Lufthansa Group Conference & Roadshow Presentation 2.5% margin - - PowerPoint PPT Presentation

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Lufthansa Group Conference & Roadshow Presentation 2.5% margin - - PowerPoint PPT Presentation

Apr 08, 2023 239 likes •628 views

Lufthansa Group Conference & Roadshow Presentation 2.5% margin improvement in Q3 Adjusted EBIT margin improves to 15.5% Free cash flow doubles, net financial debt down 80% Good strategic progress: e.g., pilot deal and Air Berlin

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SLIDE 1

Lufthansa Group Conference & Roadshow Presentation

November 2017

2.5% margin improvement in Q3

 Adjusted EBIT margin improves to 15.5%  Free cash flow doubles, net financial debt down 80%  Good strategic progress: e.g., pilot deal and Air Berlin

Strong trading continues

 Normalization of trading after last year’s burdens  Constant currency RASK +4.5% in Q3  Unit cost stable (+0.2%), would be negative ex one-offs

Aim to further increase financial strength

 At least 1% unit cost reduction every year  Keep margins on higher level through the cycle  Stabilize balance sheet further, create room to maneuver

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SLIDE 2

2

Disclaimer

The information herein is based on publicly available information. It has been prepared by the Company solely for use in this presentation and has not been verified by independent third parties. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. The information contained in this presentation should be considered in the context of the circumstances prevailing at that time and will not be updated to reflect material developments which may occur after the date of the presentation. The information does not constitute any offer or invitation to sell, purchase or subscribe any securities

  • f the Company. Without the Company’s consent the information may not be copied, distributed,

passed on or disclosed. This presentation contains statements that express the Company‘s opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results, in contrast with statements that reflect historical facts. While the Company always intends to express its best knowledge when it makes statements about what it believes will occur in the future, and although it bases these statements on assumptions that it believes to be reasonable when made, these forward- looking statements are not a guarantee of performance, and no undue reliance should be placed on such statements. Forward-looking statements are subject to many risks, uncertainties and other variable circumstances that may cause the statements to be inaccurate. Many of these risks are outside

  • f the Company‘s control and could cause its actual results (positively or negatively) to differ materially

from those it thought would occur. The forward-looking statements included in this presentation are made only as of the date hereof. The Company does not undertake, and specifically declines, any

  • bligation to update any such statements or to publicly announce the results of any revisions to any of

such statements to reflect future events or developments.

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SLIDE 3

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  • Lufthansa Group is the world’s largest aviation group based on three strong pillars
  • Portfolio of premium network airlines, profitably growing P2P airlines and world leading aviation services
  • Consistent modernization of all parts of the Group shows positive economic impact
  • Constant profit improvement, Q3 and 9M 2017 pave the way for delivering further margin growth
  • Adjusted EBIT up by 370m EUR to 1,518m EUR; most profitable Q3 in Group’s history
  • Free cash flow almost doubled; net financial debt decreased; investment grade rated by Moody’s again
  • Very strong 2017: Adjusted EBIT 2017 expected “above previous year”
  • Passenger Airlines drive strong result development; Aviation Services on par with previous year in Q4
  • KPIs in Q4: CASK slightly negative; RASK slightly positive; 50m EUR headwind from fuel; no strikes
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Modernization of the Lufthansa Group has made strong progress Highlights of first nine months

Best nine-month result of all times – third consecutive year with record result expected Competitiveness strengthened through agreements with Vereinigung Cockpit1 and UFO Premium positioning strengthened: LH: “Best Airline in Europe” Strong growth of Eurowings to 210 aircrafts Strong share price performance, leading in the German DAX 2017 Actively shaping and consolidating the industry: Acquiring parts of the Air Berlin Group

1 Union ballot still pending

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Our objective remains: #1 for customers, shareholders, employees Set-up of Lufthansa Group

Digitalization Flexibilization Consolidation

Goal: #1 for customers, shareholders, employees

#1 Network Airlines in Europe #1 Point-to-Point Airline in home markets #1 Aviation Services world-wide

Cost Optimization

…and others Employee Shareholder Customer

Strategic focus topics Aspirations

#1

Shape the industry Grow the business Invest steadily Stay competitive

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Network Airlines

Network Airlines: Customer centricity and cost reduction Current measures

Customer centricity and strengthening of premium positioning

Skytrax: Lufthansa = „Best Airline in Europe“ Enhancing product and service offers (e.g. Introducing Premium Economy at Austrian Airlines) Improving digital services (e.g. shopping en route)

Cost reduction and flexibilization

Short-term cost reduction in FRA and new cooperation model in preparation Agreement with Vereinigung Cockpit – structural reduction of staff costs by 15%, 150 m EUR p.a. as of 2018 Focus on reducing unit costs of all airlines

Commercial integration Network Airlines

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Comprehensive agreement on a long-term deal with pilots achieved Overview terms

New and more competitive cockpit costs contribute to improving overall cost structure

  • Productivity

Increased productivity and lower supplementary pay for extra work

  • Transitional pay

Reduction of payment period from 5 to 3 years on average

  • Pensions

Full move from Defined Benefit to Defined Contribution scheme

  • Salaries

One-off payment of 1.8 monthly salaries 11.4% increase for 10 year period (average yearly increases of 1.1%) New structure: Base pay (seniority based) + supplements per a/c type

  • Long-term

Agreement lasts at least until 2022

  • Stable fleet

325 aircraft (LH, Cargo, Germanwings) crewed exclusively by pilots under this agreement

  • New career perspectives

At least 700 new pilot hires to compensate for attrition but no guaranteed growth

Comprehensive deal achieved “New Deal” with pilots after 5 year conflict

Network Airlines

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Eurowings: Europe’s third largest Point-to-Point Airline Key figures Eurowings Group

Point-to-Point Airlines

Aircraft

(# in operation)

CASK

(excl. Fuel, ETS, FX and project costs)

Passengers

(in m)

Eurowings has become third largest Point-to-Point-Airline in Europe with the highest concentration of aircraft per base

  • Adj. EBIT

(in m EUR)

2015 ~80

2017 ~160

2016 ~90

2018 ~210 Eurowings expected to be profitable in 2017 80,000 additional flights and 50 new connections in the network as of 2018

  • 91

38 2017 positive 2016 2015 2018 ~40 2017 ~32 2016 ~18 2015 ~17 2020 2016 2015

  • 20%

by 20201

  • 10%

in 2016

Constantly reducing costs: ~10% CASK reduction achieved in 2016; another 10% already in 9M 2017

1 Incl. Brussels Airlines and wet leases of 33 a/c from Air Berlin

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Eurowings: Acquisition of parts of Air Berlin Group Key facts of the transaction

Point-to-Point Airlines Closing at beginning of January in 2018

  • Expected closing of transaction after approval of

anti-trust authorities

  • Start of integration phase of Niki & LGW –

focus on operational stability

  • Beginning of Tuifly wetlease

Project volume in total: ~1.5 bn EUR, of which ~210 m EUR for LGW and Niki Anti-trust approval Review by EU Commission Taking over two AOCs of Air Berlin Group Eurowings grows by 81 aircraft1 Eurowings grows by 3,000 employees

(1,700 from LGW & Niki, 1,300 job postings at Eurowings)

17 x DH-8 Q400-aircraft 13 x A320-aircraft ~870 Employees 20 x Aircraft of A320-Family ~830 Employees 24 x Aircraft of A320-Family 7 x Boeing 737-800 in wetlease from TUIfly

1 Operational fleet

Signing 13 October 2017

Overview Timeline

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Page 10

Aviation Services: Current developments and outlook Highlights

  • Significant increase in revenues

and freight load factor

  • Ongoing restructuring leads to

reduction of unit costs

Aviation Services

  • Key decisions taken regarding

production sites, efficiency improved

  • Successful implementation of new

aircraft types (among others A350 and B787)

Current developments

  • Implementation of OEM partnerships

(e.g. General Electric)

  • Focus on digitalization and growth of LCC

maintenance services

Outlook

  • Extending partnerships

(e.g. ANA Cargo, United)

  • Digitalizing business

(e.g. eFreight)

  • Improved process orientation and

efficient organizational structure

  • Selective expansion in growing

markets (e.g. Asia)

  • Transformation of European business
  • Growth of buy-on-board, in-flight

Equipment and convenience retail business

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Consistent strategy implementation drives improving financial KPIs Development of financial KPIs

  • Adj. EBIT

Free Cash flow

  • Adj. ROCE (pre-tax)

Net financial debt Equity ratio Adjusted EBIT Margin

2.635 1.752 1.817 1.171 986 725

Q4 16 + 9M 17 2016 2015 2014 2013 2012

>3x

2.410 1.138 834

  • 297

1.307 1.397

Q4 16 + 9M 17 2016 2015 2014 2013 2012

521 2.701 3.347 3.418 1.695 1.953

Q3 17 2016 2015 2014 2013 2012 2016

9,3%

2015

11,0%

2014

7,1%

2013

6,0%

2012 Q4 16 + 9M 17

13,3%

2015

5,7%

2014

3,9%

2013

3,3%

Q4 16 + 9M 17

7,6%

2016

5,5%

2012

2,4%

2016 Q3 17

22,3%

2015

20,6% 18,0%

2014

13,2%

2013

21,0%

2012

16,9%

~2x

+5.4 %P.

>2x >3x

  • 75%
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  • Lufthansa Group is the world’s largest aviation group based on three strong pillars
  • Portfolio of premium network airlines, profitably growing P2P airlines and world leading aviation services
  • Consistent modernization of all parts of the Group shows positive economic impact
  • Constant profit improvement, Q3 and 9M 2017 pave the way for delivering further margin growth
  • Adjusted EBIT up by 370m EUR to 1,518m EUR; most profitable Q3 in Group’s history
  • Free cash flow almost doubled; net financial debt decreased; investment grade rated by Moody’s again
  • Very strong 2017: Adjusted EBIT 2017 expected “above previous year”
  • Passenger Airlines drive strong result development; Aviation Services on par with previous year in Q4
  • KPIs in Q4: CASK slightly negative; RASK slightly positive; 50m EUR headwind from fuel; no strikes
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Favourable trading environment in all major traffic areas Operating KPIs Passenger Airlines

Q3 ‘17

  • 2.7%

+2.0pts. +3.2% +1.0% +1.5pts. +3.8%

Q3 ‘17 9M ‘17

+1.3% +3.8pts +0.5% +4.2% +1.1pts. +1.1%

Q3 ‘17

+9.4%

  • 5.6%

+2.4pts. +12.4%

  • 7.7%

+1.7pts.

Q3 ‘17

1 excl. currency

ASK SLF CASK1 ex fuel Yield1 RASK1

9M ‘17 9M ‘17 9M ‘17

  • 0.8%

+0.7% +1.2% +1.1pts. +2.3% +1.7pts. +4.5% +3.1% +11.8% +1.0pts. +0.2%

  • 0.8%

+2.0%

  • 0.1%

+2.1pts. +11.7%

Q3 ‘17 9M ‘17

+3.9% North America +1.4%

  • 4.7%

South America -2.4%

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Group airlines drive strong profit improvement Q3 and 9M 2017 operating KPIs and key profit figures at a glance

Network Airlines Point-to-Point Airlines Aviation Services

in m EUR

Q3 '17

  • vs. Q3 ‘16

9M '17

  • vs. 9M ‘16

Revenue 9,810 +11.1% 26,761 +12.1% EBIT 1,404

  • 22.5%

2,435 +4.5% Adjusted EBIT 1,518 +32.2% 2,560 +52.7% Net income 1,181

  • 16.9%

1,853 +0.1%

1 Including Lufthansa Cargo 2 Includes Logistics, MRO, Catering, Others and Consolidation

Q3 ‘17 9M ‘17 ASK +11.8% +11.7% RASK

(constant currency)

+4.5% +2.0% CASK

(constant currency; ex-fuel)

+0.2%

  • 0.8%

Fuel cost headwind (m EUR)1

(year-on-year)

+20 +243

in m EUR

Q3 ‘17 9M ‘17

  • Adj. EBIT2

106 468

Δ year-on-year

  • 94

+91

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Strong cash flow development drives reduction of net debt Key balance sheet and cash flow figures at a glance

Network Airlines Point-to-Point Airlines Aviation Services

Cash Flow in m EUR 9M ‘17

  • vs. 9M ‘16

Operating cash flow 4,459 +46.0% Net invest 1,669 +8.7% Free cash flow 2,790 +83.8% Balance Sheet in m EUR 9M ‘17

  • vs. FY ‘16

Net financial debt 521

  • 80.7%

Pension provisions 7,888

  • 5.7%

Equity ratio 22.3% +1.7 pts.

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Strong performance of Passenger Airlines and Cargo Segment overview Q3 2017

in m EUR

Network Airlines

Revenue

  • vs. Q3 ‘16

6,598

+369

4,627

+265

1,297

+44

723

+58

  • Adj. EBIT
  • vs. Q3 ‘16

1,190

+353

836

+275

255

+60

97

+17

  • Adj. EBIT Margin
  • vs. Q3 ‘16

18.0%

+4.6pts.

18.1%

+5.2pts.

19.7%

+4.1pts.

13.4%

+1.4pts.

Revenue

  • vs. Q3 ‘16

594

+88

  • Adj. EBIT
  • vs. Q3 ‘16

20

+44

  • Adj. EBIT Margin
  • vs. Q3 ‘16

3.4%

+8.1pts.

Logistics

Revenue

  • vs. Q3 ‘16

840

  • 29
  • Adj. EBIT
  • vs. Q3 ‘16

53

  • 3
  • Adj. EBIT Margin
  • vs. Q3 ‘16

6.3%

  • 0.1pts.

Catering

Revenue

  • vs. Q3 ‘16

1,249

  • 22
  • Adj. EBIT
  • vs. Q3 ‘16

111

  • 51
  • Adj. EBIT Margin
  • vs. Q3 ‘16

8.9%

  • 3.8pts.

MRO

1 Includes Eurowings, Brussels Airlines and equity stake in SunExpress

Revenue

  • vs. Q3 ‘16

1,259

+619

  • Adj. EBIT
  • vs. Q3 ‘16

222

+111

  • Adj. EBIT Margin
  • vs. Q3 ‘16

17.6%

+0.3pts.

Point-to-Point Airlines1

Revenue

  • vs. Q3 ‘16
  • 730
  • 43
  • Adj. EBIT
  • vs. Q3 ‘16
  • 78
  • 84
  • Adj. EBIT Margin
  • vs. Q3 ‘16

n.a.

Others & Consolidation

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Strong performance of passenger airlines and cargo Segment overview 9M 2017

in m EUR

Network Airlines

Revenue

  • vs. 9M ‘16

17,695

+1,065

12,467

+699

3,568

+221

1,814

+177

  • Adj. EBIT
  • vs. 9M ‘16

1,947

+623

1,405

+483

442

+120

100

+21

  • Adj. EBIT Margin
  • vs. 9M ‘16

11.0%

+3.0pts.

11.3%

+3.5pts.

12.4%

+2.8pts.

5.5%

+0.7pts.

Revenue

  • vs. 9M ‘16

1,752

+270

  • Adj. EBIT
  • vs. 9M ‘16

98

+167

  • Adj. EBIT Margin
  • vs. 9M ‘16

5.6%

+10.2pts.

Logistics

Revenue

  • vs. 9M ‘16

2,437

+42

  • Adj. EBIT
  • vs. 9M ‘16

66

  • 14
  • Adj. EBIT Margin
  • vs. 9M ‘16

2.7%

  • 0.6pts.

Catering

Revenue

  • vs. 9M ‘16

4,003

+194

  • Adj. EBIT
  • vs. 9M ‘16

333

  • 33
  • Adj. EBIT Margin
  • vs. 9M ‘16

8.3%

  • 1.3pts.

MRO

1 Includes Eurowings, Brussels Airlines and equity stake in SunExpress

Revenue

  • vs. 9M ‘16

3,031

+1,469

  • Adj. EBIT
  • vs. 9M ‘16

145

+169

  • Adj. EBIT Margin
  • vs. 9M ‘16

4.8%

+6.3pts.

Point-to-Point Airlines1

Revenue

  • vs. 9M ‘16
  • 2,157
  • 149
  • Adj. EBIT
  • vs. 9M ‘16
  • 29
  • 29
  • Adj. EBIT Margin
  • vs. 9M ‘16

n.a.

Others & Consolidation

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  • Lufthansa Group is the world’s largest aviation group based on three strong pillars
  • Portfolio of premium network airlines, profitably growing P2P airlines and world leading aviation services
  • Consistent modernization of all parts of the Group shows positive economic impact
  • Constant profit improvement, Q3 and 9M 2017 pave the way for delivering further margin growth
  • Adjusted EBIT up by 370m EUR to 1,518m EUR; most profitable Q3 in Group’s history
  • Free cash flow almost doubled; net financial debt decreased; investment grade rated by Moody’s again
  • Very strong 2017: Adjusted EBIT 2017 expected “above previous year”
  • Passenger Airlines drive strong result development; Aviation Services on par with previous year in Q4
  • KPIs in Q4: CASK slightly negative; RASK slightly positive; 50m EUR headwind from fuel; no strikes
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Page 19

Focus on capacity discipline, growth driven inorganically Lufthansa Group capacity growth 2017 per region

Network Airlines (organic) 4% Eurowings (organic) 9% Eurowings (organic) 124% Network Airlines (organic) 9%

4.5% organic + 8.0% inorganic growth

Status: September 2017 Eurowings (organic)

  • 25%

Network Airlines (organic) 2% Eurowings (organic) Network Airlines (organic) 83% 2% All capacity plans indicative and subject to change +2% +7% +2% Group Capacity +1% AB wet lease Brussels Airlines EW (organic) Network Airlines

12.5% Reported growth Organic growth 4.5%

0.5pts. strike effect Inorganic growth Eurowings Network Airlines 0% 3% 2% 19% Landings ASK

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Page 20 30 40 50 60 70 80 90 100 110 30 40 50 60 70 80 90 100 110

Fuel costs expected above previous year Fuel forecast and sensitivities FY 2017 and 2018

As of 30 Sep 2017 1 incl. fuel hedging 2 forwards are actual numbers for FY16

3 excluding acquisition of parts of Air Berlin

Lufthansa Group fuel expenses after hedging (in bn EUR)

Sensitivities with deviating oil price

Fuel hedging level

  • 78%

80% 79% 77% 76% 60%3

Exp.volume (in m tons)

9.3 9.7 2.1 2.5 2.7 2.4

  • Jet fuel price

(USD per ton)1

578 579 579 557 569 615 612

EUR/USD forward

1.09 1.13 1.06 1.11 1.18 1.17 1.17

Brent forward (USD/bbl)

45 54 55 51 52 57 56 FY162 Q4 17 Q3 17 Q2 17 Q1 17 FY 17 1.4 1.3 1.2 1.1 1.1 5.0 4.9 1.2 1.2 1.3 2017e 2016

Lufthansa Group price curve remainder of 2017 and 2018

Market price in USD/barrel Price paid in USD/barrel Hedging result Hedging result Market price: 57 USD/bbl LH price: 56 USD/bbl Hedging result : +1 USD/bbl

5.1 (+20%) 5.0 (+10%) 4.9 (- 10%)

+280m EUR

from Brussels Airlines FY 18 LH price 2017 LH price 2018 Market price

4.8 (- 20%)

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Network Airlines Point-to-Point Airlines Aviation Services1

Forecast Lufthansa Group for Q4 2017

1 Includes Logistics, MRO, Catering, Others and Consolidation

2 Organic growth excluding Brussels Airlines and Air Berlin wet lease, excl.

3 As of 30 Sep 2017; details in appendix of presentation

strike effect in Q4 2016

Fuel headwind of c. 50m EUR3 (excl. Brussels Airlines)

(5.0bn EUR total fuel cost for FY 2017; +280m EUR from Brussels Airlines)

Small positive contribution from Brussels Airlines and Air Berlin wet lease Flat development at other business segments

Differing performances among single group companies

ASK 5.5% organic growth2; corresp. to 14.4% total growth RASK

(constant currency)

Slightly positive

Including mix effect from organic growth of P2P segment

CASK

(constant currency; ex-fuel)

Slightly negative

Driven by individual cost reductions and change in mix

No major change in restructuring costs compared to previous year

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Deutsche Lufthansa AG Investor Relations / FRA IR Lufthansa Aviation Center Airportring D-60546 Frankfurt Andreas Hagenbring, Head of IR Phone: +49 (0) 69 696 28000 Fax: +49 (0) 69 696 90990 E-mail: investor.relations@dlh.de lufthansa-group.com/investor-relations

Lufthansa Investor Relations Contact

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Appendix – Additional financial information Q3 17 –

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Revenue increases faster than absolute costs in Q3 and 9M 2017 Operating costs and revenues

Lufthansa Group (in m EUR)

Q3 ‘17

  • vs. Q3 ‘16

9M ‘17 vs. 9M ‘16

Total revenue 9,810 +11.1% 26,761 +12.1% Other operating income 573 +40.1% 1,747 +6.5%

Total operating income 10,383 +12.4% 28,508 +11.7% Operating expenses 9,075 +20.6% 26,213 +12.7% Non-fuel operating expenses 7,696 +24.9% 22,274 +13.8% Cost of materials and services 4,961 +8.2% 14,230 +10.6%

Fuel expenses 1,379 +1.5% 3,939 +6.6% Fees and charges 1,734 +8.7% 4,790 +9.5%

Staff costs 2,162 +74.8%1 6,456 +23.7%1 Depreciation 600 +36.4% 1,460 +13.8% Other operating expenses 1,352 +7.3% 4,067 +4.4% Result from equity investments 96

  • 2

140 +52 EBIT 1,404

  • 408

2,435 +105 Adjustments 114 +778 125 +778 Adjusted EBIT 1,518 +370 2,560 +883

1 includes 713m EUR one-off gain from union agreement in 08/2016

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Lufthansa Group (in m EUR)

9M ‘17

  • vs. 9M ‘16

EBT (earnings before income taxes) 2,350 +47 Depreciation & amortization (incl. non-current assets) 1,449 +109 Net proceeds from disposal of non-current assets

  • 34

+15 Result of equity investments

  • 140
  • 52

Net interest 201 +10 Income tax payments/reimbursements

  • 179
  • 101

Significant non-cash-relevant expenses / income

  • 139

+872 Change in trade working capital 596 +193 Change in other assets / liabilities 355 +312 Operating cash flow 4,459 +1,405 Capital expenditure (net)

  • 1,669
  • 133

Free cash flow 2,790 +1,272 Cash and cash equivalents as of 30.09.171 1,301 +138 Current securities 4,942 +2,615 Total Group liquidity 6,243 +2,753

Free cash flow increases strongly despite higher capex Cash flow statement

1 Excluding fixed-term deposits with terms from three to twelve months (2017: 217 m EUR, 2016: 124 m EUR)

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Group revenue and currency impact 9M 2017 vs. 9M 2016

1,000 1,527 Volume: +8.1% Brussels Airlines: +5.4% 21,360 9M 2017

  • 113

Currency: -0.6% 9M 2016 18,674 5,196 5,401 Price: +1.5%% 272 Traffic revenue (+14.4%) Other revenue (+3.9%) ∑ Group revenue (+12.1%) ∑ 23,870 ∑ 26,761 Currency influence on EBIT (in m EUR) Q1 Q2 Q3 Q4 FY (YTD)

  • 39

34

  • 73
  • 78

in m EUR

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Page 27

+616 9M 2017 3,939 Brussels Airlines +210 Currency

  • 27

Hedging

  • 666

Price Volume +110 9M 2016 3,696 Hedging result by quarter (in m EUR) Q1 Q2 Q3 Q4 FY (YTD) 2016

  • 336
  • 235
  • 217
  • 115
  • 903

2017

  • 30
  • 63
  • 29
  • 122

Change versus previous year

in m EUR

Fuel cost development 9M 2017 vs. 9M 2016

243

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Page 28

Favourable trading environment in all major traffic areas Operating KPIs Group Airlines

Total Q3 '17 9M '17 Number of flights +10.8% +9.3% ASK +11.8% +11.7% RPK +13.2% +14.6% SLF +1.0pts. +2.1pts. Yield +1.0%

  • 0.6%

Yield ex currency +3.1%

  • 0.1%

RASK +2.5% +1.5% RASK ex currency +4.5% +2.0% CASK incl. fuel

  • 2.7%
  • 1.6%

CASK ex currency ex fuel +0.2%

  • 0.8%

Europe Q3 '17 9M '17 ASK +3.8% +3.2% RPK +5.7% +6.0% SLF +1.5pts. +2.0pts. Yield

  • 0.6%
  • 3.3%

Yield ex currency +1.0%

  • 2.7%

North America +3.9% +1.4% South America

  • 4.7%
  • 2.4%

Asia/Pacific Q3 '17 9M '17 ASK +1.1% +0.5% RPK +2.4% +5.2% SLF +1.1pts. +3.8pts. Yield +0.2% +0.3% Yield ex currency +4.2% +1.3% Americas Q3 '17 9M '17 ASK

  • 0.8%

+1.2% RPK +0.4% +3.3% SLF +1.1pts. +1.7pts. Yield +0.2% +0.3% Yield ex currency +2.3% +0.7% Middle East/Africa Q3 '17 9M '17 ASK +12.4% +9.4% RPK +14.7% +12.9% SLF +3.6pts. +2.9pts. Yield

  • 7.0%
  • 7.8%

Yield ex currency

  • 5.6%
  • 7.7%
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Page 29

in m EUR Q1 Q2 Q3 Q4 6M 9M Full Year

Adjusted EBIT 2016

  • 53

582 1,148 75 529 1,677 1,752

Strikes

  • 100

100

Adjusted EBIT ex one-off factors

  • 53

582 1,148 175 529 1,677 1,852 Adjusted EBIT 2017 25 1,017 1,518 1,042 2,560

One-off effects

Adjusted EBIT ex one-off factors 25 1,017 1,518 1,042 2,560

Adjusted EBIT and one-off effects Quarterly results 2016-2017

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Page 30

Appendix – Balance Sheet –

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Rolling hedging approach to reduce volatility Fuel and FX hedging strategies

5 9 14 19 24 28 33 38 42 47 52 56 61 66 71 75 80 85 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1

# months before actual date of consumption

Aim of hedging strategy

  • Lufthansa's hedging strategy is designed to

reduce volatility

  • No intention to outperform the market
  • Rolling approach up to 24 months going forward

Fuel Hedging

  • Hedging level is increased month-by-month

until up to 85% is hedged

  • Mostly options, not fixed contracts, to still benefit

from falling oil prices FX Hedging

  • Hedging of net FX exposure per currency, level

is increased every two or six months until 80% for next 24 months is hedged

  • Use of forward contracts

Fuel Hedging Approach Hedging Strategy

* Example

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Investment Grade Rating

  • S&P (BBB-, stable outlook) – Apr. 17
  • Moody’s (Baa3, stable outlook) – Aug. 17
  • Scope (BBB-, stable outlook) – Nov. 16

Unburdened fleet

  • ~ 90% of fleet owned
  • vs. 10% leased
  • ~75% of fleet

financially unencumbered (not used as security for financing deals) Attractive Debt Financing

  • December 2016: 1.2bn EUR promissory notes

(maturity: 5, 7 and 10 years)

  • April 2017: 372m EUR aircraft financing

(Japanese Operating Leases)

4.5 2.8 2016 1.1 3.2 2015 0.8 3.4 2014

  • 0.3

2.0 2013 1.3 3.3 2012 1.4 2.8 9M 17 Free Cash Flow Operating Cash Flow

15.5 bn €

leased

  • wned
  • wned &

unencumbered

The Lufthansa Group has access to attractive financing options Cash flow generation and balance sheet

Financial strength Sustainable free cash flow & high liquidity

Lufthansa Group‘s profitability Free cash flow generation

2016 1.8 1.8 2015 1.8 1.7 2014 1.2 1.5 2013 1.0 1.8 2012 0.7 1.8 9M 17 2.6 1.5

  • Adj. EBIT

Depreciation in bn EUR

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Page 33 Manufacturer / type LH LX OS LCAG EW SN Group Fleet Airbus A319 30 5 7 44 22 108 Airbus A320ceo 67 27 23 51 14 182 Airbus A320neo 8 8 Airbus A321 63 9 6 78 Airbus A330 19 16 6 6 47 Airbus A340 42 9 51 Airbus A350 5 5 Airbus A380 14 14 Boeing 737 Boeing 747 32 32 Boeing 767 6 6 Boeing 777 8 5 5 18 Boeing MD11F 12 12 Bombardier CRJ 34 1 35 Bombardier CSeries 12 12 Bombardier Q-Series 18 18 Avro RJ 3 3 Embraer 26 17 43 Fokker F70 Fokker F100 3 3 Total aircraft 340 86 85 17 102 45 675

Investments are focused on efficient and less complex fleet Fleet overview and capex plan

X 20 Airbus 350-900 36 Boeing 777 56 108 A320 Family 18 Bombardier CSeries Delivery schedule 2017 18 19 20 21 Aircraft type

Aircraft orders: long-haul

126

Aircraft orders: short-haul

Aircraft type Delivery schedule 2017 18 19 20 21

Lufthansa Group Fleet (as of 30 September 2017)

Thereof fleet invest ~ 2.7 FY 17 ~2.7 FY 16 2.1 2.2* FY 18 FY 19 ~ 2.7

(bn EUR)

Net invest Gross invest Aircraft to be phased-out

until 2025 777-9X from 2020 4 out of 15 a/c types to be phased

  • ut in 2016/17

until 2023 until 2025

Capital expenditure

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Page 34

  • Flexible funding model

no mandatory funding

  • Change of accounting standard

(IAS19R) and decreasing discount rate has lead to strongly increasing liabilities since 2012

  • Current sensitivity (based on

FY16 assumptions): increase in discount rate of 50bps decreases

  • bligation by c. 2bn EUR
  • Change of pension system from

defined benefit to defined contribution model for German ground staff (new entrants) and cabin crews achieved

  • Agreement with pilots’ union:

reduction of transitional payment period and pension change from DB to DC will significantly reduce pension deficit

Pension system change to reduce pension deficit and volatility Pension obligations

Discount rate1

Development of discount rate and pension deficit Pension systematic

Q4 2017 Q3 2017 7.9 Q2 2017 8.1 Q1 2017 8.7 Q4 2016 8.4 Q3 2016 10.5 Q2 2016 10.8 Q1 2016 8.1 2015 6.6 2014 7.2 2013 4.7 2012* 5.82 2011 2.2 2010 2.6 2009 2.7 2008 2.4 2007 2.5 2006 3.8 2005 4.0 5.2

Pension provisions

1 for German and Austrian pensions; based on AA-rated European corporate bonds; 2 restated figures;

3 assuming stable discount rate as well as 1.6bn EUR of liquidity reserved for pension funding from the cabin deal and 1.1bn EUR from the pilot deal

Implementation

  • f IAS19R

4.25% 4.50% 5.50% 6.00% 5.50% 5.00% 4.50% 3.50% 3.75% 2.60% 2.80% 2.40% 1.60% 1.50% 2.10% 2,00% 2,10% 2,10%

0% 1% 2% 3% 4% 5% 6% 7%

3

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Shareholders to participate through established dividend policy Dividend payment and policy

2007 2008 2009 2010 2011 2012 2013 2014 Financial year

Year of payout

Dividend Policy

EBIT 10 - 25% Local GAAP result = max. payout Base Pay-out Restriction

2015

Continuous dividend payments

Target

2,000 1,500 1,000 500 2016 2015 2014 2013 2017 2012 2011 2010 2009 2008

2.0bn EUR since 2008

Optional scrip dividend

2016

~ 3%

average dividend yield p.a. since 2008

Source: Annual Reports Lufthansa Group

Cumulative Dividend Payments in m EUR

1

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Page 36

Appendix – Financial KPIs–

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Page 37

WACC is based on a target capital structure of 50:50 WACC of 4.2% from FY 2017 onwards

Cost of Debt1 Cost of Equity2 1.7% (FY 2017) 6.8% (FY 2017) Target Capital Structure 50 : 50 WACC: 4.2%

1 Currently no consideration of tax shield 2 Cost of Equity FY 2017 = Risk-free market interest rate of 1.2% + (Market risk premium of 5.1% x Beta Factor 1.1)

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Current capital employed is ca. 20.3 bn EUR Weighted average cost of capital was 4.8%

Balance Sheet Total 29,108 30,474 32,462 34,697 ./. Non-Interest Bearing Liabilities 11,563 12,890 13,657 13,657

  • liabilities from unused flight documents

2,635 2,848 2,901 3,040

  • trade payables, other fin. liabilities, other provisions

5,113 5,151 5,605 5,464

  • adv. payments, deferred income, other non-fin. liabilities

2,151 2,103 2,141 2,121

  • others

1,664 2,798 3,010 3,811 Capital Employed at year-end 17,545 17,584 18,805 20,261 Average Capital Employed 17,582 17,565 18,195 19,533 WACC 6.2% 5.9% 5.9% 4.8% EBIT 936 1,000 1,676 2,275 Interest on liquidity 67 84 186 64 Taxes

  • 251
  • 271
  • 466
  • 585

Cost of capital

  • 1,090
  • 1,036
  • 1,073
  • 937

EACC

  • 338
  • 223

323 817 ROCE 4.3% 4.6% 7.7% 9.0%

19.533 18.195 17.565 17.545

2016 2015 2014 2013 6.2% 5.9% 5.9% 4.8% WACC

Average Capital Employed