Lufthansa Group Roadshow Presentation June 2015 Disclaimer in - PowerPoint PPT Presentation

Lufthansa Group Roadshow Presentation June 2015

Disclaimer in respect of forward-looking statements Information published in this presentation concerning the future development of the Lufthansa Group and its subsidiaries consists purely of forecasts and assessments and not of definitive historical facts. These forward-looking statements are based on all discernible information, facts and expectations available at the time. They can, therefore, only claim validity up to the date of their publication. Since forward-looking statements are by their nature subject to uncertainties and imponderable risk factors – such as changes in underlying economic conditions – and rest on assumptions that may not occur, or may occur differently, it is possible that the Group’s actual results and development may differ materially from the forecasts. Lufthansa makes a point of checking and updating the information it publishes. However, the Company is under no obligation to update forward-looking statements or adapt them to subsequent events or developments. Accordingly, it neither explicitly nor implicitly accepts liability, nor gives any guarantee for the actuality, accuracy or completeness of this data and information. Page 2

 The Lufthansa Group is the world's largest aviation group A unique portfolio of airlines and aviation services as basis for future success  The Lufthansa Group is based on three strong pillars Hub airlines to improve profitability at current size; P2P airlines and aviation services to grow  Adjusted EBIT increases by more than 30 per cent in the first quarter 2015 All operating segments improve; SWISS and Lufthansa Cargo show strongest positive development  For 2015 the Lufthansa Group expects an Adjusted EBIT of more than 1.5 bn EUR before strikes 2015 will be year of following through: fleet optimization, CASK reduction & revenue quality improvement Page 3

Lufthansa Group is the world's largest Aviation Group Portfolio of several leading brands and businesses. MRO Total revenue 2014 Hub Airlines 4.3 bn € Lufthansa Group Catering Multi-hub, multi-brand Total revenue 2014 Logistics Other Services Total revenue 2014 Poin-to-point 21.4 bn € Total revenue 2014 2.6 bn € Total revenue 2014 2.4 bn € Internal Revenue 1.9 bn € External Revenue Page 4

A unique portfolio of airlines and aviation service companies Service companies sustainably contribute c. 500 m EUR to Adj. EBIT p.a. Revenue Adjusted EBIT Adj. EBIT Margin range Airlines 23.3 bn 701 m +3.9% Passenger Airline Group 1.4% 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2.4 bn 123 m +12.1% Logistics (Cargo) 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 +4.3% Service Companies +11.3% 4.3 bn 380 m MRO +7.4% 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 non-airline profits +4.2% 2.7 bn 88 m of c. 500 m EUR Catering +3.2% 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 +6.7% 0.7 bn 44 m IT Services* 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 +1.8% -165 m Others incl. Group Functions 2010 2011 2012 2013 2014 *dissolved and partly integrated in „ Others “ segment from FY 2015 Page 5

Lufthansa Group has a solid financial profile Conservative financial profile, but currently burdened by pension provisions 1. Lufthansa Group is profitable and 2. Conservative fleet structure and 3. Solid financial profile provides produces strong cash flows ambitious balance sheet targets provide competitive edge in financing conditions; security buffer low net financial debt, but pension provision burden in bn EUR owned & S&P Investment Grade unencumbered Rating (BBB-, stable) 1.8 1.4 1.7 owned confirmed in May 2015 1.8 14.3 bn € leased Recent Issuance of 1.125% Bond 1.2 1.0 1.0 0.7 0.4 Debt Volume of 500 m EUR ca. 90% of fleet is owned vs. 10% leased -0.2 financing and a maturity of 5 years >70% of fleet is financially unburdened (Sept 2014 - Sept 2019) 2011 2012 2013 2014 Q1 2015 (not used as security for financing deals) Depreciation Adj. EBIT Target FY 14 Q1 15 3.3 10.2 2.8 7.2 2.4 5.8 Min. 2.3 2.6bn 3.0bn 2.0 4.7 2.2 Liquidity bn EUR EUR EUR 1.4 1.4 1.3 3.4 2.9 2.3 2.0 1.7 0.7 0.5 Debt Re- 2011 2012 2013 2014 Q1 2015 45% payment 21% 17% (min. 35%) pension provisions net financial debt Ratio -0.3 2011 2012 2013 2014 Q1 2015 25% pension provisions: flexible funding model, Equity 13% 8% midterm no "margin call" for additional fundings Ratio Operating Cash Flow Free Cash Flow Page 6

Maintaining stable fleet size while complexity is being reduced Fleet overview and capex plan Lufthansa Group Fleet ( as of 31. March 2015 ) Aircraft orders: long-haul Delivery schedule Aircraft type 19 2015 16 17 18 X 2 A380-800 4 B747-8 777-9X 44 B777 (Freighter + PAX) from 2020 X 1 A330-300 25 A350-900 76 Aircraft orders: short-haul Delivery schedule Aircraft type 2015 16 17 18 19 166 A320 Family 30 Bombardier CS100 196 (bn EUR) 2.9 2.8 2.5 2.5 2.5 2.3 2.0 Aircraft to be phased-out FY 13 FY 14 FY 15 FY 16 FY 17 Gross invest Net invest Thereof fleet invest Page 7

Lufthansa Group committed to future dividend payments Future dividends continue to be linked to profit development Dividend per share in EUR 1.25 0.70 0.70 0.60 0.60 0.60 0.50 0.45 continue 0.30 0.25 regular payments 0.00 0.00 0.00 0.00 0.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Financial Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Dividend Year 2002 2003 2004 2001 Old Dividend Policy New Dividend Policy Operating Result EBIT Regular Pay-outs 30%-40% 10-25% pay-out pay-out local GAAP net result local GAAP net result = max payout in m EUR = max payout in m EUR Page 8

 The Lufthansa Group is the world's largest aviation group A unique portfolio of airlines and aviation services as basis for future success  The Lufthansa Group is based on three strong pillars Hub airlines to improve profitability at current size; P2P airlines and aviation services to grow  Adjusted EBIT increases by more than 30 per cent in the first quarter 2015 All operating segments improve; SWISS and Lufthansa Cargo show strongest positive development  For 2015 the Lufthansa Group expects an Adjusted EBIT of more than 1.5 bn EUR before strikes 2015 will be year of following through: fleet optimization, CASK reduction & revenue quality improvement Page 9

Our strength – the three pillars of the Lufthansa Group Ambitious targets for all segments Point to Point / Hub Airlines Aviation Services Secondary Brand Eurowings #1 Multi-Brand Premium #3 Pan-European #1 in Aviation Services Hub System in Europe Point-to-Point Airline Margin improvement Profitable Growth Integrated Value Chain Financial Stability Strong Brand Family Attractive Employer … Customer Data Natural Hedging Strong Home Markets Page 10

Lufthansa Group continues to consistently approach challenges 7to1 - Our Way Forward: Seven fields of action, one goal Customer New concepts centricity & for growth quality focus Constantly Innovation & improving digitalization efficiency Value based Effective & lean steering organization Culture & leadership Page 11

Industry-leading products and services drive customer satisfaction Quality focus of hub airlines Lufthansa Passenger Airlines Lufthansa Group Airlines Full flat Business Class seats New First Class New Business Class now standard in the Lufthansa Group 600 new seats until Jun. 2015 7,000 new seats until Sep. 2015 5 Star Service Upgrades New Premium Economy Class 5 STAR 3,600 new seats until Oct. 2015 Page 12

Network and partnerships are important drivers for revenue quality Passenger network and partner overview for all airlines Largest Airline Group in Europe Largest Transatlantic Joint Venture First JV for Japan-Europe and Europe-China* Intra- European 46.1% North Asia (-0.5pts.) America Pacific 22.8% 17.8% (+1.4pts.) (+0.2pts) Mid-East 3.8% (-0.3pts.) Africa 3.7% South (-0.3pts.) America 5.8% (-0.5pts.) Traffic revenue shares Passenger Airline Group as of 31 December 2014 (comparison to previous year) * Joint venture with Air China in progress (MoU signed in 2014) Page 13

Current distribution through GDS is highly standardized This leads to the commoditization of Lufthansa Groups offer Incentive GDS fee Classic GDS Distribution Content etc. Corporate Discount for FCA * GDS Retailer Transaction Online TA Fee 70% of Travel Full Content bookings Agency via GDS’s Price Route Terminal Offer Fee Limited add. Booking feature Class (i.e. Seat reservation) GDS controlled 30% of LH Direct Sales bookings LH.com, Call Center, Airport Office, City Office via LH Direct Sales Proprietary our products are not a commodity. Customization only limited by GDS’s technological But capability *Full Content Agreement (FCA): Additional contract specification, which offers access to „full content“ to the GDS (i.e. to all pri ces and availabilities as well as all functionalities). In return the GDS grants extensive discounts on the list prices Page 14