SAS Group
MUSD 700 Revolving Credit Facility
November 26, 2001
SAS Finance
1 2001 -10 -26
Contents
1. September 11 – SAS Position- Measures
2. Share Structure and New Organisation
3. Financials Jan-Sep 2001
4. Braathens and Spanair
5. Financial Position
6. Fleet Composition
7. Financial Commitments & Asset Value Guarantees
SAS Finance
2 2001 -10 -26
Highlights
4A leading flag carrier
47th largest airline globally
450% State ownership
4Strong position in home markets
4Founding member of the Star Alliance
4Quality carrier with good growth prospects
4Strong balance sheet with an A3/P2 (under
review) rating
SAS Finance
3 2001 -10 -26
Scandinavian Airlines System / SAS Finance
MUSD Revolving Credit Facility
November 26, 2001
SAS Group
1995 – 2000 a period of stabile profit levels
Gains a natural part of ongoing business
3000 8 000 18%
16%
2500
14%
6 000
2000 12%
1500 10%
MSEK
4 000
8%
1000
6%
500 2 000 4%
2%
0
0 0%
MSEK 1995 1996 1997 1998 1999 2000 1995 1996 1997 1998 1999 2000 2001
(E)
PTP Gains EBITDAR EBITDAR margin
SAS Finance
4 2001 -10 -26
September 11
- SAS Position & Measures
SAS Finance
5 2001 -10 -26
Challenging times for the Airline Industry
4September 11, 2001 changed the industry
4September 11, 2001 changed the industry
4Worst airline crisis since the Gulf war
4Worst airline crisis since the Gulf war
– Sharp initial drop in Business travel
– Sharp initial drop in Business travel
4Great uncertainty
4Great uncertainty
– Threat of world recession
– Threat of world recession
– General fear of travelling
– General fear of travelling
A substantial hit in an already battered airline industry
A substantial hit in an already battered airline industry
SAS Finance
6 2001 -10 -26
Scandinavian Airlines System / SAS Finance
MUSD Revolving Credit Facility
November 26, 2001
SAS strengths in this scenario
4Limited direct exposure to the U.S.
4Limited direct
–Only 6,5% of revenues
–Only 6,5% of revenues
–Limited feeder effects
–Limited feeder effects
4Limited capacity on many Intercontinental routes
4Limited capacity on many Intercontinental routes
–High load factors prior to U.S. event
–High load factors prior to U.S. event
4Strong strategic position
4Strong strategic position
4Strong financial position
4Strong financial position
4Fleet flexibility
4Fleet flexibility
–Possibility to adjust pace of fleet replacement
–Possibility to adjust pace of fleet replacement
SAS Finance
7 2001 -10 -26
Limited direct U.S exposure
46,5% of Group
46,5% of Group
Passenger Revenue, 2000
revenues from North
revenues from North
Intercontinental
(14,6%)
Atlantic
Atlantic
4Limited feeder effects
4Limited feeder effects
– 500+ passengers
– 500+ passengers
transfers each day
Intra-Scandinavian Europé (41,0%)
(14,3%) transfers each day
Domestic (30,1%)
4Limited direct effect on
4Limited direct effect on
bottom line
bottom line
SAS Finance
8 2001 -10 -26
SAS AB Group
SAS weaknesses in this scenario
4High exposure to Business Class market
4High exposure to Business Class market
–Europe's largest Business Class share
–Europe's largest Business Class share
–Businesses reduce travel
–Businesses reduce travel
–Service and product costs
–Service and product costs
4In the middle of large fleet replacement program
4In the middle of large fleet replacement program
–Large capital requirement
–Large capital requirement
SAS Finance
9 2001 -10 -26
Scandinavian Airlines System / SAS Finance
MUSD Revolving Credit Facility
November 26, 2001
SAS Airline
Extended home market of > 100 million
people
4 Relatively large in a
4 Relatively large in a
European context
European context
4 High propensity to fly
4 High propensity to fly
4 Geography/ topography
4 Geography/ topography
– Few competing means of
– Few competing means of
transport
transport
4 A combination of mature/
4 A combination of mature/
and emerging markets
and emerging markets
4 Potential for consolidation
4 Potential for consolidation
– I.e. Braathens in Norway
– I.e. Braathens in Norway
SAS Finance
10 2001 -10 -26
Strong Base in Scandinavia
SAS Market Shares (2000)
SAS Mission: (excluding regional partners)
–In cooperation with selected
airlines, SAS shall offer Intercontinental
competitive air transport 25%
services within, between, to
37%
and from all three
Scandinavian countries 70%
–Alliance and partner airlines
60% Intra-
extend our home market to
more than 100 million people Scandinavian
–SAS and its regional partners 87%
serve more than 100
destinations in Scandinavia Europe
and neighboring countries Targets: 50%
SAS >40% of passengers to/from and
within eachScandinavian country
SAS Finance
11 2001 -10 -26
STAR Alliance – the World´s leading
Alliance
SAS BRITISH AIRWAYS AER LINGUS
ANSETT
LUFTHANSA AMERICAN IBERIA
ALL NIPPON
UNITED QANTAS FINNAIR
AUSTRIAN
AIR CANADA / CATHAY LAN CHILE
CANADIAN LAUDA AIR
THAI TYROLEAN SWISSAIR AIR LITTORAL
SINGAPORE SABENA
VARIG TAP
CROSSAIR
AIR NEW ZEALAND MEXICANA AOM
LOT
BRITISH MIDLAND AIR EUROPE
TURKISH
AIR FRANCE
KLM
DELTA AIR
NORTHWEST
AERO MEXICO
CONTINENTAL
KOREAN AIR
SAS Finance
12 2001 -10 -26
Scandinavian Airlines System / SAS Finance
MUSD Revolving Credit Facility
November 26, 2001
SAS & Partners - Global & Regional
Coverage 900 destinations in 130 countries
+ Regionals
Europe
N. & C. America 251 destinations
373 destinations 40 countries.
21 countries
Asia
98 destinations
M. East 25 countries
32 destinations
23 countries
Africa
11 destinations
8 countries
Australasia
S. America 83 destinations
49 destinations 2 countries
9 countries
SAS Finance
13 2001 -10 -26
Copenhagen is an efficient hub for SAS
Key characteristics
4No airspace or airport
4No airspace or airport
constraints
constraints
4SAS and partners under one
4SAS and partners under one
roof in Terminal 3
roof in Terminal 3
4Efficient transfers
4Efficient transfers
4Shorter walking times
4Shorter walking times
4High service levels
4High service levels
4Northern Europe's largest
4Northern Europe's largest
airport lounge
airport lounge
SAS Finance
14 2001 -10 -26
SAS Airline
Traffic Hub Copenhagen
4 Copenhagen’s catchement area
4 Copenhagen’s catchement area
comprises 100m people
comprises 100m people (Major hubs AEA punctuality statistics
(Major hubs AEA punctuality statistics
4 One of the best functioning,
4 One of the best functioning, 2000)
2000)
most punctual hubs in Europe
most punctual hubs in Europe Delay >15 minutes
Delay >15 minutes
4 Oslo
4 Oslo 12,1%
12,1%
– efficient reloading
– efficient reloading 4 Helsinki
4 Helsinki 14,0%
14,0%
– shorter lead times
– shorter lead times 4 Stockholm
4 Stockholm 14,3%
14,3%
– shorter transfer times
– shorter transfer times 4 Copenhagen
4 Copenhagen 14,3%
14,3%
4 Frankfurt
4 Frankfurt 20,0%
20,0%
– small airspace limitations
– small airspace limitations 4 London LHR
4 London LHR 25,0%
25,0%
4 Amsterdam
4 Amsterdam 28,7%
28,7%
4 Rome
4 Rome 29,1%
29,1%
4 Paris CDG
4 Paris CDG 31,3%
31,3%
4 Zürich
4 Zürich 32,0%
32,0%
4 Brussels
4 Brussels 33,3%
33,3%
4 Madrid
4 Madrid 36,4%
36,4%
4 Milan (MXP)
4 Milan (MXP) 36,6%
36,6%
SAS Finance
15 2001 -10 -26
Scandinavian Airlines System / SAS Finance
MUSD Revolving Credit Facility
November 26, 2001
Intercontinental strategy is still valid,
but we will adjust the pace
4 Replacement of aircraft will
4 Replacement of aircraft will
continue
continue
– Airbus A 340/330
– Airbus A 340/330
– Airbus A321
– Airbus A321
– Boeing 737
– Boeing 737
4 No order cancellations – but
4 No order cancellations – but
deferrals 2002/2003
deferrals 2002/2003
4 Increased pace in retirement
4 Increased pace in retirement
of aircraft
of aircraft
– DC9’s (all on op. lease)
– DC9’s (all on op. lease)
– Boing 767 (most on lease)
– Boing 767 (most on lease)
– F50
– F50
SAS Finance
16 2001 -10 -26
Fleet Renewal Program
Long haul/ Intercontinental (Boeing 767)
Long haul/ Intercontinental (Boeing 767)
4Airbus A 330/340
4Airbus A 330/340
12/15% lower cost per ASK than B767
12/15% lower cost per ASK than B767
Intra-Scandinavian/European peak
Intra-Scandinavian/European peak
4Airbus A 321
4Airbus A 321
13% lower cost per ASK than MD80
13% lower cost per ASK than MD80
Medium Range, European (MD80/DC9)
Medium Range, European (MD80/DC9)
4Boeing 737-6/7/800
4Boeing 737-6/7/800
4% lower cost per ASK than DC9/F28
4% lower cost per ASK than DC9/F28
Regional (F 50/F-28/Saab-2000)
Regional (F 50/F-28/Saab-2000)
4Q400
4Q400
22% lower cost per ASK than F50
22% lower cost per ASK than F50
SAS Finance
17 2001 -10 -26
SAS introduces a variety of measures to
offset effects from September 11
412% reduction in capacity 2002
412% reduction in capacity 2002
4Reduced pace in long-haul strategy
4Reduced pace in long-haul strategy
416 aircraft to be taken out of service
416 aircraft to be taken out of service
4800-1 100 redundancies
4800-1 100 redundancies
4Price increases of 5% from October 1, 2001
4Price increases of 5% from October 1, 2001
4Result improvement
4Result improvement
– 500-600 MSEK in 2002
– 500-600 MSEK in 2002
4In total MSEK 2000
4In total MSEK 2000
SAS Finance
18 2001 -10 -26
Scandinavian Airlines System / SAS Finance
MUSD Revolving Credit Facility
November 26, 2001
SAS reductions announced September 26
(%- reductions vs. planned capacity 2002)
Single
Trip ASK
Intercont -22 -20
Europe -10 -10
Intrascand -2 -3
Swedish domestic -9 -8
Total -7 -12
4Delhi, Kaliningrad, Stansted, Tel Aviv and Barcelona
4Delhi, Kaliningrad, Stansted, Tel Aviv and Barcelona
to be closed down
to be closed down
4Oslo- Newark operations ceased as from October 3,
4Oslo- Newark operations ceased as from October 3,
2001
2001
SAS Finance
19 2001 -10 -26
Additional improvement measures SAS Airline
announced November 6
4Traffic system, 3-5% capacity
4Revenue enhancement, 4USD/ pass leg
4New customer offers
4Cost measures MSEK 2400
– Efficiency
– Personell reductions
– New work processes
SAS Finance
20 2001 -10 -26
Redundancies amount to 2 500 SAS Airline
employees
No
Unit staff
World Sales 300
Scandinavian Flight Operation 120
Sandinavian Cabin Operation 570
Scandinavian Ground Services 590
Scandinavian Technical Services 550
Central functions 150
SAS Airline total 2 280
Other units 220
Total SAS Group 2 500
SAS Finance
21 2001 -10 -26
Scandinavian Airlines System / SAS Finance
MUSD Revolving Credit Facility
November 26, 2001
SAS Airline
The program (of Nov 6) target 3 500 MSEK
4SAS Airline
– Revenue enhancement 1 000 MSEK
– Reduced costs 2 400 MSEK
4Other units 100 MSEK
4Total 3 500 MSEK
SAS Finance
22 2001 -10 -26
Together the two programs sum
up to 5,5 billion SEK
4Program of September 26 2 000 MSEK
4Program of November 6 3 500 MSEK
4Total 5 500 MSEK
SAS Finance
23 2001 -10 -26
Share structure and new organisation
SAS Finance
24 2001 -10 -26
Scandinavian Airlines System / SAS Finance
MUSD Revolving Credit Facility
November 26, 2001
Former structure was not optimal from
a capital market point of view
Danish Private Norwegian Private Swedish Private
state shareholders state shareholders state shareholders
50% 50% 50% 50% 50% 50%
SAS Danmark A/S SAS Norge ASA SAS Sverige AB
2/ 2/ 3/
7 7 7
SAS Group
Airline Operations SAS International Hotels
4Individual market capitalisation too low to attract strong
international investors’ interest
SAS Finance
25
Simplified Capital Structure (as of July 6, 2001)
4 Founded in 1946 as a Consortium
4 Founded in 1946 as a Consortium
4 The sole flag carrier of 3 countries
4 The sole flag carrier of 3 countries
– Denmark and Norway (2/7 each)
– Denmark and Norway (2/7 each)
– Sweden (3/7)
– Sweden (3/7)
4 Listed on the 3 Scandinavian exchanges
4 Listed on the 3 Scandinavian exchanges
4 Owned 50% private // 50% governments
4 Owned 50% private 50% governments
4 One SAS share implemented
4 One SAS share implemented
SAS AB
SAS DANMARK A/S SAS NORGE ASA SAS SVERIGE AB
2/7 2/7 3/7
SAS
SAS Finance
26 2001 -10 -26
SAS AB Group
…and three different business areas
SAS Finance
27
Scandinavian Airlines System / SAS Finance
MUSD Revolving Credit Facility
November 26, 2001
SAS Market Capitalization vs. European Peers*
(Rebase 29 DEC 2000)
130
120
110
100
90
80
70 63,9
60
50
52,9
40
30
0 1 - j a n - 01-feb-0 1 - m a r - 01-apr- 01-maj- 01-jun- 01-jul- 01-aug- 0 1 - s e p - 01-okt- 01-nov-
01 01 01 01 01 01 01 01 01 01 01
Index Peers Index SAS
* Peers: Alitalia, Air France, British Airways, Finnair, KLM, Lufthansa & Swissair
SAS Finance
28 2001 -10 -26
SAS Market Capitalization vs. European Peers* measured in SEK
(Rebase 11 SEP 2001)
130
120
110
100
92,9
90
80 81,9
70
60
50
40
30
11-sep-01 11-okt-01 11-nov-01
Index Peers Index SAS
SAS Finance
29 2001 -10 -26
Increased volume in SAS AB vs
SAS AB (last year)
Number of shares traded in SAS per month
18 000 000
16 000 000
14 000 000
12 000 000
SAS Parent Comp 2000
10 000 000
8 000 000 SAS Parent Comp 2001
6 000 000 SAS AB
4 000 000
2 000 000
0
y
ne
ril
ly
h
Ma
ry
Ju
ary
er
Ap
arc
st
Ju
er
ua
gu
tob
mb
M
bru
Jan
Au
Oc
pte
Fe
Se
SAS Finance
30 2001 -10 -26
Scandinavian Airlines System / SAS Finance
MUSD Revolving Credit Facility
November 26, 2001
Group Management
Board of Directors
Board of Directors
Strategic Focus Areas - CEO Strategic Focus Areas -
Communications
4Corporate Development/M&A
CEO
CEO 4Customer Relations
4Alliances & Partnerships
4Group Brand & Image
4Customer Satisfaction
4Government & External
Relations
Strategic Focus Area - HR HR
HR Communications
Communications
4Communications
4People Capabilities
COO
COO CFO
CFO
Strategic Focus Areas - COO Strategic Focus Areas - CFO
4Shareholder Value/
4Operational Excellence
Investor Relations
4Finance & Capital
4Corporate Business Control
4Information Technology
Capabilities
SAS Finance
31 2001 -10 -26
Financials
Jan-Sep 2001
SAS Finance
32 2001 -10 -26
SAS AB
Statement of Income Group
jan-sep
jan-sep
MSEK
MSEK 2001
2001 2000
2000
Operating revenue
Operating revenue 38,623 34,731
38,623 34,731
Personnel costs
Personnel costs -12,967 -11,231
-12,967 -11,231
Other costs
Other costs -24,133 -21,095
-24,133 -21,095
Operating income bef. depreciation
Operating income bef. depreciation 1,523
1,523 2,405
2,405
Depreciation
Depreciation -1,732
-1,732 -1,443
-1,443
Income from the sale of aircraft,
Income from the sale of aircraft,
affiliated companies etc.
affiliated companies etc. 208
208 279
279
Operating result
Operating result 27
27 1,289
1,289
Interest income and other items
Interest income and other items -20
-20 -181
-181
Income before taxes
Income before taxes 7
7 1,108
1,108
SAS Finance
33 2001 -10 -26
Scandinavian Airlines System / SAS Finance
MUSD Revolving Credit Facility
November 26, 2001
SAS Group
EBITDAR down 13%
EBITDAR margin significantly down
MSEK 2001 2000 Change
4 Revenue 38 623 34 731 +12%
4 EBITDAR 3 290 3 734 -13%
4 EBITDAR 9% 11% -3 p.u.
margin
SAS Finance
34 2001 -10 -26
SAS Group
CFROI 1991-2001E
35% 4 Weak performance
30% 1991-1993
25% 4 Strong performance
20% 1994-1998
15% – Peak 1995
10%
5%
4 Weaker performance
0% 1999-2001
– Below target
91
93
94
95
98
99
00
92
96
97
01
19
19
19
19
19
19
20
19
19
19
20
CFROI Target
SAS Finance
35 2001 -10 -26
SAS Airline
Key airline profitability drivers
3 rd Quarter 2001 vs 2000
SAS Passenger Transport
4Traffic growth (RPK) up 3,1%
4Cabin Factor down 4,3 p.u.
4Yields down 2,1%
4Unit costs up 4,3%
SAS Finance
36 2001 -10 -26
Scandinavian Airlines System / SAS Finance
MUSD Revolving Credit Facility
November 26, 2001
SAS Airline
October figures
4Significantly reduced passenger load factor
4Business Class -15,9% - Economy Class -6,1%
Passenger- Seat capacity Cabin-
traffic (RPK) (ASK) factor
SAS Total -9,3% +5,3% -9,4 p.u.
Intercontinental -12,1% +4,6%
Europe -6,9% +8,4%
Domestic and -8,7% +2,5%
Intrascandinavian
SAS Finance
37 2001 -10 -26
SAS Airline
Intercontinental routes
Significant down from September 11
3m Moving average 4 U.S Airspace closed
4 U.S Airspace closed
September 11-14
September 11-14
20% – New York and
– New York and
15% Washington most
10% Washington most
5% affected
affected
0% – Seatlle route less affected
– Seatlle route less affected
-5%
-10% 4 Asian routes developed
4 Asian routes developed
-15% well
well
June
September
February
January
May
April
Marsh
July
August
October
– Up 3% Sep 11- Oct 31
– Up 3% Sep 11- Oct 31
– Tokyo and Bejing strong
– Tokyo and Bejing strong
Total Traffic Business Class – Delhi to be closed down
– Delhi to be closed down
February 2002
February 2002
SAS Finance
38 2001 -10 -26
SAS Airline
Traffic development SAS vs peers after
September 11 –North Atlantic
RPK change (%) North Atlantic 4SAS traffic down
4SAS traffic down
20 26,6%
26,6%
0
-20 4AEA traffic down
4AEA traffic down
-40 35,3%
35,3%
-60
35 36 37 38 39 40 41 42 43
Week
SAS AEA
SAS Finance
39 2001 -10 -26
Scandinavian Airlines System / SAS Finance
MUSD Revolving Credit Facility
November 26, 2001
SAS Airline
Traffic development SAS vs peers after
September 11 -Asia
RPK change (%) Asia 4SAS traffic up 2,3%
4SAS traffic up 2,3%
15
10
5 4AEA traffic down
4AEA traffic down
0
-5
15,5%
15,5%
-10
-15
-20
-25
35 36 37 38 39 40 41 42 43
Week
SAS AEA
SAS Finance
40 2001 -10 -26
SAS Airline
European routes
significantly weaker in Business Class
3rd Quarter 4Significant slowdown
4Significant slowdown
in Business Class
in Business Class
3m Moving average during May -August
during May -August
15% 4Slowdown accelerated
4Slowdown accelerated
10% after September11
after September11
5%
0% 4Business Class down
4Business Class down
-5%
-10% 36% on London after
36% on London after
-15% September 11
September 11
September
February
January
July
April
June
May
October
Marsh
August
4Weak also on most
4Weak also on most
other areas
other areas
Total Traffic Business Class
SAS Finance
41 2001 -10 -26
SAS Airline
Traffic development SAS vs peers after
September 11
RPK change (%) Geographical Europe
15 4SAS traffic down 3,9%
4SAS traffic down 3,9%
10
5
0 4AEA traffic down 9,8%
4AEA traffic down 9,8%
-5
-10
-15
35 36 37 38 39 40 41 42 43
Week
SAS AEA
SAS Finance
42 2001 -10 -26
Scandinavian Airlines System / SAS Finance
MUSD Revolving Credit Facility
November 26, 2001
SAS Airline
Intrascandinavian routes –
Less affected but mix weakens in October
3m moving average 4Significantly less
4Significantly less
affected
affected
15%
10% 4Weaker on feeder
4Weaker on feeder
5% routes to/from U.S.A
routes to/from U.S.A
0%
and Europe
and Europe
-5% 4Weaker to/ from
4Weaker to/ from
September
February
January
June
April
May
July
Sweden
October
Marsh
August
Sweden
– Weaker Swedish
– Weaker Swedish
Total Traffic Business Class economy
economy
SAS Finance
43 2001 -10 -26
SAS Airline
Danish domestic routes –
Improvements on main trunk routes
4Copenhagen – Aalborg
4Copenhagen – Aalborg
3m Moving average
and Copenhagen –
and Copenhagen –
8%
6%
Aarhus developed
Aarhus developed
4%
2%
positive
positive
0%
-2% 4Positive mix turned
4Positive mix turned
-4%
negative in September
negative in September
February
January
June
September
May
July
August
Marsh
October
April
Total Traffic Business Class
SAS Finance
44 2001 -10 -26
Norwegian domestic routes SAS Airline
affected by increased passenger fees
3m Moving average
4 Weak overall growth
4 Weak overall growth
30% – SAS gain market shares
– SAS gain market shares
20% 4 Strong recovery in
4 Strong recovery in
10%
Business Class
Business Class
0%
-10% – Up 9% January-
– Up 9% January-
-20% September
September
September
Marsh
October
January
July
August
February
May
April
June
4 Increased estimated over
4 Increased estimated over
Total Traffic Business Class capacity 12-14% (August)
capacity 12-14% (August)
is now 15-20%
is now 15-20%
SAS Finance
45 2001 -10 -26
Scandinavian Airlines System / SAS Finance
MUSD Revolving Credit Facility
November 26, 2001
SAS Airline
Swedish domestic routes
Significantly weaker
4Weaker growth in
4Weaker growth in
Swedish economy
Swedish economy
3m Moving average affect traffic growth
affect traffic growth
15%
4Slowdown accelerated
4Slowdown accelerated
10%
5%
in September/
in September/
0% October
October
-5%
February
January
June
September
April
May
July
August
Marsh
October
Total Traffic Business Class
SAS Finance
46 2001 -10 -26
SIH
SAS International Hotels’s –
a slowdown in 3rd Quarter
in MSEK
9m 9m
2001 2000 Change
Revenues 2 561 2 269 12,8%
Operating result 203 297 -32%
Adjusted EBITDA 203 295 -30%
Pre tax profit 81 487 n.m.
Including gains
SAS Finance
47 2001 -10 -26
Electronic Channels -
volumes up 17% first 9 months 2001
4 Products: Travel Pass -
4 Products: Travel Pass -
19%
Travel Pass Corporate
Travel Pass Corporate
17% (TPC), E-TIX, Internet
(TPC), E-TIX, Internet
15%
13%
4 Total volume E-channels
4 Total volume E-channels
11%
9%
MSEK 4 600
MSEK 4 600
7% 4 17% of total passenger
4 17% of total passenger
5% sales vs 9% Last Year
sales vs 9% Last Year
Ju 0
Ap 00
Ap 1
De 0
M 1
Au 0
1
0
Ja 0
M 0
M 1
N 0
M 0
-0
-0
-0
0
l-0
-0
0
p-0
c-0
0
1
0
b-0
1
b-0
t-0
r-0
-
g-0
r-
n-0
n-0
n-0
n-0
ay
ar
ar
ov
ay
Ju
Oc
Se
Fe
Fe
Ju
Ja
% sold 4 Target: more than 20% by
4 Target: more than 20% by
end 2001
end 2001
Note: 1 Euro = 8.851 SEK as of December 31, 2000
SAS Finance
48 2001 -10 -26
Scandinavian Airlines System / SAS Finance
MUSD Revolving Credit Facility
November 26, 2001
SAS Airline
Fuel cost – outlook 2001
4 Hedging ratio
4 Rest of 2001 55%
4 Next 12 months 48%
4 Estimate Full year 2001 MSEK 4 100
SAS Finance
49 2001 -10 -26
SAS AB
Group
Forecast for full year 2001 –
chronology of downgrades
4On August 8 forecast for full year 2001 ex gains MSEK
1200
4September 12 profit warning as mix worsen – at least
25% less than 2000
– No September 11 effect accounted for
4September 26 Result improvement measures to avoid a
loss for full year 2001
4November 6 – No signs of recovery – a loss of at MSEK
1500 -2000 expected for 2001
SAS Finance
50 2001 -10 -26
SAS AB
Group
The Board of Directors
Assessment for full year 2001:
4 Weaker economies in general
4 Significant impact from September11
4 Further improvement measures introduced
4 October traffic level for rest of 2001
4 Loss excluding gain for full year 2001 estimated
at MSEK 1 500 –2 000
SAS Finance
51 2001 -10 -26
Scandinavian Airlines System / SAS Finance
MUSD Revolving Credit Facility
November 26, 2001
Braathens and Spanair
SAS Finance
52 2001 -10 -26
Braathens Acquisition would give SAS
a Strong Position in Norway
4Very strong market position in Norway
4Very strong market position in Norway
4Reduced over-capacity improves profitability
4Reduced over-capacity improves profitability
4Positive feeder effects in SAS international network
4Positive feeder effects in SAS international network
4Significant pre -tax synergies
4Significant pre -tax synergies
– Increased pace in capacity adjustments and increased
– Increased pace in capacity adjustments and increased
focus on cost synnergies
focus on cost synnergies
– Expected NPV of MSEK 3000-4000
– Expected NPV of MSEK 3000-4000
4Transaction is good for passengers, lenders and the
4Transaction is good for passengers, lenders and the
shareholders of Braathens and SAS
shareholders of Braathens and SAS
4Approv ed by Norwegian competition authorities 23 Oct
4Approv ed by Norwegian competition authorities 23 Oct
SAS Finance
53 2001 -10 -26
Overview of Braathens
Norwegian business
Braathens Norway Route Network
Market Position
Longyearbyen
– Braathens has an
attractive domestic market
TromsØ
Harstad/ Narvik Bardufoss
BodØ
Kristiansund Trondheim
position in Norway
• 23 routes
Alesund Molde
Bergen
Haugesund Oslo
Stavander
• 8 owned aircraft
Aberdeen
Kristiansund
Newcastle
• 24 leased aircraft
Billund
London Amsterdam
• 6.3 million passengers
• Approximately 50% market
Milano share
Barcelona
Nice
Summary Financials
Norway
Malaga
Allcante
NOK MM 2000A Q1 2001A
Revenues 5,785 1,413
EBITDAR 319 39
SAS Finance
MORGAN STANLEY DEAN WITTER
54 2001 -10 -26
Scandinavian Airlines System / SAS Finance
MUSD Revolving Credit Facility
November 26, 2001
SAS to Take Control of a Strategic Asset
Ø Spanair is the main alternative carrier in the high
Ø Spanair is the main alternative carrier in the high
growth Spanish market
growth Spanish market
Ø Capitalise on Spanair’s very low cost base and large
Ø Capitalise on Spanair’s very low cost base and large
investment in slots. Potential to grow in the
investment in slots. Potential to grow in the
business segment
business segment
Ø Ambition to make Spanair an associated member of
Ø Ambition to make Spanair an associated member of
Star Alliance
Star Alliance
Ø SAS’ controlling position to be translated into
Ø SAS’ controlling position to be translated into
further transfer of management skills and system
further transfer of management skills and system
capabilities
capabilities
Ø Long haul to be closed down
Ø Long haul to be closed down
SAS Finance
55 2001 -10 -26
Key Transaction Terms
SAS to purchase an additional 25% stake
4Total ownership 74%
Convertion of loan €60million
SAS’s capital injection €52 million
4Continued involvement by Spanair founders
4Continued involvement by Spanair founders
4Joint holding company and earn-out
incentive structure
4Expected closing before end of December 2001
4Subject to EU Competition approval
SAS Finance
56 2001 -10 -26
Spanair is Well Positioned to Capture the Spanish Market
Growth Through its Investments in Slots and Capacity …
Market Share of Slots MAD (1) Market Share of Slots Barcelona(1)
Others
Air Europa 40%
7%
Air Europa Spanair
10% 8%
Iberia(2)
45%
Others
25%
Market Share of Slots Palma (1)
Iberia (2) Spanair
51% 14%
Others
63%
Spanair
11%
Air Europa Iberia (2)
Source: AENA 13% 13%
(1) Summer period (March -October); Including domestic and international operators
(2) Includes Air Nostrum
SAS Finance
57 2001 -10 -26
Scandinavian Airlines System / SAS Finance
MUSD Revolving Credit Facility
November 26, 2001
…and its Highly Competitive Cost Position…
Unit Cost Variations with Flight Distance, Europe 1999
Cost/Available tonne
Kilometre, US Cents
180
160
140
SAS
120
100
AEA Average
80
Cost advantage ≈ 40%
60
Average
Spanair (1) Spanair (2) flight distance
40 (Km)
20
0
600 800 1 000 1 200 1 400 1 600 1 800
Source: SAS Annual Report 2000 and Spanair Management
(1) Excluding Charter
(2) Including Charter
SAS Finance
58 2001 -10 -26
…While there Continues to be Room for Yield Improvement
by Increasingly Targeting Business Segments
Yield Variations with Flight Distance, Europe 1999
Revenue/Revenue tonne
Kilometre, US Cents
350
300
250 SAS
200
AEA Average
150
Potential for
improvements ≈100% Average
100
flight distance
(Km)
Spanair (1) Spanair (2)
50
0
600 800 1 000 1 200 1 400 1 600 1 800
Source: SAS Annual Report 2000 and Spanair Management
(1) Excluding Charter
(2) Including Charter
SAS Finance
59 2001 -10 -26
Further Transfer of SAS Management
Skills and System Capabilities
} SAS has recently appointed and will further appoint and transfer managers in
} SAS has recently appointed and will further appoint and transfer managers in
key positions
key positions
4General Management
4General Management
4Finance
4Finance
4Network planning
4Network planning
4IT/Hosting
4IT/Hosting
4Quality management
4Quality management
} Implementation of SAS systems are being evaluated
} Implementation of SAS systems are being evaluated
4Mobile solutions, Travel Pass, etc.
4Mobile solutions, Travel Pass, etc.
} Advantages for Spanair customers through the implementation of EuroBonus
} Advantages for Spanair customers through the implementation of EuroBonus
for the 160,000 Spanair Plus members, starting in March 2002
for the 160,000 Spanair Plus members, starting in March 2002
4“The Freddie Award” for best frequent flyer programme worldwide for 5th
4“The Freddie Award” for best frequent flyer programme worldwide for 5th
consecutive year
consecutive year
SAS Finance
60 2001 -10 -26
Scandinavian Airlines System / SAS Finance
MUSD Revolving Credit Facility
November 26, 2001
Financial Position
SAS Finance
61 2001 -10 -26
SAS Group
Balance Sheet
MSEK 31SEP01 31DEC00
Liquid funds 7 761 8 979
Other interest-bearing assets 7 896 4 790
Aircraft 17 391 15 985
Other assets 24 084 19 671
Total assets 57 132 49 425
Operating liabilities 14 826 13 250
Interest-bearing liabilities 24 327 17 684
Subordinated debenture loan 956 840
Minority interests 275 131
Equity 16 748 17 520
Total liabilities and equity 57 132 49 425
Net debt 5 586 794
SAS Finance
62 2001 -10 -26
Book Equity of SEK 17 billion &
Significant Surplus Values
4Surplus values of a/c fleet, ~MSEK 2,600 as of 3Q-01
4Surplus values of a/c fleet, ~MSEK 2,600 as of 3Q-01
4SAS International Hotels
4SAS International Hotels
4SMART
4SMART
4Flight Academy
4Flight Academy
4British Midland
4British Midland
4Other
4Other
Total Surpluses of USD 1,400-1,700 billion pre-sept 11
Total Surpluses of USD 1,400-1,700 billion pre-sept 11
USD 700-1,100 billion post-sept 11
USD 700-1,100 billion post-sept 11
Note: 1 Euro = 8.851 SEK as of December 31, 2000
SAS Finance
63 2001 -10 -26
Scandinavian Airlines System / SAS Finance
MUSD Revolving Credit Facility
November 26, 2001
Surplus Values in SAS Aircraft Fleet
Owned Fleet 30 september : 100 A/C
MSEK
Est Market value MSEK 19,740 Pre 11/9
Book value MSEK 14,500
Surplus value MSEK 5,240
Sensitivity analysis
Surplus values as of Sept 30 at market values valid pre Sept 11 5,240
Surplus value at 10% decrease in A/C value 3,266
Surplus value at 20% decrease in A/C value 1,292
Surplus value at 26.5% decrease in A/C value 0
SAS Finance
64 2001 -10 -26
SAS Group
Surplus values aircraft fleet 1994-2001
7 500
6 500
5 500
SEK Million
4 500
3 500
2 500
1 500
500
-500
2
3
6
9
2
3
6
9
2
3
6
9
2
3
6
9
2
3
6
9
2
3
6
9
2
1
1
1
941
950
950
950
951
960
960
960
961
970
970
970
971
980
980
980
981
990
990
990
991
000
000
000
011
030
060
090
SAS Finance
65 2001 -10 -26
Net Debt Development 9112-0109
Average-92 Average-93 Average - 94 Average -95 Average -96 Average-97 Average -98 Average-99 Average -00 Average -0109
MSEK13.000 MSEK 15.900 MSEK 9.700 MSEK 4.750 MSEK 2.350 MSEK 1.870 MSEK 1.950 MSEK 4.900 MSEK 2.400 MSEK 3.800
18 000
16 000
14 000
12 000
10 000
MSEK
8 000
6 000
4 000
2 000
0
91-12 92-12 93-12 94-12 95-12 96-12 97-12 98-12 99-12 00-12
Figures of parent company included from January,2000
SAS Finance
66 2001 -10 -26
Scandinavian Airlines System / SAS Finance
MUSD Revolving Credit Facility
November 26, 2001
Low Leverage, High Solidity
120%
100%
80%
60%
40%
20%
0%
98-12-31 99-12-31 00-12-31 01-09-30
Net debt / Equity NPV Operating lease + Net debt / Equity
Operating lease * 7 + Net debt / Equity Equity /assets ratio
SAS Finance
67 2001 -10 -26
SAS AB
SAS financial position is strong Group
compared with main competitors
SAS
SAS AF
AF BA
BA LH
LH
Adj net debt/
Adj net debt/
Booked equity
Booked equity 120%
120% 150%
150% 357%
357% 123%
123%
Based on analyst estimated 2001 results
Based on analyst estimated 2001 results
SAS Finance
68 2001 -10 -26
Fleet Composition
SAS Finance
69 2001 -10 -26
Scandinavian Airlines System / SAS Finance
MUSD Revolving Credit Facility
November 26, 2001
Fleet Plan 1999 –2010
200
A340 / A330
175
767 A321
150
125 MD-90
100 DC 9 - 81 MD-81 /-82 /-83
A/C MD-87
737-800
75
737-700
50
DC-9 737-600
25 F28
SAAB2000
F50 Q400
0 8
0
00
02
09
S99
S00
S01
S02
S03
S04
S05
S06
S07
S09
9
1
3
4
5
6
7
8
0
S0
S1
W9
W0
W0
W0
W0
W0
W0
W0
W1
W
W
W
SAS Finance
70 2001 -10 -26
Fleet Modernization
As of Dec -00
4 Average age of Owned aircraft 6 years
4 Average age of all aircraft in Operation 8 years
Fleet age declining with new Airbus, Boeing and Bombardier
deliveries and phase-out of DC9s, Fokkers and B767s.
SAS Finance
71 2001 -10 -26
SAS Fleet – high operational flexibility
4Phase-out leases of 27 a/c,
1 mts – 3 yrs remaining leaseterm
1 mts – 3 yrs remaining leaseterm
4Japanese Operational Leases (JOL) of 29 a/c,
3 –7 yrs remaining leaseterm
3 –7 yrs remaining leaseterm
4Joint Venture (Commercial Aviation Leasing Ltd)
in regard of 30 a/c,, 6 a/c per year can be terminated
6 a/c per year can be terminated
SAS Finance
72 2001 -10 -26
Scandinavian Airlines System / SAS Finance
MUSD Revolving Credit Facility
November 26, 2001
Firm Order CAPEX MUSD 1340
Aircraft Orders
Oct-Dec 01 2002 2003 2004 2005 2006
CAPEX (MUSD) 320 528 242 129 60 60
Aircraft on order 9 12 6 3 2 2
Airbus A340/330 9
Airbus A321 12
Boeing 737 8
Q400 5
34
Note: Deferral of Airbus and Boeing aircraft accounted herein.
SAS Finance
73 2001 -10 -26
Cash Flow vs Investments
12000
Q400
10000 Airbus
B737
8000
MSEK
6000
4000
2000
0
e
94
97
00
e
91
92
93
95
96
98
99
e
e
03
02
01
04
19
19
20
19
19
19
19
19
19
19
20
20
20
20
Investments Cashflow op + Asset Sales
SAS Finance
74 2001 -10 -26
Financial Commitments &
Asset Value Guarantees
SAS Finance
75 2001 -10 -26
Scandinavian Airlines System / SAS Finance
MUSD Revolving Credit Facility
November 26, 2001
High Financial Flexibility
Liquid Funds 30 Sept
Liquid Funds 30 Sept MSEK 7,750
MSEK 7,750 MUSD 730
MUSD 730
Committed Facilities
Committed Facilities
Bank Facilities
Bank Facilities Currency
Currency Unutilised 30/9-0 1
Unutilised 30/9-0 1
Revolving Credit Facility
Revolving Credit Facility MUSD 700
MUSD 700 700
700
Bilateral Bank Facilities
Bilateral Bank Facilities MUSD 150
MUSD 150 15 0
15 0
EIB
EIB MUSD 35
MUSD 35 35
35
Total
Total 885
885
Other Facilities
Other Facilities
Manufacturer Leasing
Manufacturer Leasing MUSD
MUSD 220
220 220
220
Manufacturer Leasing
Manufacturer Leasing MUSD
MUSD 85
85 85
85
Grand Total
Grand Total MUSD
MUSD 1,920
1,920
Uncommitted Facilities
Uncommitted Facilities
Euro Medium Term Note
Euro Medium Term Note MEUR 1,000
MEUR 1,000 400
400
Euro Commercial Paper
Euro Commercial Paper MUSD 500
MUSD 500 400
400
Swedish Commercial Paper
Swedish Commercial Paper MSEK 3,000
MSEK 3,000 2,300
2,300
Uncommitted Bank Facilities
Uncommitted Bank Facilities MSEK 3,350
MSEK 3,350 3,350
3,350
SAS Finance
76 2001 -10 -26
Potential Sources of Capital
Equiv MSEK
Export Credit Support
ECA for Airbus MUSD 800 8500
US ExIm for Boeing MUSD 110 1200
Sale & Lease-backs
2 A340-300s MUSD 200 2 100
6 B737-700s & 4 -800s MUSD 340 3 600
5 Dash Q400s MUSD 85 900
Bi-lateral loans
Relationship Bank MNOK 1800 2 000
Relationship Bank MNOK 250 300
EMTN Issuance
Japanese Investor MUSD 300 3 150
Securitisations
EETC MUSD 500 5 300
TOT 27 050
SAS Finance
77 2001 -10 -26
Additional Sources of Capital
ADDITIONAL SOURCES OF CAPITAL
Equiv MSEK
Real Estate Sales
Total Real Estate 4 860
Non-Core Subsidiaries
SAS International Hotels &
SMART MSEK 5000-6000 5000-6000
SAS Finance
78 2001 -10 -26
Scandinavian Airlines System / SAS Finance
MUSD Revolving Credit Facility
November 26, 2001
Financial support from manufacturers
Boeing, Bombardier & Airbus
Aircraft type Residual value
guarantee (AVG)
Boeing 737 -600 13
de Havilland Q400 28
Airbus 330/340 10
SAS Finance
79 2001 -10 -26
Debt Maturity Profile
Debt profile by category, 2001-09-30
20,000
18,000
16,000
14,000
SHORT
12,000
Fin. Lease
MSEK
10,000
EIB
8,000 EMTN
Multi Option Facility
6,000
Perpetual Sub.
4,000
2,000
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
SAS Finance
80 2001 -10 -26
Composition of financing
Outstanding Amount Spread over "Libor"
Debt Facility in SEK as of 30Sep (basispoints)
Multi Option Facility 2 710 32,5
EMTN 5 751 83,6
EIB 3 765 13,4
Fin. Leases 2 477 41,3
Sub. Perpetual 956 -56
ECP 1 158 0
Domestic CP 700 5
17 518 MSEK 38 Bps
Gross Debt Average Spread
SAS Finance
81 2001 -10 -26
Scandinavian Airlines System / SAS Finance
MUSD Revolving Credit Facility
November 26, 2001