Create efficient and sustainable operating platforms

SAS PRODUCTION MODEL

AIRLINE OPERATIONS

SAS’s production model is based on producing the majority of traffic for the larger traffic flows under SAS’s own traffic license based on a homogeneous aircraft fleet, while smaller flows and regional traffic are flown via business partners (wet lease).

As a consequence of wet-lease operating costs being 15– 20% more cost-effective, we have also been able to expand our regional network and increase the number of frequencies on ex¬isting routes. Flexibility in the production model also facilitates us in being able to optimize production according to how seasonal demand change.

GROUND HANDLING SERVICES

The SAS production model for ground handling services is built on operating our own ground handling services at SAS’s primary airports in Copenhagen, Oslo and Stockholm. At the primary air¬ports, we are working on further raising quality and productivity through increased automation and digitalization. The aim is to improve customer service through more modern processes for check-in and flight irregularity management, in order to promote loyalty among frequent travelers.

At other airports, SAS contracts ground handling services from subcontractors. This provides us with greater flexibility in our cost and planning structure, which means we can implement network changes more quickly.

TECHNICAL MAINTENANCE

SAS’s technical maintenance means that at five airports in Scandinavia we perform ongoing technical maintenance of aircraft for SAS and other airlines. Heavier technical maintenance, in which aircraft are taken out of service for a longer period, has been outsourced to subcontractors with better preconditions for efficiently performing this type of maintenance.

CARGO SERVICES

SAS Cargo manages SAS’s cargo services, which are built on our utilizing the space on SAS’s over 800 daily flights. This is supplemented by ground transportation on shorter stretches as well as to and from the airports. Through SAS’s broad network and many frequencies, we can offer high-quality, punctual transportation of cargo.

EFFICIENCY ENHANCEMENT PROGRAM

We are working on implementing an efficiency enhancement program for our core operations based in Scandinavia to meet developments in our operating environment. During the 2013– 2017 period, we realized efficiency gains in our operations of SEK 5.1 billion. The earnings impact from efficiency enhancements in 2016/2017 totaled SEK 0.8 billion. This contributed to a 3.6% fall in the currency-adjusted unit cost, excluding jet fuel.

Aircraft productivity during the fiscal year was the highest ever. Flight crew productivity also increased according to plan during the fiscal year, driven by longer flight distances and fewer retrainings between aircraft types.

BASES OUTSIDE SCANDINAVIA

In parallel with the implementation of the efficiency enhance¬ments in our core operations, in January 2017, SAS decided to establish a new air operator certificate (AOC) in Ireland. We decided to establish bases in London and Malaga, where a total of nine Airbus A320neos will deploy. The first AOC was granted in December 2017, and the first flight took place that same month from the base in London. The first flight from the base in Malaga took place in June 2018.

The bases complement our production in Scandinavia, which will continue to account for the main share of our business.