Sustainability Report

SAS welcomes an open debate about aviation and the environment. On the basis of scientific findings we will present a nuanced picture of the airlines’ actual environmental impact and help ensure a competition- neutral policy framework.

Important events in 2009 COP15 concluded with the “Copenhagen Accord,” a political goal of a maximum temperature rise of two degrees Celsius. SAS and IATA were active in the process. IATA and the aviation industry agreed on specific and relative targets for reducing greenhouse emissions. SAS’s MRV (Monitoring–Reporting–Verifying) plan, which ­represents the basis for calculating carbon dioxide and tonne kilometers for the EU ETS, was approved. SAS’s climate index improved by four points to 93 (97). Blue1 was certified and Cargo recertified according to ISO 14001. SAS stepped up its environmental communication internally and externally. The phasing out of older aircraft resulted in a substantial ­improvement in the fleet’s total environmental performance.

Sustainability-related KPIs1 2009 20082 2007

Operating revenue, MSEK 44,918 52,870 50,598 EBT before non-recurring items, MSEK –1,754 –339 1,234 EBT margin before non-recurring items, % –3.9 0.6 2.4 Average number of employees 18,786 24,635 26,5383 of which women, % 45 42 413 Sick leave, % 6.9 6.5 6.43 Climate index 4 93 97 95

Carbon dioxide (CO2), emissions, 1,000 tonnes 3,784 5,840 6,295

Nitrogen oxides (NOX), emissions, 1,000 tonnes 15.0 24.2 25.6

Grams of carbon dioxide (CO2)/RPK 127 129 130 Total fuel consumption, 1,000 tonnes 1,208 1,857 1,999 Fuel consumption, liter/RTK 0.46 0.47 0.48 Water consumption, 1,000 m3 175 176 2083 Energy consumption, ground, GWh 207 213 2093 Unsorted waste, 1,000 tonnes 1.5 0.9 1.03 External environment-related costs, MSEK 368 453 414 Number of passengers, 1,000 5 27,382 41,741 44,772

1 We’re reducing our climate impact for All financial key data follow the financial portion of the Annual Report. Wherever possible, all sustainability KPIs include operations owned during the reporting year. 2 Apart for average number of employees, all key data for 2008 exclude airBaltic. 3 Data have not been examined by an external auditor. 4 The climate index has been corrected in the Internet version and thus departs from long-term, responsible traffic growth the index in the print version. 5 Including paying, bonus and charter passengers 102 and non revenue passengers. SAS Group Sustainability Report 2009 Aviation sector a key player at UN climate ­conference

Our world – our stakeholders In 2006 the airline industry began to examine industry positions on being included in the ­European emissions trading scheme. Already then advantages were identified of seeking global SAS’s activities include flight operations and ope- During the period 2008-09 SAS reduced its capacity by 15%, solutions to avoid competition-distorting rules rations on the ground. Actual flights account for the resulting in an increase in the passenger load factor from 72.3 to and purely regional systems. 72.7% in 2009. IATA estimates that demand fell by around 8% in At the end of 2008/beginning of 2009, SAS invited the IATA and biggest environmental impact by far, yet ground ope- a number of industry players to attend the World Business Summit 2009, with growth picking up again by 2011 at the earliest. rations and onboard customer service also impact the climate conference, held in Copenhagen in May 2009. Subsequently, environment. In 2009 the environmental debate intensified with a contin- IATA was able to present an initial proposal for a global strategy for the ued focus on global emissions of greenhouse gases, primarily airlines’ greenhouse emissions. IATA then obtained industry accept- ance of the strategy ahead of the UN climate summit in New York in carbon dioxide (CO2). There is growing agreement that a consid- SAS believes in sustainable development as a concept both for erable effort is required to limit and eventually reduce emissions. September 2009. Since SAS played a leading role in the process, SAS Group CEO Mats Jansson was one of three airline chiefs tasked with taking responsibility and as way of creating value for sharehold- However, major emitters such as the U.S., China and India have presenting the strategy. In September 2009 the strategy was also ers. Continuously improving processes and optimizing produc- difficulty reaching a consensus on specific targets and a time­ presented at a preparatory climate conference, Nordic Climate Solu- tion in a sustainable way creates value, not only in the form of table for taking action. See also the report from COP15 at right. tions, in Copenhagen. SAS was a “greening partner” at both the World growth for shareholders but also for outside stakeholders, sup- Business Summit and Nordic Climate Solutions. During the year, global pliers and passengers. To communicate these efforts and their On the way to zero emissions industry organizations for airports, air traffic management and aircraft results, SAS strives to continue to be a leader in sustainability In 2007 the industry organization IATA formulated a vision and engine manufacturers also endorsed IATA’s global strategy. This means that the global aviation industry stands united on com- reporting, work that is propelled by the demands of the outside whereby it will be possible to fly commercially without impact- mon goals, a situation, by the way, that is unique in the world, since no world and by the expectations of stakeholders. ing the climate by 2050. This vision is to be realized through a other global industry had succeeded in agreeing in this way, ahead of The airline industry is sensitive to outside disruptions. These combination of new technology, more efficient air traffic manage- COP15. ICAO, the UN civil aviation body, held a meeting prior to the have been amplified during the most recent decade, with the ment, new fuels and measures to improve infrastructure and climate conference where environmental issues topped the agenda. market affected by cyclical fluctuations, acts of terrorism, war other external conditions under which the airlines operate. Despite initial differences, during COP15 it became clear that ICAO and the aviation industry are largely in agreement on basic principles. and the current financial crisis. At the same time, competition is Realizing zero emissions requires the total replacement of

increasing, which puts additional pressure on falling margins in a existing aircraft fleets with a new generation of aircraft not yet in Conclusion: less than two degrees labor- and capital-intensive industry. production. The lead time for such a changeover is 20-30 years, Following serious problems reaching agreement in the negotiations SAS’s long-term objectives remain firm, and reporting of sus- which is why the vision of zero emissions should be interpreted to among 192 countries, the world had to settle for the final report, the tainability work is to maintain the same high standards that have mean that the necessary technology is to be commercially avail- ­“Copenhagen Accord”. Despite the lack of targets and plans, it is how- been garnering praise for SAS from sustainability analysts and able and adopted by the airlines at a financially proper pace. ever, positive that COP15 resulted in a political pledge to keep the global temperature increase under two degrees Celsius. Moreover, almost all other outside commentators. On the way to this vision, IATA and the rest of the aviation countries in the world endorsed the declaration to establish and report industry agreed on joint recommendations and a target scenario national targets. Market performance ahead of the COP15 climate conference: While aviation was on the policy agenda at the summit, it was not The airline industry is now seeing lower demand from business included in any agreement. In the short term this may be seen as an ad-  Improving energy efficiency by an average of 1.5% per year travelers in particular, the most important segment for the estab- vantage, since aviation avoided the tax measures that many countries until 2020. had proposed, but a more long-term assessment is that a clarification lished network carriers. would have been best, preferably in the form of a global framework for  Carbon-neutral growth starting in 2020. This has led to greater competition and increasing pressure regulating aviation. 50% reduction in greenhouse CO emissions by 2050, on fares, affecting margins and profitability for the entire indus-  2 try. At the same time, substantial capacity has been mothballed, ­compared with 2005 levels. Intensive industry collaboration and many airlines have put new investment on hold. ACARE (Advisory Council for Aeronautical Research in Europe) During the entire COP15, SAS was part of an IATA team, which worked In the long term, however, a continued uptick for the airline has set a goal for developing technology for aircraft, engines and intensively to establish contacts with negotiators and decision-makers from all over the world. The aim was to create a dialog on the needs and industry is expected with average passenger growth of 3-4% per better air traffic management to reduce greenhouse CO emis- We’re reducing our climate impact for 2 requirements of aviation and present the industry’s own recommenda- year. Most of the growth is expected in Asia, primarily in China sions by 50% per revenue passenger kilometer and nitrogen ox- tions. Particular weight was given to industry desires for a global agree- and India, while the mature markets in the industrialized West will ides (NOx) by 80% by no later than 2020. In addition, noise levels ment and for ICAO regulation of airline emissions. post lower figures. are to be cut in half compared with today’s. Another example of During COP15, SAS was a sponsor of airport services, which meant long-term, responsible traffic growth that in partnership with the Danish foreign ministry, SAS personnel ­offered all customers and stakeholders service in all practical matters. SAS Group Sustainability Report 2009 103 how air traffic management will be optimized is SESAR JU (the long-term growth, means that aviation’s environmental impact the focus is likely to be on other environmental impacts, primarily Single European Sky ATM Research Joint Undertaking), with the will increase if no actions are taken. That is why the entire aviation NOx and contrails. goal for 2020 of reducing travel times by 8-14 minutes, cutting industry agreed on ambitious, long-term environmental goals. Industry and scientists generally agree on the magnitude

fuel consumption by 300-500 kg and thus reducing CO2 emis- Read more on p. 103. and effects of CO2 emissions. There is less agreement, however, sions by 1-1.5 tonnes for an average European flight. For long journeys there is no real alternative to flying. His- regarding NOx, particulates and water vapor. At the same time, torically, air transport has belonged to the industrialized world. there are increasing calls for introducing some form of tax on Impact of air transport Today, the major growth in both nominal and relative terms is NOx. SAS and the airline industry recommend the ECAC model

The airline industry currently accounts for 2-3% of global CO2 taking place in Asia and the Middle East, while Africa continues with differential landing fees based on NOx emissions. There emissions, which is equal to around 12% of the transportation to post modest growth. In countries within these geographical are also suggestions to use a multiplier, though its size is con-

sector’s global emissions. CO2 emissions account for about two- areas both private persons and industry can now utilize the infra- troversial and not based on scientific findings. Ten years ago, a thirds of air transport’s total impact on climate, while NOx, water structure previously reserved for the industrialized world. Thus, multiplier of 2-4 was under discussion, while the current value is vapor and particulates are assumed to be responsible for most of environment-motivated global restrictions on aviation would around 1.2-1.8. The issue is on the EU agenda, and some form of the balance. primarily affect those who previously neither had the means nor decision is expected no later than 2012. See the article from Under the Kyoto Protocol commitments, which extend to the opportunity to fly. Air transport is therefore a key part of the Cicero on aviation’s environmental impact at www.sasgroup.net 2012, all industrialized countries must reduce their emissions by infrastructure of a globalized world, necessary for economic and under “Sustainability.” 5%, compared with 1990-levels. The EU has gone a bit further, social progress. SAS fully endorses the “polluter pays principle” and is

pledging to reduce the community’s total CO2 emissions outside SAS’s main market is the Nordic region, with emphasis on prepared to account for its share. This assumes that any taxes the Emissions Trading Scheme (ETS) by a total of 20% by 2020. travel to, from and between the Nordic countries. The Group’s imposed on it are based on scientific findings and that the total The airlines will be included in EU emissions trading in 2012. share of total traffic in its main markets is around 37%. All of climate impact of competing modes of transportation is taken

Industry and IPCC estimates indicate a possible reduction in Norwegian domestic traffic accounts for 1.7% of national CO2 into consideration. In the current debate, the actual environ-

CO2 emissions of 2% per year on average through new technolo- emissions. The corresponding figures for Danish, Swedish and mental impact of air transport is, in many respects, often unfairly gy and efficiency gains. This trend, in combination with expected Finnish domestic traffic are 0.4%, just under 1% and 1.3%, re- and crudely depicted. It is also important that EU environmental spectively. (Source: National statistics). standards not create conditions that disadvantage European over non-European airlines. Emissions trading An AEA working group, with SAS participation, has put forth In 2008 the EU adopted the revised general ETS directive and a proposal for a global system called GAP (Global Approach for Air transport’s share of global carbon emissions a special directive to include air transport into the EU/ETS from International Aviation Emissions), which takes into account the Air transport 2% 2012. The aviation directive may be overhauled in 2014 to enable UN CBDR principle (Common But Differentiated Responsibil- Other transport 12% a global ETS system. ity), aimed at leveling the playing field for airlines. The proposal The decision means that the airlines must deliver one emis- divides the world into three blocs, with more onerous obligations Agriculture 14% sion allowance for each tonne of CO2 emitted. Airlines will be on the industrialized zone than on developing countries. Moreover, allocated approximately 80% of the allowances at no cost, with IATA is working on a document outlining ideas for economic Energy/other 72% 2004-2006 as a base period. The remainder, including any ­instruments for reducing air transport’s CO emissions. Source: EEA/IPCC (2004) 2 emission increase, must be purchased in the market. SAS esti­ mates that the costs may amount to MSEK 200-300 per year Environmental policies Air transport’s share of the transportation sector’s total carbon emissions based on expected production and an estimated credit price of Airline operations are subject to the environmental policies Air transport 12% EUR 30 per tonne. applic­able to each airport. These usually involve noise, rules for So far, the climate impact of air transport has concentrated on using deicing fluids and limits on emissions to air and discharges Shipping/rail 12% CO2 emissions. Now that emissions trading is being introduced, into soil and water.

Road transport 76% Source: Stern Report 2000, WBSCD (2004) 104 SAS Group Sustainability Report 2009

Fördelning av koldioxidutsläppen i Europa Energi/övrigt 59%

Transporter 21%

Jordbruk 9% Avfall 3% Industri 8% Källa: EEA What comes in and goes out

SAS’s responsibility Air SAS’s responsibility

Aviation fuel Carbon dioxide (CO2) IN Engine oil Nitrogen oxides (NOx) Halons Hydrocarbons (HC) Volatile organic compounds (VOC) In 2009, SAS did an updated survey of the Group’s busiest Oil aerosols Scandinavian airports and engaged in dialogs with them to en- Jettisoned fuel sure that they had the required permits. Noise Water vapor (H2O) One of Stockholm-Arlanda Airport’s environmental rules is a Sulfur dioxide (SO2) ceiling for how much CO and NOx the airport may emit. In 2008 Carbon monoxide (CO) 2 Halons (CFC) the Environmental Court ordered a postponement from 2011 to 2016 of the date when Arlanda’s emission ceiling is supposed to go into effect, provided that LFV submits an application for a new Flight operations account for an estimated 95% environmental permit by no later than the end of 2010. However, of SAS’s environmental on formal grounds, the Supreme Court rejected this linkage be- impact OUT tween a change in terms and the application, which means that the emission ceiling will be compulsory in 2011. LFV has been Flygverksamheten working on an application for a whole new environmental permit SAS’s responsibility* Cabin SAS’s responsibility* Airport owner’s responsibility since 2008, and the goal is to submit it at year-end. When this Food and beverages Organic waste IN Packaging Waste Wastewater application is considered, the emission ceiling will be examined Disposable/semi- Unopened packaging (disposal) disposable items Waste and recycling in its entirety, which for formal reasons was not possible in the Flygbränsle Articles for sale Lavatory waste Lavatory waste Motorolja ­Supreme Court hearing. SAS has extensive activities at Arlanda Newspapers (disposal) Halon and is very much dependent on the airport’s environmental Chlorinated water Germicides permit. The environmental permit for Copenhagen Airport includes a noise limit of 80dB(A) for night traffic. SAS is evaluating technical fixes for lowering the noise level of its MD-80 aircraft. So far, this attempt has not had satisfactory results. At the same time, SAS is Cabin operations account for an estimated reducing its need to use MD-80 aircraft, and airport noise limits are 2% of SAS’s not expected to have any material effect on SAS’s traffic planning. environmental impact OUT Due to stricter noise standards, a growing number of airports have tougher restrictions regarding permitted approach and takeoff corridors. Deviations generally result in fines on the airline. SAS’s responsibility* Ground services SAS’s responsibility* Airport owner’s responsibility LFV has appealed a judgment regarding noise restrictions Glycols Waste IN Water Hazardous waste Glycols in connection with Landvetter Airport outside Gothenburg. Maintenance supplies Wastewater Urea/Acetate SAS and LFV believe that since the judgment does not take into Energy Sulfur dioxide (SO2) Wastewater Vehicle fuel Carbon dioxide (CO2) (disposal) ­account all factors impacting the environment, it unfairly affects Office supplies Nitrogen oxides (NOx) airlines with good environmental performance. Chemicals Hydrocarbons (HC) Equipment Soot and particulates In general, the trend is toward increased use of environment- Work clothes and uniforms Volatile organic compounds (VOC) related charge systems and operational limits. The twofold Airport owner’s responsib. purpose is to reduce local environmental impacts and create Urea/Acetate incentives for airlines to speed up the use of aircraft with the best Ground operations available “green” technology. Read more about policies and account for an violations in the Report by the Board of Directors, pp. 52-53. estimated 3% of SAS’s * Direct and indirect responsibility environmental impact OUT

See also Environmental management system on p. 111. SAS Group Sustainability Report 2009 105 Environmental vision

SAS intends to be a leader in work toward sustainable ­development in air transport, thus contributing to sustainable social progress. Goals, strategies and goal attainment SAS intends to have the most ambitious long-term environ­ mental program in the airline industry. The overall objective of SAS’s sustainability work is to create During the year SAS actively improved customers’ ability to Principal strategic targets long-term growth in shareholder value and help the Group reach purchase carbon offsets. While demand has been limited, it is its goals. Formulated goals and adopted strategies for sustain­ expected to grow as SAS gets more environmental information In line with IATA’s vision, the overriding long-term objective of ability work are a part of Core SAS. The environmental goals for out and awareness in society increases. Major customers were of- SAS’s environmental work is to make it possible to fly without 2011 are to lay the groundwork for SAS’s operations becoming fered environmental statistics and the ability to buy carbon offsets greenhouse emissions by around 2050. sustainable in the long term. as part of contracts with SAS. SAS was involved in transportation  20% lower emissions by 2020, traffic growth included to and from major conferences. Here too, offsets were included 50% lower emissions per unit produced by 2020 In 2009 SAS’s sustainability work continued at high intensity in all in numerous agreements with the organizers. Carbon offsets Group units in line with the action plans drawn up in 2008 for reach- are purchased for all business travel at SAS. More environmental Environmental goals 2008–2011 ing the goals by no later than 2011. The deterioration in the market information was added to the frequently used emission calculator SAS will environment has not affected goals or timetables. on the SAS website, which may well be one of the most elaborate  be seen as the most environment-conscious airline in Europe This section reports the current status at the end of 2009 and in the market. It has also been examined by a third party.  have ISO 14001-certified environmental management systems measures planned for 2010. SAS’s process for monitoring, reporting and verification in  have the industry’s most effective fuel saving program emissions trading was submitted on time and approved by the  be among the first airlines to use alternative fuel blends authorities. This ensures the Group a correct and fair allocation of SAS will be seen as the most environment-conscious allowances for the period 2012-2020. Since the emissions trading once they are approved and commercially available airline in Europe have a long-term plan for its aircraft fleet that leads to a scheme will represent costs to the airlines, a correct allocation is ­significant reduction of greenhouse emissions essential for competitive pricing in the future. Many airlines had not have reached the target for SAS’s eco-efficiency index. Goal attainment 2009 reported required plans when the deadline expired at year-end. The goal to step up external communication and involvement During the year, 1,500 employees underwent training in the was pursued by publishing an environmental folder, articles in “SAS and the Environment” program. The program is a key ele- The SAS Group’s vision, goals and strategies for its ­sustainability work are reported in their entirety at internal and external publications and by heavy involvement in ment of certification work now under way. www.sasgroup.net under “Sustainability.” environmental conferences, seminars and presentations. En- SAS was major advocate of environmental and sustainability vironmental work was enhanced in all areas to ensure that the issues in international bodies such as IATA and AEA and actively environmental strategy goal is reached in 2020. participated in society-wide discussions of these issues.

SAS’ environmental strategy targets for 20201 SAS has given priority to initiatives aimed at giving passen- Environmental and sustainability data were a key element of

Million tonnes C02 Based on 4% annual growth gers a positive experience also from an environmental stand- Baseratnumerous på 4% årlig traf icontractsktillväxt with major customers, governmental as well 9.0 point. These include environmental9,0 adjustments on board and as private. In Sweden there are guidelines for all wholly owned in lounges, communication on SAS’s environmental work, more state enterprises to present a certified sustainability report. The 8.0 8,0 green flights, etc. Government will work to require partly-owned state enterprises to 7,0 7.0 It is of the utmost importance that all stakeholders receive an apply these guidelines as well. SAS has been doing this for more 6.0 objective and correct picture6,0 of the current state and long-term than ten years. 20% 5,0 5.0 goals of the airlines in relation to the benefits air transport con- reduction –20% by 2020 tributes to society. Measures in 2010 4.0 4,0 In 2009 SAS was involved in a number of conferences and In 2010, SAS will continue its extensive environmental communi- 3.0 3,0 2006 2010 2014 2018 2020 fairs. For example, SAS was a2005 “greening partner”2010 at both the2015 cation2020 work, placing it in the context of the benefits that Actual outcome2 World Business Summit and Nordic Climate Solutions and spon- air transport contributes to society. Faktiskt utfall hela gruppen Expected trend if no actions taken sored airport services during COP15. In addition, numerous envi- During the year SAS will initiate activities in the form of articles, Expected trend with planned replacement of aircraft fleet Faktiskt utfall SAS utan Spanair och AirBaltic Förväntad utveckling med planerat utbyte av flygplansflottan Expected trend with planned replacement of aircraft fleet and other measures ronmental presentations were made at fairs and events attended presentations, conference attendance, “official airline” agreements by many different stakeholders.Förv äntad utveckling med planerat utbyte av flygplansflottan ocwithh an dra agreen åtgärder perspective and similar activities to speed up the effort 1 Adjusted from 2005 to reflect the current Group. 2 Improvement explained by a ­15-20% decline in traffic and higher energy efficiency. 106 SAS Group Sustainability Report 2009 to make the company more eco-friendly. A key task will be to formu- In 2009, a 1% cut in fuel consumption meant savings of MSEK late new environmental targets for the period from 2012 up to and 70-80 for the whole Group and CO2 emissions lower by 38,000 including 2015. Voluntary carbon offsets will be enhanced to make tonnes. The saving program also includes a number of measures them more accessible and easier to buy. SAS will also continue to in areas such handling and modifications of aircraft, more effi- be involved in the international collaboration from COP15 aimed at cient speed planning and sharing experiences with other players, global regulation of aviation. especially within Star Alliance. SAS has amassed an extensive database (MRV) of fuel-related KPIs for each type of aircraft, individual aircraft and route, which SAS will have ISO 14001-certified environmental is constantly being evaluated and followed up with recommenda­ management systems tions for improvements. The database provides input for calcula- Any renewable aviation fuels that are developed need to per- tions in the emissions trading scheme and confirms SAS’s leading form as well as today’s fossil fuels and have a minimal overall im- Goal attainment 2009 position in the area. pact on ecosystems. Moreover, production must be sustainable All companies have already integrated environmental and climate in the long term and thus not compete with food production and issues into their management systems. The goal for SAS is ISO Measures in 2010 must use as little drinking water and acreage as possible. 14001 certification during 2010. The timetable was adhered During the year, SAS will continue to implement the fuel saving Both algae and the plant Jatropha curcas, which produce to during the year, and all indications are that the goal will be program. SAS will step up the development of computer-based vegetable oils, are deemed to be important renewable sources reached. Moreover, SAS will be certified according to EMAS. This system support to further refine methods for measuring goal that can be used to produce alternative aviation fuels. In many will make SAS the first airline with combined ISO and EMAS certi- ­attainment and set future targets after 2011. The target for 2010 regions, agricultural and forestry residues and organic waste fication of its entire operations. is to reduce fuel consumption by 1%. products from industry and households may become an import­ Blue1 was certified and SAS Cargo recertified according to ISO ant source. Several processes for producing biofuels are already 14001 in 2009. SAS Cargo has been ISO-certified since 2006. known, and the challenge will be to have sufficient production SAS will be among the first airlines to use capacity once the fuel is certified. Measures in 2010 alternative fuel blends once they are approved Current tests of alternative fuels indicate that as early as 2011 and commercially available SAS will continue the process toward getting all operations certi- there should be certified and commercially marketable products fied during the year. During the first half of the year, SAS Tech and that can be used in existing engines. Successful test flights have al- Widerøe will be certified. Goal attainment 2009 ready been carried out with airlines actively participating in SAFUG. The future of aviation strongly depends on the industry’s ability to find alternative aviation fuels based on one or more renewable Measures in 2010 SAS will have the industry’s most effective fuel sources. These are primarily renewables that can be blended In 2010, SAS will continue its involvement in SAFUG and in the ­saving program with existing fossil fuels to reduce greenhouse CO2 emissions. Biofuel Network that is part of Copenhagen Capacity. The net- In that regard, the whipsawing oil prices combined with greater work also includes Boeing, Novo Zymes and Maersk. SAS will Goal attainment 2009 environmental awareness are pressing incentives. make its expertise and aircraft available for carrying out suitable In 2005 SAS began a fuel saving program aimed at cutting SAS helped to form SAFUG (Sustainable Aviation Fuel User evaluations in the Scandinavian climate. consumption by 6-7% by 2011. Fuel consumption per flight is Group), tasked with speeding up the development of new, long- During the year, SAS will work together with a number of po- calculated and adjusted for relevant weight and wind conditions term sustainable aviation fuel from renewable sources. Partici- tential suppliers of alternative aviation fuel in the Nordic market. relative to averages corresponding to the destination in question. pants include Boeing, the fuel developer Honeywell UOP and The aim is to hasten developments towards the day certification The program is on schedule, and by the end of 2009 a saving of a number of airlines. Participating airlines together account for is ready and commercial flights can be take place using a 50/50 4.3% was reported for Scandinavian Airlines compared with the over 20% of commercial aviation’s fuel consumption. The group blend using alternative aviation fuel. end of 2005. These measures were motivated by environmental is closely following currently ongoing efforts aimed at certifying SAS’s ambition is to use as much biofuel as possible once it is concerns and by costs. alternative fuels in 2010/2011. commercially available.

SAS Group Sustainability Report 2009 107 Organization and management 2009

Sustainability work is based on SAS’s policies, as well as the Group’s commitment to comply with the principles of the UN Global Compact. The strategy for sustainability work, sustain­ ability and environmental policies, as well as targets and KPIs connected with them, are a part of the Core SAS structure. SAS will have a long-term plan for its aircraft fleet which NOx is a substantial portion. Besides, NOx is not affected Handling sustainability data Environmental data are reported twice a year, while data concerning em- that leads to a significant reduction of greenhouse by the admixture of alternative aviation fuels. ployee sick leave and injuries are followed up at a local level on an ongoing emissions basis. In addition, units and companies are to report at least once a year on Measures in 2010 measures aimed at improving the Group’s sustainability work. Reporting Goal attainment 2009 includes areas such as community involvement, supplier contracts, collabo- In 2010 an additional one Boeing 737NG, one CRJ900 and three ration with stakeholders, working environment, training, conflicts, work on An essential requirement for SAS to reach its strategic environ- Q400s will be put into service. After that, SAS has no further ap- the Group’s Code of Conduct and the UN Global Compact. mental goals by 2020 is a cost-effective and economical aircraft proved acquisitions of new capacity. Responsibility for reporting rests with the head of each Group company fleet tailored to market needs. The strategy is based on continu- Like many other airlines, SAS is watching for the results of de- or unit, but reporting is coordinated by the Sustainability Network. Data are compiled by the Group department for Environment and Sustainability and ally replacing aircraft with the best available technology when velopment efforts currently in progress by relevant manufacturers. are then reported to Group Management. financially justifiable. Read more on p. 110. In 2009, the SAS Group put 16 new and two used short-range SAS has a favorable fleet composition, which allows for great SAS Group Management aircraft into service, while 35 older aircraft were taken out of flexibility in advance of coming aircraft purchases. service. SAS continually assesses various options for the future com- Scandinavian Airlines Management At the end of 2009, Scandinavian Airlines had nine long-range position of its aircraft fleet and along with Star Alliance airlines has Corporate Communications and 87 short-range aircraft of the most recent generation, cor- its own development “wish list.” A number of factors play a part. Corporate HR Environment and responding to 69% of the company’s fleet. If Scandinavian Airlines They include assessments of the market structure and demand, Sustainability were to opt to replace all MD-80 today, this would result in a theo- aircraft environmental performance, economy of operation, pas- retical short-term fuel reduction in the SAS Group of 3–3.5% at an senger comfort, etc. The current market situation and ongoing HR Management Team SAS Group Sustainability Network investment of just over SEK 7 billion. From a sustainability stand- development work among manufacturers mean that there is no point such an investment is not profitable. The long-term ­effect hurry to make a final decision. Read more on pp. 29-30. SAS Group companies and units would be that SAS would likely not reach its strategic environmen- Group Management Sets framework in the form of the Code of Conduct, over­ tal goals for 2020, since an aircraft flies for 15-25 years. arching objectives, policies and other guidelines. Initiates support activities. The net effect of the measures is a reduction in the SAS Group SAS will have reached the target for SAS’s ­eco-efficiency index. Scandinavian Arlines Management Responsible for carrying out support fleet of 17 aircraft. The phasing-in of new aircraft and phasing-out activities. On behalf of Group Management performs Group-wide support functions for sustainability work via its staffs. of older ones lowered the average age of the active fleet from 12.1 years to 11.5 years. Goal attainment 2009 SAS Corporate Human Resources Coordinates, negotiates, administers and develops the Group’s human resource-related issues. Contributes An aircraft’s age does not always correlate with its environmen- Except for intercontinental traffic, the environmental index for the ­through the HR Management Team, where the Group’s HR supervisors tal performance. For example, the MD-90 is an aircraft that went majority of SAS airlines improved during the year. They are thus meet, to develop sustainability work by coordinating employee issues. out of production 13 years ago, yet it still has very good environ- ahead of, or in line with, their targets for 2011. This is thanks to an SAS Corporate Communications Besides responsibility for press and ­information issues in the Group, also includes the functions Investor mental performance. A brand new 737NG generally has the same early implementation of Core SAS, which quickly adjusted SAS’s ­Relations and Environment and Sustainability. environmental performance as one delivered in 1998. Although capacity following the falloff in demand. This has allowed SAS to Environment and Sustainability Coordinates and advises on issues con­ certain developments have taken place resulting in a 2-3 percent- retain a high passenger load factor. Moreover, the fuel saving pro- cerning the environment and sustainability/CSR for Group Management age point improvement, how the aircraft is flown is more import­ gram went better than planned, and less energy-efficient aircraft and other SAS functions and companies. ant than how old it is, assuming it is of the same generation. were replaced with more fuel-efficient ones. See p. 107. SAS Group Sustainability Network Representatives from companies, units and Group Management functions coordinate SAS’s sustainability Between generations of the same aircraft type, however, there work and compile data for the annual report. is quite a big difference. There can be on the order of 15-20% Measures in 2010:

SAS koncernens bolag och enheter Set specific goals for sustainability lower fuel consumption and CO2 emissions. Moreover, engine The fuel saving program will continue to reach the target for the work, environmental and social targets and targets in other areas. Carry manufacturers tend to achieve lower NOx emissions with each eco-efficiency index. SAS will continue to ensure a high passenger out activities and follow up results. generation. This trend is very positive, since about a third of avia- load factor and high energy-efficiency in all operations. This guar- The process outlined above for sustainability work applied in 2009. SAS’s new organization, which was approved in February 2010, will be reflected in tion’s greenhouse emissions involve other greenhouse gases, of antees a continued positive trend for all environmental indexes. the 2010 Sustainability Report. See p. 13. 108 SAS Group Sustainability Report 2009 SAS’s sustainability-related policies Environmental responsibility • Corporate social Responsibility for sustainable development responsibility • Financial responsibility Environment Working environment Quality Safety SAS is convinced that financially sustainable opera- SAS Corporate Manual (CM) tions require social and environmental responsibility. SAS’s four core values – consideration, reliability, value creation Shareholders IIT In various ways, work on sustainability issues con­ and openness – form the basis for the Group’s sustainability Communication Sustainability Purchasing Hållbarhets- work. The Corporate Manual describes SAS’s organization, form Finance policy Insurance tributes to value growth and competitiveness. Laws and policy of management and the overarching policies that all together regulations Dialog with stakeholders govern the Group’s sustainability work and operations in general. Management A key contributor is dialog with stakeholders, with whose help www.sasgroup.net Governance Personnel SAS can identify, define and deal with important sustainability Diversity issues. SAS takes the initiative on dialogs, and anyone seeking Code of Conduct Ethics and morals contact with SAS will be heard. SAS has an ongoing dialog with To summarize and clarify the Group’s stated values, policies, Core values various customer groups as a tool for refining and adapting prod- guidelines and other regulations, the SAS Board of Directors ucts to the market’s shifting demands. Here sustainability issues has issued a Code of Conduct that covers all Group employees. Consideration • Reliability • Value creation • Openness have become increasingly important, evident for instance in pur- To underscore the Code’s importance, there are systems for SAS’s four core values cover all operations in the Group and form the basis for all work on sustainability issues. On the basis of these core values, SAS has set chasing routines and input from both government and business. reporting and dealing with suspected violations. Supervisors and overarching policies that along withMiljö a number of strategies govern its sustain- Similarly, employee attitudes to the company and the company’s other managers play a key role in implementing and following ability work. An account of the mostArbetsmiljö important of SAS’s policies can be found at www.sasgroup.net Kvalitet ability to meet employee needs regarding working environment up the Code. An extensive training program supports the Code, Säkerhet and other important factors affecting commitment and loyalty and the aim is for all personnel to participate in the program. By Stakeholders Examples of dialogs* are constantly being measured. Ethical issues and development the end of 2009, 57% of the employees had done so. The Code’s Ledarskap IT Styrning of culture and values are emphasized. whistleblower function was used in nine cases, three of which Employees EmployeeHållbarhets- index PULS. DevelopmentInköp interviews. Whistle­ Personal Försäkring SAS plays a very active role in dialog with authorities, airports, were dismissed without action. Four were dismissed after an in- Mångfaldblower function.policy Meetings with employees at all levels including meetings related to ISO 14001 and EMAS industry bodies and opinion makers and in clarifying and explain- vestigation and two matters are under investigation. Etik och moral Customers Customer surveys. Interviews. Customer Satisfaction ing the role of the airlines in global efforts for sustainable devel- Aktieägare Contract customers Index (CSI). Image index, CO2 Reduction Network. opment. SAS has also taken the initiative in specific methods to Business relations Direct dialogKommunikation in meetings and ongoing contact with several thousandFinansiering contract customers reduce noise and emissions. These include green approaches With its tradition of close partnerships, antitrust issues are Owners, investors and Board meetings.Lagar och Shareholders’ regler Meeting. Surveys. together with LFV. Regarding air traffic management (ATM), SAS ­always in focus in the airline industry. The SAS Competition Law financial analysts Telephone conferences. Regular meetings. has actively worked to shorten flight paths by changing routines Compliance Program covers all affected employees and is to en- Authorities International working groups. Close contact with rele- for approaches and takeoffs and using computer systems for sure that SAS complies with laws, rules and practices in this area. vant authorities, policymakers, airport owners and air traffic management navigation planning. SAS has also been a tireless advocate of There are particularly strict rules against offering or accepting Suppliers Purchasing negotiations based on the SAS Group’s both air transport and emissions trading, participating in numer- bribes or improper perquisites. purchasing policy and compliance with Global Compact ous reports, committees and lobbying groups on these topics. principles The media focus on aviation’s adverse impact on the environ- Global Compact and the GRI Aircraft, engine and Dialog on greener products chemical manufacturers ment is a challenge for the entire airline industry. SAS has chosen The SAS Group joined the Global Compact in 2003 and participates Partnerships and networks Star Alliance. Global Compact Nordic Network. to take a leading role in the debate as part of its efforts to link the in the Global Compact Nordic Network. One criterion for publishing CSR Sweden. Copenhagen Climate Council. brand with dealing responsibly with climate issues. company information on the Global Compact website is an annual NHO Climate Panel Sustainability aspects are also increasingly important in the capi- update of the material, the Communication On NGOs Bellona. Friends of the Earth, WWF, Save the Children Organizations ICAO Committee on Aviation Environmental Protec- tal market. Investors closely follow environmental work, environmen- Progress (COP). The most recent update of tion. Association of European Airlines (AEA). IATA’s tal liabilities and any risks tied to failure to adapt company operations SAS’s information was done in June 2009. environmental committee Confederation of Swedish Enterprise. Confederation of Danish Industries. Con­ to laws, rules and regulations regarding health, the environment and SAS’s sustainability reporting follows the federation of Norwegian Enterprise, etc. climate. SAS has been a pioneer in reporting environmental and sus- guidelines in the Global Reporting Initiative Mass media Interviews. Articles and opinion pieces tainability work, which has been noticed in numerous forums. (GRI) and is examined by an external auditor. Schools and universities Dialog prior to theses and dissertations. * A more detailed description of the SAS Group’s dialogs with stakeholders with in-depth information may be found at www.sasgroup.net SAS Group Sustainability Report 2009 109 Four pillars of SAS and airline ­industry ­environmental work

New technology Infrastructure The airline industry’s four pillars

The industry’s environmental work takes place in four Infrastructure areas: New technology, Infrastructure, Operational Within the framework of Eurocontrol there is an ongoing effort measures and Economic instruments. The airline aimed at coordinating European air traffic management – SESAR industry’ commitment to reducing its environmental (Single European Sky ATM Research). This would lead to shorter impact requires long-term investment in environment- flight paths, shorter holding time in the air and on the ground and ACARE Single sky less congestion in the air and at airports. Fully-implemented, it Breakthroughs NUAC+FAB related measures that take time to carry out and are Alternative fuels Coordinated ATM would result in an estimated 10-12% lower environmental im- Improved aerodynamics capital-intensive. pact. It is estimated that this process will be completed by 2020.

Operational measures Economic instruments A step in the right direction is that a common Nordic airspace is The airlines are a relatively young industry, but there is consider- being established as a part of the Single European Sky. Similar able potential for environmental improvements, provided that projects are being carried out in many places in the world. they are technically feasible and economically justifiable. In the last forty years developments have significantly altered Operational measures

the airlines’ operating assumptions. CO2 emissions per produced Most major airlines have action programs for optimizing resource revenue passenger kilometer have been reduced by 70%, and in in order to reduce environmental impacts over time. These include the next forty years, it is the airline industry’s goal to lower total fuel saving, route planning, optimizing speed and altitude, weight

Fuel saving program Emissions trading greenhouse emissions by 50% compared with 2005. reduction and improvements in communication, training and infor- Green flights Taxes, charges, regulations www.enviro.aero mation to create awareness of the need for small- and large-scale changes in all parts of operations. This effort is absolutely crucial New technology for improving efficiency using existing aircraft and under current Ground-based environmental measures New technology primarily means lighter and more aerodynam­ assumptions. Energy SAS works continuously on adjustments and improvements to reduce ically designed aircraft, more efficient engines and alternative its energy consumption. In 2009, Coor, SAS’s main provider of prop- fuels based on renewable sources. Economic instruments erty services, made it less cumbersome to examine environmental The major aircraft and engine manufacturers are now focusing Taxes and charges are often used by opinion makers as examples data and the buildings are inventoried on an ongoing basis with the on the next generation of long-range aircraft, which will be in com- of effective economic instruments for reducing the airlines’ environ- aim of finding ways to optimize energy consumption. SAS endeavors to only use energy from renewable sources. mercial service in a few years. After that, short- and medium-range mental impact. The debate takes two main approaches. One is for All sources of energy consumption are to be examined and opti- aircraft will be prioritized and will probably be commercially availa- airlines to pay for their environmental impact, and the other is not mized to reduce energy use. SAS and Coor will carry out an energy ble around 2020. The major aircraft and engine manufacturers indi- only to limit the growth of air transport, but also its current scope. saving campaign in 2010. cate that the next generation short- and medium-range aircraft will The EU’s own estimates show that taxes and charges do little Ground transportation have fuel consumption that is 30-35% lower than current best avail- to reduce demand. On the other hand, they increase costs for the SAS endorses airport owners’ efforts to reduce CO emissions and par- 2 able technology, with corresponding reduction of CO emissions. airlines, which affects fares. At the same time, the airline industry ticipates in projects for “better air.” As a result, SAS’s ground equipment 2 (such as vehicles) are improved, adjusted or replaced with greener units. There is a parallel development effort by smaller aircraft manufac- is going against the tide of opinion, which facilitates the introduc- SAS is working for all company cars to be replaced with green turers, which will have a short- and medium-range aircraft available tion of environment-related taxes. vehicles. Guidelines will be issued for all companies and units in SAS, already in 2013. It will reduce fuel consumption and CO emissions The airline industry’s general view is that economic instru- though decisions will be made locally, since green vehicles are defined 2 by 15-20% compared with other aircraft of the same size. This de- ments should be competition-neutral, cover the global industry differently from country to country. velopment has prompted the major manufacturers to consider the and always be based on actual emissions rather than the number Deicing possibility of installing next generation engines on aircraft currently of passengers. The essence of the economic instruments must Deicing aircraft before takeoff uses glycols, which are harmful to the environment. SAS continues to search for alternative technologies. available, which will reduce fuel consumption and CO2 emissions by be to encourage lower emissions rather than limit the growth of Various methods to reduce glycol use are currently being evaluated. 10-15%. Moreover, next generation engines will mean approxi- the airline industry and thereby deny society the benefits of air For example, a system is being tested with electronic control of glycol mately 60% lower NOx emissions and substantially less noise. transport. content and a preventive deicing method that may lead to a substan- tial reduction of glycol use with the same degree of safety. 110 SAS Group Sustainability Report 2009 Results for the year

Despite the fact that 2009 was characterized by a Environmental responsibility deep recession and receding demand, SAS’s climate and environmental index improved in all areas, except In 2009, the SAS Group’s flight operations accounted for more for intercontinental traffic. Total carbon emissions than 95% of its overall environmental impact. The remainder were the Group’s lowest ever. came from ground and cabin operations. Customer perceptions of SAS as an environmentally and so- SAS climate index* cially responsible company are measured in the annual customer 100 SAS’s carbon dioxide (CO2) emissions per unit produced fell to survey that is part of the Customer Satisfaction Index. A survey 127 (129) g/RPK. The climate index, which also includes emis- was done in February 2009, which showed a clear improvement. 95 sions other than CO2, improved to 93 (97). The chief reasons for The results are presented on page 115. the improvements are that the Core SAS strategy adjusted SAS’s 90 supply early on to the falling demand and that during the year, Climate index SAS was successful in reducing fuel consumption in day-to-day Starting in 2007, SAS has reported a climate index, which refers 85 2005 2006 2007 2008 2009 2010 2011 operations. Moreover, 16 new aircraft with better environmental to weighted climate impact excluding noise, i.e., emissions of CO2 performance went into service during the year. and nitrogen oxides (NOx). The index measures the Core SAS’s The climate index measures climate impact relative to production measured in RPK Historical data have been adjusted to reflect developments in overall climate impact relative to traffic measured in RPK and was and consists of 2/3 carbon dioxide and 1/3 nitrogen oxides (as a non-CO2 indicator). the companies in Core SAS. worked out in the period 2005-09. * Adjusted from 2005 to reflect the current Group’s climate impact. Corrected in the Internet version, thus departs from the index in the print version. With regard to individual company and unit environmental The trend was positive in 2005-07. In 2008 the climate index indexes in 2009, all improved except for intercontinental traffic, deteriorated, and in 2009 it improved by four points to 93. The whose deterioration was due to a fall in the passenger load factor chief cause was a change in the utilization of the aircraft fleet during the year. All told, however, the absolute majority of SAS and a relative decrease in CO2 and NOx emissions. The target for SAS Group work on ISO and EMAS companies and units are ahead of, or in line with, their environ- 2011 is 89. mental targets for 2011. Corporate Functions The SAS Group’s total CO emissions fell by 35% in 2009 Environmental index 2 Production Norway compared with 2008. The reduction is primarily due to the sale Since 1996 SAS has been measuring eco-efficiency using an of Spanair and airBaltic, capacity cuts within the framework of ­environmental index in which environmental impact is measured Production Denmark the Core SAS strategy and a successful effort to reduce fuel con- relative to production. Read more about calculation methods Production Sweden sumption through fuel saving projects and the introduction of 18 ­under “Reports, Accounting principles” at www.sasgroup.net. new aircraft, for example. An environmental index is measured for each company, but not Widerøe In February 2010, the Core SAS strategy was strengthened, for the Group as a whole. These indexes are a tool for managing which involves substantial changes in SAS’s production and and following up the Group’s environmental performance. Blue 1 * organization and for the individual employee. Management of In 2009 most companies continued to show a positive trend. SAS Cargo * SAS will be centralized and streamlined, which will be reflected in See p. 119. sustainability reporting for 2010. SAS Tech Environmental management system 0 1 2 3 4

SAS’s environmental work is based on the ISO 14001 standard 0 = Not started 1 = Started 2 = Well on the way 3 =Internal audit 4 = Certified as a framework for environmental management, a requirement All companies have begun the process of assembling a formalized environmental for constant improvements and an environmental responsibility management system in accordance with ISO 14001. The goal is certification be- for stakeholders. Since the mid-1990s, all companies and units fore 2011. The diagram illustrates process status at the end of February 2010. have their own environmental management system that is inte- * EMAS-certification requires completion of ISO 14001 certification. Blue1 and SAS Cargo will be EMAS-certified during the first half of 2010.

SAS Group Sustainability Report 2009 111 grated into management and quality processes and are aimed at A detailed description of SAS’s licenses and environment- CSR complying with the principles in ISO 14001. related permits is found in the Report by the Board of Directors. The environmental management system and SAS’s environ- See p. 52. The SAS Group’s primary social responsibility is to its own mental policy cover all activities in Scandinavian Airlines, techni- employees and the communities dependent on and affected cal operations, ground services, goods handling and the airlines Carbon offsets by SAS’s operations in a number of countries, primarily in the Widerøe and Blue1 with main bases in Copenhagen, Oslo, SAS’s offer of voluntary carbon offsets for a flight is an important Nordic region. Stockholm, Bodø and Helsinki. The system covers all activities, part of SAS’s commitment to the environment. At SAS individual units give priority to issues based on their products and services that to any material degree impact the en- All business travel at SAS is offset and corresponds to emis- own operations. For that reason what their social responsibility vironment. The most important are fuel, noise, oil and chemicals, sions of 4,000-5,000 tonnes per year. For organizers of confer- entails may vary depending on time, place and content. energy use, waste and general resource use, primarily in pas- ences, seminars, trips, meetings, etc., SAS offers customized See p. 116-119. senger service. Read more about environmental polices and offsets, often when SAS is the Official Airline, such as at the cli- SAS is a vital part of society’s infrastructure both nationally environmental aspects at www.sasgroup.net mate conferences in Copenhagen in 2009. A similar agreement and internationally. SAS benefits society by enabling citizens to Following the SAS Group’s overarching objectives and strate- was signed with the organizers of a conference in Copenhagen in attend international meetings concerning development and co- gies, each company or unit sets environmental targets based on May 2010 that will conclude five years’ work on a new ISO 26000 operation in a global perspective. In this connection it is vital for the requirement for constant improvements in environmental standard for Social Responsibility (SR). SAS employees to see the challenges and be able to offer solu- performance. One goal is for the entire Group to be certified ac- Major customers are encouraged to sign up for carbon off­ tions to the issues arising in their day-to-day work. cording to ISO 14001 and EMAS before 2011. As the first SAS sets, which are based on estimates of travel volume on an annual Competition in the airline business in Europe is fierce. In this Group airline, Blue1 was ISO 14001-certified in 2009. SAS Cargo or semiannual basis. It has been relatively complicated for situation employees play a key role in adding value to the prod- was recertified according to ISO 14001 during the year. The individual customers to buy carbon offsets. In March 2009 SAS uct. SAS’s strategic cultural work is therefore aimed at improving process for ISO certification involves both internal and external began offering a simplified payment solution for carbon offsets job satisfaction, motivation and dedication among its own staff. audits. The audits connected with certification and recertifica- on the Internet. The goal is for this to have positive effects on relations with cus- tion showed no major non-conformances, only minor comments. Carbon offset payments go entirely to SAS’s partner, the tomers and boost SAS’s competitiveness. ­CarbonNeutral Company, which is responsible for funding en- Environmental permits ergy projects based on renewables in verified/certified projects. Service And Simplicity Airline operations have no separate licenses or environmental See p. www.sasgroup.net under “Sustainability.” SAS’s vision is to be the obvious choice for air travel. In the Core permits for operation, but depend on permits that airport owners SAS strategy, “Service And Simplicity” is established as both the hold, such as for glycol handling, runway deicing, and noise and Purchasing company’s promise to customers and as the principle for SAS’s emission thresholds. The SAS Group has numerous subcontractors, manufacturers of corporate culture. However, environmental approval is part of the aircraft certi- everything from disposable articles for onboard service to aircraft Customers and co-workers alike are to be treated with friend- fication process followed in the three Scandinavian countries as and engines. Negotiations are increasingly coordinated from the liness, courtesy and helpfulness. well as in the terms for technical aircraft maintenance. Group’s central purchasing function, through which it is ensured Airline operations have a statutory dispensation for halon use that suppliers follow the guidelines in the Code of Conduct. Sup- Cultural development and submit annual reports to the authorities on consumption pliers with certified environmental and sustainability work are The development of corporate social responsibility is based on the and storage. The reason for the dispensation is that there is no given priority when economically possible. following focus areas, on which SAS’s cultural turnaround rests. certified alternative to halons for extinguishing fires in aircraft engines, cabins and aircraft toilets. In the SAS aircraft fleet a total Incentive with customer focus of just over 6 kg was released during the year. A project began in 2007/2008 aimed at introducing a profit- SAS Oil is an aviation fuel purchasing company for the SAS sharing and employee stock ownership plan for all employees at fleet at Copenhagen, Oslo and Stockholm airports. Through SAS a suitable point. In 2009 the project was shelved, since the first Oil, SAS is a minority owner of a number of smaller companies priority was on cost savings and the impact the falling market that handle aviation fuel. and financial crisis was having on SAS. SAS management intends The Group is satisfied that these companies have the neces- to present a proposal for a profit-sharing program, and the issue sary permits, contingency plans and insurance. will be revisited in 2010.

112 SAS Group Sustainability Report 2009 Management development Working environment With regard to meeting social responsibility, management has In 2009 total sick leave in the Group totaled 6.9 (6.5)%. The a key role as role models and in interpreting and implementing increase is likely due to employees being under severe strain in SAS’s strategies. SAS endeavors to have clear leadership, char- 2009 in connection with the restructuring and downsizing. The acterized by consistency, honesty and reliability. Managers must variation between various occupational groups is still high. This be self-aware and mature, and know how personal qualities are to area has high priority, and in 2010 efforts are being redoubled to be used to achieve a trustful working relationship with personnel. reduce sick leave. In 2009 SAS, continued to develop a “role model” for all man- In the SAS Group there are a large number of occupations agers in the organization. It contains an assessment module that represented, working in different environments and exposed to once a year will show whether managers live up to requirements different sorts of occupational injuries, etc. Thus, average sick and a leadership program for the requisite know-how. Both the leave is not an unambiguous concept, nor does it provide general evaluation module and several parts of the leadership program guidance for actions that can be taken to reduce absences and began in 2009. This includes a focus on the TOP100 group and related problems for the individual and costs to the company. a master’s program for 45 manages in partnership with the BI To obtain data for analyses and better target systematic pre- Norwegian School of Management. ventive efforts, a project aimed at coherent reporting of sick leave has been stepped up. Expected to go into operation in 2010, the Organizational development program enables quicker compilation and action-taking. SAS Introduced in February 2009, the Core SAS organization entails management is convinced that this tool will result in lower sick a fundamental restructuring of SAS’s previous organization. In leave. February 2010 a further step was taken in organizational de- The number of occupational injuries continues to fall, owing velopment, focusing on measures to ensure clearly managed, to staff reductions as well as preventive measures. In 2009, the efficient processes that result in better profitability. SAS Group reported a total of 291 occupational injuries, com- See p. 13. pared with 368 the previous year. SAS Ground Services (SAS) had the largest number of per- Adjustment and redundancy sonal injuries in the Group. In 2009 the total number of occ­u­ The weak economy in 2009 had an adverse impact on demand pational injuries was 173 (224). The reduction is due in part to for air travel. Generally the industry has responded with further preventive efforts and in part to staff reductions. capacity cuts, timetable changes, fewer departures and savings Occupational injuries at SAS Tech were reduced to 17 (28) programs. During the year SAS carried out additional cost reduc- and at SAS Cargo/Spirit/Trust to 19 (32). Production Denmark tions within the Core SAS framework. rose to 47 (39), though is below the outcome for 2007. Redundancy among staff as a consequence of these actions Besides sick leave and occupational injuries, each company is primarily dealt with in individual units and companies. Nego- and unit is working actively on such issues as telecommuting, tiations follow national laws and agreements. In 2009 several flextime, health insurance, etc. It is each company’s responsibil- companies were sold or outsurced, such as Spanair, airBaltic, ity to ensure a well-functioning working environment. This work bmi and parts of SGS International, entailing a marked reduction takes place in collaboration with safety representatives, super­ in the workforce within the Group. A number of company sales visors and labor-management joint safety committees that cover in progress will, once carried out, result in a further reduction in all employees in each country. Besides medical staff, the com- personnel in the SAS Group. pany health services or health, safety and environment (HSE) de- The reorganizations and other initiatives in the cost program partment employs therapists, stress and rehabilitation experts, have meant that around 4,600 FTEs (full-time equivalents) have left and ergonomic engineers. The department has also developed or will leave the company. Of these, nearly 2,900 FTEs left the Core and offers special services, including aviation medicine, stress SAS organization in 2009. Divestments and outsourcing, including management, sick leave follow-up, health profiles, ergonomics the sale of Spanair, resulted in a further reduction of the number of and advising in handling chemicals. employees in the SAS Group in addition to the cost program.

SAS Group Sustainability Report 2009 113 Diversity and equality Human resource development The SAS Group’s diversity policy is based on equal treatment of The SAS Group has around 1,100 managers at various levels in all employees and job applicants. Work on equal treatment in- the Group. The number will drop with the implementation of the cludes promotion of diversity and equality in all its forms. new organization as of February 2010. More than half of manag- Union membership is high in SAS in the Nordic region, and ers are in operations with direct customer contact, such as sales, ­labor organizations enjoy a strong position. Collective agree- airport services and onboard service. The development of man- ments govern working hours, pay and other terms of employ- agers’ skills is based on and evaluated according to SAS’s “role ment in great detail. With equal pay for equal work, full gender model” for managers. A systematic survey is in progress in the equality prevails in these issues as well. whole Group, of existing managers as well as to identify persons In general in the SAS Group, women predominate in such who may meet the need for managers in the somewhat longer jobs as cabin crew, administrative staff, assistants and passen- term. The aim is for all manager material to have an individualized ger service at airports, while men predominate in such areas as development program. The entire manager process is based ­pilots, technicians, aircraft maintenance and baggage loading on the “role model,” which reflects general personal attributes and unloading. Women also work more part-time than men. as well as SAS’s business objectives. Evaluation focuses on the Of the company’s pilots, 95% are men, and among captains individual’s performance, ability to change, leadership, potential the share is 97%. At the same time, the recruitment base for fe- and ambition. male pilots is small, since few opt for such a career. Nor has SAS Around 30 persons with potential as future managers have recruited pilots in the last ten years. The ratio for cabin crew is undergone a number of skills modules and worked on a number 79% women. of projects in a Business Driven Action Learning program. This Top management in Group is dominated by men. At the high- program concluded in 2009. est level of management there was only one woman in 2009. Besides this, there are around 50 mentoring relationships After February 2010, Group Management consists of one woman with internal and external mentors, as well as the previously and five men. The figure for the TOP100 management forum is mentioned master’s program for 45 managers in partnership approximately 20% women. with BI Norwegian School of Management. Each year, an equal treatment plan is drawn up based on anal- Human resources development is an important, ongoing ac- ysis and surveys of a number of factors, ranging from sick leave tivity in the entire SAS Group. Flight staff and operational ground to bullying and harassment. A reference group representing the staff are covered by a number of licensing and qualification parties provides support. requirements from EU-OPS and IATA through the IOSA (IATA Operational Safety Audit). The obligatory training for various Employee surveys personnel categories has been carried out as planned, such as in PULS, SAS’s employee survey, was conducted at the end of the hazardous cargo, passenger rights, IT security and food safety. year. The response rate was over 76%, which is tied with 2008 Training in the Code of Conduct is ongoing. for the highest ever. Just over 14,000 employees responded During the year SAS employees had access to nearly 110 to questionnaires sent out. The results for the SAS Group as a web-based training programs, and the number of users has almost whole is also compared with an external index for the Nordic tripled since 2007. At SAS Scandinavian Airlines practically all transportation industry (EEI - European Employee Index). employees are involved in e-learning, flight staff as well as ground The survey results show that job satisfaction at SAS is under personnel. heavy pressure, and the index fell by 6 points to 61 (67), while the index for EEI remained unchanged at 67. Extensive meas- Cooperation with labor unions ures have been taken at all levels in the Group to prepare action Cooperation with labor organizations mainly takes place region- plans and activities to boost job satisfaction. However, there are ally in units, where dialog takes place with organizations with a bright spots. Widerøe had a very strong PULS outcome, with an collective agreement with SAS. Cooperation takes place within improved job satisfaction index. The survey generally showed the framework of national laws and agreements affecting the unit strong dedication among employees in all of SAS. concerned.

114 SAS Group Sustainability Report 2009 Relative CO2 emissions g CO2/RPK

210 Employee representatives from the Scandinavian countries Financial responsibility sit on the SAS Group Board of Directors. The employees can elect 190 representatives from units in the Group’s Scandinavian opera- SAS is convinced that it is impossible to have economically 170 0,08 tions. Group Management and the Board are engaged in an on- sustainable operations in the long term without being socially going discussion with union representatives primarily on issues and environmentally responsible. To boost the SAS Group’s 150 0,07 concerning cost reductions, organizational structure, the cultural competitiveness, the strategy plan Core SAS was launched. A 130 0,06 turnaround and the need for a customer-oriented culture. more efficient and profitable SAS will come from targeting the Nordic market, focusing more on business travelers, improving 110 0,05 2006 2007 2008 Contract negotiations and disputes the cost base, streamlining the organization and strengthening 0,04 Production Norway Intercontinental traffic 2009 was characterized by an intensive dialog between SAS the capital structure. Production Denmark Widerøe management and union organizations on outsourcing and re- The link between sustainable development and the bottom Production Sweden Blue1 0,03 2007 2008 2009 dundancies resulting from the Core SAS strategy and contract line is obvious to SAS. An analysis of SAS’s statement of income changes affecting personnel at SAS. reveals that major portions of revenue and expenses, and rel- Breakdown of costs in 2009 There is an ongoing effort to optimize production and evant industry-specific earnings measurements are items rel- Jet fuel 17% changes in salary and remuneration levels to achieve further evant from an environmental and/or social perspective. In short, LeasiReng latcostivas koldioxidutsläp5%p cost-effectiveness. the highest possible financial return is generated by the best PayrollGr amexp COens2es/RPK 39% During the year SAS was a party to a number of disputes possible resource utilization and management of the company’s 220 heard by the courts. These disputes cover several areas such as assets, human as well as financial. occupational injuries, pension benefits and age discrimination. Optimal resource utilization means flying fuel-efficiently and 190 For example, SAS in Denmark, Norway and Sweden was a party making the most of capacity for carrying passengers and freight. External environmental costs 1% 160 to an age discrimination suit in each country regarding pilots’ A clear example is the relationship between CO2 emissions and Government user fees 9% rights to continued employment after age 60. In Norway and the aircraft’s fuel consumption. Lower fuel consumption leads to Other 29% 130 Sweden the judgments were in SAS’s favor. In Denmark, a deci- lower fuel costs, while also reducing the charges the SAS Group sion was handed down in one of six ongoing cases. The court pays for CO emissions. The same applies to all other activities 2 Geog100raphical breakdown of employees in 2009 found in favor of the pilot plaintiff. that, in addition to environmental considerations, have strong 2007 2008 2009 Denmark 31% financial incentives to reduce consumption of energy and other Produktion Norge Interkontinental trafik Humanitarian assistance and sponsorships/ partnerships resources. One way to protect the company’s assets is to have Produktion Danmark Widerøe Finland Produkt3%ion Sverige Blue1 Produktion Norge Produktion Danmark SAS has a number of agreements with the Swedish government positive and improving relations with employees and responsibly Produktion Sverige to make available two specially equipped SAS Boeing 737s as air ensure maintenance of aircraft and other plant and equipment. Sweden 22% ambulances within the framework of Swedish National Air Mede- Conversely, long-term sustainable profitability and growth are a vac (SNAM). During the year a drill was held, but no evacuations. sine qua non for being able to meet and preferably surpass the Norway 39% Similar agreements also exist with the Norwegian Armed Forces. environmental standards and demands for social responsibil- Other 5% Otherwise, SAS engages in sponsorships and aid activities of ity and for ethical conduct placed on SAS today. If the financial 110 various sizes with a focus on local communities. Sponsorships resources are lacking for long-term investment and maintaining and partnership agreements in the area of sustainability will grow extensive sustainability work, the necessary steps in a positive Image index, environment and CSR 105 in importance and scope, as a natural element of the SAS Group’s direction will not be made either. commitment to society. In 2009, SAS was primarily involved with SAS aims to show clearly how its strategic sustainability work 100 100 Save the Children, and SAS is one of that organization’s main helps to create long-term value. In the current debate the airline sponsors. industry in general and SAS in particular have been depicted as 95 95 climate villains. This means that the ability to work to improve SAS’s environmental performance, as well as to communicate 90 90 2006 2007 2009 2006 2007 2008 2009 this work, has a direct positive impact on the Group’s earnings. Environment, 1996 = 100 CSR, 2004 = 100 The ability of the SAS Group to increase its revenues relies on its Work on sustainable development has a positive impact on the SAS Group’s ability to retain current customers as well as attract new ones. ­image since 1998. According to the survey for 2009, the image index for both Flygenvironmentalbränsle and social18% responsibility improved markedly compared with the Lepreviousasingkost survey.nader 4% SAS Group Sustainability Report 2009 Personalkostnader 35% 115

Externa miljökostnader 1%

Luftfartsavgifter 9%

Övrigt 33% The customer’s choice to use SAS’s services depends a great Environment-related costs deal on sustainability issues, since environmental matters have The SAS Group’s external environment-related costs fell by 19% received more attention and since social issues, primarily related till MSEK 368 in 2009. These costs consisted of environment- to labor conflicts, are something many customers are increas- related taxes and charges that are often related to aircraft envi- ingly aware of. ronmental performance and are included in the landing fee. The For SAS it is relatively easy to specify the cost reductions that fall was primarily due to a decline in the number of passengers focused sustainability work can result in, not only in terms of re- and flights. Other environment-related costs, such as expenses source use in the form of lower fuel and energy costs but also in for waste management, purification plants and costs for the terms of the taxes and charges the Group pays. environmental organization, amounted to MSEK 82.8 (76.4). The One of the aims of systematic and proactive sustainability increase is mostly a result of higher costs for gylcol handling and work is to prevent or at least reduce the risk of being surprised for personnel related to ISO certification. by new and tougher government and market demands. This is The SAS Group has no known major environment-related crucial, in view of the fact that bad press and direct costs in the debts or contingent liabilities, for example in the form of con­ form of fines and civil damages can also result in indirect costs taminated soil. owing to a tarnished brand and poor market image. The ultimate consequence may then be that customers abandon SAS for Environment-related investment other operators. The investment made by the SAS Group in accordance with Group policies shall be both environmentally and financially Financial aspects of environmental responsibility sound, thus contributing to the Group’s value growth and helping The SAS Group’s environmental work has several overriding to ensure that the Group meets future environmental standards. purposes. Besides optimizing resource use and improving envi- It should be noted that investment not emphasized in this sec- ronmental performance, it includes ensuring that Group opera- tion may also have a positive impact on the environment. Invest- tions comply with environmental laws and regulations. Below is ment that can clearly be linked to structured environmental work an account of some of the most important financial aspects of is disclosed in this section. environmental work. The most effective measure to improve the fleet’s environ- mental performance is to renew the equipment, investing in Program for saving fuel aircraft with fuel-efficient engines with low noise and emissions. SAS has an ambitious fuel saving program. The goal of the fuel This renewal is an ongoing activity in SAS airlines. saving program, launched in 2005, is a 6-7% relative saving by See pp. 29-30 and 110. 2011. At year-end savings of 4.3% since the program began were Investment in 2009 amounted to MSEK 4,661 (4,455), of achieved. In view of the year’s fuel costs, a 1% reduction corre- which MSEK 16.5 (17.6) represented environment-related invest- sponds to cost savings of MSEK 70-80. The fuel saving program ment, primarily related to winglets on delivered Boeing 737NGs. is reported in more detail on page 107. Research and development (R&D) Infrastructure charges and security costs The SAS Group contributes in many ways to the emergence of a Airlines pay the costs for the infrastructure they need and use sustainable society. Among them are the Group’s commitment to complete flights, i.e., airports and air traffic management. For to and support of the development and dissemination of green 2009 these costs fell by just under 3% to MSEK 7,466, of which technologies such as bio-based aviation fuel and green flights. MSEK 3,609 was paid directly by customers via the ticket price. In 2009 the SAS Group was involved in the Sustainable Avia- Likewise, SAS pays MSEK 1,373 in security costs, which for most tion Fuel User Group, whose goal is to hasten the development, other forms of transportation are financed through taxes. certification and commercial use of environmentally and socially sustainable aviation fuel. SAS also works with the Scandinavian providers of air traffic management, aimed at hastening the de- velopment of a more efficient use of airspace.

116 SAS Group Sustainability Report 2009 The SAS Group engages in – and to a certain degree pays SAS Group’s training takes place through web-based courses, or for – technology development benefiting the entire industry. e-learning. E-learning cannot always replace classroom instruc- The Group and its airlines also play a leading role internationally tion, but thanks to its greater flexibility and availability, more in drafting environment-related norms and standards for air courses can be offered at a lower cost. transport. SAS is represented on a large number of committees, projects and working groups related to the environment and Costs of sick leave and accidents corporate social responsibility in such bodies as IATA, ICAO, AEA, Sick leave and occupational injuries are a heavy cost for the indi- and N-ALM. vidual employee and employer, as well as for society as a whole. Sick leave is affected by a number of factors such as illness and Financial aspects of CSR accidents as well as physically and mentally stressful working The SAS Group’s first social responsibility is to its own employees environments. SAS Group companies employ various methods and the communities dependent on and affected by SAS’s op- to prevent both short-term and long-term sick leave. erations. For employees this includes issues concerning human Given SAS’s total payroll expenses of just over SEK 17 billion, resources development, pay and working environment efforts. In it is possible to estimate the total cost to society of sick live at addition, the Group is to contribute to social progress wherever it around SEK 1 billion. According to these calculations, a one-point operates and be a respected corporate citizen. reduction in sick leave would have a lower cost to society of nearly Air transport helps improve labor market conditions in rural MSEK 170. areas in the Scandinavian countries and makes business travel easier in Europe and to other continents. Given increasing glo- Sustainability-related business opportunities and risks balization, airlines facilitate business and other contact opportu- The intention of the SAS Group’s sustainable development work nities where efficient transportation to, from and within the coun- is to identify new business opportunities and minimize the envi- tries is more or less a prerequisite for economic development and ronmental and social business risks that operations are subject progress. The airlines also contribute expertise and transfers of to. For that reason, for SAS, the climate change issue is not only a technology and make necessary investment in infrastructure. matter of minimizing risks in the form of regulations and adverse public opinion, but also a reason to offer customers added value SAS’s contribution to the economy through the opportunity to buy carbon offsets and aim for inde- Airline operations are powerful engines of job creation. This is pendently examined sustainability information, greater transpar- made clear in the report, Luftfarten i Skandinavien – værdi og ency and reliable corporate governance. betydning. Calculations in the report 2004 show that each em- In the same way, SAS’s work on safety issues is a matter both ployee of SAS’s airline operations generates approximately one of minimizing the risk of near accidents and of developing secu- additional job in other companies and industries, indirectly creat- rity routines and systems that are highly reliable, but pose little Sustainability-related charges, ing employment for many in the Scandinavian countries. inconvenience, such as biometric security control. Minimizing costs and investment

In 2009 the SAS Group paid wages and salaries totaling safety and security risks not only protects customers and em- 2009 2008 2007 MSEK 17,233 (17,286), of which social security expenses were ployees, but also bolsters public confidence in SAS. Infrastructure MSEK 1,943 (2,047) and pensions MSEK 2,687 (2,594). Thanks to the growing interest in social and environmental Infrastructure charges 7,466 7,680 7,694 SAS endeavors to achieve market pay for all employee issues among investors, customers and other stakeholders, the of which the Group’s own costs 3,857 4,120 4,085 Security costs 1,373 1,372 1,490 ­categories. See p. 12. SAS Group is convinced that structured sustainability work and transparent reporting of both progress and setbacks is an advan- Environmental costs External environment-related costs 368 453 414 Courses and professional development tage in the stiff competition prevailing in the markets where the of which environment-related charges 76.2 88.6 72.6 To retain and develop employee skills, extensive training pro- Group operates. of which environment-related taxes 293 364 341 grams are carried out each year. In 2009 SAS employees un- Other environment-related costs 82.8 76.4 81.5 derwent an estimated 450,000 hours of training, most of which Environment-related investment relates to mandatory training programs. A growing share of the Flight operations 15.6 16.7 38.9 Ground operations 0.9 0.9 0.1 Total 16.5 17.6 39.0 Share of the SAS’s total investment in % 0.4 0.4 1.5 SAS Group Sustainability Report 2009 117 Operations in 2009 In 2008 a discharge of oil and glycol was identified outside a Production Denmark workshop at Oslo Airport. The incident was investigated and the In 2009, Production Denmark accounted for 26.4 (20)% of the Scandinavian Airlines case closed. Group’s passenger volume and had an average of 1,867 em- In 2009 an organizational change was carried out within the During the year minor spills of Jet A1 fuel were reported in ployees. The passenger load factor rose to 74.6 (72.5)%. Fuel framework of Core SAS, and three production units were created some instances in connection with aircraft refueling. The fuel consumption was 0.041 kg/RPK compared with 0.044 for 2008. within Scandinavian Airlines. In this connection, SAS’s long-haul was dealt with according to established routines. In mid-2009 The environmental index was 92 (98). The improvement may be operations are reported separately, but organizationally are a a new law went into effect banning the disposal in landfills of de- due to a higher passenger load factor and a younger aircraft fleet. part of Production Denmark. gradable waste. The company is studying the consequences and The target for 2011 is 87. During the year, Scandinavian Airlines’ fuel efficiency improved evaluating new waste management routines. In cooperation with Naviair there was a greater focus on green

significantly, and relative CO2 emissions fell. The positive perform- In 2009, SAS Norway’s own Air Operator Certificate (AOC) takeoffs and to a certain extent also green approaches. ance is primarily due to a higher passenger load factor thanks to was phased out, and all operations are now under joint manage- Thanks to good planning and a greater number of CRJ900 air- timely adjustment of capacity in the declining market, but also ment, based on the SAS Group’s AOC. The changeover involved craft in the fleet, the goal was reached of largely avoiding exceed- to higher demand, high punctuality, success in SAS’s fuel saving some personnel changes, and a few issues became legal cases. ing the 80dB(A) noise limit after 11 p.m. at Copenhagen Airport. In project and the rejuvenation of the aircraft fleet during the year. Production Norway has extensive cooperation with authori- few cases when an MD-80 was used after 11 p.m., a special take- Work to implement ISO 14001 progressed on schedule in all ties and organizations on environmental issues. In 2009 contin- off routine, called a cut back, was used to reduce noise at takeoff. production units and operations during the year. Read more ued interest was noted from major customers in the company’s A premature turn after take off resulted in an administrative fine of on p. 111. environmental management system and environmental work. SEK 43,000. The violation was acknowledged by the unit. Since 2008 SAS has had an agreement with the Bellona In the employee area, a project was initiated in flight staff or- Production Norway Foundation aimed at speeding up the development of biofuels ganizations concerning “well-being at 33,000 feet,” which covers Production Norway had an average of 1,622 employees in 2009 and improving the dialog on sustainable aviation. There were sev- healthy eating and good exercise habits. In the administration a and accounted for 35 (27)% of the Group’s passengers. During eral activities in 2009 in partnership with Save the Children and total of 90 persons with back, arm or neck pain took part in a large the year the passenger load factor rose to 70.3 (69.5)%. Fuel the Christmas Flight benefit. pilot project aimed at integrating movement into office work. consumption was unchanged at 0.042 kg/RPK. Production Production Norway’s lost time to injury (LTI) rate was 4 (6), Production Denmark was one of a total of four businesses

measured in RPK was down 16%, and CO2 emissions fell by 19% and the number of occupational injuries was 11 (27). chosen by an assessment panel headed by the minister of health. to 920 tonnes. The environmental index reached 93 (94). The The costs for training health ambassadors and for lost work time target for 2011 is 87. were covered by funds from the Prevention Foundation.

KPIs Scandinavian Airlines’ operations KPIs Widerøe and Blue1

Production Norway Production Denmark Production Sweden Intercontinental traffic Widerøe Blue1 2009 2008 2007 2009 2008 2007 2009 2008 2007 2009 2008 2007 2009 2008 2007 2009 2008 2007 RPK, mill.1 7,182 8,585 8,366 6,829 7,551 7,666 5,434 5,646 5,836 8,329 10,125 9,953 661 647 608 1,332 1,399 1,413 ASK, mill.1 10,214 12,360 11,482 9,155 10,417 10,276 7,468 8,056 7,872 9,954 11,700 11,616 1,110 1,098 1,028 2,054 2,146 2,169 Passenger load factor, %1 70.3 69.5 72.9 74.6 72.5 74.6 72.8 70.1 74.1 83.7 86.5 85.7 59.6 58.9 59.2 64.9 65.2 65.1 Fuel consumption, kg/RPK 0.042 0.042 0.040 0.041 0.044 0.042 0.041 0.045 0.043 0.037 0.036 0.037 0.057 0.063 0.065 0.050 0.049 0.052

Carbon dioxide (CO2), emissions, 1,000 tonnes 920 1,133 1,056 881 1,046 1,022 696 798 783 958 1,147 1,158 118 128 125 210 216 230

Nitrogen oxide (NOX), emissions, 1,000 tonnes 2.92 3.58 3.41 3.75 4.50 4.46 2.22 2.75 2.60 5.15 6.26 6.40 0.30 0.34 0.38 0.70 0.80 0.77 Noise impact, km2/85dB(A) at takeoff 2 1.70 1.67 1.66 3.05 3.06 2.70 2.36 3.18 2.50 4.45 4.52 4.50 0.33 0.33 0.34 2.09 2.17 2.22 Environmental index 93 94 91 92 98 94 90 104 95 105 102 105 74 83 92 86 88 89

1 Includes scheduled traffic, charter, ad-hoc flights and bonus trips, etc., which means that the figures may deviate from the SAS Group’s monthly traffic data reporting, also found on pages 1-101. 2 Weighted noise contour by number of takeoffs per day by respective aircraft type in the traffic system.

118 SAS Group Sustainability Report 2009 Scandinavian Airlines

Starting in 2007 all environmental indexes have been refor- Scandinavian Airlines total 3 Index Under the slogan “Think about those who carry – pack less in mulated according to a new model with 2005 as the base 100 100 your suitcases,” Copenhagen-based ground service companies, year. Company targets have been set in consultation with 95 95 in partnership with the union 3F, ran a campaign to get passen- ­Group Management. The targets for 2011 remain firm, despite gers to think of the impact on baggage handlers’ health when the downturn and the impact of the financial crisis on the indus­ 90 90 they check in heavy baggage. try. The index consists of 50% CO , 40% NOx and 10% noise 85 85 The Danish National Board of Industrial Injuries has awarded 2 relative to the most important production parameter, RPK.1 –05 –06 –07 –08 –09 –10 –11 occupational injury compensation to a Danish SAS flight attendant target Widerøe who developed breast cancer deemed to be linked to night work on Environmental index and target scenario for airline Index long-haul flights. Her employer is treating the matter with the ut- operations 100 100 100 100 most seriousness and is awaiting results of international research. 95 95 95 95 90 90 During the year, Production Denmark was heavily involved Production Norway 90 90 Index 85 85 in a number of major conferences and for some was the Official 80 80 85 85 100 100 75 75 80 80 ­Airline. For COP15, SAS entered into partnership agreements 70 70 75 75 with the Danish foreign ministry. 95 95 –05 –06 –07 –08 –09 –10 –11 –05 –06 –07 –08 –09 –10 –11 target mål In 2009, Copenhagen Airport and SAS signed a partnership 90 90 Blue1 85 85 aimed at facilitating shorter turnaround times and more efficient Index 80 80 use of available gates. –05 –06 –07 –08 –09 –10 –11 100 100 100 100 Production Denmark’s LTI rate was 15 (11), and the number target 95 95 95 95 Production Denmark 90 90 of occupational injuries was 47 (39). 90 90 Index 85 85 85 85 80 80 100 100 Production Sweden 80 80 75 75 In 2009, Production Sweden accounted for 22 (16)% of the 95 95 –05 –06 –07 –08 –09 –10 –11 –05 –06 –07 –08 –09 –10 –11 target mål Group’s passenger volume and had an average of 1,154 employ- 90 90 ees. The passenger load factor rose to 72.8 (70.1)%, and fuel 85 85 consumption fell to 0.041 (0.045) kg/RPK. The environmental 80 80 Environmental index and target scenario for ground –05 –06 –07 –08 –09 –10 –11 operations in Scandinavia index was 90 (104). The improvement is attributable to the higher target passenger load factor, rejuvenation of the aircraft fleet and the fact Production Sweden SAS Ground Services4 Index that at the end of 2008 SAS was forced to use leased aircraft after Index deciding to phase out the Q400 fleet. The target for 2011 is 89. 105 105 105 105 100 100 During the year, around ten thousand green approaches were 100 100 carried out according to the simpler version introduced as stand- 95 95 95 95 ard in May 2008 during low traffic periods. The estimated saving 90 90 is around 80 kg of fuel per approach. 85 85 90 90 –05 –06 –07 –08 –09 –10 –11 –05 –06 –07 –08 –09 –10 –11 Cooperation with LFV progressed during the year with the target target aim of optimizing all aspects of flight operations. For example, 2 Intercontinental traffic SAS Tech4 phase 3 of CASSIS was realized, which is aimed at carrying out Index Index the advanced version of green approaches in all traffic densities, 110 110 100 100 that is, around the clock. 105 105 95 95 The solution whereby aviation fuel is transported to Arlanda 100 100 90 90 by train instead of truck won the ECOLogistics Award for 2009. 95 95 There was keen interest in SAS’s environmental work in 2009. 90 90 85 85 –05 –06 –07 –08 –09 –10 –11 –05 –06 –07 –08 –09 –10 –11 A large number of presentations were held at seminars organ- target target ized by corporate customers, stakeholders in the travel industry 1 Refers to airlines. SGS and SAS Tech measure their environmental performance using an environmental index with 2005 as the base year. The companies’ environmental and at Swedish travel fairs. indices include the six most important environmental aspects per weighted landing for SGS and hours worked for SAS Tech. 2 Scandinavian Airlines’ long-haul production. Interkontinental3 The deterioration trafikin 2008 is explained by temporarily leased aircraft with poorer environmental performance. As a whole, Scandinavian Airlines is in line with the target for I2011.ndex 4 The increase in unsorted waste owing to a change in method is not weighted in the environmental index for 2009. SAS Group Sustainability Report 2009 100 100 119 Trafikområde International* 95 95 Index 90 90 110 110 85 85 105 105 80 80 100 100 –05 –06 –07 –08 –09 –10 –11 mål 95 95 90 90 –05 –06 –07 –08 –09 –10 –11 Widerøe mål Index 100 100 95 95 90 90 85 85 80 80 –05 –06 –07 –08 –09 –10 –11 mål

Blue1 Index 100 100 95 95 90 90 85 85 80 80 75 75 –05 –06 –07 –08 –09 –10 –11 mål Production Sweden’s LTI rate was 2 (2), and the number of Blue1 ­occupational injuries was 4 (5). In 2009, Blue1 accounted for 5 (4)% of the Group’s passenger volume and had an average of 430 (460) employees. The pas- Intercontinental traffic senger load factor was 64.9 (65.2)% and fuel consumption was In 2009, Scandinavian Airlines’ long-haul production accounted for 0.050 (0.049) kg/RPK. The environmental index was 86 (88). 4 (3)% of Group passenger volume. The passenger load factor de- The target for 2011 is 80. teriorated to 83.7 (86.5)%. Fuel consumption measured in kg/RPK The airline was certified at year-end in accordance with ISO was 0.037 (0.036). The environmental index was 105 (102), prima- 14001. The fuel saving program had a positive impact. Growing rily due to a lower passenger load factor. The target for 2011 is 98. interest in Blue1’s environmental performance was noted from The operations’ environmental work focuses on improving customers and the authorities. punctuality, weight reduction and information for employees, Blue1’s sick leave was 6.7 (6.2)%. The airline’s LTI rate was ­ above all for pilots. In November 2009 fuel was jettisoned (30 6 (0), and the number of occupational injuries was 5 (0). tonnes) off Thailand in accordance with applicable routines. Ground operations in Scandinavia Widerøe SAS Ground Services (SGS) Widerøe had just over 8 (5)% of the SAS Group’s passenger vol- Besides passenger service, lounges and baggage handling, SGS ume and an average of 1,203 (1,329) employees. The passenger also performs deicing and towing of aircraft. The most important load factor was 59.6 (58.9)% and fuel consumption was 0.057 environmental aspects are the use of energy, water, gasoline and (0.063) kg/RPK. The environmental index was 74 (83). The tar- diesel and exhaust emissions from motor vehicles. Deicing fluids get for 2011 is 82. pose a risk of being discharged into surface water. In addition, The PULS employee survey shows that job satisfaction is very operations generate considerable quantities of waste. high and rose from 2008 to 2009. The environmental index deteriorated to 103 (96), explained A decision was made for Widerøe to take over SAS’s F50 by the fact that resource use and environmental impact could production in western Norway, called the Westlink, before the not be adjusted to the production cuts in time. The increase in end of 2010. The F50 production will be replaced by Bombardier unsorted waste is not weighted in the environmental index. The Q300s and 400s. In all, 75 pilots and cabin crew to be trans- target for 2011 is 95. ferred from SAS to Widerøe are affected. SGS utilizes preventive deicing to reduce glycol use. SGS has Three Q400NGs were delivered in 2009. A further two will be the strictest environmental policy in the Nordic countries for pur- delivered in the first quarter of 2010 and one will be delivered at chasing deicing fluid. Vacuuming up fluid at the ramp is provided the end of 2010. by LFV or another contractor. Approvals and certifications Widerøe will be ISO 14001-certified during the first half of 2010. The fuel saving program carried out for nine months in 2009 SAS Cargo and Blue1 are certified in accordance with ISO resulted in savings of more than 500,000 liters, equivalent to 14001. SAS, Blue1 and Widerøe are IOSA-certified through some 1,300 tonnes of CO . Widerøe works with Avinor to achieve 2 KPIs Core SAS ground operations IATA. SAS Tech and Widerøe have EASA Part 145 and Part more efficient approach routines. 147 approval. Blue1 has Part 145 approval. The share of passengers using Widerøe’s climate offset sys- 2009 2008 2007 1 tem is at the same level as the previous year, nearly 5%, which is Energy consumption, GWh 196 196 191 Water consumption, 1 000 m3 1 163 149 184 higher than for comparable airlines. Unsorted waste, tonnes1 1,315 2 682 754 The airline sponsored a trip to Legoland for children with can- Hazardous waste, tonnes1 360 480 494 More detailed information cer and made a donation to Church City Mission. Fuel consumption, vehicles, 1,000 liters 3,757 3,706 3,993 Glycol consumption, m3 2,252 2,842 2,947 Sick leave was 5.1 (6.1)%. Widerøe’s LTI rate was 8 (6), and the Additional environmental data, KPIs and priority environmen- 1 number of occupational injuries was 15 (13). Data from SAS Group FM/Coor Service Management and Air Maintenance tal aspects for SAS units and companies, Estonia. 2 Increase owing to change in method. see www.sasgroup.net under “Reports” and “Comple- mentary information.”

120 SAS Group Sustainability Report 2009 SGS operations had the largest number of personal injuries in SAS Cargo the Group. In 2009 company’s LTI rate was 19 (19), and the total SAS Cargo had an average of 1,040 (1,247) employees in 2009. number of occupational injuries was 173 (224). The reduction is The company provides airfreight within the framework of the op- due in part to preventive efforts and in part to staff reductions. erations of Scandinavian Airlines, Blue1 and other partners. The bulk of SAS Cargo’s freight capacity is found in SAS’s own airlines. SAS Tech The ground handling company Spirit AB was transferred to SAS Tech, which provides technical maintenance of aircraft, op- Individual Holdings pending a sale. This means that SAS Cargo’s erates primarily in Scandinavia. The average number of employ- ISO 9001 certification moved with Spirit, while Spirit’s sustain- ees was 2,100 (2,344) during the year. Its biggest customers are ability data will be included in SAS Cargo’s results for 2009. The Group airlines. freight forwarding company Trust in SAS Cargo became an inde- SAS Tech is responsible for most of the operations in the pendent company in Denmark in 2009. Company formation is Group requiring environment-related permits. SAS Tech is also also under way in Norway and Sweden. The company’s sustain- the biggest user of chemicals and generates the biggest share ability data are included in SAS Cargo’s results. of hazardous waste. This is handled by approved waste manage- SAS Cargo is ISO 14001-certified, and in 2009 SAS Cargo ment companies. was recertified by Bureau Veritas. During the year, SAS Cargo de- Management of all of the Group’s owned and leased proper- veloped “alu-rails,” an aluminum support for goods on airfreight ties is provided by Coor Service Management. SAS Tech is thus pallets, as a replacement for wood. Aluminum is much lighter a participant in Coor’s environment and energy program for than wood and has a lower environmental impact. Production property management. began in February 2010.

SAS Tech has long-standing cooperation with suppliers and CO2 emissions are estimated to have fallen more than 120 researchers to find materials containing less heavy metals and tonnes thanks to the use of the temperature-regulating “Temp- other chemicals than those used till now. SAS Tech has a contract tainer,” developed in 2008 for improved chilling and lower with an external supplier for purchasing and storing chemical weight. products in order to reduce the quantity of hazardous waste, cut Regarding legal issues, see the Report by the Board of Direc- storage time and have better cost control. This will also facilitate tors, p. 52. the transition to the European REACH rules. SAS Cargo is currently implementing a new organization ow- During 2009, heavy maintenance of MD-80 at Gardermoen ing to significantly lower demand for airfreight services and the was phased out, which explains the reduction in hazardous closure of certain intercontinental routes, which are the basis of chemical waste. SAS Cargo’s operations. At the same time, SAS Cargo will focus SAS Tech intends to set up a Chemical Review Board in 2010. on an active sales strategy. Coor Service Management The aim is to examine all new chemical products from a working In 2008, SAS Cargo set an environmental target for 2011 for environment and environmental standpoint and, as needed, also its vehicle transportation of a reduction in CO emissions from 2 Coor has taken over day-to-day operation and maintenance consider whether they can be replaced by less harmful products. 153 to 148 g/tonne km. The result for 2009 was 162. The deteri­ of all of SAS’s buildings and premises in Scandinavia, includ­ The environmental index was 100 (88). The deterioration is oration is explained by the fact that SAS Cargo’s road transporta- ing follow-up of energy, waste management, purification explained by the fact that resource use and the environmental tion operates in a network system. When demand and produc- plants, environmental regulations and reporting to the impact could not be adjusted in time to the cut in production. The tion were reduced, it was not possible to adjust the number of authorities.­ This is governed in agreements between SAS increase in unsorted waste is not weighted in the environmental shipments accordingly. This results in a lower utilization rate and Group FM and Coor. Coor is contractually obligated to initiate index. The target for 2011 is 90. The company’s LTI rate was a higher relative environmental impact. improvement measures and, along with SAS Group FM, follow 5 (7), and the number of occupational injuries was 17 (28). The company’s LTI rate was 12 (16), and the number of occu- up on a continuing basis when potentials for improvements In 2009 a threshold for nickel was exceeded in one instance pational injuries was 19 (32). and any unforeseen incidents are evaluated. at the purification plant at Arlanda. SAS Group FM has primary responsibility for all facility-­ related requirements being met, which also includes environ- mental responsibility. Coor is ISO 14001-certified in Denmark and Sweden and is well on the way to certification in Norway and Finland. SAS Group Sustainability Report 2009 121 About the SAS Sustainability Report 2009 The SAS Group Sustainability Report 2009 describes the most essential envi- ronmental and societal aspects its operations impact. It reports what is felt, after an ongoing dialog, to be of interest to its main target groups: financial analysts, customers, suppliers, employees, authorities, policymakers and shareholders. Auditor’s review of sustainability report It is the opinion of SAS that the SAS Group Annual Report and Sustainability Report 2009 meets the requirements for sustainability To the readers of SAS Group Sustainability Report 2009 reporting an A+ level in accordance with the Global Reporting Initia- tive (GRI) Sustainability Reporting Guidelines, version 3.0. Introduction a. An update of our knowledge and understanding for SAS Group’s Reporting principles We have been requested by the executive team of SAS Group to organization and activities The SAS Sustainability Report has been prepared on the basis of the SAS perform a review of SAS Group’s sustainability report 2009. The sus- b. Assessment of suitability and application of criteria in respect to Group’s accounting principles for sustainability reporting. They are based in tainability report includes the SAS Annual Report and Sustainability stakeholders need of information part on Deloitte’s “Checklist for preparing and evaluating information about Report 2009, pages 102-122, as well as accounting principles, GRI c. Assessment of the result of the company’s stakeholder dialogue the environment, ethics, corporate social responsibility and corporate govern- cross reference list and stakeholder dialogue, found on SAS website d. Interviews with responsible management, at group level, subsid­ ance,” 2008 edition. In preparing the Sustainability Report the SAS Group has (www.sasgroup.net under “Sustainability”). It is the executive team iary level and at selected business units with the aim to assess if followed the GRI Sustainability Reporting Guidelines, version 3.0 and all key principles of the UN Global Compact. that are responsible for the continuous activities regarding environ- the qualitative and quantitative information stated in the Sustain- ment, health & safety, quality, social responsibility and for the prepa- ability Report is complete, correct and sufficient The sustainability reporting includes all sustainability information in the SAS ration and presentation of the sustainability report in accordance with e. Share internal and external documents to assess if the informa- Group Annual Report & Sustainability Report 2009 as well as accounting principles, GRI cross reference list and stakeholder dialog, found on SAS applicable criteria. Our responsibility is to express a conclusion on the tion stated in the Sustainability Report is complete, correct and website (www.sasgroup.net under “Sustainability”). sustainability report based on our review. sufficient The scope of the limited review f. Evaluation of the design of systems and processes used to ob- The main principle for sustainability reporting is that all units and companies tain, manage and validate sustainability information owned by the SAS Group are to be accounted for. This means that sustain­ Our review has been performed in accordance with FAR SRS (the ability-related data for divested companies owned by the Group during 2009 institute for the accountancy profession in Sweden) recommenda- g. Evaluation of the model used to calculate emissions of carbon will be reported wherever possible. tion “RevR 6 Assurance of sustainability reports”. A limited review dioxide, nitrogen oxides and noise consists of making inquiries, primarily of persons responsible for h. Analytical review of reported information Material departures from GRI Sustainability Reporting Guidelines, version 3.0, are commented on in the SAS Group’s accounting principles for sustain- sustainability matters and for preparing the sustainability report, and i. Reconciliation of financial information against company’s Annual ability reporting or in GRI cross-references on SAS’s website. Cross-refer- applying analytical and other review procedures. A review is substan- Report 2009 ences also include the tables “GRI Application Levels.” tially less in scope than an audit conducted in accordance with the j. Assessment of the company’s stated application level according Standards on Auditing in Sweden RS and other generally accepted to GRI:s guidelines For financially related information in the Sustainability Report, we are aiming for the same accounting policies as in the financial portion of the Annual auditing standards The procedures performed in a limited review do k. Overall impression of the Sustainability Report, and its format, ­Report. In cases where other principles are applied, this is commented on in not enable us to obtain an assurance that would make us aware of all considering the information’s mutual correctness with applicable the SAS Group’s accounting principles for sustainability reporting. significant matters that might be identified in an audit. Accordingly, criteria we do not express an audit opinion. l. Reconciliation of the reviewed information against the sustain- Uniform environmental and social indicators are aimed for Group-wide. Aside from primarily national discrepancies regarding social data without material The criteria used in the course of performing review procedures ability information in company’s Annual Report 2009 importance for the information reported, all operations in the Group were are based on SAS Group’s Principles for Sustainability Reporting able to report in accordance with these definitions for 2009. (www.sasgroup.net) as well as applicable parts of ”Sustainability Re- Conclusion porting Guidelines, G3”, published by The Global Reporting Initiative Based on our review procedures, nothing has come to our attention The Sustainability Report was approved by SAS Group Management in February (GRI), suitable for the sustainability report. We consider those criteria 2010. The SAS Group Board of Directors submitted the annual report in March that causes us to believe that SAS Group Sustainability Report 2009 2010, and was informed of the sustainability report at the same time. SAS to be suitable for the preparation of the sustainability report. has not, in all material aspects, been prepared in accordance with the Group Management is responsible for organizing and integrating sustainability Our limited review has been based on an assessment of materiality above stated criteria. work with the operations of the Group. and risk, among other things included the following review procedures:

EMAS publication requirements This published report has been EMAS-verified by Bureau Veritas. EMAS verification and registration will be issued when all underlying data for each business area mentioned in this report has been verified, as well as when an ISO 14001 certificate has been issued. Bureau Veritas, accreditation number DANAK 6002 Stockholm, March 15, 2010

External review Deloitte AB External auditors have reviewed all material sustainability information in the Elisabeth Werneman Torbjörn Westman annual and sustainability reports for 2009. The assurance report is at right. Authorized Public Accountant Expert member FAR SRS Sustainability information For further information and views on the SAS Group’s sustainability work, contact Niels Eirik Nertun, Director for Environment and Sustainability: [email protected]

SAS Group Annual Report & Sustainability Report 2008 was published in March 2009. 122 SAS Group Sustainability Report 2009