Bank of America Merrill Lynch Business Services

Bank of America Merrill Lynch Business Services

Lufthansa Group
Roadshow Presentation
May 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
Total revenue 2014
21.4 bn €
Poin-to-point
Total revenue 2014
2.6 bn €
Total revenue 2014
2.4 bn €
Internal Revenue
External Revenue
Page 4
1.9 bn €
Other
Services
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
2010
2011
2012
2013
2014
2010
2011
2012
2013
2014
123 m
2.4 bn
1.4%
+12.1%
Logistics
(Cargo)
2010
2011
2012
2013
2014
2010
2011
2012
2013
2014
+4.3%
Service Companies
4.3 bn
380 m
+11.3%
MRO
2010
2011
2012
2013
2014
2010
2011
2012
2013
2.7 bn
2014
+7.4%
88 m
+4.2%
2014
+3.2%
Catering
2010
2011
2012
2013
2014
2010
2011
2012
2013
0.7 bn
44 m
+6.7%
IT Services*
2010
2011
2012
2013
2014
2010
2011
2012
2013
2014
-165 m
Others incl. Group Functions
2010
1 dissolved
Page 5
and partly integrated in „Others“ segment from FY 2015
2011
2012
2013
2014
+1.8%
non-airline profits
of c. 500 m EUR
Lufthansa Group has a solid financial profile
Conservative financial profile, but currently burdened by pension provisions
1. Lufthansa Group is profitable and
produces strong cash flows
2. Conservative fleet structure and
ambitious balance sheet targets provide
security buffer
3. Solid financial profile provides
competitive edge in financing conditions;
low net financial debt, but pension
provision burden
in bn EUR
1.8
1.7
1.8
1.0
0.7
1.4
14.3 bn €
1.0
1.2
ca. 90% of fleet is owned vs. 10% leased
0.4
-0.2
2011
2012
S&P Investment Grade
Rating (BBB-, stable)
confirmed in May 2015
2013
Depreciation
2014
Q1 2015
>70% of fleet is financially unburdened
(not used as security for financing deals)
Recent
Debt
financing
Issuance of 1.125% Bond
Volume of 500 m EUR
and a maturity of 5 years
(Sept 2014 - Sept 2019)
Adj. EBIT
Target
3.3
FY 14
Q1 15
2.8
7.2
2.4
Min.
Liquidity
2.0
1.4
1.4
1.3
0.7
0.5
-0.3
2011
2012
2013
Operating Cash Flow
Page 6
2014
Debt Re45%
payment
(min. 35%)
Ratio
Q1 2015
Free Cash Flow
2.3
bn EUR
Equity
Ratio
25%
midterm
2.6bn
EUR
3.0bn
EUR
21%
17%
13%
8%
5.8
2.2
10.2
4.7
2.3
2.0
1.7
2011
2012
2013
pension provisions
3.4
2.9
2014
Q1 2015
net financial debt
pension provisions: flexible funding model,
no "margin call" for additional fundings
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
X2
2015
16
17
18
19
A380-800
4
B747-8
41
B777 (Freighter + PAX)
X1
A330-300
25
A350-900
777-9X
from 2020
73
Aircraft orders: short-haul
Delivery schedule
Aircraft type
160
30
2015
16
17
18
19
A320 Family
Bombardier CS100
190
(bn EUR)
2.5
2.8
2.0
FY 13
2.9
2.3
FY 14
Gross invest
Page 7
FY 15
Net invest
2.5
2.5
FY 16
FY 17
Thereof fleet invest
Lufthansa Group committed to future dividend payments
Future dividends continue to be linked to profit development
Dividend per share in EUR
1.25
0.60
0.70
0.60
0.70
0.60
0.50
0.45
0.30
0.00
Financial Year
Regular
Pay-outs
Dividend Year
Page 8
0.25
0.00
0.00
0.00
0.00
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
continue
regular payments
Old Dividend Policy
New Dividend Policy
Operating Result
EBIT
30%-40%
pay-out
10-25%
pay-out
local GAAP net result
= max payout in m EUR
local GAAP net result
= max payout in m EUR
 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
Hub Airlines
Point to Point /
Secondary Brand Eurowings
Aviation Services
#1 Multi-Brand Premium
Hub System in Europe
#3 Pan-European
Point-to-Point Airline
#1 in Aviation Services
Margin improvement
Integrated Value Chain
Customer Data
1 As
of 2015
Page 10
Profitable Growth
Financial Stability
Strong Brand Family
Natural Hedging
Attractive Employer
Strong Home Markets
…
Lufthansa Group continues to consistently approach challenges
7to1 - Our Way Forward: Seven fields of action, one goal
Customer
centricity &
quality focus
New concepts
for growth
Constantly
improving
efficiency
Innovation &
digitalization
Value based
steering
Effective & lean
organization
Culture &
leadership
Page 11
Industry-leading products and services drive customer satisfaction
Quality focus of hub airlines
Lufthansa Passenger Airlines
New First Class
New Business Class
New Premium Economy Class
5 Star Service Upgrades
5 STAR
Page 12
Lufthansa Group Airlines
Full flat Business Class seats
now standard in the Lufthansa Group
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
IntraEuropean
46.1%
North
America
22.8%
Asia
Pacific
17.8%
(-0.5pts.)
(+1.4pts.)
(+0.2pts)
Mid-East
3.8%
(-0.3pts.)
South
America
5.8%
Africa
3.7%
(-0.3pts.)
(-0.5pts.)
Traffic revenue shares Passenger Airline Group as of 31 December 2014 (comparison to previous year)
Page 13
Consistent focus on profitability measures
Efficiency measures at Lufthansa Passenger Airlines
2012
Capacity & fleet
dimensioning
2013
2014
2015
2016
2017
Freeze fleet size
Phase-in A380 and B747-8
Reduced ASK growth rate until competitive structures have been established
Introduction of 2 class long-haul fleet
launch new technology a/c
Cost structures
Lower cost sub-fleet of 14 A343
Fleet
development and
operational
platforms
Transfer non-hub operations to Germanwings
and achievement of break-even
Eurowings long-haul operations
Roll-over Eurowings fleet to A320 a/c
Eurowings base in VIE
Reduction short-haul fleet from 9 to 3 different a/c types
A320neo delivery
Modification of pension schemes
Renegotiation of labor contracts to competitive level
General
measures to
reduce unit cost
Reduce overhead costs through shared services
Restructuring of outstation operations
Reduction of IT infrastructure costs
Reduction of costs at all suppliers (ATC, internal suppliers, etc.)
Turn LHP into process oriented company
Strategic partnership Air China
Revenue
Quality
Invest in
revenue quality
Page 14
Individualized customer approach
New services along the customer travel chain
Improved direct sales channels
Product
initiatives
Roll-out new First and Business Class
Premium Economy
Become first western 5 Star Airline
Strict focus on asset utilization
Long-Term fleet and operating performance Passenger Airline Group
258
260
263
268
ASK (bn)
# of aircraft
234
SLF (%)
208
79,8%
195
80,1%
79,8%
79,6%
722
169
78,9%
710
144
78,8%
696
147
77,9%
627
622
615
2012
2013
2014
77,6%
432
75,0%
2005
Page 15
513
524
2007
2008
430
75,2%
2006
2009
2010
2011
Agreements with labor unions support competitiveness
Current status of negotiations
 Ongoing arbitration with cabin union UFO
! Arbitration with pilots union VC in preparation
 Strikes excluded at least until July 2015
 Agreements with pilots and cabin unions
 Perspective for further development with
 Agreement with pilots and cabin unions
 Pension age and productivity increased
 Agreement with pilots and cabin unions
 Employees transfer into "new" Austrian
 Agreement with pilots’ union VC for operation
of Airbus A340-300 aircraft
Page 16
new fleet of Airbus A320
 Chances from current tariff agreement for
pilots and cabin crew
Eurowings to be the #3 point-to-point airline in Europe
Evolution of Eurowings
Evolution into Eurowings
Until 2013
2013-2015
Long-haul flights to start from Nov 2015
2015 onwards
Bangkok
Punta Cana
LH Direct and
Germanwings
New
Germanwings
New
Eurowings
lossmaking
breakeven 2015
#3 point-topoint carrier
Varadero
Phuket
Dubai
News
•
First A320 operating since Feb 2015
•
Four more A320 until summer 2015
•
Two A330 and one B767 (TUI) for
long-haul operations from fall 2015
•
Two A320 based in Vienna this fall
with Austrian crews
Page 17
Innovations
Pricing
BEST
Fare structure
Inflight
entertainment
In-seat + own
devices
Ancillaries
Lufthansa Technik and LSG with stable development
Significant revenue increase as part of service company’s growth strategy
No. 1 Independent MRO-provider
 Operating result 2014:
392 m EUR
404
398
318
 Global market leader as
independent MRO-provider
 Expansion of customer specific
services
 3 bn EUR Revenue growth in
APAC, Middle East, North America
until 2018
 Product innovations and
strategic partnerships enable
access to new customers and
markets
 Extension of Joint Venture with Air
China (MoU signed in 2014)
Page 18
No. 1 Airline caterer
 Operating result 2014:
100 m EUR
105
100
2013
2014
85
 Global market leader in
airline-catering
2012
2013
2014
 Further development of
onboard retail
 Expansion convenience and
retail business
 Continuously enhanced
product and service portfolio
 Successful transfer of know
how in food and logistics to
new adjacent markets
2012
Lufthansa Cargo and Financial Services complement portfolio
Service companies as competitive advantage for the Lufthansa Group
105
100
77
 Higher degree of transparency
and integrated commercial steering
 Operating result 2014:
EUR 100m despite weak
air cargo market
2012
2013
 Among the world's biggest
cargo carriers with approx. 300 destinations
2014
 Accelerated speed to market
through dedicated resources and
higher degree of entrepreneurial freedom
 Enable business and profits to grow
 Five new Boeing 777F join the fleet between
2013 and 2015
 Innovations for industry specific solutions
 Increase share high value freight
 Attract new partner companies also from
non-travel industries
 Enhance attractiveness for "less frequent" flyers
 Implement dedicated mileage program for
point-to-point platforms
Page 19
Lufthansa Group focuses on sustainable development
Corporate responsibility is an important objective
Lufthansa
Compliance
program
The Lufthansa
Compliance
Continuous efficiency gain improves CO² footprint
•
•
•
Fuel consumption dropped below 4 liters in 2013*
Corporate social responsibility
•
Humanitarian aid
Help Alliance, Cargo Human
Care, SOS Kinderdorf
•
Environmental responsibility
fuel efficiency, noise reduction,
crane protection
•
Cultural and Sports
sponsorships
*Fuel consumption per passenger per 100 km
Page 20
Program ensures compliance with applicable law
The Lufthansa Compliance Office is responsible for
implementation, development and communication
Consisting of 5 modules:
 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 21
Key financial ratios clearly improve
Q1 2015 at a glance
Q1 2015
Q1 2014
vs. PY
6,973
6,462
+7.9%
5,419
5,161
+5.0%
EBIT
-144
-217
+33.6%
Adjusted EBIT
-167
-240
+30.4%
Net income
425
-252
--
Q1 2015
Q1 2014
vs. PY
Passenger Airline KPIs
1,394
855
+63.0%
No. of flights
-2.4%
Net invest
862
660
+30.6%
ASK (capacity)
+1.0%
Free cash flow
532
195
+172.8%
RPK (volume)
+1.3%
Lufthansa Group (in m EUR)
Total revenue
of which traffic revenue
Operating cash flow
SLF (load factor)
Q1 2015
+0.2pts.
Q1 2015
FY 2014
vs. FY 2014
Equity ratio
7.5%
13.2%
-5.7pts.
Yield (pricing)
+3.7%
Net debt (excl. pensions)
2,890
3,418
-15.4%
RASK (unit revenue)
+4.1%
Pension provisions
10,211
7,231
+41.2%
CASK (unit costs)
+6.0%
Page 22
All operating segments contribute to result improvement
Segment overview Q1 2015
Share of
LH Group‘s
external revenue
Q1 2015 vs. Q1 2014
in m EUR
71.6%
8.7%
Passenger
Airline Group
Logistics
1.0%
7.7%
MRO
Catering
Others &
Consolidation
Revenue
5,157
614
1,249
672
-719
vs. PY in %
+5.2%
+5.3%
+18.6%
+15.7%
-9.8%
Adj. EBIT
-254
52
106
-3
-68
+78
+27
+3
+3
-38
vs. PY in m EUR
in m EUR
Lufthansa
Passenger
Airlines
SWISS
Austrian
Airlines
Revenue
3,732
1,055
390
vs. PY in %
+4.9%
+10.1%
-3.2%
-233
51
-53
+23
+47
+1
Adj. EBIT
vs. PY in m EUR
Page 23
11.0%
Solid traffic figures but strong regional differences
Operating KPIs Passenger Airline Group
Total
Page 24
Q1 2015
Europe
Q1 2015
Asia/Pacific
Q1 2015
Number of flights
-2.4%
ASK
-4.1%
ASK
+2.7%
ASK
+1.0%
RPK
-2.9%
RPK
+1.7%
RPK
+1.3%
SLF
+0.9pts.
SLF
-0.8pts
SLF
+0.2pts.
Yield
+3.7%
Yield
+1.3%
Yield ex currency
-0.4%
Yield ex currency
-6.8%
RASK
+4.9%
RASK
+0.3%
RASK ex currency
+0.8%
RASK ex currency
-7.7%
Q1 2015
Mid East / Africa
Q1 2015
Yield
+3.7%
Americas
Yield ex currency
-2.9%
ASK
+4.6%
ASK
+2.1%
RASK
+4.1%
RPK
+5.5%
RPK
-0.5%
RASK ex currency
-2.5%
SLF
+0.6pts.
SLF
-1,9pts.
CASK incl. fuel
+6.0%
Yield
+9.0%
Yield
+3.1%
CASK* ex currency ex fuel
+2.8%
Yield ex currency
-0.3%
Yield ex currency
-5.6%
RASK
+9.8%
RASK
+0.5%
RASK ex currency
+0.4%
RASK ex currency
-8.0%
 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 25
Trading assumptions for 2015 remain unchanged
Trading assumptions FY 2015
Full Year 2015 assumptions
No. of Flights
further reduction
Capacity
c. +3%
(ASK)
Volume
(RPK)
Load Factor
(SLF)
Pricing
(Yield ex currency)
Unit Revenue
(RASK ex currency)
Unit Costs
(CASK ex fuel ex currency)
Cargo Capacity
Page 26
Explanation
Fleet rollover:
Continued phase out of small, non-efficient aircraft
Capacity growth mainly achieved through more seats per
aircraft. Growth on long-haul, short haul remains flat
above capacity growth
slightly up
clearly negative
High degree of uncertainty around market dynamics from
lower fuel price (surcharge, yield, capacity discipline)
clearly negative
slightly reduced
overall stable
Headwinds included: ATC charges, staff and pension cost,
higher depreciation
Reduction in freighter capacity offset by growing belly
capacity of passenger aircraft
Stronger US Dollar increases fuel cost expectation
Fuel forecast and sensitivities FY 2015 and 2016
Lufthansa Group fuel expenses after hedging
(in bn EUR)
Lufthansa Group price curve remainder of 2015 and 2016
130
Sensitivities with deviating oil price
6.7 (+20%)
6.5 (+10%)
6.0 (-10%)
5.7 (-20%)
6.2
110
2014
2015e
1.5
1.3
1.7 1.6
1.9 1.8
1.6 1.5
100
Hedging result
90
Hedging result
80
FY 2015
Q1
Q2
Q3
Q4
FY 2016
Fuel hedging
level
79%
79%
78%
78%
79%
59%
Expected volume
(in m tons)
9.1
2.0
2.4
2.5
2.2
slight
increase
60
Jet fuel price
(USD/ton)*
734
745
722
734
735
731
50
-
-
1.07
1.07
Brent forward
(USD/bbl)
-
-
66
69
Page 27
70
50
EUR/USD
forward
* incl. fuel hedging
as of 20 April 2015
LH price 2015
LH price 2016
Market price
120
Price paid in USD/barrel
6.8
60
70
Market price:
LH price:
Hedging result:
80
90
100
110
Market price in USD/barrel
66 USD/bbl
77 USD/bbl
-11 USD/bbl
120
130
Almost all segments expected to increase profits above previous year
Forecast 2015 per segment
Op. profit 2014
(m EUR)
Adj. EBIT 2014
(m EUR)
Adj. EBIT Forecast for 2015
Lufthansa Passenger Airlines
252
399
significantly above previous year
SWISS
289
278
slightly above previous year
10
9
2
15
Passenger Airline Group
553
701
significantly above previous year
Logistics
100
123
slightly above previous year
MRO
392
380
slightly below previous year
Catering
100
88
significantly above previous year
37
44
dissolution of segment
-211
-161
Internal Result / Consolidation
-17
-4
Lufthansa Group
954
1,171
Segment
Austrian Airlines
Consolidation
IT Services
Others
Page 28
significantly above previous year
significant improvement
more than 1,500 m EUR before strike cost
Adj. EBIT FY15 expected to be more than 1.5 bn EUR before strikes
Forecast Lufthansa Group 2015
Lufthansa Group Adjusted EBIT
Actual and Forecast
“more than 1.5 bn EUR"
Financial Year 2015
 Profit increase in 2015 mainly driven by
passenger airlines
1,297
1,171
 Four parameters will largely determine ultimate
profit level
987
972
 development of oil price
 exchange rates of EUR,
especially towards USD and CHF
725
 yield development of passenger
airlines
 progress with labor negotiations at Lufthansa
Passenger Airlines
 No strike costs included in forecast
 No restructuring costs included in forecast
2010
in m EUR
Page 29
2011
2012
2013
2014
2015 forecast
Lufthansa Investor Relations Contact
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: [email protected]
Visit our webpage: lufthansa-group.com/investor-relations
Page 30
Appendix
– Financial Figures FY 14 and Q1 15 –
Page 31
Group revenue and currency influence
Q1 2015 vs. Q1 2014
Currency impact on EBIT (in m EUR)
in m EUR
Q1
Q2
Q3
Q4
FY (YTD)
2014
-31
+63
-42
-57
-67
2015
-56
-56
Currency: +6.9%
Volume: +0.9%
44
Price: -2.8%
358
-144
5,419
Traffic revenue (+5.0%)
5,161
1,554
1,301
Other revenue (+19.4%)
Q1 2014
∑ 6,462
Page 32
Q1 2015
∑ Group revenue (+7.9%)
∑ 6,973
Fuel costs
Q1 2015 vs. Q1 2014
Hedging result by quarter (in m EUR)
in m EUR
Q1
Q2
Q3
Q4
FY (YTD)
2014
-21
-2
-30
-96
-149
2015
-203
Cost of hedging increased yoy
-203
-209
1,517
Volume
20
Price
Currency
-724
1,308
313
Hedging
182
Q1 2014
Page 33
Q1 2015
Oil price, euro and interest rates influence costs and revenues
Operating costs and revenues
Q1 2015
vs. VJ
6,973
+7.9%
913
+74.9%
Total operating income
7,886
+12.9%
Operating expenses
8,019
+11.5%
Non-fuel operating expenses
6,711
+18.2%
Cost of materials and services
3,977
+1.1%
Fuel expenses
1,308
-13.8%
Fees and charges
1,246
+6.7%
1,922
+6.9%
374
+10.0%
1,746
+55.6%
Result from equity investments
-11
-37.5%
EBIT
-144
+33.6%
Adjustments
-23
0.0%
Adjusted EBIT
-167
+30.4%
Lufthansa Group (in m EUR)
Total revenue
Other operating income
Staff costs
Depreciation
Other operating expenses
Page 34
+4.9% excl. pensions
+18.0% excl. exchange rate losses
Cash flow increases significantly, liquidity above minimum target
Cash flow statement
Lufthansa Group (in m EUR)
Q1 2015
vs. PY
EBT (earnings before income taxes)
356
+663
Depreciation & amortisation (incl. non-current assets)
395
+42
Net proceeds from disposal of non-current assets
-23
-13
Result from equity investments
11
+3
Net interest result
-2
-63
Income tax payments/reimbursements
-65
+1
3.3
2.4
2.8
2.0
1.4
FY 2011
FY 2012
FY 2013
FY 2014
Operating Cash Flow
2.6
1.6
2.8
2.5
2.4
2.3
2.0
1.4
Measurement of financial derivatives through profit or loss
-646
-687
Change in working capital
1,368
+593
Operating cash flow
1,394
+539
Capital expenditure (net)
-862
-202
Gross Invest
Free cash flow
532
+337
1.4
0.8 0.9
GJ 2011
GJ 2012
GJ 2013
GJ 2014
825
+63
Current securities
2,216
-601
Total Group liquidity
3,041
-538
1.3
0.5
-0.3
FY 2011
FY 2012
FY 2013
FY 2014
Free Cash Flow
* Excluding fixed-term deposits with terms from three to twelve months (92 m EUR)
Page 35
Q1 2015
Net Invest
0.7
Cash and cash equivalents as of 31.03.15*
Q1 2015
Q1 2015
Adjusted EBIT margins
Q1 2015 vs. Q1 2014
10.0
9.8
8.5
all figures in %
8.5
8.0
6.0
4.8
4.3
4.0
2.0
0.4
0.0
-0.4
-2.0
-1.0
-2.4
-4.0
-3.7
-4.9
-6.0
-6.3
-8.0
-6.8
-7.2
-10.0
-12.0
-14.0
-13.6 -13.4
Lufthansa
Passenger
Airlines
Q1 2015
Page 36
SWISS
Q1 2014
Austrian Airlines
Passenger
Airline Group
Logistics
MRO
Catering
Lufthansa
Group
Adjusted EBIT margins
FY 2014 vs. FY 2013
12.0
11.3
all numbers in %
11.0
10.0
8.8
9.0
8.0
7.0
6.8
6.6
6.3
6.0
5.1
4.9
5.0
4.4
4.3
3.9
4.0
3.0
3.0
2.3
2.5
2.0
3.3
3.3
2.7
1.3
1.0
0.4
0.0
Lufthansa
Passenger
Airlines
FY 2014
Page 37
SWISS
FY 2013
Austrian
Airlines
Passenger
Airline Group
Logistics
MRO
Catering
IT Services
Lufthansa
Group
Adjusted EBIT and one-off factors
Quarterly results 2014-2015
in m EUR
Adjusted EBIT 2014
Q1
Q2
Q3
Q4
6M
9M
Full Year
-240
418
810
183
178
988
1,171
incl. strikes
-10
-60
-35
-127
-70
-105
-232
incl. Venezuela
-38
-23
+7
-5
-61
-54
-59
Adjusted EBIT ex one-off factors
-192
501
838
315
309
1,147
1,462
Adjusted EBIT 2015
-167
incl. strikes
-42
incl. Venezuela
-60
Adjusted EBIT ex one-off factors
vs. PY
Page 38
-65
+127
-58
Appendix
– New set of financial KPIs –
Page 39
New system directly links profit figures and value creation metric
EBIT, EACC and ROCE are transparent and can be calculated easily
Total Op. Income
Balance Sheet Total
./. non-interest bearing
liabilities
./. operating costs
Capital Employed
Current Year
+ Income from
Subsidiaries
Capital Employed
Last Year
50
:
50
X
WACC
ROCE =
Page 40
(Rev.+ Oth. Op. Income)
EBIT
+ Interest on Liquidity
+/- pension changes:
past service costs,…
./. Tax (assumed tax
rate 25%)
+/- book gains/losses
on asset disposal
./. Cost of Capital
+/- impairments
EACC
Adj. EBIT
(EBIT + Interest on Liquidity – Tax)
Average Capital Employed
New system directly links profit figures and value creation metric
Calculation for financial year 2014
in m EUR
30,474
32,114
./. 12,980
./. 31,235
17,584
17,545
5.9%
ROCE =
Page 41
+ 121
50
:
50
X
EBIT: 1,000
+ 84
-48
./. 271
+77
./. 1,036
+142
EACC: -223
Adj. EBIT: 1,171
(1,000 + 84 - 271)
17,565
= 4.6%
EBIT is a structurally higher number than operating result
Main difference is that income from subsidiaries is included
1,645
Operating profit
EBIT
Adj. EBIT
820 864
936 986
972
839
725
699
2011
2012
2013*
2014
31,070
32,947
32,149
32,114
-30,277
-31,396
-31,337
-31,235
71
94
124
121
EBIT
864
1,645
936
1,000
./. Delta to Operating Result
-44
-806
-237
-46
Operating Result
820
839
699
954
Adj. EBIT
972
725
986
1,171
-152
-114
-287
-217
820
839
699
954
Total Operating Income
./. Operating Expenses
+ Income from Subsidiaries
./. Delta to Operating Result
Operating Result
* Restatement due to IFRS11: Aerologic GmbH has been proportionately consolidated as a joint operation since 1 January 2014
Page 42
1,171
954 1,000
Adjusted EBIT and EBIT per Quarter 2014
in m EUR
Q1
Q2
Q3
Q4
6M
9M
Full Year
Operating result
-245
359
735
105
114
849
954
Adj. EBIT
-240
418
810
183
178
988
1,171
0
0
+15
+33
0
+15
+48
book gains / losses on asset disposals
+13
0
+8
-100
+13
+21
-79
impairments
+10
+15
-1
-164
25
24
-140
-217
433
832
-48
216
1,048
1,000
pension changes
EBIT
interest on liquidity
+84
taxes (25% lump sum)
-271
cost of capital
EACC
average capital employed
WACC
ROCE
Page 43
-1,036
-223
17,565
5.9%
4.6%
WACC is based on a target capital structure of 50:50
Current WACC is 5.9%
Cost of Debt1
Cost of Equity2
3.4% (FY 2014)
8.4% (FY 2014)
Target Capital Structure
50 : 50
WACC: 5.9%
1 Currently
2
Page 44
no consideration of tax shield
Cost of Equity FY2014 = Risk-free market interest rate of 2.6% + (Market risk premium of 5.2% x Beta Factor 1.1)
Current capital employed is ca. 17.6 bn EUR
Weighted average cost of capital is 5.9%
18,101
17,526
17,545
17,565
7.0%
7.0%
6.2 %
5.9%
2011
2012
2013*
2014
Balance Sheet Total
28,081
28,559
29,108
30,474
./. Non-Interest Bearing Liabilities
10,649
10,940
11,563
12,890
- liabilities from unused flight documents
2,359
2,612
2,635
2,848
- trade payables, other fin. liabillites, other provisions
- adv. payments, deferred income, other non-fin. liabilities
- others
4,758
2,095
1,437
4,887
2,096
1,345
5,113
2,151
1,664
5,151
2,103
2,798
Capital Employed at year-end
17,432
17,619
17,545
17,584
Average Capital Employed
18,101
17,526
17,582
17,565
7.0%
7.0%
6.2%
5.9%
864
1.645
936
1,000
62
75
67
84
Average
Capital Employed
WACC
WACC
EBIT
Interest on liquidity
Taxes
Cost of capital
-232
-430
-251
-271
-1,267
-1,227
-1,090
-1,036
EACC
-573
63
-338
-223
ROCE
3.8%
7.4%
4.3%
4.6%
* Restatement due to IFRS11: Aerologic GmbH has been proportionately consolidated as a joint operation since 1 January 2014
Page 45
Appendix
– Fuel hedging policy –
Page 46
Unchanged rolling approach reduces fuel cost volatility
Lufthansa Group's fuel hedging strategy
Current hedging level status
FY2015
79%
FY2016
59%

Lufthansa Group's hedging strategy is designed to
reduce volatility

Rolling approach with 24 months lead time
before actual consumption

Hedging level increases month-by-month
until 85% is hedged

Mainly options, not fixed contracts
in order to still benefit from falling oil prices

Lufthansa Cargo (not hedged) and Germanwings (twelve month
hedging horizon) with differing approaches
due to competition reasons

Strategic hedging (in Q4 2014 / Q1 2015):
Extension of hedging horizon to up to 36 month in order to take
advantage of current low oil prices
# months before actual date of consumption
Page 47