UnionÊContractsÊStrengthenÊSASÊGroup

The new union agreements within the SAS Group are now concluded and as a
result the Turnaround 2005 action program can be implemented as planned..
Concurrently, work is proceeding with incorporating Scandinavian
Airlines by establishing independent national companies within the SAS
consortium. The international flight operations will become a business
area within the SAS consortium.
The Turnaround 2005 action program will give the SAS Group long-term
competitiveness and profitability. Savings of about SEK 14 billion are
required for the program to succeed. Decided and defined actions
currently amount to SEK 12.5 billion and the remaining portion of about
SEK 2 billion related mainly to renewed union contracts for all
personnel groups.

“We have succeeded in achieving the savings required and thanks to the
responsible actions of the unions we now have the conditions to become
Europe’s most competitive network company,” says SAS CEO J¿rgen
Lindegaard.

There is still no agreement with the Swedish Transport Workers’ Union,
nor have the parties conducted any negotiations in this contract round.

Within the framework of Turnaround 2005, work continues to establish
independent airlines in Denmark, Norway and Sweden.

In Norway, Scandinavian Airlines will be integrated with Braathens and
the combined operations will become a subsidiary in the SAS consortium
under the name SAS Braathens. Based on the new contracts, the merged
company SAS Braathens gains a competitive cost level.

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In Denmark and Sweden, new limited liability companies will be
established and the personnel transferred to the new companies with the
union contract terms signed in this year’s contract activities.

The intercontinental flight operations will be organized as a business
unit in the SAS consortium.

Economic effects of the renewed union contracts
Compensation in the form of salaries and remuneration levels in the
union contracts yields a positive effect of about SEK 1.5 billion, with
full effect in 2005. The effect during the current year is estimated at
SEK 800 M.

The contract with the pilots is calculated to provide SEK 700 M, the
cabin contract about SEK 400 M and the other contracts the remaining
amount. This means that the SAS Group achieves the savings goal of SEK
14 billion in 2005. In addition, there are possibilities for further
savings of about SEK 500 M in selection of business and distribution
models.

The contract with the cabin personnel also includes simplifications in
the salary increment structure, which will also provide for further
savings even after 2005. In addition, there are synergy effects of about
SEK 200-300 M as a result of the merger of SAS Braathens in Norway and a
changed organizational structure.
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