New direction will ensure SAS’s future

To strengthen the SAS Group’s position as Northern Europe’s leading airline the Board of Directors of SAS has decided to give the company a new direction. SAS is to concentrate on its core business – flying to, from and within Northern Europe, the home market of our most important customer groups and where SAS’ market position is also the strongest. Certain units that do not belong to the core business – such as Spanair – will be sold. Results are to be created for future capital expenditure and development.“The airline market is changing rapidly. We want to be in the forefront in terms of giving customers the best service and the most attractive fares,” says SAS CEO Mats Jansson. To ensure our development and cover our future investment needs we must from now until 2011 increase our pre-tax profit to approximately SEK 4 billion per year while simultaneously lowering our costs by SEK 2.8 billion. For example, we will be scaling back the central administration and moving the headquarters from Frösundavik as soon as this is practicable.

“A new cooperation model with the unions will be established. We have to abandon the strike culture that has long existed at SAS. We have to stand together behind a new customer-oriented business culture based on the needs, requirements and expectations of customers. This will ensure our future as a strong and independent airline and also give us an opportunity to involve employees in the value that is created through profit sharing and part ownership,” says Jansson.

The competitive situation in aviation is changing at a rapid pace. A growing number of airlines are putting pressure on airfares for both leisure and business travel. SAS shall offer the market’s best value products where customers will have great freedom to personally design the content. Our customer relations, punctuality and regularity shall be among the best in the industry. The range of nonstop routes and departures will be increased. New concepts for leisure travel will be developed.

Through the new direction SAS will create over a four-year period the preconditions for growth in all markets and increase the number of passengers by a total of 20 percent.

Airline operations will be operated by Scandinavian Airlines Danmark, Norge, Sverige and International, Blue 1, Widerøe, airBaltic and Estonian Air. Holdings in other airlines, Spanair, bmi, and Air Greenland, will be sold.

The future structure and roles of other operations, such as SAS Ground Services (SGS), SAS Technical Services (STS) and Spririt, will be evaluated. The purpose is to determine which parts of its operations SAS should continue to operate on its own and which parts should be operated by other players. This evaluation is taking place during this autumn in consultation with affected employees and other stakeholders.

The decision about the new direction was made by the SAS Board of Directors on 13 June. Negotiations and discussions with affected unions will be started immediately. The Board believes it will be feasible to implement these measures in 2007-2009.

SAS strategic plan will be presented at a press conference today, 13 June, at 17.00 CET at SAS head office, Frösundavik, Solna.

SAS Group Corporate Communications