SAS Group Year-end Report January-December 2009

Key ratios 2009

• Operating revenue: MSEK 44,918 (52,870) (-15.0%)

• Number of passengers: 24.9 million (-14.1%)

• Passenger traffic capacity (ASK) was reduced by 15.3%

• Earnings before nonrecurring items in continuing operations: MSEK -1,754 (-339)

• EBT margin before nonrecurring items in continuing operations: -3.9% (-0.6%)

• Income before tax: MSEK -3,423 (-969)

• Net income for the year: MSEK -2,947 (-6,360)

• Earnings per share: SEK -1.55 (-6.26)

Major events in 2010

• SAS launches new cost measures amounting to SEK 2.0 billion and that expand its current cost program to a total of SEK 7.3 billion, which is expected to have a remaining earnings impact of about SEK 5 billion, with the majority of the effects expected in 2010. In addition, a letter of intent, with a clearly defined commitment, has been signed with the flight deck and cabin unions for a further cost saving of MSEK 500 during the first
quarter of 2010.

• SAS announces a rights issue amounting to approximately SEK 5 billion to strengthen SAS’s liquidity position and to provide support for the implementation of the remaining parts of Core SAS. The rights issue has support from the three government owners and the largest private shareholder, the Knut and Alice Wallenberg Foundation through FAM. The participation of the three states and FAM in the rights issue is subject to, amongst other things, all four shareholders deciding to subscribe on a pro rata basis, refinancing of the bonds maturing in 2010, final agreement with the flight deck and cabin unions and parliamentary approval (where necessary). A consortium of banks has confirmed its expectation, subject to certain conditions, to enter into an underwriting agreement on a several basis for the remaining 42.4% of the shares to be issued in the rights offering.

Comments by the CEO
Fiscal 2009 was probably the most challenging year that the entire aviation industry has experienced, due to the deep recession that has affected the global economy since the beginning of the financial crisis. In February 2009, we launched a renewed strategic approach, Core SAS, in a bid to address this and our internal challenges. The sharp downturn in the economy led to an extremely large decline in business travel, which had a significant impact on the entire aviation industry. Market conditions deteriorated far more extensively than originally expected when the Core SAS strategy was initiated a year ago. The weak economic trend in 2009 had a serious effect on SAS’s passenger volumes and yield and, accordingly, revenue, which consequently had a very adverse impact on SAS’s liquidity.

The Group’s earnings before nonrecurring items in continuing operations amounted to MSEK -940 for the fourth quarter and to MSEK -1,754 for the full-year 2009. In addition, nonrecurring items totaled MSEK -1,669, which resulted in income before tax of MSEK -3,423. The Group’s largest operation, SAS Scandinavian Airlines, reported a loss of MSEK -1,522, although the loss was limited due to the extensive cost program implemented during the year. The implementation of this program has proceeded according to plan and an earnings effect corresponding to SEK 2.2 billion was generated in 2009. We are now noting that the unit cost is falling on a quarterly basis. Core SAS also includes capacity reductions corresponding to a total of 21 aircraft, of which 18 aircraft had
been withdrawn from service by the end of the fourth quarter. The divestment of non-core operations is progressing according to plan, for example, through the sales of SAS’s shareholding in bmi, and operations in SGS and Cargo. Furthermore, we can see signs of more stable demand. The load factor improved substantially during the final quarter of the year and increased for the sixth consecutive month, which is primarily a result of the implemented capacity reductions and also the initial signs of stabilizing demand.

To further improve SAS’s long-term cost position, the Core SAS cost program will be strengthened by an additional SEK 2.0 billion. The cost program will now total SEK 7.3 billion, of which about SEK 5 billion remains to have an earnings impact, with the majority of the effects expected in 2010. The Core SAS program
has been expanded by a total of SEK 3.3 billion since its launch in February 2009. One of the new measures under the program is to further centralize and enhance the efficiency of the organization. Moreover, a letter of intent, with a clearly defined commitment, was signed with the flight deck and cabin trade unions under which they expect to contribute further cost savings of MSEK 500 in 2010. It is imperative that a final agreement is reached quickly. A strong balance sheet is necessary to enable the implementation of the remaining parts of Core SAS, including the new measures, and to be able to capitalize fully on the improved market situation when the air-travel market recovers. Accordingly, the SAS Board has decided to propose to an Extraordinary General Meeting a rights issue amounting to SEK 5 billion. The rights issue is subject to the three states and the Knut and Alice Wallenberg Foundation through FAM deciding to subscribe on a pro rata basis. This requires that SAS refinances the majority of the bonds maturing in 2010, and succeeds in reaching a final agreement with the
flight deck and cabin unions corresponding to SEK 0.5 billion in cost savings.

A new commercial concept – Service And Simplicity – was launched as part of the implementation of Core SAS, and the concept has been well received by our customers. SAS has retained its strong market position and we further improved our punctuality and regularity during the year. We are now the most punctual airline in Europe, which naturally is extremely gratifying and is confirmation that our work on quality has already yielded results. We also remain a leader in innovation, for example, we introduced the option of fully automated biometric check-in services on domestic routes in Scandinavia and mobile boarding passes. As a result customer satisfaction has improved significantly in both 2008 and 2009.

With Core SAS, we have a stable foundation to build on and, with new cost-saving measures that will have anticipated earnings effects totaling more than SEK 5 billion, a more efficient and centralized organization, refinancing approved by the banks, a letter of intent from the trade unions with a clearly defined
commitment, and a strong balance sheet, we are well-equipped for the expected economic recovery.

Mats Jansson
President and CEO

Direct questions to: Investor Relations SAS Group: Vice President Sture Stølen +46 8 797 14 51, e-mail: investor.relations@sas.se