World's Leading Airline Alliance at the

World Travel Awards for the third consecutive year. The annual awards are

awarded based on a worldwide poll of qualified executives working within travel

and tourism, and the consumer travel buyer. SAS is very proud to be part of the

Alliance, and winning the award for the third consecutive year is truly a proof

of quality for SAS and for the entire Star Alliance network.

THE JOURNEY TOWARDS SUSTAINABLE AVIATION

SAS strives for global leadership in sustainable aviation and is proud to

participate in an EU-funded research project at Copenhagen Airport to

investigate sustainable aviation fuel (SAF) flights' impact on local air

quality, which started during the first quarter. The air quality from SAS

flights with 35% SAF fuel within Scandinavia has been measured several times per

day. We hope to see positive results on air quality and work environment, which

will reinforce the positive climate effects of SAF use at higher altitudes as

well.

Starting this spring, travelers buying Go Smart or Plus Pro, are able to

purchase tickets with 50% of Sustainable Aviation Fuel (SAF such as biofuel) -

to lower the C0\2\ emission of their SAS trip. This is one initiative from SAS,

being a driving force in sustainable aviation and working hard to cut emissions.

SAS will continue to invest in modern fuel-efficient aircraft, sustainable

aviation fuels, emerging technologies, and sustainable products and services.

LOOKING AHEAD - FINANCIAL PROJECTIONS

Economic uncertainties with increasing interest rates and cost inflation are

likely to affect the travel industry going forward, but the overall underlying

demand for travel remains healthy and continues its strong trend.

We reiterate our financial projections for fiscal year 2023 and expect revenue

to reach approximately SEK 40 billion, and income before tax (EBT), excluding

gains or losses related to the completion of the chapter 11 process, to amount

to a loss of approximately SEK 4-5 billion.

We are currently reviewing our longer-term projections for fiscal years 2024

-2026. The preliminary assessment, based on a stronger recovery in demand than

expected, is that our revenue for fiscal year 2026 will be higher than our

projection in September 2022 of SEK 49 billion. We reiterate our projection that

the company will reach positive EBT in fiscal year 2024, but EBT in fiscal year

2026 is expected to be higher than our previous assessment in September 2022 of

SEK 3-4 billion. We will inform the market about updated projections for fiscal

years 2024-2026 in due course.

We continue to prepare for a busy summer season in 2023. We are preparing for

the launch of our 20 new routes during the summer season, including continuing

the process of substantial recruitments and rehiring to meet the expected

increase in future demand.

We are engaging with different stakeholders as part of the next phase of the

chapter 11 process, which includes launching an equity solicitation process to

obtain the capital necessary to implement our SAS FORWARD plan and working to

build consensus for a plan of reorganization. The equity solicitation process is

expected to be commenced during the second quarter. We continue to work towards

meeting certain conditions under the DIP term loan agreement to access the

second tranche of the DIP financing as soon as possible during the second

quarter.

I am grateful for the really hard work my colleagues at SAS are doing to ensure

that we take the best possible care of our customers, and to ensure that they

get the quality service they expect from us. Thank you for all your efforts!

As always, we look forward to welcoming our customers on board our aircraft.

Anko van der Werff

President and CEO

Stockholm, February 24, 2023

Teleconference - Q1 2023

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

10.00 AM CET. Anko van der Werff, President & CEO and Erno Hildén, Executive

Vice President & CFO, will present and comment on the report. The presentation

will be held in English.

Access via web link (no advance notification is necessary): https://edge.media

-server.com/mmc/p/uebt7qy9

Link to register for participation via

telephone: https://register.vevent.com/register/BI487d37ab7b0e491781269b5b86c4a5a

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For further information, please contact:

SAS press office, +46 8 797 29 44

Investor relations, +46 709 977 070

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, through

the agency of Erno Hildén, at 08:00 a.m. CET on February 24, 2023.