Six-month summary

Six-month summary · Operating revenue for the first half of 2002 amounted to MSEK 31,643 (25,948), an increase of 21.9%. For comparable units, operating revenue decreased by 3.4% while operating revenue in the second quarter rose 0.1%. · Income before depreciation and leasing costs for aircraft (EBITDAR) in the period January-June amounted to MSEK 3,832 (2,408). EBITDAR in the second quarter was MSEK 3,248 (1,237). · Income before capital gains amounted to MSEK -133 (219) in the first six months of the year. Income for the second quarter was MSEK 1,180 (142). · Consolidated income before tax amounted to MSEK -407 (220), of which Scandinavian Airlines accounted for MSEK -569 (-56). · The acquired companies Braathens and Spanair had a positive impact on consolidated income before tax of MSEK 315. · CFROI for the 12-month period July 2001-June 2002 was 11% (15%). Since the Group's return requirement is 20%, this result is far from what is required to meet the set target. · Earnings per share for the SAS Group for the period January-June amounted to SEK -2.15 (0.87) and equity per share amounted to SEK 89.62 (104.95). · Despite continued uncertainty as regards competitive and economic development, the SAS Group expects that income before tax, excluding capital gains, will be positive for 2002. Capital gains in 2002, including costs for phasing in and phasing out aircraft, will amount to at least MSEK 350. April - June January- March January - June (MSEK) 2002 2001 2002 2001 2002 2001 Operating revenue 17,868 13,811 13,775 12,137 31,643 25,948 EBITDAR 3,248 1,237 584 1,171 3,832 2,408 EBITDAR margin 18.2% 9.0% 4.2% 9.6% 12.1% 9.3% EBIT 1,354 167 -1,406 83 -52 250 EBIT margin 7.6% 1.2% -10.2% 0.7% -0.2% 1.0% Income before 1,180 142 -1,313 77 -133 219 capital gains 1,039 180 -1,446 40 -407 220 EBT 5.88 0.79 -8.17 0.08 -2.15 0.87 Earnings per share (SEK) 2(37) President's comments The SAS Group's earnings development in the second quarter followed the plan adopted by group management in 2001, designed to restore profitability and growth. The result for the period represents a strong recovery compared with the significant loss in the first quarter. The increase in operating revenue and earnings stems, among other things, from a determined program of operational change and the strategic acquisitions in Braathens and Spanair. The Group's strategic position has strengthened in several markets. Work within the Group in the spring followed four main lines: adjustment of capacity to current demand, long-term earnings improvements and greater competitiveness in airline and related operations, integration of the newly acquired companies, and implementation of the Group's new structure. Measures designed to get to grips with the immediate overcapacity caused by the events of autumn 2001 have been implemented successfully, and the cabin factor in the Group's aircraft has reached record levels. The earnings impact of these short-term measures is expected to reach a gross amount of MSEK 6,400 with full effect in 2003, of which MSEK 2,350 had been achieved by June 30. Competition in the airline industry today is tougher than ever and comes from both traditional airlines and low fare operators. Achieving sustained profitability and competitive prices requires customized products and cost levels which are radically lower than those we have today. Against this background, a process of structural and long-term change is now under way within Scandinavian Airlines which affects all parts of our operations - everything from products to production and distribution. These measures, which represent the biggest traffic restructuring in the company's history, will provide more accurate control and a considerably lower administration requirement. The total earnings impact of these measures is expected to amount to MSEK 4,000 on an annual basis from 2004. Added to this will be the effects of enhanced efficiency of administration at Group level, restructuring in other group companies and synergies from integration of acquired companies. The acquisition of Braathens has provided a strategic strengthening in one of our most important home markets. The ongoing integration of the company into the Group is not taking place without sacrifices for employees. Happily, however, we have already been able to achieve our aim of creating a more efficient traffic system in Norway and our customers have been able to benefit from our coordination in the form of lower fares. Braathens has made a significant contribution to our improved earnings in the second quarter. For Spanair, which has been consolidated since March 1, the closure of unprofitable routes and a changed strategic focus contributed to a significant improvement in earnings. Spanair is expected to be able to report a positive operating result for 2002. The turbulent and intensely competitive situation, which has now affected the airline industry for one year, has made it essential to focus on day-to- day operations. Over the longer term, and with several significant airlines within its sphere, the Group must ensure that it has appropriate control mechanisms. The SAS Group's structure with different business areas is designed to meet demands for professionalism at every level and for cooperation and coordination in the Group's best interests. The appointment of two new members to group management, which was announced today, will ensure the continued development of the Group's business areas. The past year has perhaps been the most demanding and tumultuous period in the history of the airline industry and SAS. The probable effect is that within a few years the industry will have undergone major changes focused towards fewer but more efficient airlines. For SAS the goal is unchanged: to emerge from this process stronger and more competitive than before the start of the crisis in the airline industry. The process of change which is now under way and the sense of purpose I encounter among SAS's employees, have strengthened my belief that we will succeed. But this will not take place without major efforts and sacrifices. We are still a long way from an acceptable earnings level and from the return which our shareholders are entitled to demand on their invested capital. The result for the second quarter of 2002 strengthens us for the work which remains in order to meet the high expectations rightly placed on us by our owners, customers and employees. Jørgen Lindegaard Outlook for the full year 2002 Development for the first and second quarter of 2002 has followed the plan to restore profitability and growth adopted by the SAS Group. The trend for the cabin factor and unit revenue (yield) was slightly stronger than expected in the second quarter. The prospects for these key factors in the immediate future are stable but there are risks in view of the market situation within Scandinavia and economic development in Europe. The short-term earnings improvement measures presented in autumn 2001 have had positive effects in the first half of the year and these effects will increase during the remainder of 2002. The process of structural change is going according to plan and will have effects in 2003 and 2004. At present the currency situation is favorable with a strong Norwegian krone and a slightly weaker dollar. This will have a positive impact during the rest of 2002 provided these levels remain unchanged. The fuel price is also lower in 2002 than it was in 2001. Both in the year-end report in February and in its report for the first quarter of 2002, the SAS Group expected income before tax, excluding capital gains, to be negative for the full year 2002 but better than in 2001. Despite continued uncertainty as regards competitive and economic development, the SAS Group expects that income before tax, excluding capital gains, will be positive for 2002. Capital gains in 2002, including costs for phasing in and phasing out aircraft, will amount to at least MSEK 350. Stockholm, August 7, 2002 SAS AB Jørgen Lindegaard President and CEO 3(37) 24(37) ------------------------------------------------------------ This information was brought to you by Waymaker The following files are available for download: The full report The full report

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