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Presentation Seoul February 2017 Disclaimer in respect of - - PowerPoint PPT Presentation
Presentation Seoul February 2017 Disclaimer in respect of - - PowerPoint PPT Presentation
Presentation Seoul February 2017 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
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Three take-aways
- Lufthansa is at home in strong and sustainable economies
Germany, Switzerland and Austria are top notch in terms of GDP per citizen
- Lufthansa is more than an airline and its business model is strong
Lufthansa, SWISS, Austrian, Eurowings are strong brand names, but Lufthansa’s maintenance and catering services also contribute strongly to Lufthansa’s success story
- Lufthansa’s financial setup is leading in the industry
Strong balance sheet; investment grade rating; sustainable free cash flows; Consistent hedging policy
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Three take-aways
- Lufthansa is at home in strong and sustainable economies
Germany, Switzerland and Austria are top notch in terms of GDP per citizen
- Lufthansa is more than an airline and its business model is strong
Lufthansa, SWISS, Austrian, Eurowings are strong brand names, but Lufthansa’s maintenance and catering services also contribute strongly to Lufthansa’s success story
- Lufthansa’s financial setup is leading in the industry
Strong balance sheet; investment grade rating; sustainable free cash flows; Consistent hedging policy
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The European Union is home to world leading economies
2000 4000 6000 8000 10000 12000 14000 16000 18000 20000
Gross domestic product (GDP)
Source: German Federal Statistic Office
Bn US$
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Lufthansa Group has a global reach, but is at home in Germany, Austria and Switzerland
10000 20000 30000 40000 50000 60000 70000 80000 90000
US$
GDP Ranking (per citizen)
Source: German Federal Statistic Office
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Lufthansa Group acts in a strong economic environment
The hubs of the Lufthansa Group are located in Switzerland, Austria and Germany
GDP/citizen Germany: 40,952 USD Hubs: Munich, Frankfurt GDP/citizen Austria: 43,414 USD Hub: Vienna GDP/citizen Switzerland: 80,603 USD Hub: Zurich
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Lufthansa Group offers unique connectivity in Europe and beyond
Lufthansa, Swiss, Austrian, Brussels Airlines and Eurowings: Lufthansa Group offers unique connectivity within Europe, both via hubs and point- to-point.
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Lufthansa Group has forged strong alliances with leading partners all over the world
Intra- European Asia Pacific North America
LATAM
Africa Mid- East
The leading Airline Group in Europe
First joint venture Europe-Japan New joint venture Europe-China Leading transatlantic joint venture First joint venture Europe-South East Asia
Lufthansa Group has established joint ventures with some of the best names in the industry, thus setting the standard for a time-efficient and seamless travel experience across the continents.
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Three take-aways
- Lufthansa is at home in strong and sustainable economies
Germany, Switzerland and Austria are top notch in terms of GDP per citizen
- Lufthansa is more than an airline and its business model is strong
Lufthansa, SWISS, Austrian, Eurowings are strong brand names, but Lufthansa’s maintenance and catering services also contribute strongly to Lufthansa’s success story
- Lufthansa’s financial setup is leading in the industry
Strong balance sheet; investment grade rating; sustainable free cash flows; Consistent hedging policy
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Lufthansa Group – more than just an airline A normal day at Lufthansa Group
every30sec. takeoff or landing approx.300k passengers approx..5.100tons cargo approx.1.000aircraft getting MRO approx.1.5M meals
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The Lufthansa Group is based on three strong pillars Margin and growth-oriented goals for the business segments
1 Germany, Austria, Switzerland and Belgium
#1
for customers, shareholders, employees and partners
Premium network airline system #1 in Europe
Margin improvement Profitable growth Premium positioning & cost optimization Establishment of Eurowings as dual brand Participation in global market development
Point-to-point #1 in home markets1 Aviation Services #1 worldwide
Exploiting synergies and consistent capital allocation
… and others
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Lufthansa Group is the world’s largest aviation group Portfolio of several leading brands and businesses Hub Airlines
Logistics Catering MRO Further Service Companies Multi-Hub, Multi-Brand
Revenues 2015 Revenues 2015
Internal Revenues External Revenues
EUR 24.4bn EUR 3.0bn
Revenues 2015 Revenues 2015
EUR 2.4bn EUR 5.1bn
Point-to-Point
EUR 1.9bn
Revenues 2015
Total revenue in 2015: EUR 32.056 bn,
- f which traffic revenue: EUR 25.322 bn
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Business segment: Passenger Airline Group Lufthansa Passenger Airlines is the largest airline in Germany
75,174 77,547 79,305 2013 2014 2015
A leading global quality carrier
- Deliver high-quality product and service in all travel
classes
- Maintain strong position as premium long-haul carrier
- Operation of the two biggest German hubs in Frankfurt
and Munich
- Steadily expand the private travel segment
- Leading customer loyalty programme Miles & More
- A fleet of 364 aircraft (as of 30 June 2016)
Increasing passenger numbers underpin leading position
(000 passengers)
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Lufthansa’s new Premium Economy Class More comfort and exclusivity for both private and business travels
- Ergonomically optimized “state of the
art” seat
- Up to 50% more space
- 17 cm wider seat pitch
- More seat width and a much higher
recline
- Movable footrests in every row (leg
rest in first row)
- Power outlet and a USB-port at every
seat
- Welcome drink
- Amenity kit plus a water bottle
provided at every seat
- Two bags (23kg) free of charge
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The Lufthansa Business Class seat – 1.98 m bed length Plenty of space to arrive rested at your destination
- Fully-flat bed with a length of 1.98 m
- Optimum comfort, both while sitting and lying
- Passengers no longer need to get up from
their seats if they want to change their position from sitting to lying
- Seats can be intuitively operated thanks to
the simplified seat technology
- Feeling of spaciousness
- Adequate privacy
- Additional storage space
- A 15-inch monitor which can be moved to the
sides and pivoted
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Business segment: Passenger Airline Group SWISS and Austrian Airlines with local market expertise
SWISS is Switzerland’s flag carrier
- Dominant position at Zurich Airport
- Connecting premium home market with global destinations
- High product and service quality strategy
- A fleet of 94 aircraft (as of 30 June 2016)
- More than 17.5 million passengers carried in 2015
Edelweiss Air is Switzerland’s leading holiday airline
- Complement SWISS product line in the leisure segment
Austrian Airlines is Austria‘s largest airline
- A fleet of 81 aircraft (as of 30 June 2016)
- More than 10.8 million passengers carried in 2015
Austrian Airlines is the specialist for CEE*
- Ideal hub between East and West thanks to central base in
Vienna
- Restructuring achievements to contribute to earnings
improvements
*CEE denotes Central and Eastern Europe
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Business segment: Passenger Airline Group Eurowings is #1 point-to-point carrier in home markets
Cost reduction from transfer of platforms External growth opportunities
- Currently assessment of options to foster consolidation
- pportunities
- Defined criteria for partnerships:
- Competitive cost position
- Synergies via economies of scale
- Attractive catchment addition
Productivity gains and growth leverage Competitive cost structure and growth options
1 According to current planning; CASK excl. fuel, ETS, FX and project costs
Establishment of European brand: Launch of EW Europe in Vienna as first basis outside of Germany Levers for productivity improvement: Fleet streamlining: Upgauging of CR9 to Airbus A320 fleet Expansion of long-haul operations: 16 destinations by the end of 2016
7.2 8.3 9.5
4U A320 EW DE A320 EW EU A320
Average block hours / aircraft / day
7.2 2016 2020 5.8 2015 8.0
- 28%
CASK1 in eurocents LH 4U EW
- 20%
- 23%
Cockpit costs per block hour Competitive tariff structures; shift of platforms Network and flight plan optimization
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Interplay of business segments offers integrated value chain and puts the Lufthansa Group in a superior position over its competitors
The world’s largest provider of services related to in-flight service, including catering, in-flight sales, entertainment, in- flight service equipment and the associated logistics Third largest cargo airline worldwide With more than 790 customers and more than 3,500 aircraft under exclusive contracts, world’s leading independent MRO provider e.g. Miles & More: Europe‘s leading customer loyalty programme with over 28 million members. e.g. AirPlus: With more than 46,500 corporate customers, one of the globally leading providers of solutions for paying for and analyzing business travel.
Other business segments
and others
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Three take-aways
- Lufthansa is at home in strong and sustainable economies
Germany, Switzerland and Austria are top notch in terms of GDP per citizen
- Lufthansa is more than an airline and its business model is strong
Lufthansa, SWISS, Austrian, Eurowings are strong brand names, but Lufthansa’s maintenance and catering services also contribute strongly to Lufthansa’s success story
- Lufthansa’s financial setup is leading in the industry
Strong balance sheet; investment grade rating; sustainable free cash flows; Consistent hedging policy
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- Adj. EBIT in 9M on previous year‘s level; financial stability increased
9M and Q3 2016 at a glance
Lufthansa Group (in m EUR) 9M 16 9M 15
- vs. PY
Total revenue 23,870 24,304
- 1.8%
- f which traffic revenue
18,674 19,486
- 4.2%
EBIT 2,330 1,663 +40.1% Adjusted EBIT 1,677 1,693
- 0.9%
Net income 1,851 1,748 +5.9%
ASK = Available Seat Kilometre RPK = Revenue Passenger Kilometre RASK = Revenue per Available Seat Kilometre CASK = Cost per Available Seat Kilometre
9M 16 9M 15
- vs. PY
Operating cash flow 3,054 3,160
- 3.4%
Net invest 1,536 1,960
- 21.6%
Free cash flow 1,518 1,200 +26.5% 9M 16 FY 15
- vs. FY 15
Equity ratio 14.1% 18.0%
- 3.9pts.
Net debt (excl. pensions) 2,201 3,347
- 34.2%
Pension provisions1 10,537 6,626 +59.0%
1 incl. pension changes due to tariff agreement with UFO
amounting to 713 m EUR applying current IRFS discount rate – FY 2015: 2.8%; 9M 2016: 1.5%;
Passage Airline KPIs
9M 16 Q3 16
- No. of flights
+2.9% +3.8% ASK (capacity) +4.1% +4.0% RPK (volume) +1.8% +2.1% SLF (load factor)
- 1.9pts.
- 1.6pts.
Yield (pricing)
- 4.7%
- 5.0%
RASK (unit revenue)
- 6.7%
- 6.9%
CASK (unit costs)
- 11.9%
- 16.5%
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Investments are focused on efficient and less complex fleet Fleet overview and capex plan
1 Airbus 330-300 25 Airbus 350-900 43 Boeing 777 69 152 A320 Family 30 Bombardier CSeries Delivery schedule 2016 17 18 19 20 Aircraft type
Aircraft orders: long-haul
182
Aircraft orders: short-haul
Aircraft type Delivery schedule 2016 17 18 19 20
Lufthansa Group Fleet (as of 30 September 2016)
Aircraft to be phased-out (in 2016/2017) until 2023 until 2025 777-9X from 2020
Manufacturer / type LH LX OS LCAG EW Group Fleet
Airbus A319 30 5 7 43 85 Airbus A320 68 28 16 36 148 Airbus A321 64 9 6 79 Airbus A330 19 17 4 40 Airbus A340 42 12 54 Airbus A380 14 14 Boeing 737 7 7 Boeing 747 32 32 Boeing 767 6 6 Boeing 777 6 5 5 16 Boeing MD11F 14 14 Bombardier CRJ 25 10 35 Bombardier CSeries 2 2 Bombardier Q-Series 18 18 ATR Avro RJ 15 15 Embraer 33 10 43 Fokker F70 3 3 Fokker F100 10 10 Total aircraft 334 94 81 19 93 621
Capital expenditure1
(bn EUR) FY 19 ~ 2.2 FY 18 ~ 2.2 FY 17 ~2.7 FY 16 2.5 FY 15 2.6 2.6 Net invest Gross invest Thereof fleet invest
1 Adjustments possible due to integration of Brussels Airlines and wet lease with AB
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Financially unencumbered aircraft Unencumbered asset base
The majority of aircraft remains unencumbered:
- An unencumbered fleet grants more
financial and operational flexibility
- Unencumbered aircraft can be used as
collateral in future financing projects
- ~90% of fleet owned vs. 10% leased
- ~75% of fleet financially unencumbered
(not used as security for financing deals)
- The book value of all aircraft and reserve
engines is EUR 14.7bn (as of 30 June 2016)
14.7 bn EUR
- wned & unencumbered
- wned
leased
Fleet structure of Lufthansa Group
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Group Financing Diversified sources of financing and balanced maturity profile
Financing of the Lufthansa Group:
- Capital Markets
- Bank Loans
- Aircraft Financing
Balanced Maturity Profile Global Investors
EUR m, 30 June 2016
Good access to diversified sources of funding
1,763 1,296 3,488
Bonds Liabilities to banks Leasing liabilities and
- ther loans*
* Leasing liabilities and other loans relate exclusively to finance leases and aircraft financing arrangements
EUR m, 01 February 2017
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81%
15% 4%
5 years 7 years 10 years
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Group Financing Attractive Debt Financing: Lufthansa‘s EUR 1.2 bn promissory note
2% 35% 42% 2% 5% 1% 4% 2% 3% 3% 1% AUT CHN DEU FRA IND ITL JPN NED SWE TUR TWN
78%
14% 8%
Banks Savings Banks Credit Unions
Deutsche Lufthansa AG has placed a large-volume promissory
- note. The note was issued with maturities of five, seven and ten
- years. As a result, the group has secured a total of 1.2 billion
euros in funding. With over 180 investors, the transaction proved very popular with a wide range of investors. In addition to investors from the sector of savings banks, credit unions and other European banks, a significant share was bought by Asian investors.
Borrower Deutsche Lufthansa Aktiengesellschaft, Köln Rating Ba1/BBB-/BBB-, Moody’s/S&P/Scope Funding instrument Schuldscheindarlehen Status senior, unsecured Use of Funds General corporate purposes Lending volume EUR 1.200.000.000,-- Term 5 years 7 years 10 years Spreads 110 bps 130 bps 150 bps Distribution by Geography
% of allocation
Distribution by Period
% of allocation
Distribution by Investor Type
% of allocation
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Group Financing Aircraft Financing: continuously used at Lufthansa
>120 transactions closed with a total volume of
- appr. USD 9bn over the past 18 years
- JOLCO
- US Lease
- French Lease
- QTE
- Swedish Lease
- ECA
- Plain Vanilla
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Group Financing Lufthansa raises more than EUR 600m with aircraft financing
- 2 Airbus A321 & 1 Airbus A380
- Total volume: USD 296m
April 2016
- 2 Airbus A320
- Total volume: USD 78m
July 2016
- 2 Airbus A320
- Total volume: USD 78m
October 2016
- 6 Airbus A320
- Total volume: USD 234m
December 2016
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LH Group expects Adj. EBIT 2016 approx. on previous year‘s level Specified forecast Lufthansa Group 2016
986 725 972
approximately
- n previous
year’s level
Lufthansa Group Adjusted EBIT Actual and Forecast
in m EUR
2011
Forecast 2016
2015 1,817 2014 1,171 2013 2012
Updated forecast FY 2016:
- Expected fuel costs: 4.9 bn EUR
- Improvement of about 950 m EUR vs. PY, thereof c. 140 m
EUR in the fourth quarter (at Brent forward of 51 USD/bbl; 1.12 USD/EUR)
- Operating KPIs passenger airlines:
- ASK growth full year: +4.7%
- RASK1 fourth quarter: -7 to -8%
- CASK1 fourth quarter: -2 to -3%
- Other business segments in fourth quarter (Logistics, MRO,
Catering and Others) in total earnings contribution slightly below fourth quarter 2015
- Forecast before strike costs of c. 100m EUR
- EBIT ca. 600 m EUR above Adj. EBIT, in particular due to tariff
agreement with UFO
- Ability to pay dividend for FY2016 confirmed
1 Unit revenues excl. currency, unit costs excl. currency and fuel
Expected overall profit for the entire airline industry in 2016: USD 35.6 bn (Source: IATA/Boeing market analysis)
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