Scandinavian Airlines was faced with a decision to purchase new Boeing 737 aircraft and had to choose between a standard engine or a more expensive "green" engine. The green engine, a two-stage dual annular combustion engine, produced significantly lower NOx emissions but would cost the airline an additional $2 billion. As an airline known for its environmental leadership and operating in a culture that values environmental protection, SAS had to weigh the financial costs against the benefits of upholding its green reputation.

1. Scandinavian Airlines: The Green Engine DecisionMBA 241Anamika BhardwajJane FinneganMargaret HwangRekha Srivatsan

2. Company ProfileLargest airline in Scandinavia, serving 32 million people4th largest in Europe, important player in global airline marketPioneers and forward-thinkers1st to have a female pilot1st to offer business class2

3. Company ProfileEnvironmental management was elevated to a strategic level in 1995First environmental director – Niels Eirik NertunInfluential player in decision making processes

4. Able to justify expense of environmental initiatives

5. Competitors reacting to pressure

6. Corporate customers demanded reaction3

7. The IssueSAS has made the decision to purchase 55 Boeing-737s - Senior management must decide on an enginePurchasing a “Green” engineProgressive option that aligns with the company’s environmental reputation

8. Financial, cultural, and political drivers must all be considered in the decision-making process4

9. Green EngineBengt-Olov Nas, Director of Aircraft and Engine Analysis, must convince the management team to purchase the green engineTwo-stage dual annular combustion (DAC)Developed in the 1970s, but has not been commercialized

10. Produced significantly lower NOx emissions

11. Represents a strong environmental commitment

12. “Green” engine would add approximately 2 billion US dollars to the whole fleet

13. No specific figures on company economic impact5

14. Environmental Image of SAS“First Mover” in environmentally sustainable strategies- Implementation of Environmental AuditsForward-thinking leader in the airline industrySAS’s environmental image now prevails over the overall company image See Exhibit 4, Pg. 11