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

SLIDE 1

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

Trading outlook for Q4 2017 confirmed

 5.5% organic growth, 14.4% total growth  Slightly positive RASK; slightly negative CASK expected  Fuel headwind of c. 50m EUR (ex. Brussels Airlines)

Initial outlook 2018

 c. 7% organic ASK growth (excl. Air Berlin)  RASK to be slightly positive in Q1 (limited visibility beyond)  CASK down 1 to 2%  Additional fuel cost of c. 700m EUR at current rates

January 2018

SLIDE 2

Page 2

Market benefits from improving industry dynamics
Increasingly profitable airline industry, driven by more discipline and consolidation
Consolidation still early stages in Europe but gaining momentum
Lufthansa Group continuously improving financials through consistent implementation of strategy
All relevant financial metrics continuously improving
Room for further improvement: Multiple areas in focus to increase through-the-cycle-profitability
Adjusted EBIT 2017 expected “above previous year”
Adj. EBIT 9M 2017 >50% above previous year, free cash flow >80% above, net financial debt >80% below
Slightly positive RASK and slightly negative CASK expected for Q4 2017
Initial outlook for 2018 operating KPIs
Organic ASK growth of c. 7%; RASK to be slightly positive in Q1 (ltd. visibility beyond); CASK down 1 to 2%
Additional fuel cost of c. 700m EUR; flat development of Aviation Services

SLIDE 3

Page 3

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

Global Commercial Airline Profitability

Source: IATA World Air Transport Statistics

Return on Invested Capital

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

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%

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

Return on capital (ROIC)

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

SLIDE 4

Page 4

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

‘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

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

Partly

Source: FLASH Flight data statistics

SLIDE 5

Page 5

Consolidation continues to accelerate, particularly in Europe Different forms of consolidation

European consolidation International consolidation Global consolidation through Joint Ventures:

Commercial agreements with anti-trust approval
Joint steering of prices, capacities and frequencies
Revenue share agreements
Proven alternative to equity partnerships

Current development in Europe:

LH Group, easyJet and IAG acquire parts of Air Berlin,

insolvency of remainder of Air Berlin; More than 25 aircraft disappear from German market

Monarch insolvency, Alitalia in administration

1st consolidation wave 2nd consolidation wave Insolvency

75% of LH long haul-revenues in Joint Ventures

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SLIDE 7

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Market benefits from improving industry dynamics
Increasingly profitable airline industry, driven by more discipline and consolidation
Consolidation still early stages in Europe but gaining momentum
Lufthansa Group continuously improving financials through consistent implementation of strategy
All relevant financial metrics continuously improving
Room for further improvement: Multiple areas in focus to increase through-the-cycle-profitability
Adjusted EBIT 2017 expected “above previous year”
Adj. EBIT 9M 2017 >50% above previous year, free cash flow >80% above, net financial debt >80% below
Slightly positive RASK and slightly negative CASK expected for Q4 2017
Initial outlook for 2018 operating KPIs
Organic ASK growth of c. 7%; RASK to be slightly positive in Q1 (ltd. visibility beyond); CASK down 1 to 2%
Additional fuel cost of c. 700m EUR; flat development of Aviation Services

SLIDE 8

Page 8

Our objective: #1 for customers, shareholders and 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

SLIDE 9

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

Digitalisation Flexibilisation

€

Expansion of market position through growth (organic & inorganic) will redesign the structure of the airline industry New business models and digital solutions will decisively 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 10

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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

986 725

Q4 16 + 9M 17

2,635

2016

1,752

2015

1,817

2014

1,171

2013 2012

>3x

834

297

Q4 16 + 9M 17

2,410

2016

1,138

2015 2014 2013

1,307

2012

1,397 521

Q3 17 2016

2,701

2015

3,347

2014

3,418

2013

1,695

2012

1,953

Q4 16 + 9M 17

13.3%

2016

9.3%

2015

11.0%

2014

7.1%

2013

6.0%

2012

4.6%

Q4 16 + 9M 17

7.6%

2016

5.5%

2015

5.7%

2014

3.9%

2013

3.3%

2012

2.4%

Q3 17

22.3%

2016

20.6%

2015

18.0%

2014

13.2%

2013

21.0%

2012

16.9%

~2x

+5.4 %P.

>2x >3x

75%

SLIDE 11

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But we still aim to do better than that Key value drivers in focus

Revenue Cost Capital Employed

Improve

Profitability

Focused

Capital Allocation

Increase

Cash Flow

Maintain

Financial Stability

Premium positioning Continuous cost focus

(CASK down 1% - 2% per annum)

Active market consolidation / Scale Cultural change Process orientation (centralization) Point-to-Point growth 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 9

Optimization of working capital

Financial Priorities

1 2

SLIDE 12

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

Highly attractive home markets… GER AT CH BE

Strong premium corporate and leisure demand:
Highly 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 of premium seats Most digital airline Partner

f choice

for JVs

1

SLIDE 13

Page 13

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

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

2

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 14

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Distributive freedom to optimize and increase revenues Rationale for the new distribution strategy

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 40% (2015 vs. H1 2017)
Positive results of dynamic revenue mgmt. on test routes
Neutral bottom line effect from introduction of DCC
SWISS with new website in 2018;

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)

3

Price Booking classes

SLIDE 15

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

Reduction of management positions Process-orientation & centralization

Reduced management positions by 25%

New Management levels

Previously Now

4 FRA MUC ZRH VIE

Leverage synergies

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)

SLIDE 16

Page 16

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

Efficient and modern fleet Lufthansa Group Fleet Strategy

Successful phase-in of C Series, A320neo and A350 Ø -20% cash operating costs 40 new aircraft in 2017 Reduced number of short-haul aircraft types from 9 to 3 at LGA between 2012 and 2017

287 274 268 263 260 258 234 617 600 615 622 627 696 710 2012 2011 2010 2014 2016 2015 2013 # of aircraft ASK (bn)

2.3%

+ 3.5%

X 22 Airbus 350-900 36 Boeing 777 58 111 A320 Family (incl .NEO) 21 Bombardier CSeries Delivery schedule 2017 18 19 20 21 Aircraft type

Long-haul Short-haul

Aircraft type Delivery schedule 2017 18 19 20 21

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

132

Historic fleet development

5

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

SLIDE 17

Page 17

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

6

SLIDE 18

Page 18

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

Point-to-Point Airlines

Aircraft1

(# in operation)

CASK

(excl. Fuel, FX and project costs)

Passengers1

(in m)

Third largest Point-to-Point-Airline in Europe with highest concentration of aircraft per base

Adj. EBIT

(in m EUR)

2015 ~80

2017 ~160

2016 ~90

2018/2019 >210 Eurowings expected to be profitable in 2017 ~ 50 new connections in 2018/19; New long-haul base in DUS with lie flat business product

91

38 2017 positive 2016 2015 2018/2019 >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

8

SLIDE 19

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Eurowings: Acquisition of part of the Air Berlin Group Key facts of the transaction and future growth

Point-to-Point Airlines Closing of transaction 8 January 2018

Legal completion of transaction after approval of

anti-trust authorities

Integration of LGW – focus on operational stability

and change management

Start of TUIfly wet lease

Project volume in total: ~ 1.3bn EUR, of which ~18 m EUR for LGW Anti-trust approval Review by EU Commission Approval received 21 December 2017 Taking over Luftfahrtgesellschaft Walter from Air Berlin Group Eurowings grows up to 80 aircraft1 in total, including 30 from Luftfahrtgesellschaft Walter Eurowings grows ~ 2,700 employees in total 17 x DH-8 Q400-aircraft 13 x A320-Family-aircraft Up to 900 employees 7x Boeing 737-800 as wet lease2 Up to 45 x A320-Family aircraft ~1,800 employees through job postings

1) incl. long haul; 2) subject to ATI clearance

Signing 13 October 2017

Overview Timeline

7

(Germany, Europe)

SLIDE 20

Page 20

Aviation Services: Current development and outlook Highlights

Aviation Services

Significant increase in revenues

and freight load factor

Ongoing restructuring leads to

reduction of unit costs

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

9

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SLIDE 22

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Market benefits from improving industry dynamics
Increasingly profitable airline industry, driven by more discipline and consolidation
Consolidation still early stages in Europe but gaining momentum
Lufthansa Group continuously improving financials through consistent implementation of strategy
All relevant financial metrics continuously improving
Room for further improvement: Multiple areas in focus to increase through-the-cycle-profitability
Adjusted EBIT 2017 expected “above previous year”
Adj. EBIT 9M 2017 >50% above previous year, free cash flow >80% above, net financial debt >80% below
Slightly positive RASK and slightly negative CASK expected for Q4 2017
Initial outlook for 2018 operating KPIs
Organic ASK growth of c. 7%; RASK to be slightly positive in Q1 (ltd. visibility beyond); CASK down 1 to 2%
Additional fuel cost of c. 700m EUR; flat development of Aviation Services

SLIDE 23

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Modernization of the Lufthansa Group has made strong progress Highlights of first nine months 2017

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: “5 Star Airline” 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

SLIDE 24

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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

SLIDE 25

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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

SLIDE 26

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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

SLIDE 27

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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.

SLIDE 28

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Network Airlines Point-to-Point Airlines Aviation Services1

Forecast Lufthansa Group for Q4 2017 (unchanged from Q3 release)

1 Includes Logistics, MRO, Catering, Others and Consolidation 2 Organic growth excluding Brussels Airlines and Air Berlin wet lease, excl. strike effect in Q4 2016 3 As of 30 November 2017; details in appendix of presentation

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

SLIDE 29

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Market benefits from improving industry dynamics
Increasingly profitable airline industry, driven by more discipline and consolidation
Consolidation still early stages in Europe but gaining momentum
Lufthansa Group continuously improving financials through consistent implementation of strategy
All relevant financial metrics continuously improving
Room for further improvement: Multiple areas in focus to increase through-the-cycle-profitability
Adjusted EBIT 2017 expected “above previous year”
Adj. EBIT 9M 2017 >50% above previous year, free cash flow >80% above, net financial debt >80% below
Slightly positive RASK and slightly negative CASK expected for Q4 2017
Initial outlook for 2018 operating KPIs
Organic ASK growth of c. 7%; RASK to be slightly positive in Q1 (ltd. visibility beyond); CASK down 1 to 2%
Additional fuel cost of c. 700m EUR; flat development of Aviation Services

SLIDE 30

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2018 characterized by inorganic growth Lufthansa Group capacity growth 2018 per region

Network Airlines (organic) 7% P2P* (organic) 12% 9% Network Airlines (organic) P2P* (organic) 13%

c. 7% organic and 5% inorganic growth

All capacity plans (in particular inorganic) indicative and subject to change +5% Group Capacity +5% +2% P2P (inorganic) ** P2P (organic) Network Airlines

12.0% Total growth Organic growth 7.0%

P2P 8% 12% Network Airlines 6% 6% Landings ASK P2P* (organic) Network Airlines (organic) 5% 11% P2P* (organic) 5% Network Airlines (organic) 23%

* incl. Eurowings and Brussels Airlines ** Growth through Air Berlin insolvency

SLIDE 31

Page 31 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 2018

As of 30 November 2017 1 incl. fuel hedging 2 Incl. Brussels Airlines

3 Incl. inorganic growth indication

Lufthansa Group fuel expenses after hedging (in bn EUR)

Sensitivities with deviating oil price

Fuel hedging level

78% 65% 75% 74% 63% 49%

Exp.volume (in m tons)

10.3 11.2 2.5 2.9 3.1 2.7

Jet fuel price (USD per ton)1

578 626 620 624 628 630

EUR/USD forward

1.13 1.19 1.19 1.19 1.19 1.19

Brent forward (USD/bbl)

55 61 62 61 61 60 FY172 Q4 18 Q3 18 Q2 18 Q1 18 FY 18 3 1.3 1.5 1.4 1.6 1.3 1.5 1.2 1.3 5.9 5.2 2018e 2017e

Lufthansa Group price curve for 2018

Market price in USD/barrel Price paid in USD/barrel Hedging result Hedging result Market price: 61 USD/bbl LH price: 59 USD/bbl Hedging result : +2 USD/bbl

6.4 (+20%) 6.2 (+10%) 5.5 (- 10%)

LH price 2018 Market price

5.1 (- 20%)

SLIDE 32

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Organic Capacity Growth

(ASK)

Initial outlook on operating KPIs 2018

1 Includes Logistics, MRO, Catering, Others and Consolidation

c. +7%

Unit Revenue

(RASK, ex. currency)

slightly positive in Q1

Unit Cost

(CASK, ex. currency,

ex. fuel)
1 to -2%

Fuel

Additional cost

f c. 700m EUR

Contribution Aviation Services 1

flat

Contribution from inorganic growth

flat

Network Airlines:

Driven by short-haul growth in FRA, upgauging in MUC, ZRH and VIE

Point-to-Point Airlines:

Driven by annualization of initial Air Berlin wet lease (started 03/17), long-haul growth

Continuation of trends of FY 2017 in Q1 2018
Very limited visibility in bookings beyond Q1
Current assumption (based on capacity plans) is for roughly stable RASK in FY18
Including mix effect from organic growth of P2P segment
Cost reduction to sit within annual guidance
Driven by individual cost reductions and change in mix
As of 30 November 2017
Includes inorganic growth
Differing performance among single Group companies
Overall, no major change in total contribution
One-off cost compensate for positive contribution from operating business
Full integration and positive contribution from winter flight plan 2018/19

Assumptions Comments

SLIDE 33

Page 33

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

Cumulative Dividend Payments in m EUR

1

SLIDE 34

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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

n 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

nly 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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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

SLIDE 36

Page 36

Appendix – Additional financial information Q3 17 –

SLIDE 37

Page 37

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 +59.1% +46.7% SLF +3.6pts. +2.9pts. Yield

7.0%
7.8%

Yield ex currency

5.6%
7.7%

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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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+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 40

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

9M 2017 FY 2016 3.2 FY 2015 3.4 FY 2014 2.0 FY 2013 3.3 4.5 Operating Cash flow 2.8 9M 2017 FY 2016 1.1 FY 2015 0.8 FY 2014

0.3

FY 2013 1.3 Free Cash flow 9M 2017 FY 2016 2.1 2.2 FY 2015 2.6 2.6 FY 2014 2.3 2.8 FY 2013 2.0 2.5 1.8 1.7 Net invest Gross invest

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

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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

SLIDE 43

Page 43

Appendix – Further details on fuel –

SLIDE 44

Page 44 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

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

Lufthansa Group fuel expenses after hedging (in bn EUR)

Sensitivities with deviating oil price

Fuel hedging level

78%

80% 79% 77% 76%

Exp.volume (in m tons)

9.3 9.7 2.1 2.5 2.7 2.4

Jet fuel price (USD per ton)1

578 577 579 557 569 610

EUR/USD forward

1.09 1.13 1.06 1.11 1.18 1.18

Brent forward (USD/bbl)

45 55 55 51 52 61 FY162 Q4 17 Q3 17 Q2 17 Q1 17 FY 17 1.2 1.2 1.3 1.4 1.3 1.2 1.1 1.1 5.0 4.9 2017e 2016

Lufthansa Group price curve for the remainder of 2017

Market price in USD/barrel Price paid in USD/barrel Hedging result Hedging result Market price: 61 USD/bbl LH price: 58 USD/bbl Hedging result : +3 USD/bbl

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

+280m EUR

from Brussels Airlines LH price 2017 Market price

4.9 (- 20%)

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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 up to

24 months, level is increased every two or six months until 80% of exposure is hedged

Use of forward contracts

Fuel Hedging Approach Hedging Strategy

* Example

SLIDE 46

Page 46

Appendix – Balance Sheet –

SLIDE 47

Page 47

Investment Grade Rating

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

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; spreads of 1.1%, 1.3% and 1.5%)

April 2017: 372m EUR aircraft financing

(Japanese Operating Leases)

3.2 2.1 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 H1 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 H1 17 1.0 0.9

Adj. EBIT

Depreciation in bn EUR

SLIDE 48

Page 48 Manufacturer / type LH LX OS LCAG EW SN Group Fleet Airbus A319 30 5 7 43 22 107 Airbus A320ceo 67 28 23 49 14 181 Airbus A320neo 5 5 Airbus A321 63 9 6 78 Airbus A330 19 16 6 6 47 Airbus A340 42 9 51 Airbus A350 3 3 Airbus A380 14 14 Boeing 737 Boeing 747 32 32 Boeing 767 6 6 Boeing 777 8 5 5 18 Boeing MD11F 14 14 Bombardier CRJ 33 2 35 Bombardier CSeries 9 9 Bombardier Q-Series 18 18 Avro RJ 4 3 7 Embraer 27 16 43 Fokker F70 2 2 Fokker F100 4 4 Total aircraft 335 88 87 19 100 45 674

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

X 22 Airbus 350-900 36 Boeing 777 58 111 A320 Family 21 Bombardier CSeries Delivery schedule 2017 18 19 20 21 Aircraft type

Aircraft orders: long-haul

132

Aircraft orders: short-haul

Aircraft type Delivery schedule 2017 18 19 20 21

Lufthansa Group Fleet (as of 30 June 2017)

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

(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

SLIDE 49

Page 49

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

SLIDE 50

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Appendix – Financial KPIs–

SLIDE 51

Page 51

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