Interim Report January-September 1999

January - September 1999

*Sales increased 27 % to SEK 6,733 m. (5,288)
*Operating income increased to SEK 725 m. (400)
*Net income amounted to SEK 640 m. (427) and earnings per share to
SEK 6.01 (4.01).
*The outlook for the full year remains encouraging.

Comment by the President
The third quarter of 1999 was another good quarter with continued favorable
development of operations in all business areas. The phase-out of regional
aircraft production has proceeded considerably better than planned. I expect
that both sales and operating income for the whole year will also be
considerably better than last year. In addition, there is the positive effect
of the surplus funds from SPP.

On 15 September, an important milestone was passed when South Africa decided
to purchase 28 Gripen aircraft including equipment, training, etc., the first
nation outside Sweden to choose Gripen. The agreement is currently under final
negotiation and is intended to form part of a larger agreement that includes
24 Hawk aircraft from British Aerospace. Intensive activities in export
markets are also being conducted by other business areas, and during the
quarter several co-operation agreements have been signed with foreign

Another important event was the first delivery to Aérospatiale Matra intended
for the Airbus A340-500/600.

Our acquisitions have strengthened us in areas that we consider to be
interesting growth areas. This includes maintenance, modification and flight
services, as well as signature management technology which is part of
information warfare. At the same time, we have continued to streamline
Combitech, which has increased the focus on core business and improved

We are continuing to invest substantially in research and development on the
cutting edge of technology. This is an important reason why the Group is able
to achieve a high level of profitability in supplying advanced products and
systems based on sophisticated information technology. Applications include
military and commercial aviation, defense electronics, industrial electronics
and information technology, missile systems as well as space applications. Our
intention is to identify further growth potentials in these areas that can be
achieved both organically and/or through acquisitions.

Business Areas
Today, Saab consists of five business areas: Military Aerospace, Space,
Training Systems, Commercial Aircraft and Combitech. Regional Aircraft is in
the process of being phased out.

Military Aerospace. By the end of September, Business unit Gripen had
delivered 12 (11) Gripen aircraft, making a total of 77 deliveries out of the
204 ordered by the Defence Materiel Administration, FMV. During the third
quarter, Dynamics, with operations comprising high technology products for
guided weapons and optronic systems, signed an agreement with German BGT on
export collaboration concerning the RBS15 anti-ship missile. Avionics, which
develops and manufactures display and surveillance systems as well as
electronic warfare systems, had good order bookings during the third quarter.
Order bookings for Military Aerospace during the third quarter totaled SEK 614
m. and included electronic warfare systems and jamming equipment for Avionics.

Space develops and manufactures onboard computers, antennas and other
equipment for the space industry. Order bookings continued to be good and
amounted to SEK 170 m. during the third quarter, including a computerised
sensor for use on board the new American satellite system for weather

Training Systems leads the world in simulation systems based on laser
technology for direct fire weapons. Order bookings during the third quarter
amounted to SEK 86 m. and consisted mainly of further orders from the German
and American armies.

Commercial Aircraft consists of three business units, Collaborative Programs,
Customer Support (Saab Aircraft AB) and Saab Aircraft Leasing. The sale of
four aircraft during the third quarter and the expiry during the year of
leasing contracts for two aircraft, now returned to the investor, reduced the
Saab Aircraft Leasing portfolio to 310 Saab 340 and Saab 2000 at the end of
the period, compared with 316 aircraft at the beginning of the year. By the
end of the period, eleven aircraft remained uncontracted with airlines,
compared with eight at the beginning of the year. Order bookings for
Commercial Aircraft during the third quarter amounted to SEK 181 m. and mainly
concerned additional orders from Airbus and spare parts for the Saab 340 and
Saab 2000.

Combitech's operations comprise products in commercial high technology niches.
The group now consists of five companies since Combitech Electronics was
divested to the Norwegian company Kitron during the third quarter. The largest
company in the business area, Saab Marine Electronics, is continuing to
develop favorably with increasing market shares in both the marine and oil
terminal markets. Order bookings for Combitech during the third quarter
amounted to SEK 247 m.

Regional Aircraft delivered the last two regional aircraft, two Saab 340 to
Japan Air Commuter, during the third quarter.

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