Lufthansa Group
Baader Investment Conference
Munich
23 September 2015
The Lufthansa Group is the largest aviation group in the world
Group based on three strong pillars with synergetic businesses
FIRST CHOICE IN AVIATION
Hub Airlines
Point to Point /
Second Brand Eurowings
Aviation Services
#1 Multi-Brand Premium
Hub System in Europe
Aim to be #3 Pan-European
Point-to-Point Airline
#1 in Aviation Services
Margin improvement
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Profitable Growth
Industry-leading products and services drive customer satisfaction
Hub airlines: Quality focus to support revenue development
Lufthansa Passenger Airlines
New First Class
New Business Class
600 new seats since Jun. 2015
7,000 new seats since Sep. 2015
New Premium Economy Class
5 Star Service Upgrades
5 STAR
3,600 new seats until Oct. 2015
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Lufthansa Group Airlines
Full flat Business Class seats
standard in the Lufthansa Group
Network and partnerships are important drivers for revenue quality
Hub airlines: Comprehensive network and joint ventures boost connectivity
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)
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* Joint venture with Air China in progress (MoU signed in 2014)
Innovative sales and distribution approach increases revenues
Hub airlines: Implementing distribution strategy of the future
Implementation of new distribution strategy
Product upgrade.
Roll-out of First,
Business and
Premium Economy
Introduction of
Distribution Cost
Charge on bookings
through GDSs
Basis for generation
of ancillary
revenues
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Introduction of
flexible, modular
fare options
„Light“, „Classic“
and „Flex“
Unbundling of
fares to drive
revenue generation
Next generation
revenue
management
system
Real-time,
dynamic pricing
system going far
beyond the basic
current 26-letter
fare categories
Completely new
website as a
common
Lufthansa Group
digital
marketplace
“One kitchen, many
restaurants”
Strict focus on asset utilization and cost efficiency
Group airlines: Long-Term fleet and operating performance
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
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513
524
2007
2008
430
75,2%
2006
2009
2010
2011
Agreements with labor unions support competitiveness
Group airlines: Current status of labor negotiations
! Court ruling on pilot strikes in September
! Negotiations with ver.di postponed until end of
September
Agreements with pilots’ and cabin unions
Perspective for further development with
new fleet of Airbus A320
! Ongoing talks with cabin crew union UFO
Agreement with pilots and cabin unions
Agreement with pilots’ and cabin unions
Pension age and productivity increased
Employees transfer into "new" Austrian
Agreement with pilots’ union VC for operation
of Airbus A340-300 aircraft
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Chances from current tariff agreement for
pilots and cabin crew
Eurowings to be the #3 point-to-point airline in Europe
Eurowings: Delivering break-even in 2015, path for further development set
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 since 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
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Innovations
Pricing
BEST
Fare structure
Inflight
entertainment
In-seat + own
devices
Ancillaries
Service companies as competitive advantage for the Group
Aviation Services: Market leading companies with focus on profitable growth
MRO
Catering
Global market leader as
independent MRO-provider
Global market leader in airline
catering
Market leading positions in
respective field of activities
Expansion of customer specific
services
Further development of on-board
retail
Higher degree of entrepreneurial
freedom
3 bn EUR Revenue growth in
APAC, Middle East, North America
until 2018
Continuously enhanced product
and service portfolio
Product innovations and
strategic partnerships
i.e. Air China (Ameco)
Successful transfer of know how in
food and logistics to new adjacent
markets
Expansion into convenience and
retail business
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Finance & Services
Enable business and profits to
grow
Attract new partner companies
also from non-travel industries
Enhance attractiveness for "less
frequent" flyers at Miles & More
Realignment of organizational structure strengthens competitiveness
Group set-up: Leveraging synergies while creating entrepreneurial freedom
Corporate Center: Holding with steering function
• Simplification of cross divisional business relationships
• Lean and standardized support processes
Hub Airlines
• Commercial coordination of hubs
• Consistent
customer
experience
• Realization of
Synergies
Point to Point /
Eurowings
• Competitive cost
structure
responding to
customer needs
• Active and
passive ability for
consolidation
Levers to increase competitiveness
Profit contribution through
cost synergies and process
optimization
500 m EUR p.a.1
Streamlined management
-15%
Reduction of management
levels
by 25%
Aviation Services
• Preferred supplier
for group airlines
• Efficient intra
group business
relationship
Reduction of executive
boards and committees
• Third party
business growth
1) Ramp-up until 2019
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The Lufthansa Group has a solid financial profile
Balance sheet: Access to attractive financing options, investment grade rated
1. Lufthansa Group is profitable and
produces strong cash flows
2. Conservative fleet structure and
robust balance sheet provide financial
stability
3. Solid financial profile provides
competitive edge in financing conditions
in bn EUR
S&P Investment Grade
Rating (BBB-, stable)
confirmed in May 2015
owned &
unencumbered
1.8
1.7
1.5
owned
1.8
14.6 bn €
leased
0.9
1.0
0.7
1.0
1.2
2011
2012
2013
2014
Depreciation
0.5
ca. 90% of fleet is owned vs. 10% leased
H1 2015
>70% of fleet is financially unencumbered
(not used as security for financing deals)
Issuance of 1.125% Bond
Volume of 500 m EUR
and a maturity of 5 years
(Sept 2014 - Sept 2019)
500 m EUR Hybrid bond
Coupon: 5.125%
50% equity credit by rating
agencies (60ys maturity)
Adj. EBIT
3.3
2.8
Target
FY 14
H1 15
2.3
bn EUR
2.6bn
EUR
3.4bn
EUR
2.5
2.4
Min.
Liquidity
2.0
1.4
1.3
Debt Re45%
payment
(min. 35%)
Ratio
-0.3
2012
2013
Operating Cash Flow
7.2 *
1.0
0.7
2011
Recent
Debt
financing
2014
H1 2015
Free Cash Flow
Equity
Ratio
25%
midterm
5.8 *
21%
13%
28%
18%
2.2 *
6.6 *
4.7 *
2.3
2.0
1.7
2011
2012
2013
pension provisions
3.4
2.4
2014
H1 2015
net financial debt
* pension provisions: flexible funding model, no "margin call" for additional fundings
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Key financial ratios develop positively
Financial performance: 6M and Q2 2015 at a glance
Lufthansa Group (in m EUR)
6M 15
6M 14
vs. PY
Q2 15
Q2 14
vs. PY
Total revenue
15,365
14,166
+8.5%
8,392
7,704
+8.9%
12,123
11,466
+5.7%
6,704
6,305
+6.3%
EBIT
463
216
+114.4%
607
433
+40.2%
Adjusted EBIT
468
178
+162.9%
635
418
+51.9%
Net income
954
-79
--
529
173
+205.8%
6M 15
6M 14
vs. PY
Passenger Airline KPIs
6M 15
Q2 15
Operating cash flow
2,527
1,744
+44.9%
No. of flights
-0.1%
+1.9%
Net invest
1,507
1,198
+25.8%
ASK (capacity)
+3.3%
+5.2%
Free cash flow
1,020
546
+86.8%
RPK (volume)
+3.6%
+5.4%
+0.2pts.
+0.1pts.
of which traffic revenue
SLF (load factor)
6M 15
GJ 14
vs. FY 14
Equity ratio
17.5%
13.2%
+4.3pts.
Yield (pricing)
+2.4%
+1.5%
Net debt (excl. pensions)
2,363
3,418
-30.9%
RASK* (unit revenue)
+2.8%
+1.7%
Pension provisions
6,580
7,231
-9.0%
CASK (unit costs)
+2.3%
-0.7%
* Standard definition comprises traffic revenue excl. other operating income
RASK incl. other operating income: 6M 2015: +5.0%; Q2 2015: +3.0%
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Adj. EBIT FY15 expected to be more than 1.5 bn EUR
Financial Forecast Lufthansa Group 2015
Lufthansa Group Adjusted EBIT
Actual and Forecast
“more than 1.5 bn EUR"
Financial year 2015
Profit increase mainly driven by passenger airlines
1,297
Four parameters will determine ultimate profit level
1,171
development of oil price;
986
972
exchange rates of EUR,
especially towards USD and CHF;
yield development of passenger
airlines; and
725
progress with labor negotiations at
Lufthansa Passenger Airlines
CEO Statement on 16 September 2015
2010
in m EUR
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2011
2012
2013
2014
2015 forecast
“We have seen record load factors and record
results for July and August. The unit revenues
continue to be above the level of the second quarter.
We are hence optimistic to […] achieve our full year
guidance of more than EUR 1.5 billion
comfortably.”
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.
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Lufthansa Group
Baader Investment Conference
Munich
23 September 2015
Page 15