Sas AB

Credit Research
2 November, 2016
CDS Index D/D change

(bps)
Morning Roundup 2.5
Credit News 1.5
1
Standard & Poors ratio of downgrades to total rating actions dipped to 63% in
0.5
the third quarter, down from 72% in the second quarter. Credit/spread
positive/neutral. 0
Nasdaq Stockholm published trading activity in 27 listed bonds amounting to -0.5

MSEK 311 turnover.
-1
For full text as well as trading comments and reported transactions please see the 1.Nov 31.Oct 28.Oct 27.Oct 26.Oct
respective section in the document.
iTraxx Main Senior Financials Scandies
Nordic Issues since last report Key data

Issuer Maturity CCY Amount Rank Ratings Coupon CDS indices generic 5-years Change (bps)
Landshypotek Bank 2021-10-25 SEK incr 1125m Cov A-/- 3m +75bp* Mid 1D 5D YTD
Lnsfrskringar Hypotek 2022-09-21 SEK incr 1850m Cov -/- 2.25%* iTraxx Main 75 2 3 -3
So urce: B lo o mberg, as repo rted by 07:00 CET o n the day o f publishing *pricing fro m initial issue
iTraxx X-over 335 5 13 20
Recent Published Research Equity indices Change (%)

Last 1D 5D YTD
Fingrid (Q3 2016),2016-11-01 OMX Stockholm 506 -1.1 -2.2 0.2
Statkraft (Q3 2016),2016-10-31 OBX Oslo 570 0.1 -1.2 5.8
Scania (Q3 2016),2016-10-31 OMX Helsinki 8,297 -1.0 -3.6 -3.5
Swedavia (Q3 2016),2016-10-31 OMX Copenhagen 695 -1.7 -5.4 -11.5
SSAB (Q3 2016),2016-10-31 Interest rates Change (bps)

PostNord (Q3 2016),2016-10-31 Last 1D 5D YTD
Stockmann (Q316: Cost streamlining starts to pay off),2016-10-30 STIBOR 3M -0.546 -0.6 -2.7 -25
Electrolux (2016 Q3 result),2016-10-28 Swedish 5Y -0.326 0 1 -62
D. Carnegie (The full effect has yet to be seen),2016-10-28 Norwegian 5Y 0.973 0 3 11
Skanska (Q316: Setbacks in Poland dont shake the building),2016-10-28 Euro 5Y -0.395 0 4 -35
Currencies Change (%)

For our Rating List, please click here: Rating list as August 31, 2016 Last 1D 5D YTD
EURSEK 9.91 0.0 -1.9 -7.4
USDSEK 8.95 0.1 -0.5 -5.7
NOKSEK 1.1 0.0 -1.3 -12.4
USDNOK 8.2 0.1 0.8 7.7
Commodities Change (%)

Last 1D 5D YTD
Brent 48 -0.6 -4.3 28.3
Gold 1,292 0.3 2.2 21.9
Credit Research
Large Corporates & Institutions
Swedbank
Please see important disclosures at the end of this document

Report was ready at 02.11.2016 07:21 and published at 02.11.2016 07:21
Credit Research - Morning Roundup
Credit News
Standard & Poors ratio of downgrades to total rating actions dipped to 63% in the
third quarter, down from 72% in the second quarter. Credit/spread positive/neutral.
Standard & Poors downgraded 197 issuers (accounting for USD 890bn in rated debt) and
upgraded 117 issuers (accounting for about USD 606bn) in the third quarter of 2016. The
ratio of downgrades to total rating actions has dipped to 63% from 72% in the second
quarter, its highest level since the financial crisis, which peaked at 93% in the first quarter of
2009. Despite these downgrades, the negative bias (a forward-looking measure of
downgrade potential over the next one to two years) now approximately matches its
historical average at 21%, while its counterpart, the positive bias, remains near record lows
at 7%. Standard & Poors continue to believe that credit markets around the globe are
largely stable, balanced by slight improvements in Europe and developed economies
outside of the US and negative in the emerging markets. Global forest products and building
materials, and automotive sectors have steadily improved since last quarter from the credit
quality perspective. Although downgrade risk is expected to be concentrated in the energy
segment (particularly oil and gas), a certain improvement is expected here amid a recovery
in commodity prices.
Comment: Statistics basically confirming our view of an improving credit quality trend in
Europe. Although the pressure remains in the commodity sector we anticipate a significant
relief going forward, already visible concerning e.g. base metals.
02 November, 2016 Please see important disclosures at the end of this document Page 2 of 6
Trading Comment
There was a few prints in the SEK market today and some trading IG names on the back of
that. In HY we had mixed flows across sectors but spreads remained relatively unchanged.
In EUR we had two way activity in the short end of the curve and some small selling in the
3-5 year segment in corporates. Spreads were broadly unchanged.
NASDAQ Stockholm reported bond transactions
Traded Spread - Spread -
ISIN Description (m n) High price Low price high price low price
SE0006594412 FOURFN 11 3/4 03/27/18 2.0 102.00 101.85 1069 1081
SE0006287496 FVHSAM 1 1/2 09/16/19 #MTN 6.0 103.37 103.37 70 70
SE0008322051 SOLT1 0.1 100.00 94.00
SE0008294342 BYANDR 0 04/29/21 1.0 102.70 102.70 438 438
SE0005878352 CORESS 0 04/11/17 1.0 100.49 100.49 215 215
SE0006964821 EKTAB 0 03/26/20 2.0 99.40 99.40 138 138
SE0005217684 GETAB 0 05/21/18 1.0 100.08 100.08 183 183
SE0006453262 HEXAG 1 5/8 11/26/19 #103 6.0 102.55 102.55 114 114
SE0006453270 HEXAG 0 11/26/19 11.0 101.29 101.29 108 108
SE0005280492 ICASS 3 1/2 06/25/18 #102 0.5 105.48 105.48 67 67
SE0006028114 ICASS 0 06/17/19 43.6 102.04 101.96 90 91
SE0006994265 IKANO 0 04/15/20 12.0 99.15 98.74 121 127
SE0006425641 JERNAB 0 10/30/19 5.0 99.66 99.66 66 66
SE0005757358 KLOVSS 0 03/04/18 65.0 101.08 100.75 212 224
SE0006799987 KLOVSS 0 03/02/19 40.0 102.70 102.55 277 281
SE0008293823 MAGBOS 0 04/28/20 1.0 105.69 105.69 505 505
SE0005991635 MEDAA 0 05/21/19 13.0 101.46 100.75 122 136
SE0006371381 COMHSS 5 1/4 11/04/19 # 1.0 103.00 103.00 100 100
SE0008374425 OPUSSS 0 05/26/21 24.0 104.00 103.90 436 437
SE0005932159 ORXSS 0 05/09/18 6.0 95.40 95.25 778 784
SE0005936390 OSCARP 0 09/03/19 1.0 98.55 98.55 660 660
NO0010689342 RPLINV 0 09/19/18 8.0 52.50 51.00 4592 4686
SE0005731916 RIKSHM 0 02/20/17 10.0 100.01 100.01 52 52
SE0009155278 VRSTRA 0 09/23/20 40.0 100.37 100.37 101 101
SE0004950517 SSABAS 0 12/13/17 1.0 101.70 101.70 189 189
SE0004899961 SWEDA 0 11/21/22 1.0 102.55 102.55 110 110
SE0005033636 VOLVAB 0 01/24/17 9.0 100.29 100.27 52 56
Source: Published transactions as of 07:00 CET on the day of publishing
Credit Research Sweden and Finland
Mikael Busch Francis Dallaire Maria Gillholm Michael Johansson Jakob Midander
Sweden
Head of Credit Tier I banks Rating Junior Analyst Tier II banks
Research Tier II banks methodology Real Estate Insurance
Industrials Saving banks Real Estate Covered bonds
Consumer Goods Sub. debt IG/HY Sub. Debt
AT1 bonds AT1 bonds
Regulatory issues Regulatory issues
mikael.busch francis.dallaire maria.gillholm michael.a.johansson jakob.midander

@swedbank.se @swedbank.se @swedbank.se @swedbank.se @swedbank.se
+46 7 009 023 83 +46 8 700 9763 +46 8 700 9153 +46 72 219 36 91 +46 8 700 9901
Ingvar Matsson Sven Skld Andreas Lindstrm Erkki Vesola

Sweden Finland
Utilities & energy Telecoms Market Analyst Construction
Forest & Investment Quantitative IG/HY
packaging companies analysis Regional specialist
Metals & mining Services DCM case driven
Credit Risk models HY
Retail
ingvar.matsson sven.skold andreas.lindstrom erkki.vesola

@swedbank.se @swedbank.se @swedbank.se @swedbank.fi
+46 8 700 9349 +46 70 382 25 53 +46 72 572 2918 +358 20 746 9114
Analysts
Francis Dallaire Jakob Midander Michael Johansson
Senior Credit Analyst Credit Analyst Junior Credit Strategist
francis.dallaire@swedbank.se, +46 8 700 9763 jakob.midander@swedbank.se, +46 8 700 9901 michael.a.johansson@swedbank.se, +46 72 219 3691
Maria Gillholm Sven Skld Linus Thand

Senior Credit Analyst Senior Credit Analyst Chief Credit Strategist
maria.gillholm@swedbank.se, +46 8 700 9153 sven.skold@swedbank.se, +46 70 382 25 53 linus.thand@swedbank.se, +46 8 700 9151
Ingvar Matsson Erkki Vesola Mikael Busch

Senior Credit Analyst Senior Credit Analyst Head of Credit Research
ingvar.matsson@swedbank.se, +46 8 700 9349 erkki.vesola@swedbank.fi, +358 20 746 9165 mikael.busch@swedbank.se, +46 70 090 23 83
Swedbank Large Corporates & Institutions

Credit Research's disclaimer
What our research is based on For important U.S. disclosures, please reference:
http://www.swedbanksecuritiesus.com/disclaimer/index.htm
Swedbank Large Corporates & Institutions Credit Research (LC&I Credit Research)
department bases the research on a variety of aspects and analysis. For example: A Limitation of liability
fundamental assessment of a company's financial and business profile, current or All information, including statements of fact, contained in this research report has been
expected market sentiment, expected or actual changes in a company's credit rating, obtained and compiled in good faith from sources believed to be reliable. However, no
internal or external circumstances affecting the credit quality of the company and relative representation or warranty, express or implied, is made by Swedbank with respect to the
assessment of the company compared to peers or other relevant companies. completeness or accuracy of its contents, and it is not to be relied upon as authoritative and
Trading recommendations for fixed-income securities are mostly base on the credit spread should not be taken in substitution for the exercise of reasoned, independent judgment by
(yield difference between the security and the relevant government bond or swap rate). you.
Based on the type of investment recommendation or credit assessment, the time horizon Be aware that investments in capital markets - such as in this document - carry economic
can range from short-term up to 12 months. risks and that statements regarding future assessments are comprehended with uncertainty.
Recommendation structure You are responsible for such risks alone and we recommend that you supplement your
decision-making with that material which is assessed to be necessary, including (but not
Swedbank LC&I Credit Research's recommendation structure consists of several levels:
limited to) knowledge of the financial instruments in question and the prevailing requirements
issuer, sector and instrument. Depending of the level of recommendation, it could be in
as regards trading in financial instruments.
absolute or relative terms.
Opinions contained in the report represent the analyst's present opinion only and may be
For Swedbanks previous recommendations please follow the link:
subject to change. In the event that the analyst's opinion should change or a new analyst with
https://research.swedbank.se/files/RecoTrackList/CreditRecoTrackList.pdf
a different opinion becomes responsible for our coverage of the company, we shall
Issuer level endeavour (but do not undertake) to disseminate any such change, within the constraints of
any regulations, applicable laws, internal procedures within Swedbank, or other
Swedbank LC&I Credit Research uses a shadow rating system based on the same
circumstances.
terminology as Standard & Poor's ranging from AAA-D.
If you are in doubt as to the meaning of the recommendation structure used by Swedbank in
Credit ratings on issuer level are in absolute terms. In any case, ratings or any kind of
its research, please refer to "Recommendation structure".
research should not be used or relied upon as an investment advice. Changes in ratings
This research report is produced for general distribution to eligible recipients and Swedbank
are not the equivalent of overweight, market weight or underweight of any of the
is not advising nor soliciting any action based upon it. If you are not a client of ours, you are
company's outstanding bonds, commercial papers or credit default swaps. A change in the
not entitled to this research report. This report is not, and should not be construed as, an
credit rating indicates our view of the actual issuer and its credit quality. This should not be
offer to sell or as a solicitation of an offer to buy any securities.
confused with a recommendation.
To the extent permitted by applicable law, no liability whatsoever is accepted by Swedbank
Sector level for any direct or consequential loss arising from the use of this report.
Strong Overweight/Overweight: the return by increasing exposure to this sector is Conflicts of interest
expected to exceed the return of the credit market in general.
In Swedbank LC&I, internal guidelines are implemented in order to ensure the integrity and
Market weight: the return by having exposure to this sector is expected to be in line with
independence of the research analysts.
the return of the credit market in general.
The guidelines include rules regarding, but not limited to: contacts with the companies
Underweight/Strong Underweight: the return by having exposure to this sector is
covered; personal involvement in the companies covered; participation in investment banking
expected to be lower than the return of the credit market in general.
activities and supervision and review of research reports. For example:
Instrument level
Research reports are independent and based solely on publicly available information.
Cash bonds:
Strong Overweight/Overweight: the return by holding this instrument is expected to The remuneration of staff within the Credit Research department may include
discretionary awards based on the firm's total earnings, including investment banking
exceed the return of equivalent bonds, the sector or the credit market in general.
income. However, no such staff shall receive remuneration based upon specific
Market weight: the return by holding this instrument is expected to be in line with the
investment banking transactions.
return of equivalent bonds, the sector or the credit market in general.
Underweight/Strong Underweight: the return by holding this instrument is expected to Company-specific disclosures & potential conflicts of interest
be lower than the return of equivalent bonds, the sector or the credit market in general.
In view of Swedbank's position in its markets, you should assume that Swedbank may
Credit Default Swaps: currently (or may in the coming three months and beyond) be providing or seeking to provide
confidential investment banking services to the companies referred to in this report.
Buy protection: we expect the CDS-spread to widen more than the spread for peers'
You should note that it may happen that Swedbank, its directors, its employees or its
CDSs, the sector in general or an aggregated index.
subsidiary companies at various times have had, or have sought, positions; advisory
Neutral: we expect the CDS-spread to develop in line with the spread for peers' CDSs, the
assignments in connection with corporate finance transactions; investment or merchant
sector in general or an aggregated index.
banking assignments and/or lending as regards companies and/or financial instruments
Sell protection: we expect the CDS-spread to tighten more than the spread for peers'
covered by this report.
It may also occur that Swedbank LC&I may act as a sponsor in trading with financial
Analyst's certification instruments covered by this report.
The analyst(s) responsible for the content of this report hereby confirm that Planned updates
notwithstanding the existence of any such potential conflicts of interest referred to herein,
An investment recommendation for a company that Swedbank LC&I monitor is normally
the views expressed in this report accurately reflect their personal views about the
updated when the company has published an interim report. An update is normally made on
companies and securities covered. The analyst(s) further confirm not to have been, nor
the day after publication. In certain cases, a recommendation may be updated in the days
are or will be, receiving direct or indirect compensation in exchange for expressing any of
leading up to the said report. When required, for example if the company has some
the views or the specific recommendation contained in the report.
extraordinary items of news, an investment recommendation may also be updated during the
Issuer, distribution & recipients period between the reporting dates.
This report by Swedbank LC&I Credit Research is issued by the Swedbank Large Reproduction & dissemination
Corporates & Institutions business area within Swedbank AB (publ) ("Swedbank").
This material may not be reproduced without
Swedbank is under the supervision of the Swedish Financial Supervisory Authority
permission from Swedbank LC&I. This report may not be disseminated to physical or legal
(Finansinspektionen) and other financial supervisory bodies where Swedbank and LC&I
persons who are citizens of, or have domicile in, a country in which dissemination is not
have branches.
permitted according to applicable legislation or other decisions.
Swedbank is a public limited liability company and a member of the stock exchanges in
Reproduced by Swedbank Large Corporates & Institutions, Stockholm 2016.
Stockholm, Helsinki, Oslo and Reykjavik, as well as a member of EUREX.
This report is distributed by Swedbank's branches. In no instance is this report altered by Address
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In Estonia this report is distributed by Swedbank AS, which is under the supervision of the
Visiting address: Landsvgen 40, Sundbyberg.
Estonian Financial Supervisory Authority (Finantsinspektsioon).
In Lithuania this report is distributed by "Swedbank" AB, which is under the supervision of
the Securities Commission of the Republic of Lithuania (Lietuvos Respublikos vertybini
popieri komisija).
In Latvia this report is distributed by Swedbank AS, which is under the supervision of The
Financial and Capital Market Commission (Finanu un kapitla tirgus komisija).
In the United States this report is distributed by Swedbank Securities US LLC ('Swedbank
Securities), which accepts responsibility for its contents. Any United States institutional
investor receiving the report, who wishes to effect a transaction in any security discussed
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member of the Financial Industry Regulatory Authority. Swedbank Securities is part of
Swedbank Group.
Credit Research
Type your text here
10 June, 2016
SAS
Q2 2015/2016 quick comment
Q2 2015/2016 credit/spread neutral/negative

High maintenance costs and negative currency effects added
pressure on the quarter
On balance we remain marketweight in the name
Q2 2015/2016 in summary
Revenue amounted to SEK 8,916mn (9,403). After adjustment for
currency effects, revenue was SEK 196mn lower y/y. SASs operating
income was SEK 240mn (458). The exchange-rate trend had a negative
impact on revenue of SEK -291mn and a negative effect on operating
expenses of SEK -138mn. Accordingly, for the quarter, the exchange-rate
trend had a negative impact on operating income of SEK -429mn and
including net financial items a negative impact of SEK -463mn. During the
period, the implementation of the ongoing restructuring program resulted
in cost reductions of about SEK 180mn. Payroll expenses decline 2.0%
y/y (adjusted for currency effects). Adjusted for currency effects, jet-fuel
costs declined 34.8% y/y. Technical maintenance costs, which are
included in other operating expenses, amounted to SEK -926mn (-609).
The increase were mainly attributable to more extensive maintenance,
return requirements on leased aircrafts and changed assessments for
future engine maintenance. Cash and cash equivalents were SEK
9,121mn (7,362) at April 30, 2016. SAS also had unutilized contracted
credit facilities amounting to SEK 2,742mn (2,699). Financial
preparedness amounted to 40% (34%) of the Groups fixed costs. The
SAS Groups interest-bearing liabilities increased SEK 248mn compared
with October 31, 2015 and amounted to SEK 9,993mn on the closing
date. Cash flow was comforting in the quarter. SAS expects to be able to
deliver a positive income before tax and nonrecurring items for the
2015/2016 fiscal year. The outlook is based on no unexpected events
occurring. Low fuel costs due to hedging and reduced costs due to further
restructuring and implementation of efficiency measures will contribute
positively.
Credit ratings
Moodys: B3/Stable
Standard & Poors: B-/Stable
Comments
Certainly not a strong quarter but not a rating mover as we note a stable
outlook from both Moodys and Standard & Poors and a maintaining their
full year guidance. The five year CDS (a prominent indicator of risk
perception) is seen at 698/848, virtually unchanged over the last two
month and well in line with the expected levels for SAS rating We do
Ingvar Matsson, PhD
however foresee a certain headline driven price correction (modest +46 8 700 9349
widening) in the name. On balance we remain marketweight. ingvar.matsson@swedbank.se
Please see important disclosures at the end of this document

Credit Research - SAS
Analysts
Francis Dallaire Jakob Midander Linus Thand
Senior Credit Analyst Credit Analyst Chief Credit Strategist
francis.dallaire@swedbank.se, +46 8 700 9763 jakob.midander@swedbank.se, +46 8 700 9901 linus.thand@swedbank.se, +46 8 700 9151
Maria Gillholm Sven Skld Mikael Busch

Senior Credit Analyst Senior Credit Analyst Head of Credit Research
maria.gillholm@swedbank.se, +46 8 700 9153 sven.skold@swedbank.se, +46 70 382 25 53 mikael.busch@swedbank.se, +46 70 090 23 83
Ingvar Matsson Erkki Vesola

Senior Credit Analyst Senior Credit Analyst
ingvar.matsson@swedbank.se, +46 8 700 9349 erkki.vesola@swedbank.fi, +358 20 746 9165
Swedbank Large Corporates & Institutions

Credit Research's disclaimer
What our research is based on For important U.S. disclosures, please reference:
http://www.swedbanksecuritiesus.com/disclaimer/index.htm
Swedbank Large Corporates & Institutions Credit Research (LC&I Credit Research)
department bases the research on a variety of aspects and analysis. For example: A Limitation of liability
fundamental assessment of a company's financial and business profile, current or All information, including statements of fact, contained in this research report has been
expected market sentiment, expected or actual changes in a company's credit rating, obtained and compiled in good faith from sources believed to be reliable. However, no
internal or external circumstances affecting the credit quality of the company and relative representation or warranty, express or implied, is made by Swedbank with respect to the
assessment of the company compared to peers or other relevant companies. completeness or accuracy of its contents, and it is not to be relied upon as authoritative and
Trading recommendations for fixed-income securities are mostly base on the credit spread should not be taken in substitution for the exercise of reasoned, independent judgment by
(yield difference between the security and the relevant government bond or swap rate). you.
Based on the type of investment recommendation or credit assessment, the time horizon Be aware that investments in capital markets - such as in this document - carry economic
can range from short-term up to 12 months. risks and that statements regarding future assessments are comprehended with uncertainty.
Recommendation structure You are responsible for such risks alone and we recommend that you supplement your
decision-making with that material which is assessed to be necessary, including (but not
Swedbank LC&I Credit Research's recommendation structure consists of several levels:
limited to) knowledge of the financial instruments in question and the prevailing requirements
issuer, sector and instrument. Depending of the level of recommendation, it could be in
as regards trading in financial instruments.
absolute or relative terms.
Opinions contained in the report represent the analyst's present opinion only and may be
Issuer level subject to change. In the event that the analyst's opinion should change or a new analyst with
a different opinion becomes responsible for our coverage of the company, we shall
Swedbank LC&I Credit Research uses a shadow rating system based on the same
endeavour (but do not undertake) to disseminate any such change, within the constraints of
terminology as Standard & Poor's ranging from AAA-D.
any regulations, applicable laws, internal procedures within Swedbank, or other
Credit ratings on issuer level are in absolute terms. In any case, ratings or any kind of
circumstances.
research should not be used or relied upon as an investment advice. Changes in ratings
If you are in doubt as to the meaning of the recommendation structure used by Swedbank in
are not the equivalent of overweight, market weight or underweight of any of the
its research, please refer to "Recommendation structure".
company's outstanding bonds, commercial papers or credit default swaps. A change in the
This research report is produced for general distribution to eligible recipients and Swedbank
credit rating indicates our view of the actual issuer and its credit quality. This should not be
is not advising nor soliciting any action based upon it. If you are not a client of ours, you are
confused with a recommendation.
not entitled to this research report. This report is not, and should not be construed as, an
Sector level offer to sell or as a solicitation of an offer to buy any securities.
Strong Overweight/Overweight: the return by increasing exposure to this sector is To the extent permitted by applicable law, no liability whatsoever is accepted by Swedbank
for any direct or consequential loss arising from the use of this report.
expected to exceed the return of the credit market in general.
Market weight: the return by having exposure to this sector is expected to be in line with Conflicts of interest
the return of the credit market in general.
In Swedbank LC&I, internal guidelines are implemented in order to ensure the integrity and
Underweight/Strong Underweight: the return by having exposure to this sector is
independence of the research analysts.
expected to be lower than the return of the credit market in general.
The guidelines include rules regarding, but not limited to: contacts with the companies
Instrument level covered; personal involvement in the companies covered; participation in investment banking
Cash bonds: activities and supervision and review of research reports. For example:
Strong Overweight/Overweight: the return by holding this instrument is expected to Research reports are independent and based solely on publicly available information.
exceed the return of equivalent bonds, the sector or the credit market in general.
Market weight: the return by holding this instrument is expected to be in line with the The remuneration of staff within the Credit Research department may include
discretionary awards based on the firm's total earnings, including investment banking
return of equivalent bonds, the sector or the credit market in general.
income. However, no such staff shall receive remuneration based upon specific
Underweight/Strong Underweight: the return by holding this instrument is expected to
investment banking transactions.
be lower than the return of equivalent bonds, the sector or the credit market in general.
Credit Default Swaps: Company-specific disclosures & potential conflicts of interest
In view of Swedbank's position in its markets, you should assume that Swedbank may
Buy protection: we expect the CDS-spread to widen more than the spread for peers'
currently (or may in the coming three months and beyond) be providing or seeking to provide
confidential investment banking services to the companies referred to in this report.
Neutral: we expect the CDS-spread to develop in line with the spread for peers' CDSs, the
You should note that it may happen that Swedbank, its directors, its employees or its
sector in general or an aggregated index.
subsidiary companies at various times have had, or have sought, positions; advisory
Sell protection: we expect the CDS-spread to tighten more than the spread for peers'
assignments in connection with corporate finance transactions; investment or merchant
banking assignments and/or lending as regards companies and/or financial instruments
Analyst's certification covered by this report.
The analyst(s) responsible for the content of this report hereby confirm that It may also occur that Swedbank LC&I may act as a sponsor in trading with financial
notwithstanding the existence of any such potential conflicts of interest referred to herein, instruments covered by this report.
the views expressed in this report accurately reflect their personal views about the Planned updates
companies and securities covered. The analyst(s) further confirm not to have been, nor
An investment recommendation for a company that Swedbank LC&I monitor is normally
are or will be, receiving direct or indirect compensation in exchange for expressing any of
updated when the company has published an interim report. An update is normally made on
the views or the specific recommendation contained in the report.
the day after publication. In certain cases, a recommendation may be updated in the days
Issuer, distribution & recipients leading up to the said report. When required, for example if the company has some
This report by Swedbank LC&I Credit Research is issued by the Swedbank Large extraordinary items of news, an investment recommendation may also be updated during the
Corporates & Institutions business area within Swedbank AB (publ) ("Swedbank"). period between the reporting dates.
Swedbank is under the supervision of the Swedish Financial Supervisory Authority Reproduction & dissemination
(Finansinspektionen) and other financial supervisory bodies where Swedbank and LC&I
This material may not be reproduced without
have branches.
permission from Swedbank LC&I. This report may not be disseminated to physical or legal
Swedbank is a public limited liability company and a member of the stock exchanges in
persons who are citizens of, or have domicile in, a country in which dissemination is not
Stockholm, Helsinki, Oslo and Reykjavik, as well as a member of EUREX.
permitted according to applicable legislation or other decisions.
This report is distributed by Swedbank's branches. In no instance is this report altered by
Reproduced by Swedbank Large Corporates & Institutions, Stockholm 2015.
the distributor before distribution.
In Estonia this report is distributed by Swedbank AS, which is under the supervision of the Address
Estonian Financial Supervisory Authority (Finantsinspektsioon).
Swedbank LC&I, Swedbank AB (publ), SE-105 34 Stockholm.
In Lithuania this report is distributed by "Swedbank" AB, which is under the supervision of
Visiting address: Landsvgen 40, Sundbyberg.
the Securities Commission of the Republic of Lithuania (Lietuvos Respublikos vertybini
popieri komisija).
In Latvia this report is distributed by Swedbank AS, which is under the supervision of The
Financial and Capital Market Commission (Finanu un kapitla tirgus komisija).
In the United States this report is distributed by Swedbank Securities US LLC ('Swedbank
Securities), which accepts responsibility for its contents. Any United States institutional
investor receiving the report, who wishes to effect a transaction in any security discussed
in the report, should do so only through Swedbank Securities. Swedbank Securities is a
U.S. broker-dealer, registered with the Securities and Exchange Commission, and is a
member of the Financial Industry Regulatory Authority. Swedbank Securities is part of
Swedbank Group.
June 10, 2016 Please see important disclosures at the end of this document Page 2 of 2
Sweden / Airlines
SAS AB
Heathrow slot sale boosts 2Q15; FY15 guidance improved on macro
Short-term reprieve in supply/demand in Scandinavia should last until 2016

- Both SAS and Norwegian reported improving conditions in Nordic markets in recent months. We view
this as the direct consequence of the limited fleet growth this year by Ryanair and Norwegian as well as
the latters increased focus on its long-haul expansion program. SAS has guided for a reduction in ASK this
year of 1-2% while Norwegian targets 5% growth (mostly on international routes). This should continue to
support passenger yield (+6% y-o-y in 1H15) for the rest of the year and led SAS to upgrade guidance.
- Beyond 2015 though the picture remains more challenging. SAS takes delivery of 6 aircraft in 2016 and
11 in 2017, compared to 2 in 2015 (although most of these will be replacements). Norwegian will take
delivery of 18 aircraft in 2016 and 21 in 2018 compared to 2 in 2015. Ryanair will also register significant
growth in the next two years with an additional 70 short-haul aircraft due to join its fleet. This will
undoubtedly add further pressure to ticket prices, in particular on the already highly competitive
Scandinavia-Europe segment.
We increase FY15 EBITDA to SEK 2.8bn on higher yields; financing covered until 2H16
- We revise our FY15 forecasts to reflect the stronger than anticipated yields achieved in the first part of
the year and our expectation of a relatively benign supply environment for the remainder of 2015. Our
revised projections include the following assumptions: (0.5)% decrease in ASK by SAS in FY15, stable load
factors at an average 74%, 5% increase in passenger yields, limited increase in unit cost (driven primarily
by pressure on wages and lower ASK).
- Jet fuel prices are currently hovering around US$600/t (SEK 5,000/t) down from US$1,000 (SEK 6,500/t)
at the same time last year. The effect of the lower fuel cost has however been limited so far due existing
hedges (100% of consumption for the August to January period) and the strong appreciation of the
USD/SEK exchange rate. This should however change in 2H15 as the more expensive hedges roll off. Our
revised forecast contemplates EBIT margins improving to 8.3% this year and staying above 6% next year.
- Net debt is at its lowest point since 2008 and financing requirements have now been secured until the
second half of 2016. We would not rule out an opportunistic debt issue though later in the year to extend
the groups maturity profile and shore up finances ahead of peak plane deliveries in 2017/18.
Opportunistic sale of two Heathrow slot-pairs highlights value of landing rights

- In the past 4 months, SAS announced the sale of two slot-pairs at Heathrow for a combined gain of $86
million. The first morning slot-pair was sold to an undisclosed party for $60 million while subsequently SAS
sold an afternoon slot-pair to Turkish Airlines for $22 million. SAS said it would compensate for the lost
slots by operating larger aircraft on its remaining Heathrow services and, potentially, by flying to other
airports in the London region.
- After these two disposals, SAS remains the 5th largest operator at Heathrow where it holds 19 slot-
pairs. Valuing those is a tricky exercise as evidenced by the debate around the value of Aer Linguss 23
pairs. Recent transactions seem to indicate a value of between 30 to 40 million for morning slots, 10 to
15 million for afternoon slots and 5 to 10 million for evening slots. This puts a paper valuation of 300
to 450 million (SEK 3.8 to 5.8 billion) for SASs current landing rights at Heathrow.
SAS 3 2019 convertible bonds remain very attractive for hedge funds
- The SAS 3.625% 2019 convertible bonds are indicated 84.5-85.5 vs SEK 15.6, which using 35% vol /
550bps borrow is an implied spread of 1,172bps, 500bps wide of the SAS 9% 2017 unsecured straight
bond. We believe financing conditions have improved somewhat for airline and note the recent issuance
by unrated competitor Norwegian Air of a NOK 1 billion 2018 floater at Nibor + 575bps.
- We reiterate our constructive view on the SAS credit due to the successful implementation of the
restructuring plan and improving short term outlook for the groups key markets. We also take a more
positive view on the stock due to our improved margin forecasts, continued low fuel prices and
managements willingness to opportunistically crystallise asset value.
- We continue to see outstanding value for hedge funds at current levels. Setting the bonds up on the
theoretical delta of 40%, would reduce the trade carry from 4.2% to 2.5% but provide up to 25pts of
downside protection.
SEK 2011 2012 2013 2014 2015 2016 2017 2018

Revenues 41,412 42,419 42,182 38,006 39,886 38,792 38,037 38,468
EBITDA 3,019 872 3,647 1,576 4,428 3,783 2,241 942
Operating Income -817 1,989 133 3,271 2,648 1,137 -191 -790
Net interest paid 970 822 834 740 557 493 503
Profit/loss before tax -1,629 -3,255 1,648 -918 2,532 2,091 644 -694
Net cash flow from operating activities -482 1,717 1,028 1,096 2,748 2,493 1,507 665
Net cash flow from investing activities -1,524 -1,133 -233 -481 -987 -898 -1,325 -1,663
Net cash flow from financing activities 763 -2,606 1,167 2,051 -2,072 -1,775 -1,077 -80
Cash and cash equivalents 966 2,423 2,671 3,714 3,403 4,223 4,028 3,650
Net debt 6,696 8,026 6,648 3,262 1,851 606 774 2,121
Total assets 39,185 36,754 26,813 29,325 28,973 28,513 27,825 27,310
Total shareholders' equity 12,433 11,156 3,226 4,907 6,203 7,211 7,280 6,479
Net Debt / EBITDA 2.2 9.2 1.8 2.1 0.4 0.2 0.3 2.3
Page | 1
Sweden / Airlines
SAS AB
Temporary reprieve in macro headwind We increase FY15 EBITDA to SEK 2.8bn on higher yields; financing
- Lower fleet growth across the industry leads to a more balanced covered until 2H16
market in 2015... - We revise our FY15 forecasts to reflect the stronger than
anticipated yields achieved in the first part of the year and our
Supply /demand YoY change %
expectation of a relatively benign supply environment for the
8
remainder of 2015. Our revised projections include the following
6 assumptions: (0.5)% decrease in ASK by SAS in FY15, stable load
factors at an average 74%, 5% increase in passenger yields, limited
4
increase in unit cost (driven primarily by pressure on wages and
2 lower ASK).
- Jet fuel prices are currently hovering around US$600/t (SEK
-
5,000/t) down from US$1,000 (SEK 6,500/t) at the same time last
1Q14 2Q14 3Q14 4Q14 1Q15 2015 Est.
-2 year. The effect of the lower fuel cost has however been minimal
so far this year due to the existing hedges in place (100% of
-4
consumption for the August to January period) and strong
Passengers Capacity
appreciation of the USD/SEK exchange rate. This should however
.. pushing Nov-April PASK and yield up 6.0% and 6.7% y-o-y... start to filter from 2H15 as the more expensive hedges roll off. Our
revised forecast contemplates EBIT margins improving to 4.3% this
Yield - Passenger revenues/RPK (scheduled)
1.15
year and staying above 4% next year.
1.10
SEKm 2013 2014 2015 2016 2017
1.05
USD/SEK 6.4 7.8 8.0 8.0 7.9
1.00
0.95 Capacity
Passenger (ASK millions) 39,202 40,971 40,766 41,582 43,037
0.90
%change 24.0% 4.5% -0.5% 2.0% 3.5%
0.85 Cargo (ATK millions) 5,527 5,617 5,617 5,617 5,617
0.80 %change 23.5% 1.6% 0.0% 0.0% 0.0%
Total (ASK millions) 44,629 45,158 44,866 45,682 47,137
0.75
%change 23.5% 1.2% -0.6% 1.8% 3.2%
0.70
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Traffic
Passenger (RPK millions) 29,068 30,686 30,993 31,458 31,930
2015 2014 2013 %change 20.9% 5.6% 1.0% 1.5% 1.5%
Cargo (RTK millions) 3,930 4,067 4,067 4,067 4,068
... while capacity utilisation remains at a decent level. %change 22.8% 3.5% 0.0% 0.0% 0.0%
Total (RPK millions) 33,451 37,714 41,514 45,314 49,114
Load factor %change 20.8% 12.7% 10.1% 9.2% 8.4%
90% Operating Statistics

85% Load factor 74.1% 74.9% 76.0% 75.7% 74.2%
Passenger Yield 1.07 0.94 0.99 0.94 0.90
80% %change -1.8% -12.1% 5.0% -5.0% -4.0%
75% Unit Cost 0.70 0.64 0.65 0.65 0.64

%change -17.3% -7.8% 0.4% -0.1% -1.0%
70%
Revenue 42,182 38,006 39,886 38,792 38,037
65%
Passenger 31,739 28,710 30,590 29,496 28,741
60% Charter 2,066 2,108 2,108 2,108 2,108
Traffic 3,642 3,082 3,082 3,082 3,082
55%
Mail, Freight, Other 4,735 4,106 4,106 4,106 4,106
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2015 Min 2004-2014 Max 2004-2014 Fuel Costs 9,046 8,806 8,300 6,846 6,952
Avg. Cost $/t 1,093 978 801 650 650
- Beyond 2015 though the picture remains uncertain with a large Salaries 11,307 9,181 9,130 9,099 9,360
Selling and distrib. costs 2,444 2,228 2,250 2,195 2,172
number of deliveries due to hit the European short-haul market Government user fees 4,154 3,962 3,945 3,943 3,999
Catering costs 981 756 752 752 763
Handling costs 1,649 1,703 1,694 1,678 1,687
60,000 1.4 Aircraft maintenance 2,566 2,468 2,270 2,269 2,302
IT 981 1,067 1,050 1,014 979
1.3 Other 3,621 4,132 4,332 4,532 4,482
45,000 Leasing Costs 1,786 2,127 2,422 2,881 3,301
1.2
Other Income 607 20 688 200 200
1.1
30,000
EBITDAR 6,040 3,723 6,851 6,664 5,542
1.0
EBITDA 4,254 1,596 4,428 3,783 2,241
EBIT 2,596 153 3,271 2,648 1,137
0.9
15,000 EBIT Margin % 6.2% 0.4% 8.2% 6.8% 3.0%
0.8 Source: Company data, ISM Research
0 0.7
2008 2009 2010 2011 2012 2013 2014 2015
SAS ASK Norwegian ASK SAS Yield
Source: Company data, ISM Research
Page | 2
Sweden / Airlines
SAS AB
Further gains required on cost base ahead of FY16/17 Net debt at lowest point since 08; we see leverage trough in FY16
- In response to the changing competitive landscape in Europe - SAS is in the midst of an extensive fleet renewal program and
which is seeing the continued growth of Low Cost Carriers and ordered 12 new long-haul aircrafts in 2013 taking the total number
increasing shift towards external production platforms, SAS has of planes on firm order to 42 (30 Airbus A320neo / 12 Airbus
announced a series of measures aimed at lowering costs by up to A330E/A 350). The value of the order is approximately is US$ 3,000
SEK 2.1 billion over the FY15-17 period. The implementation of this million (US$ 5,830 million list price) with deliveries scheduled
initiative is progressing according to plan and during 2Q15 resulted between 2015 and 2021. SAS has guided for capex of SEK 1 billion
in cost reductions of about SEK 230 million. for FY15 and FY16 (including maintenance capex of SEK 700mn)
100% which implies a significant portion of off balance sheet
Other
90% transactions. SAS has already signed a sale and leaseback
80% IT
agreement for the four Airbus A330E to be delivered in 2015-2016
70% Aircraft maintenance
60% Handling costs
and expect the 4 A320neo due in 2016 to be acquired in a similar
50% Catering costs fashion.
40% Selling and distrib. costs - As of April 2015 SAS reported cash and cash equivalents of SEK
30% Leasing Costs 7,362 million and unutilized credit facilities of SEK 2,699 million.
20% Government user fees
10%
Corporate liquidity comes from the recently renegotiated Eur 150
Salaries
0%
Fuel Costs
million (SEK 1,350 million) revolving credit facility currently
2013 2014 2015 2016 2017 undrawn. In December 2014, financing was also secured for
- Looking at SASs cost structure, the main areas where gains can be advance payments for eight aircraft to be delivered until the
realised are increased flexibility in the production base, wages, beginning of 2017. We estimate maximum cash requirement
selling costs, catering costs, aircraft maintenance and IT. The through the year at SEK 1.0-1.5 billion which puts actual liquidity
recently launched cost saving program targets all of these areas: closer to SEK 8.0 billion, out of which SEK 1.6 billion will be used to
repay the 2015 convertible bond.
Increasing flexibility of production platform
- We expect net leverage to reach
Manage smaller and regional traffic flows via internal and external
wet-lease operation with turboprop aircraft. In February 2015, SAS
2013 2014 2015 2016 2017
completed the acquisition of Cimber, which has an efficient and Outstanding Debt
focused production platform for regional jet production. EMTN 4,508 2,713 2,713 2,201 1,866
Bank + Aircraft Loans 3,799 3,477 3,149 2,346 1,905
Reduction of maintenance costs Finance Leases 625 605 492 382 67
Renegotiation of maintenance agreements for the Boeing 737 fleet 2015 CB 1,600 1,600 - - -
2019 CB 1,600 1,600 1,600 1,600
Adapting employment contracts to business cyclicality
New Aircraft Debt - - 364
In addition to the cost measures and given the ongoing extensive Sub Loans 956 1,003 1,003 1,003 1,003
changes to the European airline industry with intensified New Bond -
competition as a result, SAS and the pilot associations have Total Debt 11,510 10,998 8,957 7,532 6,805
initiated discussions about a new collective agreement. SAS needs Gross Redemption Schedule - 490 - 2,041 - 1,425 - 1,091
simple collective agreements that regulate employment terms
Operating leasing capital 11,970 14,287 16,149 19,208 22,006
according to standard applicable policies in Scandinavia. The
collective agreements will also enable SAS to respond more rapidly Interest 949 819 740 557 493
in the market and to adapt production to seasonal variations to a ND/EBITDA 1.6 2.2 1.1 0.8 2.2
higher degree. Adj ND/EBITDAR 3.2 5.0 3.8 3.9 5.6
Passenger Yield vs Unit Cost Source: Company data, ISM Research

1.20
1.10
1.00
0.90
0.80
0.70
0.60
2010 2011 2012 2013 2014 2015 2016 2017
Passenger Yield Unit Cost
Page | 3
Sweden / Airlines
SAS AB
Page | 4
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Page | 5
Sweden / Airlines
SAS AB
Desk Note 20/10/14
SAS 3 19 converts, feeling of dj vu...
Bond Price History
Strong liquidity post CB/Pref. issue; we see capex/ debt funded until 2017 18.0
- Having completed the sale of Norwegian regional airline Widere for SEK 2bn in 2013 and 17.0
raised over SEK 5.0bn this year through a new convertible bond and preference share issue, 16.0
SAS is sitting on a very strong liquidity position with SEK 6,930mn in cash and SEK 2,320mn 15.0
unutilized credit facilities. This is significantly more than required to cover the repayment of 14.0
the SEK 1.6bn convertible bonds maturing next year and the working capital requirements of 13.0
the business (~SEK 1.0bn). Buying back a portion of the recent deal would make sense here
12.0
although this does not appear to be on the companys agenda at this point.
11.0
- SAS has 42 aircrafts on order for a total value of around $3.0bn but we expect most of the
10.0
FY15/FY16 deliveries (2 and 6 planes resp.) to be met through sale & lease-back transactions 02/14 03/14 04/14 05/14 06/14 07/14 08/14 09/14
which should limit capex to around SEK 1bn for each year including pre-delivery payments. SAS SS EQUITY
Details of financing plans for the balance of deliveries after 2017 remain limited but we
estimate the group should have capacity to fund a quarter of its deliveries on balance sheet Equity Price History
(export credit, EETCs and bank loans) while remaining within rating agencies requirements. 100.0
Pressure on passenger yields should moderate in FY15; we see FY15 EBITDA SEK 2.5bn 95.0
- Once the dominant airline in Scandinavia, SAS has like many other flag carriers in Europe 90.0
suffered from significant margin erosion over the past 10 years due to aggressive competition 85.0
from low cost carriers. Norwegian, the second largest airline in Scandinavia and the third 80.0
largest low-cost airline in Europe, has grown its fleet from 11 aircrafts in 2004 to 95 this year 75.0
and now competes with SAS on 70% of its routes. With SAS also adding planes and new routes
70.0
to preserve market share, capacity growth (7.8% in FY13 / 6% in FY14) has far exceeded
65.0
demand which led to intense pressure on ticket prices and falling passenger yields. . 03/14 04/14 05/14 06/14 07/14 08/14 09/14 10/14
- With SAS load factors already at historical high and unit cost reductions likely to be limited to SE0005794880 Corp
5% over the next couple years, FY15/16 profitability is highly dependent on improving
passenger yields (SEK 300mn impact/1% yield change). We expect FY15 to deliver less Research
pronounced declines on the back of less aggressive capacity additions. Norwegian only plans to
ISM Capital LLP +44 (0)20 7938 8980
add three new aircrafts to its short-haul routes in 2015 while SAS is only taking delivery of two
A330s in August and October 2015. Looking at the price elasticity of demand we estimate that Research
next year yields should decline by less than 5%. This underpins our FY15 EBITDA forecast of SEK Antoine Bourgault, CFA
2.5bn, below street consensus at SEK 2.8bn.
SAS 19 CB down 15pts on swap since issue; risk/reward now compelling
- Having dropped 30pts in the 8 months since issue (15pts on swap), the SAS 3.625% 2019
Company Information
convertible bonds are among the worst performing instruments in the EMEA space this year.
Ticker/RIC/Bloomberg SAS SS EQUITY
The sharp drop is reminiscent of the performance of the 7.5% 2015 convertible bonds in the ISIN SE0005794880 Corp
second half of 2011 (down 25pts) at a time where SAS faced a liquidity crisis and pressure from Country SWEDEN
banks to agree new terms with unions. We argue however that SAS is a much different credit Exchange/List Stockholm
today with enough liquidity to see the group through to 2017 and further improvements in the No. outstanding shares 329
Free float (%) 33
groups competitiveness likely in the coming 12 months.
Inst. stake of float (%) 75
- The SAS 3.625% 2019 convertible bonds are indicated 68-71 vs SEK 11.35, which using 36% Market capitalisation ( 6397
vol / 550bps borrow is an implied spread of 1,425bps, 500bps wide of the SAS 9% 2017 straight
bond. While current valuation certainly reflects the average liquidity in the SEK1.6bn issue Equity Valuation Ratios
($220mn), we believe the upside/downside becomes compelling above 15% YTM. Investors in EV/EBITDA 2.9
P/BV (x) 0.6
the AIRBR 6% 2019 convertibles (92-93 vs 1.2) should considering switching exposure. For
hedged investors, setting the bonds up on the theo delta of 35%, would reduce the trade carry
from 5.2% to 3.9% but provide up to 16pts of downside protection.
SEK 2011 2012 2013 2014 2015 2016 2017 2018

Revenues 41,412 42,419 42,182 37,143 37,490 37,722 38,520 39,192
EBITDA 3,019 872 3,503 2,036 2,455 2,727 2,898 2,949
Operating Income 606 -817 1,845 643 1,021 1,264 1,392 1,412
Net interest paid -970 -1,118 -949 -1,259 -705 -568 -627 -478
Profit/loss before tax -1,629 -3,255 433 428 315 696 765 935
Net cash flow from operating activities -482 1,717 1,028 797 1,762 1,918 2,013 2,152
Net cash flow from investing activities -1,524 -1,133 -233 -1,521 -2,849 -3,957 -4,123 -3,932
Net cash flow from financing activities 896 -2,577 1,563 2,494 -2,381 -1,212 313 -1,953
Cash and cash equivalents 966 2,423 2,671 4,622 3,016 2,060 2,238 320
Net debt 9,538 8,392 8,728 5,947 5,522 5,617 6,102 6,416
Total assets 39,185 36,754 35,628 39,035 37,079 36,594 37,695 36,559
Total shareholders' equity 12,433 11,156 11,103 14,822 14,880 15,244 15,643 16,076
Net Debt / EBITDA 3.2 9.6 2.5 2.9 2.2 2.1 2.1 2.2
CFO/Interest -0.5 1.5 1.1 0.6 2.5 3.4 3.2 4.5
Page | 1
Sweden / Airlines
SAS AB
SAS 19 CONVERT STANDS OUT AMONG COMPARABLE AIRLINE BONDS; RISK/REWARD COMPELLING IN THE MID 60s
SAS credit has significantly underperformed peer group SAS 19 convert cheapened 15pts on swap since issue...
- While renewed concerns about the growth outlook in Europe - The SAS 3.625% 2019 convertible bonds are indicated 68-71 vs
and the potential spread of the Ebola virus have weighted on SEK 11.35. We price the bonds using 36% vol (30/90/250d
airline credits in recent months, the underperformance of SAS historical 57/37/42%) and 550bps borrow. Using those
nonetheless stands out despite fairly resilient traffic numbers. assumptions we calculate an implied spread of 1,400bps,
Straight bonds of loss-making Air Berlin for instance have only 500bps wide of the SAS 9% 2017 straight bond.
widened by 150bps over the past 6 months, while the recently - The 19 converts were issued in February this year on a 25%
issued floater of SASs direct competitor Norwegian widened by premium to the SEK 19.2138 reference price. Using similar
110bps since its debut in June and Finnair 18 straight bond pricing inputs, the implied credit spread at issue was around
moved less than 100bps. 650bps which was 100bps wide of the SAS 9% 2017 straight
1400.00 bond at the time. The bonds have cheapened over 15 points on
a hedged basis (assuming a 50% delta) making them one of the
1200.00
worst performers among non busted EMEA convertibles.
1000.00 - Using our fair value credit estimate of 1,100bps, 36% input
volatility and 550 borrow, we calculate a theoretical value of
800.00 77.1, making the bonds 7pts cheap. For hedged investors,
600.00
setting the bonds up on the theo delta of 35%, would reduce
the trade carry from 5.2% to 3.9% while providing up to 16pts
400.00 of downside protection.
200.00
14/04 14/05 14/06 14/07 14/08 14/09 Scenario analysis / 35% delta static hedge / 1Y horizon:
- We look at both outright and hedged return for a +/-15% and
SAS 2017 Straight SAS 2019 CB Implied
30% movement in underlying equity. We estimate future CB
Air Berlin 2018 Straight Finnair 2018 Straight
prices assuming implied spread remains at current levels.
Source: Bloomberg, ISM Research
SAS3 2019 Spot 1 Year Horizon / 35% delta

Comp review puts credit fair value for CB at 1,100bps
Assumptions
- At a price of 68, the 2019 convertible bonds now offer a yield CB Price 70 70.4 71.8 73.8 76.4 79.5
to maturity of 13.8% (14.2% USD equivalent) which is 5-6% Volatility 36%
higher than new issue yields for similarly rated in the US$ HY Credit Spread 1,100 1,100 1,100 1,100 1,100 1,100
market. With 5-year credit for regional B-rated airlines around Underlying Price (SEK) 11.20 7.84 9.52 11.20 12.88 14.56
% change -30% -15% 0% 15% 30%
600bps, we view fair value for SAS 5 year unsecured credit at
Underlying Borrow 550 550 550 550 550 550
700-800bps. We add a 300bps premium for the convert taking CB Valuation
our input credit spread for valuation at 1,100bps. Theoretical Value 77.1
Implied Volatility 22.5%
ND + 7x
Name
Mkt Cap
Rntl / EBIT %
EBIT / Bond Value 76.5 76.5 76.5 76.5 76.5 76.5
(USD) Interest Theo. Delta 34.0% 13.4% 20.2% 27.2% 34.2% 41.0%
EBITDAR
AIR BERLIN 179 3.2 -5.3 -2.8
Stock Short Gain/Loss 5.6% 2.2% -1.2% -4.6% -8.0%
FINNAIR OYJ 396 2.1 -0.2 -0.3
Delta Gain/(Loss) 6.8% 3.4% 0.0% -3.4% -6.8%
SAS AB 879 3.6 4.4 2.2
Dividend 0.0% 0.0% 0.0% 0.0% 0.0%
NORWEGIAN 1,065 2.4 6.3 3.8 Borrow -1.2% -1.2% -1.2% -1.2% -1.2%
AVIANCA HOLDINGS 1,688 3.2 8.4 3.4
AIR CANADA 1,712 1.8 4.3 1.4 Outright Return 5.6% 7.7% 10.6% 14.3% 18.7%
Source: Bloomberg Price Gain/(Loss) 0.5% 2.6% 5.5% 9.1% 13.5%
Income 5.2% 5.2% 5.2% 5.2% 5.2%
ND + 7x
Credit
Instrument Rating Rntl / YTM
Spread
EBITDAR Levered Hedged Return 34.0% 29.7% 28.0% 28.9% 32.2%
AIRBR 6 05/09/19 NR 3.2 7.6 685 Return on LMV 10.3% 9.0% 8.5% 8.8% 9.8%
FOY 5 08/29/18 NR 2.1 4.2 378 Source: ISM Research
SAS 3 04/01/19 B-/B3 3.6 13.3 1,300
SAS 9 11/15/17 B-/B3 3.6 9.4 810
NASNO Float 07/03/17 NR 2.4 5.9 398
PFAVHC 8 05/10/20 B+/BB- 3.2 7.1 534
ACACN 7 04/15/21 B/B2 1.8 7.6 537
Source: Bloomberg
Page | 2
Sweden / Airlines
SAS AB
INTENSE COMPETITION IN SCANDINAVIA TAKES TOLL ON YIELDS; FY15 OUTLOOK MORE BENIGN THOUGH
Improved fleet management puts load factors at record high... We estimate FY15 yield drop should be less than 5%
- SASs revenue passenger kilometres (RPK) rose 9.6% year-on- - Some short term relief may be around the corner though for
year in the quarter to July 2014 for a capacity (measured as SAS with data from Innovata showing passenger number
available seat kilometres / ASK) increase of only 6.4% pushing growth in the Scandinavian market exceeding seat growth by
load factor to 81.9%, higher than reported by Norwegian in the 0.5 million in the last quarter. This appears to be the direct
comparable quarter. 713,000 additional passengers were result of Ryanair and Lufthansa relocating aircrafts away from
carried during the 3rd quarter without increasing the groups the region recently. Looking out we also expect less aggressive
active fleet of 142 aircrafts which demonstrates SASs fleet expansion in the region from the two major players.
optimisation strategy is bearing fruits. - Norwegian only plans to add three new aircrafts to its short-
haul routes in 2015 while SAS is only taking delivery of two
90.0% A330s in August and October 2015. This is in stark contrast with
the 14 737-800 aircrafts delivered to Norwegian and the 5 A320
85.0%
and 3 737NG added by SAS in 2014. Looking at the price
80.0%
elasticity of demand we estimate that next year yields should
75.0% decline by less than 5%.
25%
70.0%
20%
65.0%
15%
60.0%
10%
55.0%
5%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
0%
2014 Min 2004-2013 Max 2004-2013 2009 2010 2011 2012 2013 2014 2015 Est.
-5%
Source: Company data
-10%
-15%
... but continued capacity growth puts pressure on yields
-20%
- Competition from low cost carriers remains fierce however
SAS Yield SAS + NAS ASK Growth
with currency-adjusted passenger yield and total revenue /
total ASK for the 9 months to July declining respectively 9.1% Source: Company data, ISM Research
and 17%. This sharp deterioration in the ticket pricing
FY15 unit cost reduction up to 3.5%, add. 5% in FY16/FY17
environment is the direct result of the growth in capacity in the
- In part due to its older workforce and operational bases in
Scandinavian market in the past year which is estimated at +6%.
three countries, SAS carries higher costs than LCCs such as
Norwegian alone, the second largest airline in Scandinavia and
Norwegian. However a lot of the legacy issues were addressed
direct competitor to SAS (70% of routes overlap), increased ASK
in 2012 through intense negotiations with unions which helped
by 40% over the past year although some capacity has been
drive unit costs down 5.9% in FY13 and we estimate 6% in FY14.
directed to its long-haul expansion.
- SAS announce further cost reductions of SEK 1 billion in FY15
which should drive unit cost down 3.5%. Looking at the cost
60,000 1.4
structure of Norwegian we estimate further gains of up to 5% in
1.3 the following 2 years are within reach.
45,000
1.2
175
1.1
30,000 155
1.0
135
0.9
15,000
115
0.8
95
0 0.7
2009 2010 2011 2012 2013 2014
75
SAS ASK Norwegian ASK SAS Passenger Yield (RHS)

55
Source: Company data, ISM Research 2008 2009 2010 2011 2012 2013 2014 2015 Est. 2016 Est.
Total Cost incl. fuel/ RPK Total Rev / RPK

Scheduled Passenger Yield Unit Cost Ex-fuel
Page | 3
Sweden / Airlines
SAS AB
ABSENT EXTERNAL SHOCK/DRAMATIC YIELD DROP, LIQUIDITY SUFFICIENT TO COVER FLEET COMMITMENTS
We see FY15 EBITDA at SEK 2.5bn; lower than consensus Liquidity is very strong following the SEK 3.5bn pref issue
- We have built our forecast around a 3% increase in ASK at SAS - SAS aims to maintain liquidity equal to a minimum of 20% of
in FY15 and marginal improvement in load factors. As discussed its SEK 25 billion budget for salaries and other operating
previously we expect a lower decline in passenger yields for expenses, of which at least half is to be held in cash and cash
2015 although the picture is less clear for FY16 when Norwegian equivalents. As of July 2014, SAS reported liquidity stood at SEK
resumes its aggressive fleet expansion. 9,250 million, made up of SEK 6,930 million in cash and
- We have assumed some further gains on the cost front to unutilized credit facilities of SEK 2,320 million. We estimate
reflect measures announced in June that are expected to maximum cash requirement through the year at SEK 1.0-1,5
generate an earnings impact of SEK 1 billion in 2014/2015. This billion which puts actual liquidity closer to SEK 8.0 billion, out of
includes among others further reductions in personnel initiated which SEK 1.6 billion will be used to repay the 2015 convertible
during the summer. This reduces out unit cost estimate by 3.5% bond.
in FY15 and a further 1% in FY16. - Corporate liquidity comes from the recently renegotiated Eur
- Since the beginning of the year, jet fuel prices are down c19% 150 million (SEK 1,350 million) revolving credit facility currently
(in USD terms) and around 17% y-o-y. SAS has hedged 100% of undrawn and expiring in 2017. The group has another SEK 900
its projected jet fuel consumption for the August to January million available under committed credit lines.
period, which means there should be limited gains before .. but high fleet renewal capex on the horizon...
February 2015. - SAS is in the midst of an extensive fleet renewal program and
- Our forecast contemplates EBIT margins improving to 3.5% by ordered 12 new long-haul aircrafts in 2013 taking the total
2017 which remains a long way below managements goal of number of planes on firm order to 42 (30 Airbus A320neo / 12
8%. We believe achieving that target will require a steep Airbus A330E/A 350). The value of the order is approximately is
improvement in yields in the groups core markets which is not US$ 3,000 million (US$ 5,830 million list price) with deliveries
currently our base case. scheduled between 2015 and 2021. Fleet capacity will be
managed through phasing out of aircrafts currently on lease.
SEKm 2013 2014 2015 2016
Operating metrics
SAS does not currently expect to grow its fleet in the process,
Scheduled ASK millions 40,583 40,947 42,176 43,019 however should demand develop, the group retains the option
5.6% 3.9% 3.0% 2.0%
to extend existing operating lease agreements as is currently
Total RPK 33,451 34,530 35,605 36,082
Scheduled RPK millions 29,650 30,730 31,805 32,282 the case with three of the intercontinental aircrafts.
19.8% 6.5% 3.5% 1.5% - SAS has guided for capex of SEK 1 billion for FY15 and FY16
Load factor 73.1% 75.0% 75.4% 75.0%
Scheduled Passenger Yield 107.05 90.00 87.75 86.87 (including maintenance capex of SEK 700mn) which implies a
-1.8% -15.9% -2.5% -1.0% significant portion of off balance sheet transactions (S&L of 4
Total Rev / RPK 142.27 120.87 117.88 116.85
Total Cost incl. fuel/ RPK 120.59 107.15 102.50 101.11
Airbus A330s already announced in August). Further out our
-5.9% -11.1% -4.3% -1.4% capex projections are based on the assumptions SAS will
Cost / ASK 77.10 68.81 66.42 65.75 finance a around quarter of its deliveries on balance sheet
-3.3% -10.8% -3.5% -1.0%
P&L (export credit, EETCs and bank loans) and the rest through a mix
Passenger 31,739 27,657 27,909 28,044 of finance and operational leases.
Charter 2,066 2,087 2,108 2,129
Other traffic revenue 3,642 4,200 4,242 4,284 2015 2016 2017 2018 2019 2020 2021
Other operating 4,735 3,200 3,232 3,264 Aircrafts on order
Total Revenue 42,182 37,143 37,490 37,722 Airbus A320neo 4 11 7 8
Airbus A330E/A350 2 2 1 1 2 4
Fuel Costs 9,046 8,825 8,482 8,196 Assumed $ cost 280 460 495 455 500 280 560
Other op. expenses 16,396 14,783 14,576 14,668 Assumed SEK cost 1,960 3,220 3,465 3,185 3,500 1,960 3,920
Salaries 11,451 10,000 9,800 9,800
Leasing Cost 1,786 2,000 2,201 2,354 Aircraft Pre-Delivery Deposit
D&A 1,658 1,392 1,434 1,463 PDP Payments 483 520 478 525 294 588 -
EBITDAR 5,213 4,035 4,632 5,057 Capex

EBITDA 3,503 2,036 2,431 2,703 Owned Fleet Capex 2,149 3,257 3,423 3,232 3,269 2,254 3,332
Maintenance Capex 700 700 700 700 700 700 700
EBIT 1,381 643 997 1,240
Disposal - 1,862 - 2,600 - 1,975 - 1,815 - 1,995 - 1,117 - 2,234
EBIT Margin 3.3% 1.7% 2.7% 3.3%
Total Capex 987 1,357 2,148 2,117 1,974 1,837 1,798
Source: ISM Research
- SAS has previously successfully delayed firm aircraft order and

even changed aircraft size (from A321 to A320) with reasonable
terms. It is however more difficult to cancel aircraft orders
altogether.
Page | 4
Sweden / Airlines
SAS AB
WE EXPECT CREDIT METRICS TO REMAIN WITHIN RATING AGENCIES REQUIREMENTS
Leverage to remain with rating agencies requirements Liquidity requirement met until 2017
- In March this year Moody's upgraded SASs corporate family - As of July 2014, SAS had total debt of SEK 10,367 million. This
rating to B3 from Caa1 and the probability of default rating to included SEK 3,200 million in convertible bonds, around SEK 2.6
B3-PD from Caa1-PD. This followed a similar upgrade from CCC+ billion drawn under the EMTN program and SEK 3.2 billion in
to B- by S&P in August 2013. Both rating actions reflect the bank and aircraft debt.
reduced near-term liquidity risk following the implementation - The main maturity coming up is the SEK 1,600 million
of the groups refinancing and restructuring plans, in particular convertible bond due in November 2015 which has recently
after the sale of Widere. been refinanced with a new convertible bond due 2019. In
- While S&Ps rating outlook is tied to the broad performance of addition we estimate the group faces scheduled amortisations
the business, Moodys ties the rating to specific leverage targets of around SEK 500 million in 2015 and SEK 1,500 million in 2016.
and states that further upward pressure could be exerted on - Based on the projected capex outflow of SEK 1 billion in 2015
the rating over the next few quarters if SAS's adjusted leverage and 2016, we estimate that the group should remain well within
were to fall below 6.0x on a sustainable basis, while maintaining its 20% financial preparedness target (i.e SEK 5 billion liquidity)
an adequate liquidity profile and demonstrating the resilience of with our projections putting cash above SEK 2 billion at the end
its business model against increasing competition from low cost of 2016. We estimate however the group may need to
competitors as well as other legacy airlines. The rating could refinance the SEK 1.5 billion straight bond in 2017 with a similar
come under renewed negative pressure if gross adjusted instrument.
leverage were to trend back towards 7x, or from weakened
2013 2014 2015 2016 2017 2018
liquidity. Outstanding Debt
- Our forecasts put gross adjusted leverage with a 5.0-6.5x EMTN 4,508 2,641 2,641 2,129 1,794 294
range for the 2014-2017 period which is consistent with rating Bank + Aircraft Loans 3,799 3,246 2,918 2,115 1,674 1,393
Finance Leases 625 528 425 315 147 268
agencies requirements. However these figures however are
2015 CB 1,600 1,600 - - - -
dependent on the funding mix for the groups fleet renewal 2019 CB 1,600 1,600 1,600 1,600 1,600
commitments as well as the general yield environment. New Aircraft Debt - 338 944 1,502
6.0 8,000 Sub Loans 956 954 954 954 954 954
New Bond - 1,500
7,000
5.0 Total Debt 11,510 10,569 8,538 7,451 7,114 7,511
6,000 Source: ISM Research
4.0
5,000
3.0 4,000
3,000
2.0
2,000
1.0
1,000
- -
2013 2014 2015 2016 2017 2018
Net Debt ND/EBITDA Adj ND/EBITDAR
Page | 5
SUMMARY FINANCIALS
Assumptions 2014 2015 2016 Assets FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017
+ Cash & Near Cash Items 2,423 2,671 4,622 3,000 2,121 1,354
ASK millions 40,947 42,176 43,019 + Short-Term Investments 366 2,080 2,080 2,080 2,080 2,080
RPK Millions 30,730 31,805 32,282 + Accounts & Notes Receivable 1,311 1,376 1,531 1,425 1,433 1,464
+ Inventories 687 359 371 372 372 372
Load factor 75% 75% 75% + Other Current Assets 2,275 1,727 1,727 1,727 1,727 1,727
Total Current Assets 7,062 8,213 10,331 8,604 7,734 6,997
Pss. Yield 90.0 87.8 86.9
+ LT Investments & LT Receivables 0 0 0 0 0 0
ASK Cost 68.8 66.4 65.7 + Net Fixed Assets 13,343 9,677 10,266 10,022 10,178 11,107
+ Other Long-Term Assets 16,349 17,738 18,438 18,438 18,438 18,438
Total Long-Term Assets 29,692 27,415 28,704 28,460 28,616 29,545
Total Assets 36,754 35,628 39,035 37,064 36,349 36,542
Segment Liabilities & Shareholders' Equity

+ Accounts Payable 1,929 1,689 1,857 1,875 1,886 1,926
Revenues + Short-Term Borrowings 1,814 2,748 2,031 1,425 944 1,660
39,000 + Other Short-Term Liabilities 9,744 8,977 9,327 9,327 9,327 9,327
Total Current Liabilities 13,487 13,414 13,215 12,627 12,157 12,913
38,500
+ Long-Term Borrowings 9,001 8,651 8,538 7,113 6,507 5,453
38,000 + Other Long-Term Liabilities 3,110 2,460 2,460 2,460 2,460 2,460
Total Long-Term Liabilities 12,111 11,111 10,998 9,573 8,967 7,913
37,500
Total Liabilities 25,598 24,525 24,213 22,199 21,124 20,827
37,000
+ Minority Interest 0 16 16 16 16 16
36,500 + Share Capital & APIC 6,950 6,950 10,450 10,450 10,450 10,450
+ Retained Earnings & Other Equity 4,206 4,137 4,356 4,398 4,759 5,249
36,000 Total Shareholders' Equity 11,156 11,103 14,822 14,864 15,225 15,715
2014 2015 2016 2017 Total Liabilities & Equity 36,754 35,628 39,035 37,064 36,349 36,542
EBITDA Income Statement FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

3,500 Revenue 42419 42182 37143 37490 37722 38520
Cost of revenue 0 0 0 0 0 0
3,000 Operating Expenses 43236 40337 35608 35060 35019 35645
Other Revenues 0 0 0 0 1 2
2,500
EBITDA 872 3503 2036 2431 2703 2874
2,000 Operating Income -817 1845 643 997 1240 1368
- Interest Expense 1118 949 1259 705 550 519
1,500 - Foreign Exchange Losses (Gains) 0 -4 0 0 0 0
1,000
- Net Non-Operating Losses (Gains) 2438 594 0 0 0 0
Pretax Income -3255 433 428 292 691 849
500 - Income Tax Expense -245 254 150 102 242 297
Income Before XO Items -3010 179 278 189 449 552
0
- Extraordinary Loss Net of Tax 0 0 0 0 0 0
2014 2015 2016 2017 - Minority Interests 0 1 0 0 0 0
Net Income -3010 178 278 189 449 552
Comparables Cashflow Statement FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Cash From Operating Activities
+ Net Income -3010 178 278 189 449 552
+ Depreciation & Amortization 1689 1658 1392 1434 1463 1507
+ Other Non-Cash Adjustments 2554 -30 -1224 0 0 0
+ Changes in Non-Cash Capital 484 -778 351 123 3 10
Cash From Operations 1717 1028 797 1747 1914 2068
Cash From Investing Activities

+ Disposal of Fixed Assets 242 1471 180 1862 2600 1975
+ Capital Expenditures -1814 -1699 -1521 -2849 -3957 -4123
+ Other Investing Activities 439 -5 0 0 0 0
Cash From Investing Activities -1133 -233 -1341 -987 -1357 -2148
Cash from Financing Activities

+ Dividends Paid 0 0 -176 -350 -350 -350
+ Change in Borrowing -2604 1535 -830 -2031 -1087 -337
+ Change in Short-Term Borrowings 0 0 -717 -606 -481 717
+ Increase in Long-Term Borrowings 0 3115 -113 -1425 -606 -1054
+ Decrease in Long-term Borrowings -2604 -1580 0 0 0 0
+ Increase in Capital Stocks 0 0 3500 0 0 0
+ Decrease in Capital Stocks 0 0 0 0 0 0
+ Other Financing Activities 27 28 0 0 0 0
Cash from Financing Activities -2,577 1,563 2,494 -2,381 -1,437 -687
Page | 6
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Page | 7
Analyst : Quarterly Comment
M. PIERRON
marc.pierron@spreadresearch.com
SAS AB
Published on :
Sector: Travel
11th September 2014
Spread Research Credit Transparency Index of Recovery by

Corporate Rating Outlook Index Liquidity Seniority Ranking
B- 1st: 100%
Negative 3/5 2 years 2nd: 50%
Last update: 30 Jun 2014 3rd: 0%
SPREAD RESEARCH OPINION

Fundamentals:
SAS published poor 3Q14 figures, below market expectations with a revenue down -7.7% yoy to SEK 10,700m (-0.5% lfl)
and an EBITDA down -33.5% yoy to SEK 1,265m. The companys poor figures resulted from the challenging Scandinavian
air travel market, a strong yield pressure resulting from a still significant overcapacity (in LTM +50% higher seat growth
than passenger growth) and from a lack of competitiveness in the companys cost structure. During the quarter, SAS
started implementing measures expected to save SEK 1bn over 4Q14 and FY15. The company will announce additional
measures expected to save at least another SEK 1bn over the 2015-2017 period.
In 3Q14, SAS repaid its two 06/2014 maturities with proceeds from the refinancing transactions executed in the previous
quarter. Net debt remained stable qoq at SEK 3,437m, however net leverage deteriorated on a sequential basis to 2.2x
(2Q14: 1.5x) impacted by a strong decrease in LTM EBITDA. Net adjusted debt on EBITDAR ratio followed the same path
with an increase to 4.5x (vs. 3.8x at 2Q14).
The company improved its FCF generation despite remaining negative at SEK -20m due to the seasonality of the travel
business as the proportion of advance bookings is traditionally declining during the summer. Liquidity remained adequate
at SEK 9,250m as of July 31st, 2014.
Credit view:
Short-term view: Negative.
Despite the restructuring efforts, the additional liquidity of SEK 3.5bn from the preference shares and SEK 1.6bn from the
bond issuance executed in 2Q14, we are negative on SAS due to the companys unfailing poor operational performance
over the past years (and confirmed by this quarter figures) driven by overcapacity and a strongly competitive market
environment. Our negative opinion reflects our expectations that the pressure on prices will continue in the short term
making the much needed operational turnaround harder to realize.
Long-term view: Negative.
Our negative long-term view reflects: (i) the highly competitive European market with strong price pressure affecting
margins; (ii) the constant negative FCF apart from 2Q when the company benefits from early summer bookings; (iii) a high
net adjusted debt to EBITDAR ratio; (iv) the companys poor operational performance and, (vi) our assessments that the
restructuring efforts are not sufficient to generate an operational turnaround. Despite the re-capitalization plan showing the
ability of the company to raise funds, we estimate that the return to profitability remains a goal difficult to achieve for SAS.
Page 1
SPRR/2014/29000/Q/16/09/2014
SAS AB
3Q14 RESULTS
Operating results:
* Scheduled passenger number increased by +10.3% yoy to 7,6m in 3Q14 (3Q13: 6,9m). RPK followed the same trend
with a +9.6% yoy growth to 9,349m (3Q13: 8,527m) while capacity was up +6.4% yoy to 11,418m (3Q13: 10,731m)
resulting in a +240 basis points rise in the load factor to 81.9% (3Q13: 79.5%).
* 3Q14 reported consolidated revenue was down -7.7% yoy to SEK 10,700m (vs. SEK 11,600m in 3Q13), mainly due to
the Widere sale. Adjusted for FX-effects and for the Widere sale, revenues declined -0.5% yoy due to a lower yield and
lower other traffic revenues. Passenger revenue accounted for 75% of sales. The currency adjusted passenger yield was
down -9.8% yoy to SEK 0.86 (3Q13: SEK 0.96), the currency-adjusted unit revenue (PASK) dropped -7.1% yoy to SEK
0.71 (3Q13: SEK 0.76) while the currency and jet fuel adjusted unit cost declined -3.7% yoy to SEK 0.68 (3Q13: SEK 0.71).
* 3Q14 adjusted EBITDAR amounted to SEK 1,789m reporting a -25% yoy drop (3Q13: SEK: 2,383m) and the adjusted
EBITDA amounted to SEK 1,265m (vs. SEK 1,903m in 3Q13) representing a -33.5% yoy drop. Adjusted EBITDAR margin
stood at 16.7% (vs. 20.6% at 3Q13) while the EBITDA margin followed the same trend shrinking to 11.8% vs. 16.4% at the
same period last year. The decrease in margins was mainly attributable to the -9.8% passenger yield yoy drop while at the
same time currency adjusted costs were only reduced by -3.7% yoy.
Capital Structure & Liquidity:

* SAS reported slightly negative FCF amounting to SEK -20m improving from last year figures of SEK -511m driven by a
lower yoy working capital outflow of SEK -674m (3Q13: SEK -1,580m). SASs 3rd quarter of the year is traditionally FCF
negative attributable to the proportion of advance bookings (unearned transportation revenue liability) declining during the
summer.
* During 3Q14, SASs repaid the 10.50% and 9.65% notes maturing 06/2014 using cash on balance sheet secured by the
several refinancing transactions executed in 2Q14. Therefore, gross debt decreased sequentially to SEK 10,367m (vs.
SEK 12,251m at 2Q14) while net debt remained stable SEK 3,437m (vs. SEK 3,370m in 2Q14).
* Net adjusted debt on EBITDAR ratio deteriorated sequentially to 4.5x from 3.8x at 2Q14 only driven by poor LTM
EBITDAR performance (impact c.+0.64). Net leverage followed the same trend increasing at 2.2x from 1.5x as well driven
by lower LTM EBITDA figures (impact c.+0.63).
* SASs Liquidity amounted to SEK 9,250m with cash on balance sheet of SEK 6,930m and an the undrawn portion of the
credit facility amounting to SEK 2,320m.
Management Guidance:
* Management confirmed the guidance presented during 2Q14 results, targeting a positive EBT in FY14 including pension
effects and excluding restructuring provision.
* SAS secured the financing of 4 Airbus A330-300 through a sale and leaseback agreement with a Chinese bank. Those
aircrafts will be used as a part of the companys strategy to develop its long haul offer that traditionally brings better yield
than short-haul flights.
* The company expects the yield pressure to continue due to the challenging market conditions and difficult economic
environment. Therefore, SAS plans to right-size its total capacity in the next quarters while maintaining frequencies.
* SAS announced starting to implement the SEK 1bn cost savings measures which will impact the current fiscal year
figures and will disclose additional measures by the end of 2014 aiming to positively impact the 2015-2017 year range
figures.
* Management confirmed previously disclosed long-term financial targets including an EBIT margin above 8%, an equity
ratio (equity/assets) above 35% and a financial preparedness (cash & unutilized credit facilities/ fixed cost) of 20% or 70
days
* The next interim report will be published on December 16, 2014 disclosing the 4Q14 figures (August-October).
Page 2
SPRR/2014/29000/Q/16/09/2014
SAS AB
CREDIT SPREADS: SAS SEK 9% 2017 (11TH SEPT. 2014)
Page 3
SPRR/2014/29000/Q/16/09/2014
SAS AB
Contact:
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Page 4
SPRR/2014/29000/Q/16/09/2014
M. PIERRON
SAS AB
Published on :
Sector: Travel
20th June 2014

B- 1st: 100%
Stable 3/5 3 years 2nd: 75%

Fundamentals:
Following the profit warning issued by the company on 8 May 2014, SAS has published weak 2Q14 figures, below our and
managements expectations. The companys poor figures result from the challenging Scandinavian air travel market added
to an overcapacity (+7.8m seats; +5.2m passengers), leading to strong yield pressure. SAS continues its restructuring
measures and expects SEK 1bn savings in 2015.
During 2Q14, SAS significantly improved its liquidity profile with the issuance of SEK 3.5bn preference shares (treated as
equity) and SEK 1.6bn of convertible bonds. Despite a significant EBITDA drop yoy to SEK -322m (vs SEK +695m in
2Q13); net leverage decreased both on yoy and sequential basis to 1.5x (2Q13: 2.8x; 1Q14: 2.5x) driven by net debt
decrease impact of c. -1.7x partly offset by the LTM EBITDA drop impacting the ratio by c. +0.8x. EBITDAR followed the
decreasing trend reporting a drop to SEK 178m (2Q13: SEK 1,118m). The net adjusted debt on EBITDAR ratio stood at
3.8x as of 31 April 2014 (1Q14: 4.0x).
The company was FCF positive in 2Q14, due to a strong working capital inflow of SEK 1,686m (2Q13: SEK 1,293m) driven
by high level of early summer bookings.
Credit view
Short-term: Negative. Despite the restructuring efforts, the additional liquidity of SEK 3.5bn from the preference shares
and SEK 1.6bn from the bond issuance, we are negative on SAS due to the companys unfailing poor operational
performance over the past years, driven by overcapacity and a strongly competitive market environment. Our negative
opinion reflects our expectations that the pressure on prices will continue in the short term making the much needed
operational turnaround more difficult to realize.
Long-term: Negative. Our negative long term view reflects: (i) the highly competitive European market with strong price
pressure affecting margins; (ii) the constant negative FCF apart from 2Q when the company benefits from early summer
bookings; (iii) a high net adjusted debt to EBITDAR ratio; (iv) the companys poor operational performance and, (vi) our
assessments that the restructuring efforts are not sufficient to generate an operational turnaround. Despite the re-
capitalization plan showing the ability of the company to raise funds, we estimate that the return to profitability remains a
goal difficult to achieve for SAS.
Page 1
SPRR/2014/28483/Q/20/06/2014
SAS AB
2Q14 RESULTS
SAS published weak 2Q14 figures below our expectations.
Operating results
* Scheduled passenger number increased by +5.3% yoy to 6,425m in 2Q14 (2Q13: 6,101m). RPK followed the same trend
with a growth of +6.2% to 6,943m (2Q13: 6,555m) yoy while capacity (ASK) was up +4.2% to 9,746m (2Q13: 9,355m),
resulting in a 130 basis points rise in the load factor to 71.4% (2Q13: 70.1%).
* 2Q14 reported consolidated revenue was down -14.7% yoy to SEK 8,500m (vs. SEK 9,950m in 2Q13), mainly due to the
Widere sale and a strong price pressure in the Scandinavian air travel market. Adjusted for FX-effects and for the
Wildere sale, revenues declined -6.3% due to a lower yield and lower other traffic revenues. Passenger revenue
accounted for 76% of sales. The currency adjusted passenger yield was down -10.6% to SEK 0.93 (2Q13: SEK 1.04); the
currency adjusted unit revenue (PASK) dropped -8.9% yoy to SEK 0.67 (2Q13: SEK 0.73) and the currency and jet fuel
adjusted unit cost (CASK) declined by -0.5% to SEK 0.77 (2Q13: SEK 0.78).
* 2Q14 adjusted EBITDAR amounted to SEK 178m reporting an -84% drop yoy (2Q13: SEK 1,118m) and the adjusted
EBITDA was negative at SEK -322m (vs. SEK +695m in 2Q13). Adjusted EBITDAR margin shrunk to 2.1% (vs. 11.3% at
2Q13) at 31 April 2014 while the EBITDA margin followed the same trend decreasing to -3.8% vs +7.0% at the same
period last year. The decrease in margins was mainly attributable to the -10.6% yoy drop in passenger yield while at the
same time the currency adjusted costs were only reduced by -0.5% yoy.
Capital Structure & Liquidity

* SAS reported positive FCF amounting to SEK 676m (2Q13: SEK 971m) driven by a strong working capital inflow of SEK
1,686m (2Q13: SEK 1,293m). SASs 2nd quarter of the year is traditionally FCF positive as the company benefits from the
cash inflow of the early summer bookings.
* During 2Q14, SAS executed several financing transactions: (i) issuance of SEK 3.5bn preference shares (annual
dividend of 10%, SEK 350m) providing capital for modernization of the aircraft fleet; (ii) issuance of SEK 1.6bn convertible
bonds (3.625% interest) in order to refinance the existing convertible bond maturing April 2015; (iii) issuance of SEK 1.5bn
domestic private placement bond in order to refinance the 2014 bond; (iv) cancellation of the SEK 1.8bn RCF and; (v)
completed a new bilateral facility of 150m RCF with UBS.
* Gross debt increased sequentially by c. SEK 0.9bn to SEK 12.3bn as of 31 April 2014.
* Net debt was SEK 3.4bn at 31 April 2014, down from SEK 8.1bn at 31 January 2014 mainly due to the strong increase in
cash position due to new bonds & preference shares issued during the quarter.
* Net adjusted debt on EBITDAR ratio decreased to 3.8x from 4.0x at 1Q14 driven by the decline in net adjusted debt
(impact of c. -1.0x) partially offset by the decline in LTM adjusted EBITDAR (impact of c. +0.8x).
* Cash and cash equivalents amounted to SEK 8.9bn as of 31 April 2014.
Page 2
SPRR/2014/28483/Q/20/06/2014
SAS AB
KEY MANAGEMENT GUIDANCE
* The company expects the passenger yield pressure to continue mainly due to the challenging market conditions and the
difficult economic environment.
* Management changed its FY14 guidance to target a positive EBIT including pension effects (previous 1Q14 guidance
stated "a positive EBIT excluding pension effects"). Positive pension effets amount to SEK 1,044m.
* 42 new planes were ordered for an approximate order value of $3bn with delivery over a period of 7 years. The company
plans to use a mix of sources for financing the order (ie. bank debt, asset sale and lease-backs).
* Management disclosed long-term financial targets including an EBIT margin above 8%, an equity ratio (equity/assets)
above 35% and a financial preparedness (cash & unutilized credit facilities/ fixed cost) of 20% or 70 days.
* SAS expects to update in autumn on additional restructuring measures which are expected to generate additional strong
savings by 2017.
CREDIT SPREADS: SAS SEK 9% 2017
Page 3
SPRR/2014/28483/Q/20/06/2014
SAS AB
Contact:
Tel: +33 (0)4 7895 3404 27 -32 King Street
PORTAVENTURA 18th Jun. 2014 PORTAVENTURA - KEY FIGURES M. PIERRON
PORTAVENTURA 18th Jun. 2014 PORTAVENTURA - 1Q14 RESULTS ... M. PIERRON
KCSM 10th Jun. 2014 KCSM - KEY FIGURES C. RIMAUD, CFA
TUI AG 3rd Jun. 2014 TUI AG - 1H14 RESULTS ... M. PIERRON
PORTAVENTURA 2nd Jun. 2014 PORTAVENTURA - KEY FIGURES M. PIERRON
Disclaimer
PERSON.
Page 4
SPRR/2014/28483/Q/20/06/2014
M. PIERRON
SAS AB
Published on :
Sector: Travel
17th March 2014

B- 1st: 100%
Stable 3/5 3 years 2nd: 75%
Fundamentals
SAS reported weak 1Q14 results, seasonally the weakest quarter, driven by overcapacity and lower growth, which put
pressure on margins across the entire market. Excluding a one-time pension gain, EBITDA declined significantly yoy,
which coupled with negative FCF contributed to the increase of net leverage to 2.5x at 31 January 2014 vs 1.9x at 31
October 2013.
Since 31 January 2014, the liquidity profile improved materially with the issuance of SEK 3.5bn preference shares and
SEK 1.6bn of convertibles bonds. Putting the preference shares as equity, PF net leverage decreased from 2.5x to 1.4x at
31 January 2014.
Credit View: Neutral

While we acknowledge a strong improvement in SAS credit profile throughout the fiscal year 2012/13 and with the recent
financing transactions, we nevertheless remain cautious as market conditions have recently deteriorated and are
extremely challenging in FY13/14. The Q1 is seasonally very weak and was impacted by significant market capacity
growth in the Nordic region (greater than the demand growth). Management believe that positive EBT (excluding pension
effect) in FY14 is still possible.
Q1 2014 RESULTS
Operating Results
* Scheduled passenger number declined by -0.2% yoy in 1Q14 (Nov-Jan 2014). RPK increased by +0.7% yoy, while
capacity (ASK) was up +3.4%, resulting in a 1.8pp reduction in the load factor to 66.3% in 1Q14.
* Consolidated revenue was down -7.6% yoy to SEK 7,871m in 4Q13 when adjusted for FX and Widere sale primarily
due to a lower yield and load factor. The currency-adjusted yield was down -5.6% and unit revenue (RASK) ex-FX down -
8.1% yoy vs. unit cost (CASK) ex-FX and jet fuel declining by -3.2%.
* 1Q14 adjusted EBITDAR was negative SEK -65m in 1Q14 and adjusted EBITDA was negative SEK -550m. The LTM
(1Q14) adjusted EBITDA margin was 8.0% at 31 January 2014, sequentially down from 8.7% in FY13. The adjusted
EBITDA and EBITDAR included mainly the removal of a one-time non-cash SEK 1,044m gain on pension plan.
Page 1
SPRR/2014/27769/Q/17/03/2014
SAS AB

* Operating cash flow was negative SEK -908m in 1Q14 after cash interest expenses of SEK 283m and working capital
outflow of SEK 29m in the quarter. This was exacerbated by capex of SEK 226m during the period and resulted in
negative FCF of SEK 1,134m in 1Q14.
* Gross debt decrease by c. SEK 0.1bn from 31 October to SEK 11.4bn as of 31 January 2014.
* Net debt was SEK 8.1bn at 31 January 2014, up from SEK 6.8bn at 31 October 2013 mainly due to the significant
negative FCF during the quarter. As a result of the increase in net debt and the decrease in LTM adjusted EBITDA, net
leverage stood at 2.5x at 1Q14, up from 1.9x at FY13.
* Cash and cash equivalents amounted to SEK 3.3bn at 31 January 2014.
* Since 31 January 2014, SAS executed several financing transactions: i) issuance of SEK 3.5bn of preference shares
(annual dividend of 10%, SEK 350m), ii) issuance of SEK 1.6bn convertible bonds (3.625% interest), iii) cancellation of the
SEK1.8bn RCF and iv) entered in a new EUR 150m RCF with UBS.
* These above transactions allow to materially improve the liquidity of SAS by the addition of SEK 3.5bn of cash on
balance sheet from the preference shares (with preference shares classified as equity, leverage is reduced by c. 1.1x) and
the proceeds of the new convertible bonds of SEK 1.6bn will refinance the 2015 SEK 1.6bn convertible bonds (leverage
neutral). Overall, we estimate Pro Forma net leverage as of 1Q14 to be at 1.4x.
* Weak market condition with continued yield pressure expected.
* Management believe that provided that the market conditions do not decline any further, potential exists to post a positive
EBT (ex-positive pension effects).
CREDIT SPREADS: SAS 9% 2017
Page 2
SPRR/2014/27769/Q/17/03/2014
SAS AB
Contact:
Tel: +33 (0)4 7895 3404 27 -32 King Street
GATEGROUP * 13th Mar. 2014 GATEGROUP - KEY FIGURES M. PIERRON
GATEGROUP * 13th Mar. 2014 GATEGROUP - 4Q13 RESULTS ... M. PIERRON
IAG 5th Mar. 2014 IAG - KEY FIGURES M. PIERRON
IAG 5th Mar. 2014 IAG - 4Q13 RESULTS ... M. PIERRON
IAG 5th Mar. 2014 IAG - DETAILED MODEL M. PIERRON
Disclaimer
PERSON.
Page 3
SPRR/2014/27769/Q/17/03/2014
Analyst :
C. DE QUINSONAS
Quarterly Comment
charles.dequinsonas@spreadresearch.com
SAS AB
Published on :
5th September 2013
SAS
Rating Agencies Transparency Index SR Credit Rating SR Credit Index of Recovery by

Outlook Liquidity seniority rank
S&P : B- Stable 1st: 100%
Moody's :Caa1 3/5 B- Stable 2 years 2nd: 50%
Stable 3rd: 0%

SAS reported positive Q3 2012/13 results with increased passenger revenue at constant FX and a meaningful
reduction in non-fuel unit cost driven by the 4Excellence programme and new pension schemes. From a cash flow
perspective, the strong EBITDA generation was fully offset by seasonally sizeable working capital outflow in Q3. However
net leverage further reduced to 1.8x at 31 July 2013 thanks to the proceeds from the sale and leaseback of six Boeing
737-600s and the sale of 11 other aircrafts during Q3.
The sale of 80% of Widere will generate a net debt improvement of SEK 1bn at the end of September and we
believe this will result in a net leverage of 1.8x at 31 October 2013, from 3.0x at FY11/12. Liquidity headroom (SEK 3.2bn
at 3Q13) was broadly unchanged from the prior quarter and it is worth noticing the SEK 2.7bn RCF unutilised at 3Q13 will
be reduced to 2.0bn after the completion of the Widere sale, hence reducing liquidity headroom by SEK 700m at
FY12/13e and thereafter.
Looking ahead in FY13/14, we have a cautious stance on the credit and management anticipates weaker yields and
RASK due to increased competition for LCCs in the short haul business as some capacity has been redirected to
Scandinavia SAS key market on the back of weaker demand in the rest of Europe.
Q3 2012/13 RESULTS
Operating Results
* Passenger number grew by +1% yoy in 3Q13 (May-July 2013). RPK increased by +5.6% yoy, while capacity (ASK) was
up +7.7%, resulting in a 1.6pp reduction in the load factor to 78.8% in Q3.
* Revenue was down -0.4% yoy to SEK 11.6bn in 3Q13 but grew +3.3% adjusted for FX effects thanks to increased
passenger revenue and despite the 0.6% decline in the yield for Scandinavian Airlines.
* Unit cost (CASK) excluding jet fuel and FX improved by 5.8% yoy in 3Q13. Total operating expenses reduced by -5%
yoy, driven by lower payroll expenses (-7%), jet fuel (-13.5%). Other operating expense adjusted for non-recurring items
increased +5.5% due to increased capacity, higher maintenance costs for engines and phase-out costs for aircraft.
* Accordingly, adjusted EBITDAR increased to SEK 2.1bn in 3Q13 vs. SEK 1.6bn in 3Q12.
* The LTM adjusted EBITDA margin was 14.0% at 31 July 2013, up from 10.2% in FY12.
* Operating cash flow was negative SEK -276m in 3Q13 due to massive working capital outflow of SEK 1.6bn during the
quarter mainly due to a decrease in operating liabilities, which was attributable to the proportion of advance bookings
(unearned transportation revenue liability) declining during the summer.
Page 1
SPRR/2013/26295/Q/05/09/2013
SAS AB
* Capex was SEK 235m, resulting in negative FCF of SEK -511m in 3Q13. However, FCF was close to neutral considering
the sale and leaseback of six Boeing 737-600s for just over SEK 500m in July. Furthermore, eight MD82s and three Q400s
were sold during the period.
* As a result, net debt remained stable at SEK 7.6bn when compared to 30 April 2013.
* LTM leverage was strongly down to 1.8x at 31 July 2013 vs. 2.3x at 30 April 2013.
* Liquidity was flat quarter-on-quarter, with cash and cash equivalents of SEK3.0bn at 31 July 2013. In addition, the group
holds unutilized credit facilities amounting to SEK 3.2bn, including a SEK 2.7bn RCF.Following the sale of Widere, the
RCF will reduce to SEK 2.0bn.
* The sale of Widere to Norwegian companies Torghatten ASA, Fjord1 AS and Nordland Fylkeskommune will be
completed by the end of September and will generate a cash improvement of SEK 1bn.
* Management continues to anticipate lower yields; however it confirms the guidance for EBIT margin > 3% and a positive
EBT in FY12/13.
* Restructuring charges will amount to SEK 150m in FY12/13 (previous guidance: SEK 400m).
* Negotiations with Swissport regarding the disposal of the ground handling business are in progress.
5-YEAR CDS
Page 2
SPRR/2013/26295/Q/05/09/2013
SAS AB

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Analyst Certification : The analyst responsible for the preparation of this report certifies that (1) the views expressed in this report
accurately reflect the analyst's personal views about the subject securities and issuers mentioned in this report, and (2) no part of the
analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this research
report.
Disclaimer
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MAY BE COPIED, REPACKAGED, TRANSFERRED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY
SUCH PURPOSE, IN WHOLE OR IN PART, BY ANY PERSON WITHOUT SPREAD RESEARCH'S PRIOR WRITTEN CONSENT.
THIS INFORMATION IS DESTINED TO PRIVILEGED PERSONS ONLY, WHO ARE SPREAD RESEARCH'S CLIENTS AND, AS SUCH,
HAVE ACCEPTED AND SIGNED A CONFIDENTIALITY AGREEMENT PRIOR TO RECEIVING SPREAD RESEARCH'S SERVICES. ANY
UNAUTHORIZED PERSON RECEIVING THIS INFORMATION SHOULD PROMPTLY DELETE IT AND SHALL NOT, UNDER ANY
CIRCUMSTANCES, MAKE ANY USE WHATSOEVER OF THIS COMMUNICATION, NOR TRANSFER IT TO ANY THIRD PERSON.
All information contained in this communication has been obtained by SPREAD RESEARCH from generally accepted public sources and is
believed to be accurate and reliable. SPREAD RESARCH makes no representation or warranty as to the accuracy and completeness of any
such information. Under no circumstances shall SPREAD RESEARCH have any liability to any person or entity for any loss or damage in
whole or in part due to any error (negligent or otherwise) within or outside the control of SPREAD RESEARCH or any of its directors,
officers, employees or agents in connection with any such information. The credit analysis, if any, constituting part of the information
contained herein, must be construed solely as statements of opinion and not statements of fact or recommendations to purchase, sell or hold
any securities. Each analysis or other opinion must be considered as one factor in any investment decision made by or on behalf of any
recipient of the information contained in this communication, and each user must accordingly make its own study and evaluation of each
security and of each issuer and guarantor of, and each provider of credit support for, each security that it may consider purchasing, holding
or selling. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS OR FITNESS FOR ANY
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Page 3
SPRR/2013/26295/Q/05/09/2013
Analyst :
P. MARTY
Quarterly Comment
paul.marty@spreadresearch.com
SAS AB
Published on :
12th June 2013
SAS

S&P : CCC+
1st: 100%
Stable
3/5 B- Stable 2 years 2nd: 50%
Moody's :Caa1
3rd: 0%
Stable

SAS reported strong 2Q12/13 results thanks to higher unit revenues combined with lower non-fuel unit costs as a result of
the implementation of the 4Excellence program and new pension schemes. Leverage decreased to 2.3x at 30 April 2013
thanks to increased EBITDA and proceeds according to the sale and leaseback agreement signed in February 2013,
regarding reserve engines. In addition, at the start of May the group signed an agreement to sell 80% of Widere, with the
option of full divestment in 2016. Therefore, SAS will receive about SEK2bn upon completion of the transaction. We raise
our rating to B- to reflect the progress made so far, including a lower leverage and an improved liquidity.
2Q13 RESULTS
Operations
- 2Q13 passenger number fell by -0.6% YoY and RPK grew by +1.0% YoY, whilst capacity (ASK) was up by +4.3%,
resulting in a reduction in the load factor by -2.3 p.p. to 69.5%.
- 2Q13 revenue was up by +1.6% YoY excl. FX to SEK9.9bn due to higher RPK and higher yields (+2.7% YoY excl. FX for
Scandinavian Airlines).
- 2Q13 operating expenses were down by -9% YoY thanks to lower jet fuel costs (-4% YoY) and payroll costs (-24% YoY)
as a result of the 4Excellence restructuring program and the changed terms for early retirement pensions.
- As a result, 2Q13 EBITDAR rose to SEK1,097m vs. SEK363m in 2Q12.
- Similarly, EBITDA increased to SEK674m in 2Q13 from SEK1m in 2Q12.
Leverage & Capital Structure

- 2Q13 operating cash flow stood at SEK1.2bn vs. SEK1.1bn in 2Q12 primarily as a result of higher EBITDA albeit
mitigated by a lower working capital inflow during the quarter.
- As a result, FCF was SEK1.6bn in 2Q13 after CAPEX of SEK0.3bn during the quarter and a SEK0.7bn payment from
Willis and Willis Mitsui according to the sale and leaseback agreement signed in February 2013 regarding 19 spare
engines.
- Net debt was thus down to SEK7.5bn at 30 April 2013 from SEK9.1bn at 31 January 2013.
- LTM leverage was thus down to 2.3x at 30 April 2013 vs. 3.4x at 31 January 2013.
- Liquidity improved during the quarter, with cash and cash equivalents of SEK3.0bn at 30 April 2013 vs. SEK1.7bn at 31
January 2013. In addition, the group holds unutilized credit facilities amounting to SEK3.0bn.
Page 1
SPRR/2013/25596/Q/12/06/2013
SAS AB
- At the start of May the group signed an agreement to sell 80% of Widere to Norwegian companies Torghatten ASA,
Fjord1 AS and Nordland Fylkeskommune, with the option of full divestment in 2016. SAS will receive about SEK2bn upon
completion of the transaction, which is expected to close in September 2013.
- The company expanded cooperation with Sykes in March 2013, which will manage more parts of the call center
operation, and negotiations with Swissport regarding the disposal of the ground handling business are in progress. Also,
an agreement was signed with a new IT-supplier Tata Consultancy Services (TCS) during the quarter.
- The groups capacity (ASK) is projected to increase by 5-6% in FY12/13.
- In FY12/13, the 4XNG plan is expected to generate a positive impact on earnings of SEK1.5bn.
- Management continues to anticipate lower yields; however it believes that a positive EBIT margin > 3% and a positive
EBT are possible in FY12/13.
- Management targets an EBIT margin > 8% and an equity ratio > 35% in FY14/15.
- The group has hedged 49% of its anticipated fuel needs for the next 12 months.
- The group has hedged 95% of its anticipated fuel needs for 2H12/13.
5-YEAR CDS
Page 2
SPRR/2013/25596/Q/12/06/2013
SAS AB
SECTOR COMPARISON TABLES - FORECASTED CREDIT METRICS

Please find below our forecasts for EHY & Convert issuers' net leverage and coverage ratios at the end of the current
fiscal year, sorted by rating.
Source: Spread Research database.
Page 3
SPRR/2013/25596/Q/12/06/2013
SAS AB

Tel: +33 4 78 95 34 04 London WC2E 8JB

Tel: +1 215 966 6226 Tel: +1 404 495 5910
CMA CGM 7th Jun. 2013 CMA CGM - KEY FIGURES P. MARTY
CMA CGM 7th Jun. 2013 CMA CGM - DETAILED MODEL P. MARTY
STENA AB 4th Jun. 2013 STENA - KEY FIGURES P. MARTY
STENA AB 4th Jun. 2013 STENA - DETAILED MODEL P. MARTY
CMA CGM 3rd Jun. 2013 CMA CGM - 1Q13 RESULTS ... P. MARTY
report.
Disclaimer
Page 4
SPRR/2013/25596/Q/12/06/2013
Analyst :
P. MARTY
Quarterly Comment
SAS AB
Published on :
8th March 2013
SAS

S&P : CCC+
1st: 100%
Stable
3/5 CCC+ Stable 1 year 2nd: 50%
Moody's :Caa1
3rd: 0%
Stable

SAS reported improved, albeit still seasonally weak, 1Q12/13 results that were in line with expectations thanks to ongoing
solid traffic growth (+4.3%) combined with the impact of the 4Excellence program, with translated into higher yields and
lower non-fuel unit costs during the quarter. Leverage nevertheless increased to 3.4x at 31 January 2013 as the group
generated materially negative FCF. Management also took advantage of the results presentation to provide an update on
the 4XNG restructuring program: the implementation thereof is on track; in particular, SAS entered into a sale & leaseback
agreement regarding engines with a liquidity effect of SEK0.7bn. In addition, the group signed a letter of intent with
Swissport regarding the disposal of the ground handling business. We leave our CCC+ rating unchanged to reflect the
challenges faced by the company in turning around its operations; however we change our outlook to stable from negative
to reflect the progress made so far, notably the improved liquidity position of the group.
1Q13 RESULTS
Results were in line with expectations.
Operations
- 1Q13 passenger numbers and RPK grew by 0.2% and 4.3% YoY, respectively, whilst capacity (ASK) was up by 4.3%,
resulting in a reduction in the load factor by 0.3 p.p. to 67.6%.
- 1Q13 revenue was up by 4.8% YoY excl. FX to SEK9.6bn due to increased traffic (as discussed above) and higher yields
(+1.6% YoY excl. FX for Scandinavian Airlines).
- 1Q13 operating expenses were up down by -1% YoY thanks to flat payroll costs as a result of the implementation of the
4Excellence restructuring program, which mitigated higher jet fuel costs (+5% YoY).
- As a result, 1Q13 EBITDAR rose into positive territory at SEK262m vs. SEK120m in 1Q12.
- Similarly, adjusted EBITDA increased to SEK135m in 1Q13 from SEK527m in 1Q12.

- 1Q13 operating cash flow was negative but improved to SEK0.4bn from SEK0.7bn in 1Q12 primarily as a result of higher
EBITDA during the quarter.
- As a result, FCF was negative in 1Q13 at SEK1.0bn after CAPEX of SEK0.6bn during the quarter
- Net debt was thus up to SEK9.1bn at 31 January 2013 from SEK8.1bn at 31 October 2012.
- LTM leverage was in turn up to 3.4x at 31 January 2013 vs. 3.0x at 31 October 2012.
Page 1
SPRR/2013/24581/Q/08/03/2013
SAS AB
- Liquidity declined during the quarter as a result of negative FCF, with cash and cash equivalents of SEK1.7bn at 31
January 2013 vs. SEK2.8bn at 31 October 2012. In addition, the group holds unutilized credit facilities amounting to
SEK4.0bn.
- The groups capacity (ASK) is projected to increase by 5-6% in FY12/13.
- In FY12/13, the 4XNG plan is expected to generate a positive impact on earnings of SEK1.5bn.
- Management continues to anticipate a negative RASK and yield trend; however it believes that a positive EBIT margin >
3% and a positive EBT are possible in FY12/13.
- The group has hedged 18% of its anticipated USD deficit for the next 12 months
5-YEAR CDS
Page 2
SPRR/2013/24581/Q/08/03/2013
SAS AB
SECTOR COMPARISON TABLES - FORECASTED CREDIT METRICS

Please find below our forecasts for EHY & Convert issuers' net leverage and coverage ratios at the end of the current
fiscal year, sorted by rating.
Page 3
SPRR/2013/24581/Q/08/03/2013
SAS AB

Tel: +33 4 78 95 34 04 London WC2E 8JB

Tel: +1 215 966 6226 Tel: +1 404 495 5910
EUROPCAR 6th Mar. 2013 FCC - KEY FIGURES P. MARTY
HERTZ 5th Mar. 2013 HERTZ - KEY FIGURES P. MARTY
HERTZ 5th Mar. 2013 HERTZ - DETAILED MODEL P. MARTY
IAG 4th Mar. 2013 IAG - KEY FIGURES P. MARTY
IAG 4th Mar. 2013 IAG - KEY FIGURES P. MARTY
report.
Disclaimer
Page 4
SPRR/2013/24581/Q/08/03/2013
Analyst :
P. MARTY
Quarterly Comment
SAS AB
Published on :
12th November 2012
SAS

Moody's :Caa1 3/5 B- Stable 1 year 2nd: 0%
Stable 3rd: 0%

SAS reported improved 3Q12 results that were above expectations thanks to ongoing solid traffic growth (+4.5%)
combined with the impact of the 4Excellence program, with translated into higher yields and materially lower non-fuel unit
costs during the quarter (-6%). As a result, leverage dropped to 3.6x at 30 September 2012. Management also took
advantage of the results presentation to disclose an additional restructuring program called 4Excellence Next Generation
or 4XNG.
The 4XNG program provides for a material overhaul of the group, including a SEK3bn reduction in costs as well as
SEK3bn of asset disposals, including the ground handling business and Widere. This is expected to result in the groups
workforce shrinking to 9,000 employees from 15,000 today. Time is running, however, as management needs to obtain
approvals from unions by the end of the week (November 18th) so as to be able to extend its EUR366m RCF expiring in
June 2013. We lower our rating to B- with stable outlook to reflect the challenges associated with such plan and the tight
liquidity position of the group. We may re-assess our rating and/or outlook by the end of the week when the position of
unions is known.
3Q12 RESULTS
Results were above Spread Research and market expectations thanks to material unit cost reduction.
Operations
resulting in an improvement in the load factor by 1.5 p.p. to 80.3%.
- 3Q12 revenue was up by 4.5% YoY to SEK11.1bn due to increased traffic (as discussed above) and higher yields
(+1.8% YoY excl. FX for Scandinavian Airlines).
- 3Q12 operating expenses were up by 1% YoY due to higher fuel costs (+18% YoY) which offset lower unit costs
excluding jet fuel (-6.1% YoY for Scandinavian Airlines in 3Q12), primarily attributable to lower payroll expenses as a result
of the implementation of the 4Excellence restructuring program.
- As a result, 3Q12 EBITDAR margin was up to 15.2% from 12.3% in 3Q11 and 3Q12 EBITDAR increased to SEK1.7bn
from SEK1.3bn in 3Q11.
- Similarly, adjusted EBITDA increased to SEK1.3bn in 3Q12 from SEK0.9bn in 3Q11.

- 3Q12 operating cash flow was negative at SEK0.1bn from SEK0.2bn in 3Q11 mostly due to SEK1.1bn of working capital
outflow during the quarter driven by a seasonal flow of customers using tickets previously paid.
Page 1
SAS AB
- As a result, FCF was negative in 3Q12 at SEK0.4bn after CAPEX of SEK0.3bn during the quarter
- Net debt was nevertheless down to SEK8.5bn at 30 September 2012 from SEK8.6bn at 30 June 2012 due to FX
movements.
- LTM leverage was significantly down to 3.6x at 30 September 2012 vs. 4.3x at 30 June 2012 due to higher EBITDA.
- Liquidity declined during the quarter following debt repayments, with cash and cash equivalents of SEK2.4bn at 30
September 2012 vs. SEK3.2bn at 30 June 2012. In addition, the group holds unutilized credit facilities amounting to
SEK4.7bn.
Restructuring
SAS announced that it reached an agreement to extend its EUR366m (SEK3.1bn) RCF to March 2015 and to increase it to
SEK3.5bn. The RCF is provided by 7 banks and SASs main shareholders, the Scandinavian states and the KAW
foundation. It is however conditional upon new collective agreements being reached in accordance with the 4NGX plan,
which provides for SEK3bn of cost reduction and SEK3bn of asset disposals. The Board will meet on 18 November 2012
to decide if conditions for the implementation of the plan exist.
The 4XNG plans main areas include:
- Total cost reduction of SEK3bn of which SEK1.5bn in FY12/13, SEK1.2bn in FY13/14 and SEK0.4bn in FY14/15. This is
meant to be achieved through (i) new collective agreements for flight deck and cabin crew on employment conditions, incl.
salary reduction (up to 15%) so as to reduce crew cost per ASK by a third; (ii) centralization of administration activities
within Stockholm, to result in staff reduction of 800 FTEs; (iii) outsourcing of the ground handling activity (c. 4,800
employees).
- Introduction of new defined-contribution pension schemes for most employees (vs. defined-benefit currently) so as to
reduce by SEK2.8bn the projected SEK9.4bn negative impact on equity of the scheduled application of the IAS19
accounting rule.
- Asset sales of SEK3bn during FY12/13 and FY13/14 including (i) the ground handling activity; (ii) Widere; (iii) properties;
and (iv) lease back of engines.
The restructuring cost of 4XNG is estimated at SEK1.5bn, of which SEK0.9-1bn in October 2012.
- FY12 result (before non-recurring items) is expected to be slightly negative.
- The company expects 1Q12/13 results to be weak due to seasonality.
- The groups capacity (ASK) is projected to continue to increase by c. 5% per year in the next two years.
- The group has hedged 30% of its anticipated USD deficit for the next 12 months.
- Management has set the following financial targets to be reached by FY14/15: EBIT margin > 8%, equity/ total assets
ratio > 35% and cash and undrawn facilities/ fixed costs > 20%.
Page 2
SAS AB
5-YEAR CDS
Page 3
SAS AB

Tel: +33 4 78 95 34 04 London WC2E 8JB

Tel: +1 215 966 6226 Tel: +1 404 495 5910
IAG 12th Nov. 2012 IAG - DETAILED MODEL P. MARTY
IAG 12th Nov. 2012 IAG - KEY FIGURES P. MARTY
IAG 9th Nov. 2012 IAG - 3Q12 RESULTS ... P. MARTY
HERTZ 2nd Nov. 2012 HERTZ - 3Q12 RESULTS ... P. MARTY
HERTZ 2nd Nov. 2012 HERTZ - KEY FIGURES P. MARTY
report.
Disclaimer
Page 4
Analyst :
P. MARTY
Quarterly Comment
SAS AB
Published on :
8th August 2012
SAS

Moody's :Caa1 3/5 B Negative 2 years 2nd: 0%
Stable 3rd: 0%

SAS posted weak 2Q12 results that were below expectations. Despite solid traffic growth, the group continued to suffer
from ongoing competitive pressure in its markets as well as rising fuel costs due to a weaker SEK/USD exchange rate and
a lower effect of fuel hedging this quarter. At the same time, SAS has accelerated its cost-cutting efforts under its
4Excellence program, with the first effects noticeable during the quarter, which saw a reduction in non-fuel unit costs by -
4% (on a currency-adjusted basis).
Looking ahead, we believe that the company will continue to be challenged, like its peers, by elevated oil prices and
downward pressure on yields and unit revenue as the operating environment remains soft. In that respect, it is noticeable
that management continued to decline to provide earnings forecast for FY12. We maintain our B rating and negative
outlook.
2Q12 RESULTS
Results were below Spread Research and market expectations.
Operations
- 2Q12 revenue was up by 1.5% YoY to SEK11.4bn as robust passenger growth was mitigated by downward pressure on
yields (-2.7% YoY for Scandinavian Airlines in 2Q12).
- 2Q12 operating expenses were up by 6% YoY due to higher fuel costs (+39% YoY) which offset lower unit costs
excluding jet fuel (-4.0% YoY for Scandinavian Airlines in 2Q12), primarily attributable to lower costs for aircraft
maintenance and the impact of cost-saving measures.
- As a result, 2Q12 EBITDAR margin declined to 10.8% from 11.9% in 2Q11 and 2Q12 EBITDAR fell to SEK1.2bn from
SEK1.3bn in 2Q11.
- Similarly, adjusted EBITDA fell to SEK815m in 2Q12 from SEK961m in 2Q11.
- Despite the decline in EBITDA, operating cash flow was roughly stable YoY at SEK0.7bn in 2Q12 thanks to a working
capital inflow during the quarter driven by a positive trend in the number of bookings.
- FCF was positive in 2Q12 by close to SEK0.8bn after net capex of SEK0.4bn and asset disposals of SEK0.5bn (mostly
comprised of the sale of six properties in Sweden) during the quarter.
- Net debt was down to SEK8.6bn at 30 June 2012 from SEK8.9bn at 31 March 2012 driven by positive FCF and FX
Page 1
SAS AB
movements.
- LTM leverage was therefore generally stable at 4.3x at 30 June 2012 vs. 4.2x at 31 March 2012.
- Liquidity declined during the quarter following debt repayments, with cash and cash equivalents of SEK3.2bn at 30 June
2012 (vs. SEK3.7bn at 31 March 2012). In addition, the group holds unutilized credit facilities amounting to SEK5.0bn.
- SAS is still not providing an earnings forecast for FY12 given the uncertain economic trend.
- SAS expects passenger growth of 5-7% in FY12.
- The groups capacity (ASK) is projected to grow in line with the market in FY12, i.e. by around 4-5%.
- SAS continues to plan continued pressure on yield and RASK in FY12.
Page 2
SAS AB

Tel: +33 4 78 95 34 04 London WC2E 8JB

Tel: +1 215 966 6226 Tel: +1 404 495 5910
IAG 3rd Aug. 2012 IAG - 2Q12 RESULTS ... P. MARTY
IAG 3rd Aug. 2012 IAG - KEY FIGURES P. MARTY
IAG 3rd Aug. 2012 IAG - DETAILED MODEL P. MARTY
CEVA GROUP 2nd Aug. 2012 CEVA - 2Q12 RESULTS ... P. MARTY
CEVA GROUP 2nd Aug. 2012 CEVA - KEY FIGURES P. MARTY
report.
Disclaimer
Page 3
Analyst :
P. MARTY
Quarterly Comment
SAS AB
Published on :
3rd May 2012
SAS

Moody's :Caa1 3/5 B Negative 2 years 2nd: 0%
Stable 3rd: 0%

As expected, SAS posted weak 1Q12 results. Despite solid traffic growth, the group continued to suffer from rising fuel
costs and increased competitive pressure in its markets. Looking ahead, we believe that the company will continue to be
challenged, like its peers, by elevated oil prices and downward pressure on yields and unit revenue as the operating
environment remains soft. Although SAS is accelerating its cost-cutting efforts, we caution that the benefits thereof are
unlikely to flow through before 2H12 at best. In that respect, it is noticeable that management declined to provide earnings
forecast whilst it used to do so.
At the same time, we take comfort from the liquidity position of the group, which we view as adequate and which will be
further strengthened by the proceeds from the disposal of six properties in 2Q12. We nevertheless maintain our B rating
and negative outlook to reflect our expectation of ongoing difficult market conditions in the near- to medium-term.
1Q12 RESULTS
Results were roughly in line with Spread Research expectations (actual EBITDA of SEK349m vs. our forecast of
SEK334m).
Operations
- 1Q12 revenue was up by 4.1% YoY to SEK9.6bn as robust passenger growth was mitigated by downward pressure on
yields (-2.3% YoY for Scandinavian Airlines in 1Q12).
- 1Q12 operating expenses were up by 9% YoY due to higher fuel costs (+19% YoY) and higher unit costs excluding jet
fuel (+1.5% YoY for Scandinavian Airlines in 1Q12), primarily attributable to higher costs for aircraft maintenance.
- As a result, 1Q12 EBITDAR margin fell to 0.2% from 4.9% in 1Q11 and 1Q12 EBITDAR dropped to SEK18m from
SEK451m in 1Q11.
- Similarly, adjusted EBITDA fell to SEK349m in 1Q12 from SEK60m in 1Q11.

- Despite the decline in EBITDA, operating cash flow was up YoY to SEK1.2bn in 1Q12 vs. SEK567m in 1Q11 thanks to a
large working capital inflow during the quarter.
- FCF was thus positive in 1Q12 by close to SEK800m after net capex of approximately SEK400m.
- Net debt was down to SEK8.9bn at 31 March 2012 from SEK9.5bn at 31 December 2011 driven by positive FCF and
Page 1
SAS AB
adverse FX movements.
- LTM leverage was therefore up to 4.2x at 31 March 2012 from 3.8x at 31 December 2011.
- Liquidity remained stable during the quarter with cash and cash equivalents of SEK3.7bn at 31 March 2012 (vs.
SEK3.8bn at 31 December 2011). In addition, the group holds unutilized credit facilities amounting to SEK4.9bn.
- After the end of 1Q12, SAS completed the sale of six properties in Sweden, thus releasing liquidity of SEK450m.
- SAS decided not to provide earnings forecast for FY12 given the significant macro-economic uncertainty.
- SAS expects passenger growth of 5-7% in FY12. Bookings for the summer period are high.
- The groups capacity (ASK) is projected to grow in line with the market in FY12, i.e. by around 5%.
- SAS continues to plan continued pressure on yield and RASK in FY12.
- To respond to current market conditions, SAS is accelerating the implementation of its 4Excellence strategy launched last
September. It targets a SEK2bn earnings effect in 2012 and a total SEK5bn effect in 2013, split between SEK1.5bn of
revenue measures and SEK3.5bn of cost savings.
- Capex will be reduced to SEK1.0bn in FY12, and will be financed in part through further asset sales of SEK0.5bn.
- SAS expects to refinance the SEK2.1bn debt maturing in FY12 through completed asset sales (SEK0.45bn for properties
completed in 2Q12), new secured financing (SEK0.5bn) and other capital market financing and asset sales (SEK1.15bn).
Page 2
SAS AB

Tel: +33 4 78 95 34 04 London WC2E 8JB

Tel: +1 215 966 6226 Tel: +1 404 495 5910
CARLSON WAGONLIT 2nd May. 2012 NEW CARLSON WAGONLIT - SR COMMENT P. MARTY
HAPAG-LLOYD 2nd May. 2012 HAPAG-LLOYD - CREDIT PROFILE ... P. MARTY
CARLSON WAGONLIT 2nd May. 2012 NEW CARLSON WAGONLIT - THEORETICAL PRICI... P. MARTY
EUROPCAR 2nd May. 2012 NEW EUROPCAR - THEORETICAL PRICING ... P. MARTY
EUROPCAR 2nd May. 2012 NEW EUROPCAR - INVESTMENT RECOMMENDATION P. MARTY
report.
Disclaimer
Page 3
Analyst
P. Marty
Credit Analysis:
+33 4 78 95 34 04
paul.marty@spreadresearch.com SAS AB
Published on Transportation
October 18, 2011
S&P Transparency SR SR Index of Debt recovery rate

Moodys Score Credit Rating Credit Outlook Liquidity per seniority ranking
B-, Stable 1st rank: 25% / 2nd rank: 0% /
Caa1, Stable B Positive 3 years 3rd rank: 0%
OUR OPINION
Our B rating is constrained by SASs exposure to the highly cyclical and
competitive airline industry, its small scale and geographical concentra- Overall Opinion
tion. It also reflects the groups weak - albeit improving - profitability, age-
ing fleet and high level of financial leverage. More positively, the rating BUSINESS ANALYSIS
recognizes SASs leading position on the Nordic market as well as its
strong liquidity and supportive shareholders. Our positive outlook is based Market outlook
on our expectation of a net leverage (expressed as net adjusted debt /
EBITDAR) of 3.3x at YE11 driven by a supportive operating environment
Competition
in 1H11 combined with the ongoing benefits of the cost-saving programs
entered into.

Regulation
WE LIKE
MANAGEMENT & OWNERSHIP
Leading market position in the Nordic countries
Improving profitability owing to the benefits of cost-saving programs Management
Scalable asset base

Strategy

Strong liquidity position
Supportive shareholders

Shareholders

WE DISLIKE FINANCIAL INFORMATION
Smaller scale and greater geographical concentration than peers due
Latest Results
to large exposure to the Nordic market
Ageing aircraft fleet which is likely to require significant capex

High level of financial leverage Guidance

Low recovery for unsecured bondholders given the quantum of se-
Transparency
cured debt ranking ahead
FINANCIAL ANALYSIS
EVENT RISKS
Credit Ratios
Take-over target for a larger, better capitalized airline company (+)
Event risks that are proper to the airlines industry, such as terrorist
Consolidation Structure
attacks, natural disaster, military conflicts, disease outbreak, etc. (-)
Off Balance Sheet
SUMMARY FINANCIALS
Liquidity
SEK million FY10 LTM 1H11 FY11e FY12e
Recovery
Sales 40,723 41,695 42,648 44,421

Adj. EBITDAR 5,073 5,903 5,894 5,679
Covenants n/a
Net adjusted debt /
3.8x 3.3x 3.3x 3.5x
Adj. EBITDAR
Page 2
SAS AB
BUSINESS ANALYSIS
SAS AB is the parent company for the SAS Group, which combines Scandinavian Airlines,
(which flies within Scandinavia and internationally), Widere (whose main market is Norway)
and Blue1 (whose main market is Finland). It is the largest airline group in the Nordic market but
ranks well behind larger competitors such as Lufthansa and Air France-KLM in Europe. The
group operates through its three major hubs of Copenhagen, Oslo and Stockholm. It carries
over 25 million passengers each year and serves 127 destinations through a fleet of 232 air-
crafts at 30 June 2011. Scandinavian Airlines and Blue1 are members of Star Alliance. In addi-
tion to passenger transport, the group provides air freight as well as technical maintenance and
ground handling services.
2010 Revenue Breakdown by Jan-Sep 11 Capacity by Geography (ASK)

Business
Other Europe
18% 29% Intra-Scandinavian
Passeng Denmark domestic
Mail & er 43%
Norway domestic
freight 73% 6%
4% Sweden domestic
15% 7%
0% Intercontinental
Charter
5%
Source: Company, Spread Research Source: Company, Spread Research
Strengths Weaknesses
Leading position in the Nordic countries Small scale and geographical concentration
with an estimated 30% market share Ageing fleet that will require significant re-
Improving profitability thanks to cost- placement capex going forward
saving programs
CREDIT DRIVER 1: OPERATING ENVIRONMENT

The performance of the airlines industry is directly tied to economic growth, notably to that of
developed economies. In its latest economic outlook dated September 2011, the IMF expects a
slowdown in economic activity in 2012 as the current financial turbulence spills over the real
economy. In particular, it forecasts GDP growth in the EU of only 1.4% in 2012 vs. 1.7% in
2011. Nordic economies will not stay immune from this global trend, with projected growth rates
of 3.8% in 2012 vs. 4.4% in 2011 in Sweden, 1.5% in 2012 vs. 1.5% in 2011 in Denmark, 2.5%
in 2012 vs. 1.7% in 2011 in Norway, and 2.2% in 2012 vs. 3.5% in 2011 in Finland.
Against this backdrop, the IATA warned in its latest financial report dated September 2011 of a
slowdown in passenger traffic from an estimated 5.9% growth rate in 2011 to 4.6% in 2012.
This slowdown is expected to be more acute in Europe (where traffic is projected to grow by
+3.4% in 2012 vs. +7.2% in 2011) and North America (+1.7% forecasted in 2012 vs. +2.3% in
2011) whilst airlines in developing economies should sustain their profitability.
Total Air Travel & Air Freight Growth in Air Travel & Business Confidence
Volumes (seasonally adjusted)
Source: IATA Source: IATA

Page 3
SAS AB
SASs business model exposes it to a mix International Air Passengers

of leisure (40-45%), charter (5%) and by Seat Class
business passengers (50-55%). Such
level of diversification is in theory positive
as economy revenues tend to be less
cyclical than premium revenues. Never-
theless, SASs profitability relies mostly
on the performance of its business seg-
ment, which will undoubtedly be affected
by weaker demand for air travel as the
latter tends to have a more severe impact
on premium traffic relative to economy
traffic, as per chart opposite. Source: IATA
CREDIT DRIVER 2: COMPETITIVE POSITION

The airline industry is highly Passenger Volume for European Airlines
competitive. The primary com- (in million, 2010)
petitive factors include prices,
route networks, flight schedules,
Norwegian 13
reputation and safety record,
Alitalia 21
range of passenger services
SAS 25
provided, as well as type and
Air Berlin 34
age of aircraft.
easyJet 50
IAG 56
In the long-haul business, which Air France-KLM 71
accounts for 30% of its passen- Ryanair 73
ger activity, SASs main competi- Lufthansa 90
tors include British Airways
(IAG), Lufthansa and Air France- 0 20 40 60 80 100
KLM, as per table opposite.
Source: Company reports, Spread Research estimates
In the short- and medium-haul business, which accounts for 70% of its passenger activity, SAS
mostly competes against low-cost carriers (LCCs). SAS estimates that its share of the Nordic
market is about 30%, split as per map below. As a legacy carrier, SAS benefits from competi-
tive advantages such as better slots, more extensive flight schedules and larger catchment
areas. At the same time, LCCs generally benefit from lower costs owing to their point-to-point
system vs. the traditional hub-and-spoke network system under which asset utilization is lower.
SAS Market Shares Market Share Nordic Region

(based on ASK, 2010)
easyJet 1%
Air Berlin 1%
Wideroe 2%
Blue1 2%
British Airways 2%
airBaltic 3%
Air France-KLM 3%
Ryanair 9%
Finnair 10%
Norwegian 17%
Scandinavian 25%
SAS Group 29%
0% 10% 20% 30%
Source: Company Source: Company
CREDIT DRIVER 3: FUEL COSTS & CURRENCY EXPOSURE

Given the cyclicality of its revenues, the ability for an airline company to control or pass through
its costs is a key driver of performance. In particular, jet fuel (whose price evolves in sync with
crude oil price) represents a major component of total costs; and one that companies have no
or little control on. In 2010, fuel costs accounted for 17% of SASs operating expenses (vs. 35%
for personnel expenses and 48% for other expenses).
Page 4
SAS AB
Airlines ability to pass through rising fuel costs depends on the balance between supply and
demand for air transport, which drives asset utilization. In line with its peers, SAS estimates it
has managed to pass through 2/3 of the fuel price increase since the beginning of the year,
although this is becoming increasingly difficult. The groups policy is to hedge 40-70% of its
anticipated volume requirements for the next 12 months. As of 30 June 2011, 56% of its jet fuel
needs for the period July 2011 to June 2012 were hedged.
Brent Oil Price ($/bbl) NOK/USD & SEK/USD

150 10.0
125 9.0
100 8.0
SEK
75 7.0
50 6.0
25 5.0 NOK
0 4.0
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
Source: Bloomberg Source: Bloomberg
Similarly, SASs policy is to hedge on a 12-month rolling basis 60-90% of the currency risk that
arises from the mismatch between some operating costs denominated in USD (e.g. fuel pur-
chases) and revenues mostly in NOK and SEK (35% and 22% of total revenues, respectively).
At 30 June 2010, the group had hedged 72% of its net dollar exposure for the next 12 months.
CREDIT DRIVER 4: COST-SAVING PROGRAM

SAS launched in February 2009 the Core cost-saving program which is now nearing comple-
tion and has resulted in unit cost reductions of 23% since 2008. The remaining effect of the
program is expected to be around SEK1 billion in 2011/2012, with the remaining restructuring
costs estimated at SEK100-200 million in 2H11. In September 2011, the recently appointed
management launched the new 4Excellence strategy, which targets inter alia unit cost reduc-
tion of 3-5% p.a. through fleet reconfiguration, network optimization and productivity gains.
CREDIT DRIVER 5: AGEING FLEET & CAPEX REQUIREMENTS

Airlines investments mainly stem from (i) fleet replace- Aircraft Fleets Average Age (YE10)
ment (which depends on the age of existing aircrafts);
Airline Fleet's age (years)
and (ii) fleet additions (which depends on the need for
Ryanair 2.9
new capacities). At 30 June 2011, SASs fleet included
232 aircrafts, of which 110 owned and 122 under leases. Air Berlin 5.0
As its fleet is relatively old vs. peers (and hence boasts Finnair 6.7
higher fuel and maintenance costs), SAS plans to gradu- Air France 9.0
ally phase out ageing aircrafts and to replace them with KLM 9.1
a reduced number of models so as to lower maintenance Norwegian 9.1
costs. SAS has orders in place for 30 Airbus A320neo to SAS 11.6
be delivered between 2016 and 2019, and options for 11 British Airways 12.1
more. We caution that this may result in a higher capex
Lufthansa 12.9
going forward, which could in turn exert some pressure
Source: Company
on credit metrics.
CREDIT DRIVER 6: M&A

In an industry that has been steadily consolidating, SAS has been rumoured for a long time as
a potential take-over target for one of the top European airline companies, such as Air France-
KLM, Lufthansa or IAG. We believe that, among these three players, Lufthansa is by far the
most credible candidate owing to its stronger strategic and geographical fit with SAS. Although
the governments of Sweden, Denmark and Norway have already indicated their willingness to
divest their shareholding in due time, we caution that a take-over of SAS is unlikely in the near
term. We would expect a transaction to take place only once SAS has restructured substantially
its business and reduced much further its cost base.
Page 5
SAS AB
MANAGEMENT ANALYSIS & COMPANY HISTORY
MANAGEMENT
Rickard Gustafson, President and CEO

Prior to joining the SAS Group as CEO in February 2011, he was the CEO of
the Codan insurance group. Prior to that, Mr. Gustafson held various senior
positions at GE Capital for ten years, both in Europe and the US. He started
his career in 1989 with Andersen Consulting, where he spent seven years.
Gran Jansson, CFO and Deputy President

Prior to joining the SAS Group as CFO in March 2011, he was the CFO and
deputy CEO of Assa Abloy. He is also chairman of Bankit AB as well as board
member of Human Care AB, Note AB, nWise AB, Stille AB and Axis Commu-
nication AB. Mr Jansson is a graduate of Stockholm University.
Flemming J. Jensen, Executive Vice President, COO

Prior to being appointed COO in September 2011, Mr Jensen held various
positions within SAS, which it joined in 1989. He started his career as pilot
within the Royal Danish Air Force.
COMPANY HISTORY
1918 DDL, SASs Danish parent company, is founded
1924 ABA, SASs Swedish parent company, is founded
1927 DNL, SASs Norwegian parent company, is founded
1946 DDL, DNL and SILA combine to form SAS
1951 ABA joins the SAS consortium
1997 SAS is one of the founders of Star Alliance
1999 The SAS Group becomes the majority owner of Widere
2001 SAS is listed on the stock exchanges in Stockholm, Oslo and Copenhagen
2003 SAS acquires 49% of the shares in Estonian Air
2009 Rights issue of SEK6bn to facilitate the implementation of Core SAS
2010 Rights issue of SEK5bn

Estonian Air is divested
TRANSPARENCY SCORE:
The group is listed and provides detailed operational and financial information, as well as a
good level of guidance.
Page 6
SAS AB
CAPITAL STRUCTURE
SHAREHOLDERS FREE FLOAT: 42% MARKET CAP.: SEK3.7BN

Key Shareholders In % SAS AB is a Swedish public limited company
Swedish government 21.4% registered and headquartered in Stockholm.
14.3%
It is listed on the stock exchanges of Copenhagen,
Danish government
Oslo and Stockholm.
Norwegian government 14.3% It is 50%-owned by the governments of Sweden,
Knut & Alice Wallenbergs foundation 7.6% Denmark and Norway.
The group has not paid any dividend since 2002.
Other 42.4%
Total 100.0%
Source: Company, 30 September 2011
DEBT SUMMARY
Capital structure as of Drawn Undrawn Coupon /
Maturity Currency Leverage Issuer
30 June 2011 (SEKm) (SEKm) M argin
EUR366m RCF Jun-13 EUR 52 3,321 0.0x n/a Scan Air System
USD121m RCF Apr-13 USD 766 - 0.3x n/a Scandinavian Airlines
USD125m RCF Jun-16 USD 391 400 0.1x n/a Scandinavian Airlines
Bilateral RCF Jun-13 SEK - 1,300 0.0x n/a Scandinavian Airlines
Overdrafts Dec-11 SEK - 400 0.0x n/a Scandinavian Airlines
Other facilities >2011 SEK 5,457 - 1.9x 4.18% N.A.
Senior secured debt 6,666 5,421 2.3x
SEK1bn senior notes May-12 SEK 1,000 - 0.4x 13.50% Scandinavian Airlines
EUR60m senior notes 2016 EUR 553 0.2x 14.90% N.A.
SEK1.6bn convertible bond Apr-15 SEK 1,431 0.5x 7.50% SAS AB
EUR40m bond 2017 EUR 369 0.1x n/a SAS AB
SEK1.3bn bond Jun-14 SEK 1,300 0.5x 10.50% SAS AB
EUR75m bond Jun-14 EUR 691 0.2x 9.65% SAS AB
Senior unsecured debt 5,344 - 1.9x
Total Senior Debt 12,010 5,421 4.2x
CHF127m subordinated loan Perpetual CHF 872 - 0.3x 2.375% Scandinavian Airlines
Subordinated debt 872 - 0.3x
Total Reported Debt 12,882 5,421 4.5x
Less cash in hand (5,648) - -2.0x
Total Net Reported Debt 7,234 5,421 2.5x
Debt adjustments
Operating leases 11,796 - 4.1x
Contingent liabilities SEK 453 - 0.2x 1.55% SAS Denmark-Norway
Convertible bond - equity part Apr-15 SEK 226 0.1x 7.50% SAS AB
Pensions - - 0.0x
Total Adjusted Net Debt 19,709 5,421 6.9x
LTM EBITDA as of 30 June 2011 2,852
BOND KEY TERMS & CONDITIONS

SEK1.6BN 7.50% Senior unsecured issued by SAS AB due April 1, 2015; coupon of 7.5% p.a.
CONVERTIBLE Conversion price of SEK46.5 per share
BOND 2015 Callable @ 100 from April 1, 2013 if share price > 150% of conversion price for 20/30 days
Covenants: negative pledge, CoC
Senior unsecured issued by Scandinavian Airlines System Denmark Norway Sweden

EUR75M 9.65% due June 16, 2014; coupon of 9.65% p.a.
BOND 2014 Non-callable
Covenants: negative pledge, CoC (inc. government ownership < 25%), disposal of assets
Page 7
SAS AB
LIQUIDITY & RECOVERY ANALYSIS
LIQUIDITY (ASSUMING NO REFINANCING)

Liquidity analysis as of 30 June 2011
Change in liquidity Maturity Currency SEK amount Detail
Cash in hand - SEK 5,648
EUR366m RCF Jun-13 EUR 3,321 Unused
USD121m RCF Apr-13 USD - Unused
USD125m RCF Jun-16 USD 400 Unused
Bilateral RCF Jun-13 SEK 1,300 Unused
Overdrafts Dec-11 SEK 400 Unused
Available cash as of 30 June 2011 11,069
Overdrafts Dec-11 SEK (400) Maturity
Debt amortization FY11 SEK (500) Amortization
FCF FY11 SEK 18
Available cash as of 31 Dec. 2011 10,187
SEK1bn senior notes May-12 SEK (1,000) Repayment
Other amortization FY12 SEK (1,100) Amortization
FCF FY12 SEK (56)
RCF expiry FY13 EUR & USD (4,621) Maturity
Other debt amortization FY13 USD (1,200) Amortization
FCF FY13 SEK 458
RECOVERY
EV / LTM consolidated
In million of SEK
EBITDA multiple assets
Market capitalisation 3,700
ENTREPRISE Net debt 7,234
VALUE Total 10,934
Entreprise multiple 3.8x
Peer comparison (avg): 6.3x

Aer Lingus 4.2x
Norwegian 11.0x
PEER
Easyjet 7.2x
VALUATION
Finnair 6.8x
Lufthansa 2.0x
Ryanair 6.6x
Stressed EBITDA multiple (A) 3.1x 8,947
Market EBITDA multiple (B) 6.3x 17,894

VALUATION
Book value of assets discount
OF THE
Cash in hand 5,648
COMPANY
Net property & equipment 20% 14,134
VIA 3
Inventories 20% 648
METHODS
Receivable - Payable 20% (472)
19,958
- less applied discount (2,862)
Net asset book value (C) 17,096
AVERAGE
Asset value (A+B+C)/3 5.1x 14,646
VALUATION
Pension -
Leases 11,796
Net Asset Value 2,849
Senior secured debt 12,087

1st rank recovery rate 24%
Senior unsecured debt 6,023

2nd rank recovery rate 0%
Subordinated loans and derivatives 872

3rd rank recovery rate 0%
Page 8
SAS AB
OFF BALANCE SHEET & OTHER ADJUSTMENTS
ACCOUNTING PRINCIPLES
The consolidated financial statements of the SAS Group are prepared in accordance with IFRS.
Reporting currency is the Swedish kronor (SEK).
CONSOLIDATION
All material subsidiaries are fully-owned by the SAS Group.
LEASE ADJUSTMENTS
Operating lease payments (SEKm) 2008 2009 2010
Next year lease payment 3,427 2,990 2,572
Last payment in years 6.2 6.6 5.5
Average maturity in years 3.1 3.3 2.8
Interest rate 7% 7% 7%
Interest payment 1,202 1,103 826
NPV 17,178 15,763 11,796
Year equivalent 5.0 5.3 4.6
Source: Company report, Spread Research
PENSION ADJUSTMENTS
The SAS Group carries a small pension surplus.
Pension adjustment (SEKm) 2008 2009 2010

Present Benefit Obligation 32,615 33,578 31,370
Fair value of plan asset 30,472 32,816 31,651
Deficit / (Surplus) 2,143 762 (281)
Deficit in % of PBO 7% 2% (1%)
Debt adjustment - - -
Recovery adjustment 2,143 762 -
OTHER ADJUSTMENTS
The group has granted various guarantees for a total amount of SEK453m as of 31 December
2010. We have adjusted the debt position for this.
LITIGATION
In November 2010, the EC ordered SAS to pay fines of EUR70m with respect to SAS Cargos
alleged anti-competitive behaviour. As a consequence, the group is subject to various civil law-
suits relative to such decision. SAS is also defendant in class-action lawsuits in California alleg-
ing price-fixing of air passenger fares on trans-Pacific routes. As of 31 December 2010, the
group had not booked any provisions relative to legal claims on its balance sheet.
Page 9
SAS AB
LATEST QUARTERLY RESULTS & COMPANY GUIDANCE
2Q11 RESULTS
2Q11 passenger numbers and RPK grew by 17.8% and 13.3% YoY, respectively, whilst
capacity was up by 12.3%, leading to an increase in the load factor by +0.7 p.u. to 71.6%.
2Q11 revenues were up by +12.5% YoY to SEK11.2bn (up by +20% on a currency adjusted
basis) due to capacity growth, to a gain on the Euro Bonus revaluation of SEK380m, to a
positive comparison effect due to the Icelandic ash cloud which negatively affected last
years revenue (by approximately SEK700m), and to a slight uptick in yields (+0.6%). Un-
derlying revenue growth was 7.5%.
2Q11 operating expenses declined by -6.4% YoY, due to the effects of the Core SAS cost
savings program and to the positive contribution of a SEK729m gain related to the closing
of a groups USD hedging position. Payroll expenses declined by -6.6% YoY, whilst fuel
costs rose by +23% driven by increased fuel prices and higher volumes. Unit costs
(excluding fuel costs) were down by -5.1% YoY.
As a result, 2Q11 EBITDAR margin rose to 21.5% vs. 5.6% in 2Q10 whilst EBITDAR in-
creased to SEK2,410m from SEK559m in 2Q10. Excluding the positive non-recurring items
effect, adjusted EBITDAR margin improved to 11.9% (vs.8.8% in 2Q10) and adjusted EBIT-
DAR grew to SEK1,334m (vs. SEK883m in 2Q10).
Operating Results: 2Q11 vs. 2Q10
Revenue growth FY09 2Q10 FY10 2Q11 EBITDAR margin FY09 2Q10 FY10 2Q11
Scandinavian Airlines (16.5%) (18.7%) (10.1%) 14.1% Scandinavian Airlines - - - -
Blue1 (9.1%) (10.0%) (1.5%) 2.8% Blue1 - - - -
Widere (4.9%) (3.4%) 4.3% 16.1% Widere - - - -
Total growth (15.0%) (18.4%) (9.3%) 12.5% Total margin 5.8% 8.8% 9.4% 11.9%
Total revenue 44,918 9,979 40,723 11,229 Group EBITDAR 2,626 883 3,837 1,334
Adjusted CFO was up to SEK731m in 2Q11, thus allowing to group to fully finance net
capex of close to SEK500m.
Net debt was flat at SEK7.2bn at 30 June 2011 vs. SEK 7.2bn at 31 March 2011.
LTM leverage (expressed as net reported debt / reported EBITDA) went down to 2.5x at 30
June 2011 vs. 3.1x at 31 March 2011.
Liquidity remains healthy with cash and cash equivalents of SEK5.6bn at 30 June 2011
(down from SEK6.6bn at 31 March 2011). In addition, the group holds unutilized credit facili-
ties amounting to SEK5.4bn.
COMPANY GUIDANCE
The markets capacity is expected to grow by 10% in 2011, whilst SAS plans to increase
capacity by 6% in 2011 in line with expected market growth, which is driven by the US
routes as well as the domestic and intra-Scandinavian routes.
The Core SAS cost savings program has been completed at 97%. The remaining earnings
effect is expected to be SEK500m in 2011 and SEK500m in 2012 while the remaining asso-
ciated costs are estimated at SEK100-200m in 2011.
Following the completion of Core, the group intends to announce its next strategic priorities
during the autumn.
The group is currently offsetting rising fuel costs through hedging (50 to 60% of fuel vol-
umes for the next 12 months are currently hedged), fuel surcharges and yield management.
However the growing competition sustained by additional capacity - particularly on Euro-
pean routes from Denmark and in Sweden - remains a threat to the groups ability to pass
on fuel surcharges.
Net aircraft capex is expected to be zero in FY11.
The group has SEK1.8bn of equity exposure in relation to the potential bankruptcy of
Spanair, but the cash flow impact would be only around SEK200 to 300m.
Given the first half performance and the stable booking status, the group maintains its target
to achieve positive income before tax in FY11.
Page 10
SAS AB
FINANCIAL STATEMENTS & FORECASTS
INCOME STATEMENT
Spread Research SAS Group SAS Group SAS Group SAS Group SAS Group SAS Group
Global Model Audited Audited Unaudited Forecast Forecast Forecast
(SEK m) FY FY LTM FY FY FY
Dec-31 Dec-31 Jun-30 Dec-31 Dec-31 Dec-31
2009 2010 2011 2011e 2012e 2013e
Revenue 44,918 40,723 41,695 42,648 44,421 46,251
Payroll expenses (17,998) (13,473) (12,906) (13,008) (13,104) (13,182)
Other operating expenses (25,912) (25,210) (24,649) (24,230) (27,046) (28,182)
Leasing costs for aircraft (2,319) (1,815) (1,630) (1,535) (1,644) (1,758)
Depreciation and amortization (1,845) (1,867) (2,590) (2,410) (1,688) (1,804)
Share of income in affiliated companies (258) 12 31 - - -
Income from sale of shares in subs. & aff co's 429 (73) (47) - - -
Income from sale of aircraft and buildings (97) (239) (234) 12 - -
Extraordinary expense -
Income from other securities holdings (263) (255)
Debt interests expense -
Total interest expense (645) (1,041) (1,032) (1,000) (950) (950)
Interest income 304 186 304 200 200 200
Net interests (341) (855) (728) (800) (750) (750)
Income tax 803 799 441 - - -
Income from discontinued operations (327) 43 46 - - -
Minority Interest - - -
Net Income (2,947) (2,218) (826) 678 189 576
Gross margin
EBITDAR reported 1,008 2,040 4,140 5,411 4,271 4,887
EBITDAR adjusted 4,091 5,073 5,903 5,894 5,679 6,181
EBITDA reported (1,311) 225 2,510 3,875 2,628 3,130
EBITDA adjusted 307 2,022 2,852 2,843 2,628 3,130
EBIT reported (3,082) (1,942) (330) 1,478 939 1,326
EBIT adjusted (1,413) 683 1,484 1,159 939 1,326
CASH FLOW STATEMENT

FY09 FY10 LTM FY11e FY12e FY13e
Fund From Operation (2,342) 232 922 1,083 1,878 2,380
Inventories 69 31 (23) (29) (30)
Receivable 8 382 (125) (180) (65)
Payable (1,149) (800) (145) (24) (27)
Change in WC (1,072) (387) (1,446) (294) (233) (122)
Adjusted CFO (3,414) (155) (524) 790 1,644 2,258
Cash Flow from Operation (3,414) (155) (524) 790 1,644 2,258
Capital expenditure (4,661) (2,493) (1,861) (1,600) (1,700) (1,800)

Asset acquisition (net of sale) 1,046 614 605 400
Company acquisition (net of sale) 605 68 3
Other investing activities 399 15 15
Cash flow from investing activities (2,611) (1,796) (1,238) (1,200) (1,700) (1,800)
Dividends -
Equity issuance 5,808 4,678 (52)
Bank debt use 2,080 4,100 2,586 566
Bank debt repayment (3,060) (6,100) (4,540) (1,500)
Bond issue use 2,234 2,234
Bond redemption - (1,000)
Other financing activities (544) 141 685
Financing cash flow 4,284 2,819 913 1,300 (1,000) -
Exchange rate fluctuations 49 (16) (7)
Cash provided from discontinued operations
Total cash flow (1,692) 852 (856) 890 (1,056) 458
Page 11
SAS AB
FINANCIAL STATEMENTS & FORECASTS (CONTINUED)
BALANCE SHEET
Total assets 42,495 41,825 42,685 43,803 42,992 43,568
Intangible assets 1,296 1,414 1,574 1,414 1,414 1,414
Property & equipment 15,574 14,782 14,134 14,213 14,394 14,571
Receivable 1,581 1,277 5,584 1,402 1,582 1,647
Inventories 758 678 648 701 730 760
Cash in hand 4,189 5,043 5,648 5,933 4,877 5,335
Financial assets 14,395 14,648 14,395 14,395 14,395
Other assets 19,097 4,236 449 5,744 5,600 5,446
Payable 1,738 1,749 - 1,604 1,580 1,553
Shareholder equity 11,389 14,438 14,445 15,116 15,305 15,881
Senior debt 7,914 6,666 6,980 6,980 6,980
Total reported debt 14,377 11,799 12,882 13,099 12,099 12,099
Other liabilities 14,991 13,839 15,358 13,984 14,008 14,035
Net reported debt 10,188 6,756 7,234 7,166 7,222 6,764
Adjustments 16,471 12,475 12,475 12,475 12,475 12,475
Total adjusted debt 30,848 24,274 25,357 25,574 24,574 24,574
Net adjusted debt 26,659 19,231 19,709 19,642 19,697 19,240
RATIOS
Total adjusted debt / total asset 75% 60% 62% 60% 59% 58%
Net adjusted debt / Shareholder equity 234% 133% 136% 130% 129% 121%
Free Cash Flow (8,075) (2,648) (2,385) (810) (56) 458
FCF/ Net adjusted debt -30% -14% -12% -4% 0% 2%
Adjusted CFO / net adjusted debt (13%) (1%) (3%) 4% 8% 12%
Adjusted CFO / gross interests -5.3x -0.1x -0.5x 0.8x 1.7x 2.4x
EBITDA / gross interests 0.5x 1.9x 2.8x 2.8x 2.8x 3.3x
EBITDAR / lease adjusted interests 2.1x 2.5x 2.9x 2.9x 2.9x 3.1x
EBIT / gross interests -2.2x 0.7x 1.4x 1.2x 1.0x 1.4x
Total reported debt / EBITDA 46.8x 5.8x 4.5x 4.6x 4.6x 3.9x
Net senior debt / EBITDA -13.6x 1.4x 0.4x 0.4x 0.8x 0.5x
Net reported debt / EBITDA 33.2x 3.3x 2.5x 2.5x 2.7x 2.2x
Net adjusted debt / EBITDA 86.8x 9.5x 6.9x 6.9x 7.5x 6.1x
Net adjusted debt / EBITDAR 6.5x 3.8x 3.3x 3.3x 3.5x 3.1x
Revenue growth (15.0%) (9.3%) 2.4% 4.7% 4.2% 4.1%
Depreciation/Property & equipment (11.8%) (12.6%) (18.3%) (17.0%) (11.7%) (12.4%)
FFO before WC margin (5.2%) 0.6% 2.2% 2.5% 4.2% 5.1%
EBITDA margin (2.9%) 0.6% 6.0% 9.1% 5.9% 6.8%
Adjusted EBITDAR margin 9.1% 12.5% 14.2% 13.8% 12.8% 13.4%
Adjusted EBITDA margin 0.7% 5.0% 6.8% 6.7% 5.9% 6.8%
Adjusted EBIT margin (3.1%) 1.7% 3.6% 2.7% 2.1% 2.9%
ROE (25.9%) (15.4%) (5.7%) 4.5% 1.2% 3.6%
Debt interests costs 4.5% 8.8% 8.0% 7.6% 7.9% 7.9%
Tax rate 23.5% 26.1% 33.6% - - -
Working capital 601 206 6,232 500 733 855
Working capital days 5 2 55 4 6 7
Inventories days 6 6 6 6 6 6
Receivable days 13 11 49 12 13 13
Payable days 35 47 - 45 44 43
FINANCIAL COVENANTS
At year-end 2010, 11% of the groups financial liabilities were subject to financial covenants, including cash
flow-based covenants, debt/equity and liquidity. However, such covenants were not disclosed.
Page 12
SAS AB
CREDIT METRICS AND MARKET DATA FOR THE TRANSPORTATION SECTOR
Source: market sources, Spread Research

You can also
19, Boulevard Eugne Deruelle find us on
69003 Lyon BLOOMBERG
Tel : +33 4 78 95 34 04
info@spreadresearch.com SPRR <GO>
SPREAD RESEARCHs latest reports on SAS

October 13, 2011 Report Airline Monthly Traffic Stats Report: September 2011
August 17, 2011 Financial Model SAS - Key Figures & Detailed Model
August 17, 2011 Quarterly Comment SAS - 2Q11
July 22, 2011 News SAS makes an announcement about continuous growth and customer
satisfaction
June 21, 2011 News SAS places an order with Airbus for 30 aircrafts worth 1.96bn
Disclaimer
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Credit Research

CDS Index D/D change

Morning Roundup 2.5

Credit News 1.5

Nasdaq Stockholm published trading activity in 27 listed bonds amounting to -0.5

Nordic Issues since last report Key data

Recent Published Research Equity indices Change (%)

Swedavia (Q3 2016),2016-10-31 OMX Copenhagen 695 -1.7 -5.4 -11.5

SSAB (Q3 2016),2016-10-31 Interest rates Change (bps)

Currencies Change (%)

Commodities Change (%)

Please see important disclosures at the end of this document

mikael.busch francis.dallaire maria.gillholm michael.a.johansson jakob.midander

Ingvar Matsson Sven Skld Andreas Lindstrm Erkki Vesola

ingvar.matsson sven.skold andreas.lindstrom erkki.vesola

Maria Gillholm Sven Skld Linus Thand

Ingvar Matsson Erkki Vesola Mikael Busch

Swedbank Large Corporates & Institutions

Q2 2015/2016 credit/spread neutral/negative

Please see important disclosures at the end of this document

Maria Gillholm Sven Skld Mikael Busch

Ingvar Matsson Erkki Vesola

Swedbank Large Corporates & Institutions

Short-term reprieve in supply/demand in Scandinavia should last until 2016

Opportunistic sale of two Heathrow slot-pairs highlights value of landing rights

SEK 2011 2012 2013 2014 2015 2016 2017 2018

90% Operating Statistics

75% Unit Cost 0.70 0.64 0.65 0.65 0.64

0.8 Source: Company data, ISM Research

SAS ASK Norwegian ASK SAS Yield

Source: Company data, ISM Research

Passenger Yield vs Unit Cost Source: Company data, ISM Research

Passenger Yield Unit Cost

Source: Company data, ISM Research

SEK 2011 2012 2013 2014 2015 2016 2017 2018

SAS3 2019 Spot 1 Year Horizon / 35% delta

SAS ASK Norwegian ASK SAS Passenger Yield (RHS)

Total Cost incl. fuel/ RPK Total Rev / RPK

Source: Company data, ISM Research

EBITDAR 5,213 4,035 4,632 5,057 Capex

- SAS has previously successfully delayed firm aircraft order and

Source: Company data, ISM Research

Segment Liabilities & Shareholders' Equity

EBITDA Income Statement FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Comparables Cashflow Statement FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Cash From Investing Activities

Cash from Financing Activities

Spread Research Credit Transparency Index of Recovery by

SPREAD RESEARCH OPINION

Short-term view: Negative.

Long-term view: Negative.

Capital Structure & Liquidity:

CREDIT SPREADS: SAS SEK 9% 2017 (11TH SEPT. 2014)

SPREAD RESEARCH's latest reports on the Travel sector

Company Date Title Analyst

TRAVEL 5th Sep. 2014 Sector Recos: TRAVEL ... M. PIERRON

Spread Research Credit Transparency Index of Recovery by

SPREAD RESEARCH OPINION

Capital Structure & Liquidity

* Cash and cash equivalents amounted to SEK 8.9bn as of 31 April 2014.

KEY MANAGEMENT GUIDANCE

CREDIT SPREADS: SAS SEK 9% 2017

SPREAD RESEARCH's latest reports on the Travel sector