A challenging Quarter, but record passenger numbers EBT bef. non rec. Q3: MSEK 632, Jan-Sep : MSEK 982 Record number of passengers Group airlines perform strongly Negative effect from Q4, ECA agreement S11 implementation as planned Despite setbacks SAS has full focus ahead Still favorable market conditions S11 will secure strong and profitable SAS SAS Group 3 rd Quarter Presentation Press conference Stockholm, November 8 2 Quarter overshadowed by Q4 problems Two accidents in September Aalborg, Vilnius Three weeks grounding Third accident in October Unique and strong decision to permanently stop operations Customers Employees SAS brand Ongoing dialogue with Bombardier Overall reflection: Complex company and thereby difficult to manage S11 strategy will ensure SAS s future Cultural Turnaround Focus and concentration Harmonization and development of customer offer Competitiveness Profitable growth 3 4
Cultural Turnaround Focusing and concentration Customer orientation Increased participation and commitment Improved management Common target and new cooperation model Profit sharing system and partownership program Ongoing tight dialogue with the unions Employee incentive scheme to be presented on AGM in April 8 Core Business Keep Scandinavian Airlines Danmark Scandinavian Airlines Norge Scandinavian Airlines Sverige Scandinavian Airlines International Widerøe Blue 1 Seek majority stake airbaltic Estonian Air Review future role (decision in Dec.) SAS Ground Services SAS Technical Services Spirit (Cargo handling within SAS Cargo) Non-core business divestments Spanair Newco bmi Air Greenland 5 6 Harmonization and development of customer offer Positive effects from New Commercial initiatives Competitiveness: Status of the cost reductions of SEK 2.8 bn World class electronic travel solutions Customer improvements: New fast track in Stockholm Biometric solutions SMS service More distinct product concepts Lower prices in Economy Extra Seamless flow at the airport Increased award recognition New offers to corporate market Positive Customer feedback SAS takes market shares in premium segments Economy Extra well received Increased Business traffic London f.ex. WLAN service launched human home or a Inga köer Fast track New fast track at Stockholm-Arlanda SMS check in service launched Group administrative functions 3-4 MSEK Administration, to be completed by year end Shared services, ongoing effects in 8 Group coordination of procurement 4 MSEK Centralized purchasing function with a clear mandate Many activities in process SAS Group subsidiaries SEK 2.1bn Operational flight costs SEK 1m Administrative and sales cost SEK 6m Ground/Technical SEK 5m 18% implemented 3, 2,5 2, 1,5 1,,5, Implemented Cost program Sep 3 2.8 To be implemented Fast track to be introduced at Oslo- Gardermoen 7 8
Profitable growth New routes and commercial initiatives Fall Decision to add one new long haul aircraft Copenhagen San Francisco (8) Copenhagen New Delhi (8) Long haul routes Copenhagen-Dubai (October) Stockholm-Bangkok (October) 18 new routes in Europe introduced New aircraft 2 B737-8 and 2 A319 () 3 B737-8 (8) 2 B737-8 (9) SAS Norway focus on leisure segment Reallocation of aircraft 12 new destinations S11 Target to grow 2% until 211 15-2 new aircraft Gunilla Berg 9 CFO Underlying 3 rd Quarter Result improved Full year Q4 direct result effect estimated to MSEK 6-7 3 rd Quarter Underlying result development July-September January-September SAS Group Q4 incidents direct result effect Q3 effect Q4 effect 5 5 MSEK first grounding estimate: MSEK 6 6 4 3 MSEK direct effect Income before nonrecurring items in 632 851-219 982 239 +743 3 MSEK indirect goodwill effect continuing operations Strike effects 3 35-5 1 Joint Venture Lufthansa/ECA Q4 effects 259 82 +177 + 57 147 +423 + sep oct nov-dec Underlying result improvement +158 +1 316 Q4 first grounding Estimated result impact = appr. 3MSEK Q4 second grounding Estimated result impact = appr. 3-4MSEK 11 12
Actions taken to mitigate negative passenger consequences from the grounding of Q4 SAS Norge and SAS Sverige close or above profitability targets Q4 permanently grounded on Oct 28 27 of the Group s 33 aircraft accounting for 5% of the capacity Measures to mitigate negative passenger consequences Review of network and reallocation of aircraft capacity within the SAS group External wet lease capacity External dry lease capacity Long term replacement is expected to start implementation in the 2 nd Half 8 As of early November, 8 wet leases secured Estimated to be 11-14 by end of November Almost 8% of capacity covered Q4 replacement in production 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % 29 Oct 12-nov 26-nov 1-dec 24-dec Due to wet lease, internal group changes, usage of reserves and minor timetable changes. SAS is able to recover quickly. Scandinavian Airlines Results EBIT margin EBT before nonrec. (MSEK) SAS Norge SAS Danmark SAS Sverige SAS Norge Q3 6.% 27 EBIT-margins, 12 months rolling +1.4 p.u. +6 SAS Danmark SAS Sverige SAS International Q3 Q3 Q3 8.6% +6.1 p.u. 5.3% +3.5 p.u. 1.5% -.4 p.u. 283 +213 18 +78 228-22 8.3% 6.3% 9.7% SAS International 1.4% 13 14 Strong improvement in Widerøe and Blue1 Weak Quarter in Spanair and STS Sum up 3 rd Quarter 3 rd Quarter Business Area Individually Branded Airlines SAS Aviation Services Subsidiary Spanair Widerøe Blue1 airbaltic STS EBT before nonrecurring items 16 1) 37 24 58-137 EBIT Margin, 12 months rolling -1.1% 6.2% 4.8% 3.8% -7.4% 2) vs. last year Key Drivers Ongoing activities Strong market growth Stable load Positive yield Cost & capacity control Strategy 211 under implementation Cost measures of SEK 2.8bn in process SGS -48 -.7% 2) SAS Cargo 1) Denotes EBIT 2) Denotes EBIT before nonrecurring items. 2 1.4% 2) Currently no clear signs of weaker market Q4 to affect full year negative by 6-7 MSEK 15 16