[PPT] - Lufthansa Group Conference & Roadshow Presentation Continued PowerPoint Presentation

SLIDE 1

Lufthansa Group

Conference & Roadshow Presentation

August 2018

Continued good development in Q2 – strong operational performance  Adj. EBIT down 35m EUR, affected by one-off integration costs at Eurowings  Network Airlines more than offset higher fuel costs, Adj. EBIT +40m EUR  Cargo, MRO and Catering Adj. EBIT up 69m EUR; margins increase Unit revenues increase as unit costs continue to come down  Stable load factor on growing capacity, cc yields rise 1.1%  Q2 cc RASK +1.3% (Network Airlines +1.3%, Eurowings +3.6%)  Q2 cc CASK -0.7% (Network Airlines -2.3%, Eurowings +7.7% due to one-off costs) Adjusted EBIT 2018 still expected to be slightly below previous year  c. 8% total ASK growth (reduced from 8.5% as of last guidance)  RASK now assumed to be slightly up in the full year (up from “roughly stable”)  CASK down 1% despite Eurowings one-offs and industry-wide challenges  Fuel costs expected to increase c. 850m EUR compared to prior year

SLIDE 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 of 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 of 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 obligation 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

Page 3

Market participants benefit from improving industry dynamics
Airline industry increasingly profitable, driven by more discipline and consolidation
Consolidation in Europe still in early stages but gaining momentum
Lufthansa Group financials improve due to consistent implementation of strategy
All relevant financial metrics improve continuously
Multiple focus areas to increase through-the-cycle-profitability
Continued good development in Q2 2018 after another record year 2017
Adj. EBIT Q2 18 only slightly below last year despite Eurowings one-off costs; net debt decreases further
Adj. EBIT 2017 of 3.0bn EUR, free cash flow doubles, net financial debt stable; pension liabilities down 3.5bn EUR
Profit guidance unchanged: Adjusted EBIT 2018 expected to be slightly below previous year
Total ASK growth of c. 8%; RASK slightly up in full year; CASK down c. 1%
Additional fuel cost of c. 850m EUR; profit contribution from Aviation Services slightly below last year

SLIDE 4

6%
4%
2%

0% 2% 4% 6% 8% 10%

30
20
10

10 20 30 40 50 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17e '18e

Net profit EBIT Margin

Performance of the airline industry is constantly improving Long-term EBIT margin and ROIC development

Page 4

Global Commercial Airline Profitability

Source: IATA World Air Transport Statistics

Return on Invested Capital

Major Drivers: Increasing consolidation Clear strategic positioning of airlines More rational management teams

00% 02% 04% 06% 08% 10% 12% '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17e '18e

Return on capital (ROIC)

SLIDE 5

Industry consolidation is a major driver Degree of consolidation in US and EU

Page 5

‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘96 ‘16 ‘17 ‘18 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘96 ‘16 ‘17 ‘18 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘96 ‘16 ‘17 ‘18 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘96 ‘16 ‘17 ‘18

US EU

American Airlines TWA America West U.S. Airways American Airlines Delta Northwest Delta United Continental United Continental Southwest AirTran Southwest Jetblue Jetblue Swiss Austrian Lufthansa Air France KLM Air France KLM British Airways Iberia Vueling Aer Lingus International Airlines Group Ryanair Ryanair Easyjet Easyjet Sabena Brussels Airlines Lufthansa Group Air Berlin

Partly

44%

Top 5 EU carriers reach 44% market share in terms of ASK

85%

Top 5 US carriers reach 85% market share in terms of ASK US EU Market share

33%

2007 2017

65%

2007 2017

Source: FLASH Flight data statistics

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Market participants benefit from improving industry dynamics
Airline industry increasingly profitable, driven by more discipline and consolidation
Consolidation in Europe still in early stages but gaining momentum
Lufthansa Group financials improve due to consistent implementation of strategy
All relevant financial metrics improve continuously
Multiple focus areas to increase through-the-cycle-profitability
Continued good development in Q2 2018 after another record year 2017
Adj. EBIT Q2 18 only slightly below last year despite Eurowings one-off costs; net debt decreases further
Adj. EBIT 2017 of 3.0bn EUR, free cash flow doubles, net financial debt stable; pension liabilities down 3.5bn EUR
Profit guidance unchanged: Adjusted EBIT 2018 expected to be slightly below previous year
Total ASK growth of c. 8%; RASK slightly up in full year; CASK down c. 1%
Additional fuel cost of c. 850m EUR; profit contribution from Aviation Services slightly below last year

SLIDE 8

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

Page 8

Flexibilization

Strategic focus topics

Consolidation Digitalization

Invest steadily Stay competitive Shape and lead the industry Grow the business Aspirations

Cost Reduction

Employees Shareholders Customers

#1

… and others

Network Airlines: #1 in Europe Eurowings: #1 in home markets Aviation Services: #1 world-wide

SLIDE 9

3bn EUR Adj. EBIT Continuous unit cost reduction Dividend up 60%

Balancing stakeholders’ interests is key to our success Drivers of record results in 2017

Page 9

Long lasting labor agreements 3,000 new jobs in 2017, revenue per FTE +7% Leaner management structure New digital customer services Lufthansa: 5 Star Airline LH, LX, OS: Best three European Airlines

Employees Shareholders Customers

#1

1

SLIDE 10

Three key themes to develop strategic pillars of the group Key areas of action

Page 10

Digitalization Flexibilization

Expansion of market position through growth (organic & inorganic) will redesign the structure of the airline industry New business models and digital solutions will determine Lufthansa Group’s position in the airline industry Efficient and flexible forms of organization and new production logic will determine the way of working within the Lufthansa Group. Cost focus remains key to sustainable success

Consolidation

SLIDE 11

Focus on value creation Financial strategy

Sustainable value generation
Strict cost management

Focus KPIs

Adj. ROCE
Adj. EBIT Margin
Continuous shareholder

participation

Balanced investment level
Tight working capital management
Dividend
Capital expenditure
Stable investment grade rating
Hedging of financial risks
Access to different forms of funding
Securing appropriate liquidity
Adj. Net Debt / Adj. EBITDA

Targets

Target 2017

Adj. ROCE

constantly increasing through the cycle 11.6%

Adj. EBIT Margin

8.4%

Target 2017

Dividend

10 – 25%

f EBIT

11.4 % Capex in line with best-in-class peers 3.0bn EUR

Target 2017

Adj. Net Debt /
Adj. EBITDA

< 3.5 x 1.7 x

Improve Profitability
Focus Capital Allocation
Maintain Financial Stability

Page 11

SLIDE 12

Lufthansa Group profits reach new highs Development of financial KPIs

Page 12

20 million more passengers Unit cost1 down 0.4% 1.8bn EUR value created (EACC) Adjusted EBIT up 70% Revenues increase 12%

986 2017

2,973

2016

1,752

2015 1,817 2014 1,171 2013

+70%

817

323

223
338

2016 2015 2014 2013 2017

1,758

+1bn

2017

130

2016

110

2015 108 2014 106 2013 105

+20m

2017

35.6

2016

31.7

2015 32.1 2014 30.0 2013 30.0

+12%

0.4%

Dividend increased by 60%

2017

0.80

2016

0.50

2015 0.50 2014 0.00 2013 0.45

+60%

1 constant currency CASK excl. fuel

2017

6.5

2016

6.5

2015 7.0 2014 6.5 2013 6.6

SLIDE 13

Multiple levers in place to further improve financial performance Key value drivers in focus

Page 13

Revenue Cost Capital Employed

Improve

Profitability

Focus Capital

Allocation

Maintain

Financial Stability

Premium positioning Continuous cost focus

(CASK down 1% - 2% per annum)

Active market consolidation / Growth in Point-to-Point Cultural change Process orientation Joint Ventures Fleet (Harmonization; new & efficient aircraft; used aircraft) Development of Aviation Services Labor agreements Capital Allocation Distribution strategy New Products & Services

(e.g Internet on board)

25% management positions

3 4 5 6 7 8

Optimization of working capital

Financial Strategy

1 2

SLIDE 14

LH Group best positioned to benefit from European market specifics Superior home markets define premium positioning

Page 14

Very attractive home markets…

GER AT CH BE

Strong premium corporate and leisure demand:
Stable and export oriented economies
Low unemployment
Highly diversified industries
Low cyclicality
Decentral structure
At the same time these markets do not

support cost leadership:

E.g., labor and infrastructure cost
Relatively high share of transfer passengers
Limited possibility to outsource production to lower cost

countries for airlines

…define premium positioning

In nearly all markets 5 Star Airline

#1

“our product needs to be at least as much better than it is more expensive” Most dense network Highest share

f premium

seats Most digital airline Partner of choice for JVs

1

SLIDE 15

Unit cost to be reduced between 1% and 2% every year Key cost drivers 2018

Page 15

Being awarded quality and reducing cost at the same time are not mutually exclusive

1% to 2% CASK reduction every year

Labour deal Cabin Crews

(structural cost improvement)

Labour deal Pilots

(150m EUR cost reduction)

Short term savings + strategic dialogue

(two-digit million Euro initial cost reduction)

New aircraft

(c. 20% less operating cost each)

Optimizing MRO cost

(low three-digit million euro benefit over next few years)

Lower distribution cost

(increasing share of direct sales)

Reorganization

(200m EUR profit contribution)

SLIDE 16

Distributive freedom to increase revenues Rationale for the new distribution strategy

Page 16

Price curve (illustrative)

Background

Full content agreement expired in April 2015
Loss of discount related to global distribution system
16 EUR distribution cost charge for bookings via GDS
Neutral effect on bottom line

Benefits

No limitation to 26 pricing points anymore (GDS Technology)
Unlimited price points = optimized revenue ( )
More direct distribution = stimulated demand ( )

(ancillaries and personalized offers)

Development so far

Direct distribution: from 30% to now more than 40% (2015 vs. H1

2018)

Positive results of dynamic revenue mgmt. on test routes
Neutral bottom line effect from introduction of DCC
SWISS with new website first;

Lufthansa and Austrian Airlines to follow later

Currently untapped revenue potential

(Dynamic revenue management with unlimited pricing points)

Distributive freedom

Price point

(26 letters of the alphabet)

Upward shift of the price curve

(Increasing sales of ancillary and personalized fares)

Price Booking classes

3

SLIDE 17

Reorganization allows for better steering and leverages synergies Key building blocks of the reorganization

Page 17

Reduction of management positions by 25% Process-orientation to leverage synergies

New Management levels

Previously Now

FRA MUC ZRH VIE

Sustainable profit contribution

Commercial Management Finance, HR Admin, IT

500 300 100 2018 2017 2016 2019

Fleet and technical asset management
Network and revenue management
Sales and distribution
Product development
Operations

Processes

(Examples)

4

SLIDE 18

X 19 Airbus 350-900 38 Boeing 777 5 Airbus 330 119 A320 Family (incl .NEO) 15 Bombardier CSeries

Modern and less complex fleet as driver of cost reduction Fleet overview

Page 18

5

Efficient and modern fleet Lufthansa Group Fleet Strategy

Successful phase-in of C Series, A320neo and A350 Ø -20% cash operating costs 111 additional aircraft in 2017 Reduced number of short-haul aircraft types from 9 to 3 at LGA between 2012 and 2017

323 287 274 268 263 260 258 234 728 617 600 615 622 627 696 710 2014 2013 2017 2016 2015 2012 2011 2010

# of aircraft ASK (bn)

+ 0.4% + 4.7%

Delivery schedule 2018 19 20 21 22 Aircraft type

Long-haul Short-haul

Aircraft type Delivery schedule 2018 19 20 21 22

until 2025 777-9X from 2020 until 2023 until 2025

134

Historic fleet development

Less complexity from reduction of fleet diversity
Acquisition of used aircraft
Optimization of age structure
High cyclical flexibility through owned aircraft

62

SLIDE 19

Long-term labor agreements achieved Overview

Page 19

6

Wage agreement until 30 June 2022 30 June 2019 30 September 2020 Salary increases 01/01/2018 +2.00% 01/04/2018 +1.20% 01/04/2019 +1.40% 01/04/2020 +1.55% 01/04/2021 +1.75% 01/02/2018 +3.00% 01/05/2019 +1.80% to +3.00% Pensions

Defined contribution for

existing staff and new entrants

Defined contribution for

existing staff and new entrants

Shortened transitional pension

scheme

Defined contribution for

new entrants and existing non-tariff employees

Possible change to defined

contribution for existing staff Other

Cabin unit cost monitoring

implemented

Conflict resolution mechanisms

agreed

Productivity increased
Revised pay structure for

new entrants

Commitment to 325 aircraft
perated under new agreement
Wage increase in Jan. 2019

depending on financial result 2018 (per business unit)

SLIDE 20

HAM HAJ CGN DTM DUS STR TXL NUE VIE SZG MUC BRU 8 (+2) 10 (+3) 16 (+2) PMI 20 (+6) 23 (+4) 52 (+0) 9 (+2) 38 (+10)

Eurowings: Strong growth in home markets and focus on operations Established as leading point-to-point airline

Page 20

Operational ramp-up CASK1 development

Eurowings is successfully growing through inte-

gration of former AB Group assets, especially LGW

Hiring crews and contracting wet lease providers

(e.g. TuiFly, Laudamotion amongst others)

Brussels Airlines as “Center of Excellence” for

long-haul flights, new operation from DUS

Eurowings growth in home markets

2015 ~80

2017 152

2016 ~90

2018 ~210 Growth path aircraft # based EW aircraft Summer ’18 vs. ’17 (Plan)

5% p.a.

FC 2019 FC 2018 2017 2016 FC 2020

1 underlying CASK; in particular 2018 will be burdened by

project and integration costs

SLIDE 21

Aviation Services: Current development and outlook Highlights

Page 21

Successful turnaround, profit improvement
f approx. 300m EUR vs. PY
Targeted investments into high yield

product categories

First airline customers for Digital Platform

AVIATAR acquired

Partnership models integrated into

global network (GE, MTU, Honeywell)

Roll-out predictive maintenance capability using

AI for AVIATAR Platform

Broaden global footprint through accretive

acquisitions and new aircraft types (e.g. 737 MAX)

Strong demand situation continues in 2018
Restructuring program “C40” ahead of plan,

to be completed in 2018

Transformation of LSG Europe in

implementation

Retail in Motion strengthens its

leading market positioning in Onboard Retail

Central production sites:
perational setup in Europe
Further growth of Onboard Retail, In-flight

Equipment and Convenience Retail business Outlook Current developments

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SLIDE 23

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Market participants benefit from improving industry dynamics
Airline industry increasingly profitable, driven by more discipline and consolidation
Consolidation in Europe still in early stages but gaining momentum
Lufthansa Group financials improve due to consistent implementation of strategy
All relevant financial metrics improve continuously
Multiple focus areas to increase through-the-cycle-profitability
Continued good development in Q2 2018 after another record year 2017
Adj. EBIT Q2 18 only slightly below last year despite Eurowings one-off costs; net debt decreases further
Adj. EBIT 2017 of 3.0bn EUR, free cash flow doubles, net financial debt stable; pension liabilities down 3.5bn EUR
Profit guidance unchanged: Adjusted EBIT 2018 expected to be slightly below previous year
Total ASK growth of c. 8%; RASK slightly up in full year; CASK down c. 1%
Additional fuel cost of c. 850m EUR; profit contribution from Aviation Services slightly below last year

SLIDE 24

Good operating performance largely offsets fuel cost and fx pressures Q2 2018 operating KPIs and key profit figures at a glance

Page 24

Aviation Services

in m EUR

Q2 ‘18

vs. Q2 ‘17

H1 ‘18

vs. H1 ‘17

Revenue 9,298 +0.4%3 16,938

0.1%4

EBIT 983

3.2%

1,010

2.0%

Adjusted EBIT 982

3.4%

1,008

3.3%

Net income 734

0.8%

677 +0.7%

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

Consolidation

3 +5.8% excl. IFRS 15 adjustment 4 +5.2% excl. IFRS 15 adjustment

Q2 ‘18 H1 ’18

ASK +7.8% +8.2% RASK

(constant currency)

+1.3% +1.3% CASK

(constant currency; ex-fuel)

0.7%
0.6%

Fuel cost (m EUR)1

(year-on-year)

+205 +216

in m EUR

Q2 ‘18 H1 ‘18

Adj. EBIT2

141 256

Δ year-on-year

24
106
2.3% unit cost reduction at

Network Airlines in Q2 above initial expectations

Eurowings suffers from

EUR 50m one-off costs related to integration of former Air Berlin

perations and operational

challenges (H1: c. 120m EUR)

Logistics, MRO and Catering grow their

profits

Others unit swings to loss due to non-

recurrence of currency gains in ‘17

Passenger Airlines

SLIDE 25

Cash flow generation remains strong despite higher investments Key balance sheet and cash flow figures at a glance

Page 25

Network Airlines Eurowings Aviation Services

Cash Flow in m EUR H1 ‘18

vs. H1 ‘17

Operating cash flow 3,018

6.4%

Gross investments1 1,927 +37.9% Free cash flow 977

53.5%

Balance Sheet in m EUR H1 ‘18

vs. FY ‘17

Net financial debt 2,554

11,4%

Pension provisions 5,418 +5.9% Equity ratio 25.0%

1.5pts.

Financial Stability in m EUR Q3 ’17 –Q2 ’18

vs. FY ‘17

Adjusted Net Debt/ Adjusted EBITDA 1,6x

0.1x

1 Excluding cash-outs from equity investments

SLIDE 26

Q2 H1

660

+71

1,301

+143

60

+15

125

+47

9.1%

+1.5pts.

9.6%

+2.9pts.

Network Airlines and Logistics drive growth and margin improvement Segment overview Q2 and H1 2018

in m EUR

Network Airlines

Q2 H1 Q2 H1 Q2 H1 Q2 H1

Revenue1

vs. 2017

5,940

228

10,668

429

4,154

204

7,494

346

1,242

+32

2,303

+32

612

39

1,008

83
Adj. EBIT
vs. 2017

837

+40

951

+194

577

4

660

+91

194

+42

293

+106

64

+2

3
6
Adj. EBIT Margin1
vs. 2017

14.1%

+1.2pts.

8.9%

+2.1pts.

13.9%

+0.6pts.

8.8%

+1.5pts.

15.6%

+3.1pts.

12.7%

+4.5pts.

10.5%

+1.0pts.

0.3%
0.6pts.

Q2 H1

1,142

+53

1,935

+163

4

51
199
122

0.4%

4.7pts.
10,3%
6.0pts.

Eurowings2

Q2 H1

1,424

+125

2,852

+98

115

+30

218

4

8.1%

+1.6pts.

7.6%

0.4pts.

Q2 H1

830

+2

1,552

45

39

+24

40

+27

4.7%

+2.9pts.

2.6%

+1.8pts.

Logistics MRO Catering

Page 26

in m EUR

Revenue

vs. 2017
Adj. EBIT
vs. 2017
Adj. EBIT Margin
vs. 2017

1 Includes IFRS 15 impact, adjusted numbers on page 13 of this presentation 2 Includes Eurowings, Brussels Airlines and equity stake in SunExpress

Others & Consolidation

Q2 H1

698

+15

1,370

+57

73
93
127
176

nmf. nmf.

SLIDE 27

Negative mix effect impacts yields in Europe,

performance stable on an underlying basis

Capacity expansion and yield increase go

hand-in-hand in key North Atlantic business

Asia holds up well after prior year records

+3.9% North America +1.9%

0.2% South America
0.6%

Strong yield performance in North Atlantic business Operating KPIs Passenger Airlines

Page 27

Q2 ‘18 Q2 ‘18 Q2 ‘18

1.6%

+2.3pts. +11.4%

3.8%
0.7 pts.

+4.3% +3.0%

0.9 pts.

+7.2%

ASK SLF Yield excl. currency

+1.0% +0.5 pts. +6.3%

H1 ‘18 H1 ‘18 H1 ‘18

0.9%

+2.2 pts. +12.7%

0.1%
1.1 pts.

+5.3%

Q2 ‘18 H1 ‘18

+0.1%

1.9 pts.

+4.3%

5.0%

+1.1 pts. +5.2% +1.1% 0.0 pts. +7.8%

Q2 ‘18 H1 ‘18

+0.7% +1.1 pts. +8.2%

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Market participants benefit from improving industry dynamics
Airline industry increasingly profitable, driven by more discipline and consolidation
Consolidation in Europe still in early stages but gaining momentum
Lufthansa Group financials improve due to consistent implementation of strategy
All relevant financial metrics improve continuously
Multiple focus areas to increase through-the-cycle-profitability
Continued good development in Q2 2018 after another record year 2017
Adj. EBIT Q2 18 only slightly below last year despite Eurowings one-off costs; net debt decreases further
Adj. EBIT 2017 of 3.0bn EUR, free cash flow doubles, net financial debt stable; pension liabilities down 3.5bn EUR
Profit guidance unchanged: Adjusted EBIT 2018 expected to be slightly below previous year
Total ASK growth of c. 8%; RASK slightly up in full year; CASK down c. 1%
Additional fuel cost of c. 850m EUR; profit contribution from Aviation Services slightly below last year

SLIDE 30

Lufthansa Group confirms operating profit guidance Full year 2018 outlook

Page 30

1 Includes Logistics, MRO, Catering, Others and Consolidation

Forecast

c. +8%

Capacity Growth

(ASK, organic and inorganic)

slightly positive

Unit Revenue

(RASK, ex. currency)

c. -1%

Unit Cost

(CASK, ex. currency, ex. fuel)

additional cost of c. 850m EUR

Fuel

(compared to previous year)

slightly below previous year

Group Adjusted EBIT

Group Airlines

Adjusted EBIT Aviation Services

(compared to previous year)

slightly below previous year

SLIDE 31

Group Adjusted EBIT expected to be “slightly below previous year” Forecast 2018 by segments and units

Page 31

Segment

Adj. EBIT 2017 (m EUR)
Adj. EBIT Forecast for 2018

Lufthansa German Airlines 1,627 slightly below previous year SWISS 542 broadly stable Austrian Airlines 94 slightly below previous year Network Airlines 2,263 slightly below previous year Eurowings 94 negative Logistics 242 slightly below previous year MRO 415 broadly stable Catering 66 slightly above previous year Other

130

below previous year Internal Revenue / Reconciliation 23 Lufthansa Group 2,973 slightly below previous year

SLIDE 32

Passenger Airlines expand capacity in a consolidating market Lufthansa Group capacity growth 2018 by region

Page 32

All capacity plans indicative and subject to change

Total growth incl. inorganic growth1

8% 6% FY ’18 H1 ’18

1 Growth through Air Berlin insolvency

Status: July 2018 FY ’18 12% H1 ’18 13% 5% 5% H1 ’18 FY ’18 6% 5% FY ’18 H1 ’18 8% 9% ASK Landings 8% 9% ASK Landings

H1 ‘18 FY ‘18

SLIDE 33

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

Fuel costs expected to increase by c. 850m EUR in 2018 Fuel forecast and sensitivities FY 2018

Page 33

As of 30 June 2018 1 incl. fuel hedging and into-plane charge 2 Incl. Brussels Airlines

3 Incl. inorganic growth indication

Lufthansa Group fuel expenses after hedging (in bn EUR)

FY 172 FY 183 Q1 18 Q2 18 Q3 18 Q4 18

Fuel hedging level

78% 78% 79% 78% 78% 77%

Exp.volume (m tons)

10.2 10.9 2.4 2.8 3.0 2.7

Hedged Jet fuel price (USD/t)1

578 661 639 654 655 685

EUR/USD (forward)

1.13 1.19 1.23 1.19 1.16 1.16

Brent forward (USD/bbl)

55 75 67 75 79 78 1.6 1.3 1.7 1.4 1.6 1.4 1.2 1.2 6.1 5.2 2018e 2017

Lufthansa Group price curve for 2018

Market price in USD/barrel Price paid in USD/barrel Hedging result Hedging result Market price: 75 USD/bbl LH price: 64 USD/bbl Hedging result : +11 USD/bbl LH price 2018 Market price

Sensitivities

(deviating oil price) 6.3 (+20%) 6.2 (+10%) 6.0 (- 10%) 5.8 (- 20%)

SLIDE 34

Lufthansa Investor Relations Contact

Page 34

Dennis Weber, Head of Investor Relations Phone: +49 (0) 69 696 28000 E-mail: dennis.weber@dlh.de Deutsche Lufthansa AG Investor Relations / FRA CW Lufthansa Aviation Center Airportring D-60546 Frankfurt

Phone: +49 (0) 69 696 28000 Fax: +49 (0) 69 696 90990 E-mail: investor.relations@dlh.de lufthansa-group.com/investor-relations

Phuc-Thi Thai, Investor Relations Manager Phone: +49 (0) 69 696 28003 E-mail: phuc-thi.thai@dlh.de Frédéric Depeille, Investor Relations Manager Phone: +49 (0) 69 696 28013 E-mail: frederic.depeille@dlh.de

SLIDE 35

Page 35

Appendix

SLIDE 36

Lufthansa Group

1,071.5

Eurowings

283.7

Adoption of IFRS 15 reduces revenues and costs Profit & Loss effect of IFRS 15

Page 36

Structural improvement of Adj. EBIT margin around 0.4 pts.1

IFRS 15 relates to the accounting of revenues arising from contracts with customers
Netting of revenues and related expenses required in some cases (e.g. ticket related taxes, airport fees)

Context Effect on Lufthansa Group

P&L

IFRS 15 will be applied prospectively, thus no adjustment for previous years will be made. A note in the appendix of the 2018 Annual Accounts will quantify the like for like development Revenues and costs: ► Both reduced in absolute terms ► RASK (c. –8%); CASK (c. –10%) ► EBIT remains unaffected, thus higher EBIT Margin

in m EUR

Lufthansa German Airlines

615.5

Swiss

32.0

Austrian Airlines

140.3

Network Airlines

787.8

IFRS 15 effect in H1 ’18

n traffic revenue and fee expenses

1 Calculated for FY 2017

SLIDE 37

Q2 H1

660

+71

1,301

+143

60

+15

125

+47

9.1%

+1.5pts.

9.6%

+2.9pts.

Passenger Airlines and Cargo drive growth and margin improvement Segment overview Q2 and H1 2018 – excluding IFRS 15 effect

in m EUR

Network Airlines

Q2 H1 Q2 H1 Q2 H1 Q2 H1

Revenue

vs. 2017

6,365

+197

11,456

+359

4,489

+131

8,110

+270

1,265

+55

2,335

+64

678

+27

1,148

+57

Adj. EBIT
vs. 2017

837

+40

951

+194

577

4

660

+91

194

+42

293

+106

64

+2

3
6
Adj. EBIT Margin
vs. 2017

13.2%

+0.3pts.

8.3%

+1.5pts.

12.9%

0.4pts.

8.1%

+0.8pts.

15.3%

+2.7pts.

12.5%

+4.3pts.

9.4%

0.1pts.
0.3%
0.6pts.

Q2 H1

1,307

+218

2,219

+447

4

51
199
122

0.3%

4.7pts.
9.0%
4.7pts.

Eurowings1

Q2 H1

1,424

+125

2,852

+98

115

+30

218

4

8.1%

+1.6pts.

7.6%

0.4pts.

Q2 H1

830

+2

1,552

45

39

+24

40

+27

4.7%

+2.9pts.

2.6%

+1.8pts.

Logistics MRO Catering

Page 37

in m EUR

Revenue

vs. 2017
Adj. EBIT
vs. 2017
Adj. EBIT Margin
vs. 2017

1 Includes Eurowings, Brussels Airlines and equity stake in SunExpress

Others & Consolidation

Q2 H1

698

+15

1,370

+57

73
93
127
176

nmf. nmf.

SLIDE 38

Operating costs and revenues Q2/H1 2018 vs. Q2/H1 2017

Page 38

Lufthansa Group (in m EUR)

Q2 ‘18

vs. Q2 ‘17

Total revenue 9,298 +0.4% Other operating income 469

23.5%

Total operating income 9,767

1.1%

Operating expenses 8,824

0.8%

Non-fuel operating expenses 7,269

3.7%

Cost of materials and services 4,681

4.1%

Fuel expenses 1,555 +15.2% Fees and charges 1,144

31.1%

Staff costs 2,233 +0.9% Depreciation 452 +3.2% Other operating expenses 1,458 +7.0% Result from equity investments 40 +2 EBIT 983

32

Adjustments

1
3

Adjusted EBIT 982

35

H1 ’18

vs. H1 ‘17

16,938

0.1%

874

25.6%

17,812

1.7%

16,845

1.7%

14,069

3.5%

8,764

5.4%

2,776 +8.4% 2,166

29.1%

4,339 +1.0% 898 +4.4% 2,844 +4.8% 43

1

1,010

21
2
13

1,008

34
Excluding IFRS 15, “Total
perating income“ would

have increased by 4.9% versus Q2 ’17 (+4.2% vs. H1 ’17)

Excluding IFRS 15, “Fees

and charges“ would have increased by 4.4% versus Q2 ’17 (+6.0% vs. H1 ’17)

SLIDE 39

Lufthansa Group (in m EUR)

H1‘18

vs. H1 ‘17

EBT (earnings before income taxes) 955 +73 Depreciation & amortization (incl. non-current assets) 907 +5 Net proceeds from disposal of non-current assets

2

+25 Result of equity investments

43

+1 Net interest 85

48

Income tax payments/reimbursements

92

Significant non-cash-relevant expenses / income

111
114

Change in trade working capital 1,610 +63 Change in other assets / liabilities

291
213

Operating cash flow 3,018

208

Capital expenditure (net)

2,041
915

Free cash flow 977

1,123

Cash and cash equivalents as of 30.06.181 1,286

229

Current securities 2,570

1,832

Total Group liquidity 3,856

2,061

Cash flow statement H1 2018 vs. H1 2017

Page 39

FY 2016 3.2 FY 2015 3.4 FY 2014 2.0 H1 2018 3.0 FY 2017 5.0 Operating Cash flow H1 2018 1.0 FY 2017 2.3 FY 2016 1.1 FY 2015 0.8 FY 2014

0.3

Free Cash flow H1 2018 2.0 1.9 FY 2017 2.8 3.1 FY 2016 2.1 2.2 FY 2015 2.6 2.6 FY 2014 2.3 2.8 Net invest Gross invest

1 Excluding fixed-term deposits with terms from three to twelve months (2018: 248m EUR, 2017: 201m EUR) 2 2 2 Excl. cash-outs from equity investments

SLIDE 40

Group revenue bridge H1 2018 vs. H1 2017

Page 40

301 H1 2018 3,782 13,156 Currency: -3.5%

470

Price: +2.3% Volume: +8.4% 1,104 IFRS 15 adj.: -8.1%

1,072

H1 2017 3,658 13,293 ∑ Group revenue (-0.1%) ∑ 16,951 ∑ 16,938 in m EUR Traffic revenue (-1.0%) Other revenue (+3.4%)1

1 Including positive 180m EUR IFRS 15 effect from reclassification of LAT and AirPlus commisions from other operating income into other revenue

SLIDE 41

Fuel cost bridge H1 2018 vs. H1 2017

Page 41

+771 Volume

429

H1 2017 Price 2,560 +146 2,776 H1 2018 Currency

272

Hedging Hedging result by quarter (in m EUR) Q1 Q2 Q3 Q4 FY (YTD) 2017

30
63
93

2018 107 229 336

Change versus previous year

in m EUR +216

SLIDE 42

EBIT and Adjusted EBIT by quarter 2018

Page 42

in m EUR Q1 Q2 Q3 Q4 6M 9M FY

EBIT

27 983 1,010

pension changes +2

1

+1 book gains / losses on asset disposals

3

+2

1

impairments gains / losses // badwill

2
2
Adj. EBIT

26 982 1,008

interest on liquidity taxes (25% lump sum) cost of capital

EACC

average capital employed WACC

ROCE (after tax)

Adj. ROCE (after tax)

SLIDE 43

EBIT and Adjusted EBIT by quarter 2017

Page 43

in m EUR Q1 Q2 Q3 Q4 6M 9M FY

EBIT

16 1,015 1,404 875 1,031 2,435 3,310

pension changes +32 +9

592

+32 +41

551

book gains / losses on asset disposals

23
5
6
3
28
34
37

impairments gains / losses // badwill +7 +111 +133 +7 +118 +251

Adj. EBIT

25 1,017 1,518 413 1,042 2,560 2,973

interest on liquidity +178 taxes (25% lump sum)

872

cost of capital

858

EACC

1,758

average capital employed 20,441 WACC 4.2%

ROCE (after tax)

12.8%

Adj. ROCE (after tax)

11.6%

SLIDE 44

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

Page 44

Full Investment Grade Rating

Standard & Poor’s (BBB-, positive outlook) – Apr. 18
Moody’s (Baa3, stable outlook) – Aug. 17
Scope (BBB-, positive outlook) – Dec. 17

Unburdened fleet

~ 85% of fleet owned
vs. 15% leased
~75% of fleet

financially unencumbered (not used as security for financing transactions)

Attractive Debt Financing

Dec 2016 / Jan 2017: EUR 1.2bn “Schuldscheindarlehen”

(maturity: 5, 7 and 10 years; fix and floating tranches)

April 2017: 372m EUR aircraft financing (6 JOLs*)

H1 18 1.0 3.0 2017 2.3 5.0 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 Free Cash Flow Operating Cash Flow

16.9 bn €

leased

wned
wned &

unencumbered

Financial strength Sustainable free cash flow & high liquidity

Lufthansa Group‘s profitability Free cash flow generation

0.9 1.0 H1 18 2017 3.0 2.1 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 Depreciation

Adj. EBIT

in bn EUR *Japanese Operating Leases

SLIDE 45

Pension system change to reduce pension deficit and volatility Pension obligations

Page 45

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 FY17

assumptions): increase in discount rate of 50bps decreases obligation 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 significantly reduced pension deficit

Discount rate1

Development of discount rate and pension deficit Pension systematic

2016 8.4 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 5.4 2017 Q2 18 5.1

Pension provisions

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

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% 2.10% 2.00% 1.90%

0% 1% 2% 3% 4% 5% 6% 7% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Q2 18

SLIDE 46

20,441 19,533 18,195 17,565 2017 2016 2015 2014

Material improvement of capital returns Value creation

Page 46

Balance Sheet Total 30,474 32,462 34,697 36,297 ./. Non-Interest Bearing Liabilities 12,890 13,657 13,657 15,646

liabilities from unused flight documents

2,848 2,901 3,040 3,773

trade payables, other fin. liabilities, other provisions

5,151 5,605 5,464 5,989

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

2,103 2,141 2,121 2,281

others

2,798 3,010 3,811 3,603 Capital Employed at year-end 17,584 18,805 20,261 20,621 Average Capital Employed 17,565 18,195 19,533 20,441 WACC 5.9% 5.9% 4.8% 4.2% EBIT 1,000 1,676 2,275 3,310 Interest on liquidity 84 186 64 178 Taxes

271
466
585
872

Cost of capital

1,036
1,073
937
858

EACC

223

323 817 1,758 ROCE 4.6% 7.7% 9.0% 12.8%

Adjusted ROCE 5.4% 8.3% 7.0% 11.6%

5.9% 5.9% 4.8% 4.2% WACC

Average Capital Employed

SLIDE 47

WACC is based on a target capital structure of 50:50 WACC calculation

Page 47

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)

SLIDE 48

Americas Q2 '18 H1 '18 ASK +7.2% +6.3% RPK +6.0% +7.0% SLF

0.9pts.

+0.5% Yield

2.3%
4.3%

Yield ex currency +3.0% +1.0%

Operating KPIs of Passenger Airlines by region Q2 & H1 2018

Page 48

Total Q2 '18 H1 '18 Number of flights +8.3% +8.5% ASK +7.8% +8.2% RPK +7.9% +9.2% SLF +0.0pts. +0.8pts. Yield

1.8%
2.8%

Yield ex currency +1.1% +0.7% RASK

2.1%
2.4%

RASK ex currency +1.3% +1.3% CASK incl. fuel

1.1%
2.7%

CASK ex currency ex fuel

0.7%
0.6%

Europe Q2 '18 H1 '18 ASK +11.4% +12.7% RPK +14.6% +16.1% SLF +2.3pts. +2.2pts. Yield

3.2%
2.9%

Yield ex currency

1.6%
0.9%

North America +3.9% +1.9% South America

0.2%
0.6%

Asia/ Pacific Q2 '18 H1 '18 ASK +4.3% +5.3% RPK +2.0% +3.9% SLF

1.9pts.
1.1pts.

Yield

1.7%
4.0%

Yield ex currency +0.1%

0.1%

Middle East/ Africa Q2 '18 H1 '18 ASK +4.3% +5.2% RPK +3.3% +6.7% SLF

0.7pts.

+1.1% Yield

7.3%
8.7%

Yield ex currency

3.8%
5.0%

SLIDE 49

Page 49

Appendix

FY 2017 -

SLIDE 50

Positive unit revenue development despite strong growth in most regions Operating KPIs Passenger Airlines

Page 50

Q4 ‘17

1.6%

+2.0pts. +19.0% +1.7% +1.7pts. +22.9%

Q4 ‘17 FY ‘17

+1.2% +3.0pts +2.1% +0.6% +1.4pts. +5.0%

Q4 ‘17

9.9%

+2.2pts. +42.3%

8.2%

+2.4pts. +43.6%

Q4 ‘17

1 excl. currency

ASK SLF Yield1 RASK1

FY ‘17 FY ‘17 FY ‘17

0.6% 0.6% +1.4pts. +6.5% +0.5pts. 9.1% +0.4% +1.8pts. +1.9% +2.3% +1.8% +1.0pts. 15.7 12.7

Q4 ‘17 FY ‘17

0.6%

North America +1.0% +6.7% South America -0.2%

SLIDE 51

Positive RASK development despite high growth in most regions Operating KPIs Passenger Airlines

Page 51

Total Q4 '17 FY '17 Number of flights +14.7% +10.6% ASK +15.7% +12.7% RPK +17.2% +15.2% SLF +1.0pts. +1.8pts. Yield

1.1%
0.7%

Yield ex currency +1.8% +0.4% RASK

0.3%

+0.9% RASK ex currency +2.3% +1.9% CASK incl. fuel

1.6%
1.6%

CASK ex currency ex fuel +0.7%

0.4%

Europe Q4 '17 FY '17 ASK +22.9% +19.0% RPK +25.6% +22.2% SLF +1.7pts. +2.0pts. Yield +0.3%

2.4%

Yield ex currency +1.7%

1.6%

North America

0.6%

+1.0% South America +6.7%

0.2%

Asia/Pacific Q4 '17 FY '17 ASK +5.0% +2.1% RPK +6.9% +5.8% SLF +1.4pts. +3.0pts. Yield

2.6%
0.4%

Yield ex currency +0.6% +1.2% Americas Q4 '17 FY '17 ASK +9.1% +6.5% RPK +9.8% +8.3% SLF +0.5pts. +1.4pts. Yield

3.8%
0.6%

Yield ex currency +0.6% +0.6% Middle East/Africa Q4 '17 FY '17 ASK +42.3% +43.6% RPK +46.4% +48.1% SLF +2.2pts. +2.4pts. Yield

14.4%
9.5%

Yield ex currency

9.9%
8.2%

SLIDE 52

Airlines drive strong profit improvement Q4 and FY 2017 operating KPIs and key profit figures at a glance

Page 52

Network Airlines Point-to-Point Airlines Aviation Services

in m EUR

Q4 '17

vs. Q4 ‘16

FY '17

vs. FY ‘16

Revenue 8,818 +13.2% 35,579 +12.4% EBIT 875 nmf. 3,310 +45.5% Adjusted EBIT 413 +450.7% 2,973 +69.7% Net income 511 nmf. 2,364 +33.1%

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

Q4 ‘17 FY ‘17

ASK +15.7% +12.7% RASK

(constant currency)

+2.3% +1.9% CASK

(constant currency; ex-fuel)

+0.7%

0.4%

Fuel cost (m EUR)1

(year-on-year)

+104 +347

in m EUR

Q4 ‘17 FY ‘17

Adj. EBIT2

148 616

Δ year-on-year

+224 +315

SLIDE 53

High cash generation and stronger Balance sheet Key balance sheet and cash flow figures at a glance

Page 53

Network Airlines Point-to-Point Airlines Aviation Services

Cash Flow in m EUR FY ‘17

vs. FY ‘16

Operating cash flow 5,035 +55.1% Gross capex 3,005 +34.4% Free cash flow 2,253 +98,0%

Balance Sheet in m EUR FY ‘17

vs. FY ‘16

Net financial debt 2,884 +6.8% Pension provisions 5,116

38.8%

Equity ratio 26.5% +5.9 pts.

Adjusted ROCE (post-tax): 11.6% (+4.6 pts.)

SLIDE 54

Q4 FY

772

+170

2,524

+440

144

+125

242

+292

18.7%

+15.5pts.

9.6%

+12.0pts.

Passenger Airlines and Cargo drive growth and margin improvement Segment overview Q4 and FY 2017

in m EUR

Network Airlines

Q4 FY Q4 FY Q4 FY Q4 FY

Revenue

vs. 2016

5,622

+388

23,317

+1,453

3,974

+330

16,441

+1,029

1,159

+35

4,727

+256

544

+28

2,358

+205

Adj. EBIT
vs. 2016

316

+85

2,263

+708

222

+54

1,627

+537

100

+17

542

+137

6

+15

94

+36

Adj. EBIT Margin
vs. 2016

5.6%

+1.2pts.

9.7%

+2.6pts.

5.6%

+1.0pts.

9.9%

+2.8pts.

8.6%

+1.2pts.

11.5%

+2.4pts.

1.1%

+3.0pts.

4.0%

+1.3pts. Q4 FY

1,010

+512

4,041

+1,981

51

+29

94

+198

5.0%

+11.1pts.

2.3%

+7.3pts.

Point-to-Point Airlines1

Q4 FY

1,401

+66

5,404

+260

82

+37

415

+4

5.9%

+2.5pts.

7.7%

0.3pts.

Q4 FY

782

17

3,219

+25

24

66

38

0.0%

3.0pts.

2.1%

1.2pts.

Logistics MRO Catering

1 Includes Eurowings, Brussels Airlines and equity stake in SunExpress

Page 54

in m EUR

Revenue

vs. 2016
Adj. EBIT
vs. 2016
Adj. EBIT Margin
vs. 2016

SLIDE 55

Revenue increases faster than absolute costs in Q4 and FY 2017 Operating costs and revenues

Page 55

Lufthansa Group (in m EUR)

Q4 ‘17

vs. Q4 ‘16

FY ‘17

vs. FY ‘16

Total revenue 8,818 +13.2% 35,579 +12.4% Other operating income 635

0.5%

2,382 +4.5%

Total operating income 9,453 +12.2% 37,961 +11.9% Operating expenses 8,595 +1.4% 34,808 +9.6% Non-fuel operating expenses 7,302 +0.2% 29,576 +10.1% Cost of materials and services 4,783 +12.8% 19,013 +11.1%

Fuel expenses 1,293 +8.7% 5,232 +7.1% Fees and charges 1,567 +15.0% 6,357 +10.8%

Staff costs 1,716

19.5%1

8,172 +11.1%1 Depreciation 592 +21.8% 2,052 +16.0% Other operating expenses 1,504

7.2%

5,571 +1.0% Result from equity investments 17 +20 157 +72 EBIT 875 +930 3,310 +1,035 Adjustments

462
592
337

+186 Adjusted EBIT 413 +338 2,973 +1,221

1 includes 582m EUR one-off gain from pilot agreement ratified in 12/2017

SLIDE 56

11.4% = 13.8% excl. Pilots one-off (0.80 EUR / share = 377 m EUR)

Dividend of 0.80 EUR per share equates to 11.4% pay out ratio Dividend payment and policy

Page 56 2007 2014 2015 2016 Financial year

Year of payout

Dividend Policy

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

FY 2017

3,310m EUR Local GAAP result allows for payout Continuous dividend payments

Target

2,500 2,000 1,500 1,000 500 2008 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009

2.3bn EUR since 2008

Optional scrip dividend

2017

~ 4%

average dividend yield p.a. since 2008

Cumulative Dividend Payments in m EUR

2008 2009 2010 2011 2012 2013