A new traffic system with simpler and more efficient production in the SAS Group’s airline companies is to provide the foundation for a profitable expansion and result in a strong improvement in earnings. In conjunction with the change in timetables in October 2002, SAS Airline will exit certain market areas in which the conditions are such that SAS Airline is unable to serve them on a profitable basis.

The SAS Group is implementing major realignments of the traffic and production programs in SAS Airline as well as the Group’s other airline companies, Braathens, Air Botnia, Spanair and Wideröe. The realignment will contribute to a better utilization of aircraft and a simpler production philosophy will result in increased punctuality and a more robust route network. This will increase the quality of SAS services for the benefit of customers.

“The offering to customers on strategically important business destinations will be strengthened and a more efficient production structure will create conditions for a sharp rise in the Group’s profitability,” says Jörgen Lindegaard, CEO and President, SAS Group.

The change in the traffic system is a step in the process to achieve a long-term earnings-improvement target of more than SEK 4 billion on an annualized basis, in addition to the action programs announced previously. The realignment will mean that other airlines within the SAS Group will take over part of the production that SAS Airline handles today. Certain routes operated by SAS Airline will be discontinued for profitability reasons.

SAS Airline is starting its new program for earnings improvement with the new customer offering, Scandinavian Direct, which is to be introduced in the Scandinavian market on June 1. “SAS Airline is currently being operated at a substantial loss,” says Marie Ehrling. “The earnings improvement of the planned measures within the framework of the traffic system corresponds to approximately half of the total goal of SEK 3-4 billion and will bring SAS Airline out of a loss situation.”

SAS Airline’s new traffic system was developed from the ground up, and it will now be possible to adapt operations more closely to demand and the customer base. Production will be simplified meaning that aircraft fly back and forth from the three base airports - from Stockholm to London, for example. Is this manner, conceivable problems are isolated and disturbance to the rest of the route network is minimized.

The planned measures will free up approximately 20 aircraft, which means that SAS Airline’s aircraft utilization will improve by about 5 percent. This will be achieved primarily by starting the traffic day earlier in Stockholm and Copenhagen than is currently the case, and by minimizing time spent on the ground at destinations away from the home bases.

The number of on-the-ground waiting periods at regional airports is also to be reduced, which will lead to SAS Airline having more aircraft at its home bases during the night, resulting in better quality during the early-morning period that is so crucial for the traffic day. “We also expect to be able to improve quality in terms of punctuality and regularity,” notes Marie Ehrling.

As a result of the traffic reorganization, SAS Airline will cease serving 13 destinations. Six of these will be served by other airlines within the SAS Group, while seven routes will be phased out. “We decided to present the plans now in order to enable other airlines to begin services to the affected destinations as early as this autumn,” says Marie Ehrling. “We are hoping that those employees who are made redundant could be offered work if other operators decide to begin flights to the affected locations.”

“SAS management will now initiate discussions with employees and the trade unions regarding how these production resources could be reallocated in a profitable manner,” say Marie Ehrling.

SAS Airline will gradually phase out services to the following destinations, beginning on October 27, 2002:
Copenhagen to Västerås, Jönköping, Norrköping and Wroclaw (Poland)
Stockholm to Kristianstad and Skellefteå
Copenhagen to S¿ndre Str¿mfjord (Greenland) effective April 2, 2003.

SAS Airline will also cease operations on the routes Stockholm-Turku and Stockholm-Tammerfors. Service on these routes will be taken over by SAS-owned Air Botnia.

In northern Norway, SAS Airline will cease its operations within the Norlink network. This will be a gradual process beginning in October 2002 when SAS-owned Wideröe will take over the routes. The final route network will depend on market developments.
The following routes are currently included in the Norlink network:
Troms¿-Alta/Lakselv/Kirkenes
Evenes-Troms¿/Bod¿/Trondheim
Lakselv-Kirkenes Braathens will take over SAS Airline’s Oslo-Troms¿-Kirkenes route.

The winter traffic program will also introduce new early-morning departures from Copenhagen to London, Amsterdam and Paris. In addition, the number of flights between Copenhagen and Frankfurt, Helsinki and Vienna, and between Stockholm and Helsinki will be increased.

Further information can be obtained from:
Marie Ehrling, Deputy CEO, SAS Group and Chief Operating Officer and Accountable Manager for SAS Airline, tel. +46 (0)8-797 21 56, or +46 (0)709-97 21 56
Gunnar Reitan, CFO, SAS Group, +46 (0)8 797 28 44, or +46 (0)709 97 28 44.

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