New Restructuring Measures for SAS

The Board of Directors of the SAS Group has today provided the SAS Group
management team a mandate to implement comprehensive restructuring
measures to ensure the Group`s profitability, long-term competitiveness
and efficient flight operations for the Group`s airlines.

The SAS Group is already implementing two restructuring programs, with a
total earnings effect of SEK 12.5 billion prior to 2005. It is estimated
that the additional measures will result in further cost savings of SEK
6-8 billion, providing the remaining union negotiations are completed
according to plan.

“These measures are necessary for the Group`s ability to compete and
will represent a healthy platform for future expansion. We have achieved
excellent results in negotiations with all of the unions, except for
cabin employees. Agreements have been signed with 35 of the 39 unions
and the SAS Board has assigned us to complete the discussions with the
remaining parties,” says J¿rgen Lindegaard, SAS`s CEO, who continues:
“We are aware that flight competition in Scandinavia will be intensified
and we must therefore be well-equipped for the future. We must be able
to offer additional and less expensive travel in the Scandinavian
market. The ambition is to enhance the traffic with additional routes
from Stockholm and Oslo”
At full effect, the restructuring steps will reduce Scandinavian
Airlines` average unit costs by approximately 30 percent, which
corresponds to the goals established for the new restructuring measures..

Constructive union cooperation:
The restructuring program was preceded by extensive analysis and
constructive dialog with the unions.
“We have made several ground-breaking changes to old collective
agreements and the unions have assumed major responsibility for us now
being able to continue our efforts to become a stronger company. In
cooperation with Group management, they have laid the foundation for a
lower cost level, thereby opening the door for expansion,” says J¿rgen
Several fundamental changes to agreements will make it possible to
substantially raise productivity. The collective agreements with
Scandinavian Airlines` pilots will enable such steps as increasing the
number of hours in the air - “block hours” - from the current level of
490 to more than 700.
Most unions have also accepted the Group`s proposal for a wage-freeze in
The measures within the framework of the new program will commence
during the spring and the program in its entirety is expected to have
full effect within 18 months.

The efficiency measures will result in overmanning of about 4,000
persons, in addition to measures already approved. The majority of the
persons affected are within Scandinavian Airlines` administration, cabin
crew and pilots, ground staff in station operations, Scandinavian Ground
Services, personnel within SAS Technical Services and sales staff at SAS
World Sales.
Simplified base organization:
Through greater autonomy for Scandinavian Airlines` bases in Copenhagen,
Oslo and Stockholm, and planning of each base`s flight operations, work
methods, management and decision-making processes will be simplified,
with minimized need for coordination.
Scandinavian Airlines will also conduct a redistribution of its aircraft
fleet and minimize the number of aircraft types at each base. Flight
personnel will mainly start and end their day at their home bases,
thereby reducing the number of layovers. The separation of the bases in
Copenhagen, Oslo and Stockholm will also apply to administration and
If, contrary to expectations, the remaining negotiations do not bring a
satisfactory result, the SAS management will evaluate alternative
measures within the Group to enable profitable flight operations on
shorter routes, with an emphasis on domestic.