1/21/2016

1

Göran Jansson, Deputy President & CFO

SAS –

REVIVING A BRAND AND

GROWING MARKET SHARE

2

Agenda

Transforming and turning a legacy carrier around

SAS to increase capacity to/from US and Asia in 2016

Maintaining profitability and a competitive edge in a fast paced environment

1/21/2016

2

Overview of SAS

• Airline, cargo, technical maintenance and

ground handling

• 28 million passengers and 119 destinations

in 2015

• Short haul focused with70% capacity within

Europe

Scandinavia’s leading airline Share of capacity in the Nordic market 2015

0 20

Wizz Air IAG

Air France/KLM Ryanair

Wideröe Lufthansa Group

Norwegian SAS

0

50

100

Number of passengers 2015

474147

1833

14

ARN OSL CPH

Position at hubs, % of departures

Largest competitor SAS

Key financial data

MSEK (1EUR=9.35SEK) FY15

Revenue 39,650

EBIT margin 5.6%

Income before tax and nonrecurring items 1,174

Net income 956

Cash flow from operating activities 3,036

Interest-bearing liabilities 9,745

Financial net debt (net cash position) +726

Pension obligations 17,394

Fair value of plan assets 21,762

Pension funds, net surplus 4,368

Typical low cost carrier strategy

4

SAS strategy is to focus on Scandinavia’s frequent travelers

Strategy of SAS

• Multimarket focus, general low yield,

especially leisure

Market • Focus on Scandinavia’s frequent

travelers

• One type fleet, operate traffic flows

that fit fleet

• Fleet designed to fit best network and

schedule for customers

Growth • New destinations, anywhere • Improve offer for primary customer base

to increase loyalty

Operational

platform

1/21/2016

3

SAS strategic priorities

Vision Strategic priorities Enablers

Make life easier for

Scandinavia’s

frequent travelers

Establish an efficient

operating platform

4XNG - Cost down SEK 3bn

New cost program SEK 2.1 bn

LEAN throughout SAS

Win Scandinavia’s

frequent travelers

New Euro Bonus launched

Increased membership base

Invest to stay

competitive

30 leased A/C -> 2012-2014

Short haul - 30 A320neo

Long haul - 4 A330E/8 A350

IT – MSEK 500

5

Further objectives: Increased variable cost

’Lighter’ balance sheet

Outsourcing of non-core

businesses

• Cost reduction

SEK ~3 bn

• Cash increase of

SEK ~3 bn

• Equity increase of

SEK >3 bn

A comprehensive plan was launched (4XNG) in 2012

• Centralization and

reduction of administration

• Outsourcing customer contact

centers and ground handling

• Divestments

• New agreements flight crew

and maintenance staff

• New pension

schemes DB to DC

6

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4

4XNG program completed

SEK 3 billion restructuring program initiated

2012 completed, e.g.

• Admin centralization and reduction

• New pension schemes

• Divestment of non-core businesses

• Improved union agreements

• Strengthened financial preparedness

SAS has delivered on restructuring program

resulting in decreased unit costs, a more

flexible cost base and increased productivity

Improved productivity R12 block hours

FTE reduction

-24%

FY15

11,288

FY12

14,903

7

+4%

+13%

688

FY12

659

762

674

FY15

Cabin

Pilots

SAS financial risk exposure reduced

Significant achievements

• Pension commitments reduced by SEK 16.1bn

• Preference share issue of SEK 3.5 bn

• Convertible bond issue of SEK 1.6 bn

• Repayments

• Bond in June 2014 of SEK 1.8 bn

• Convertible bond in April 2015 of SEK 1.6 bn

• Financing of 4 Airbus A330E secured

• PDP secured for 13 Airbus aircraft

• Working capital improvement

Pension commitments, SEK bn

Financial net debt, MSEK

Financial preparedness

8

28.5 33.5

Oct 12 Oct 15

17.4

Oct 14

18.1

Oct 13

-726

1,102

Oct 13 Oct 15 Oct 14 Oct 12

4,567 6,549

26% 29%

Oct 12 Oct 15

40%

Oct 14

37%

Oct 13

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SAS 2010

9

SAS has evolved last five years

2015

Company structure

FTEs, #

Pension basis

Pilot union agreement

Aircraft in fleet, #

Aircraft types, #

Aircraft block hours/day, #

Ground handling

Heavy maintenance

# P2P routes (weekly traffic)

Leisure share of ASK

Wetlease production, % of legs

Holding company

14 903

Defined benefit

230 pages

159

10

7.5

Inhouse

Inhouse

151

11%

4%

One airline

11 288

Defined contribution

40 pages

152

4

8.8

• Line station

outsourced, hubs

in progress

• Base maintenance

outsourced

189

16%

22%

(-24%)

(-4%)

(-60%)

(+16%)

(+25%)

(+5 p.u.)

(+18 p.u.)

Structure

Personnel

Fleet

Ground/

tech

Network

SAS TODAY

Euro Bonus strengthening SAS as the membership airline

• Enhanced EuroBonus launched in February 2014

– New Diamant tier level

– Silver member after 10 flights with SAS

– Access to SAS lounges during Christmas and

summer for silver members

– New Gold benefits– give away a Silver card, 2 extra

bags free, increased availability of award trips

– More third-party partnerships, e.g.

– Coop, Preem, Aftonbladet, Fortum, Lexus,

Skandiabanken, SEB and American Express

• Number of award travelers up 14% in FY15

• Number of EuroBonus members up 14% in FY15

• Revenue from EuroBonus members up 13% in FY15

Euro Bonus members, million

Revenue generated by EuroBonus members

4.5

3.5

0.0

4.0

Q4

2013

Q4

2015

Q4

2014

0.00

45%

50%

40%

Q3

2014

Q4

2014

Q1

2015

Q2

2014

Q1

2014

Q4

2015

Q3

2015

Q2

2015

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New aircraft ordered – A320neo, A330 Enhanced and A350 XWB

A320neo

• Firm orders 30

• First delivery year 2016

A330 Enhanced

• Firm orders 4

• First delivery Sep 2015

A350 XWB

• Firm orders 8

• First delivery year 2018

Total order ~3 bn

value, USD

11

2 Airbus A330E

delivered

12

Agenda

Transforming and turning a legacy carrier around

SAS to increase capacity to/from US and Asia in 2016

Maintaining profitability and a competitive edge in a fast paced environment

1/21/2016

7

13

SAS is growing its long haul fleet

The Scandinavian long haul market is

large with growing demand…

…and SAS is now in a position to

grow the long haul network with:

• Minimal investment and capital

at risk

• Reduced cost and increased

productivity

• Growing long haul fleet

• New long haul product well

received

Source: DDS; Innovata

7.2

+8% 8.3

7.6

2011 2014

6.6

2013 2012

Passengers (mn)

ORD

IAD

NRT

PEK

PVG

CPH

OSL

HKG

ARN

SFO LAX

MIA

14

• From 12 to 16 aircraft

– More frequencies on existing routes

– New routes to Hong Kong, Los Angeles, Miami

and Boston

• Capacity increase in FY16 of 25%

• Destinations and an attractive product for the

frequent traveler

SAS grows its long haul operation

2015 2016 …2018

EWR BOS

HONG KONG

Stockholm–Hong Kong 5 days a week

Book at flysas.com

A350

BOSTON

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15

SAS focus on making traveling easier for the frequent travelers

Examples of initiatives

• Upgraded cabins on long haul

fleet

• Investment in lounge

experience

– SAS Café lounge concept

launched in Trondheim and

Tromsø

– Arlanda and Gardermoen

lounges expanded

Customer survey long haul

Overall Business class

69

47

59

76

76

75

Inflight

Entertainment

Seat comfort

Overall satisfaction

onboard services

Old cabin New cabin

75

67

55

88

82

92

16

Agenda

Transforming and turning a legacy carrier around

SAS to increase capacity to/from US and Asia in 2016

Maintaining profitability and a competitive edge in a fast paced environment

1/21/2016

9

Further SEK 2.1 billion in cost savings to be implemented after the

conclusion of 4XNG of SEK 3.1 bn

Fleet, production and maintenance optimization

• Acquisition of Cimber and transfer of CRJ900 fleet

• Phase out of Boeing 717 fleet from Blue1

• New maintenance program for Boeing 737

Administration, sales and distribution

• 300 FTE and simplifications

• Commercial functions and distribution model

Ground handling

• Improved scheduling and more flexible staffing

• Increased automation, e.g. bag drops, boarding

Supply chain and logistics

• Improved steering of external spend

• Improved logistics, contracts and optimization of costs

Facilities and rental agreements

• Increased utilization of premises

• Divestments and renegotiations of rental agreements

Selected areas

17

FY17

0.4

1.0

0.9*

FY16 FY15

* Includes SEK 0.3 bn from the

restructuring program (4XNG), launched

in November 2012

Expected earnings impact, SEK bn

18

Digitalization provides opportunities to enhance customer

experience

0 1 2 3 4 5

airberlin

British Airways

SWISS

Germanwings

Airfrance

Lufthansa

Wizzair

easyJet

Ryanair

Norwegian

KLM

SAS

Android iOS

SAS

Airline average app ratings last 6 months

Source: Apple App Store and Google Play, 1 April 2015 – 30 September 2015

New app highest rated for both iOS

and Android

Newspaper at gate through app

New IT platform to enable greater

degree of personalization for the

frequent travelers

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19

Facilitate employees to improve customer satisfaction further

Dedicated employees key driver to

improved customer satisfaction

• Cabin crew at all-time-high

• Onboard services at all-time-high

• Intercont at all-time-high

In addition, new tools will further

improve customer personalization

• Hand held devices for crew to be

rolled out

• Direct customer feedback in SAS

app

• Electronic flight bag for pilots

Oct

2015

Oct

2014

72

74

Apr Jun Feb Dec Aug

SAS customer satisfaction index

…and maintain position among Scandinavia’s frequent travelers...

Airline preference among ’Flyers 5+’, Norway

2013 2014 2015

Pe

rce

nt

10

20

30

40

50

20

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SAS to further improve customer offering

21

Product:

• New café Lounges (e.g. Malmö to open in

2016)

• Self Service Bag Drops

• New long-haul cabin on all aircraft

Grow EuroBonus:

• Upgrade EuroBonus IT platform in 2016

• Target 5 million members

• Expand attractiveness of program with more

partners

Route network:

• Improve leisure offering

• 8 new routes during the winter program

• ~50 seasonal summer routes

• More long haul destinations

• More wet leased aircraft to offer best network

and frequencies

MIA

4.2 mn

Summary and outlook

FY16 outlook Summary

22

Step change made in modernizing SAS during

the last few years to a membership airline

Investments in enhanced customer offering

paying off (FY15 vs. FY12):

• Increased Plus share by 9 p.u.

• EuroBonus members up 42%

• Ticket revenue from EB members up more

than 30%

Investments in further product improvements

• Long haul expansion

• EuroBonus

• Digitilization

• Fleet

Improve productivity and reduce cost to stay

competitive in tough market

Market capacity expected to increase

SAS to increase ASK by 10%, whereof

9% long haul

Number of flights up 1%

Lower PASK and unit cost due to stage

length effect

Efficiency program to deliver SEK 1 bn in

earnings impact

SAS expects to post a positive EBT

before tax and non-recurring items in

FY16

1/21/2016

12

THANK YOU