Shareholder Information
Investor Relations
November 2010
Ladies and gentlemen, dear shareholders,
­
Lufthansa has flown through the financial and economic crisis
­successfully. After a gratifying third quarter the Group was able to
report a very respectable result for the first nine months of 2010
and increase its earnings forecast for the full year. After the effort it
took to stabilise our business during the financial and economic
crisis, we are now back on our course of profitable growth.
Recent months have also seen further important decisions taken
for the Group’s future development. In September the Supervisory Board appointed Christoph Franz as the next Chairman of
the Executive Board and CEO with effect from 1 January 2011.
Carsten Spohr was appointed to the Executive Board of Deutsche
Lufthansa AG; he will also chair the Lufthansa German Airlines
Board. At the same meeting the Supervisory Board approved
the order for 48 aircraft as part of the ongoing programme to
moder­nise the fleet.
Today’s Shareholder Info gives you an overview of current developments and the outlook for Lufthansa. Furthermore, we present a
brief portrait of Lufthansa Cargo and comments on the dividend
policy and corporate responsibility. If you are interested in more
detailed information, please visit our website at i lufthansa.com/
investor-relations. We would also be delighted to hear your views on
our business – our contact details can be found on the back cover.
Key figures January to September 2010
Jan. – Sept.
2010
Revenue and result
€m
20,193
16,162
24.9
of which traffic revenue
€m
16,445
12,589
30.6
Operating result
€m
612
226
170.8
EBIT
€m
957
208
360.1
Net profit/loss for the period
€m
524
31
€m
29,501
27,281
8.1
Key balance sheet and
cash flow statement figures
Total assets
Equity ratio
%
25.1
22.5
2.6 pts
Net indebtedness
€m
1,521
1,908
– 20.3
Cash flow from
operating activities
€m
2,425
1,438
68.6
Capital expenditure (gross)
€m
1,760
1,777
– 1.0
Share price
at the quarter-end
€
13.49
12.11
11.4
Earnings per share
€
1.14
0.07
thousands
67,869
55,635
22.0
%
79.7
78.0
1.7 pts
thousand
tonnes
1,468
1,231
19.3
The Lufthansa share
Traffic figures 2)
Passengers
Freight and mail
Cargo load factor
Frank Hülsmann, Head of Investor Relations,
Deutsche Lufthansa AG
Change
in %
Total revenue
Passenger load factor
Kind regards,
Jan. – Sept. 2009 1)
%
68.0
58.1
9.9 pts
Available tonne-kilometres
millions
28,780
25,907
11.1
Revenue tonne-kilometres
millions
21,479
17,994
19.4
%
74.6
69.5
5.1 pts
number
763,170
638,492
19.5
Overall load factor
Flights
Last year’s figures have been restated in line with measurement changes under IAS 39.
Lufthansa Group without Germanwings.
1)
2)
Performance of the Lufthansa share, indexed as of 31.12.2009,
After falling in the second quarter of 2010, the stock markets
compared with the DAX and competitors
r­ allied again in the third quarter. The DAX climbed to 6,229 points
(+4.4 per cent) on 30 September 2010. The Lufthansa share was
1,4140
lifted even more strongly by the sustained pace of the sales and
earnings recovery, finishing the quarter at EUR 13.49. It was one of 1,3130
the strongest performers in the DAX in the third quarter, posting 1,2120
an increase of 14.8 per cent since the beginning of the year. On an
1,1110
industry comparison the Lufthansa share also outperformed many
1,0100
competitors. A large majority of equities analysts continue to
rate Lufthansa as a buy. Their average target price at the end of
0,9 90
September was EUR 15.20 and expectations were adjusted
0,8 80
upwards again following publication of the quarterly results. Cur70
rent analysts’ opinions and more information about the Lufthansa 0,7
31.12.
share are available on our website.
2009
DAX Lufthansa Shareholder Information November 2010
Lufthansa British Airways Air France
30.9.
2010
benefited particularly well from resurgent demand, reporting
another record result. Lufthansa Technik and Lufthansa Systems
confirmed their role as late-cycle segments with slight falls in revenue, but nevertheless presented good results. LSG Sky Chefs also
benefited from the resurgent premium business. The structural
measures taken by all Group companies to safeguard earnings
and the restructuring of the new companies are being pursued
unchanged.
Outlook
Business development
After a turbulent start to the year 2010, Lufthansa was increasingly
able to match the performance of prior years over the following
months. The global economic recovery, the business segments’
strong positioning in their markets, the increased use of potential
synergies in the airline group and ongoing cost-cutting measures
all had a positive effect on the Group’s revenue and income.
Strong growth rates were reported particulary in freight traffic and
international passenger traffic over the reporting period, with traffic
revenue here rising sharply. By contrast, revenue in European
­traffic con­tinues to lag behind as a result of structural shifts in
­passengers’ booking patterns.
Despite varying levels of activity in the business segments, the
­success to date and current stable developments in demand have
altogether led us to the conclusion that our expectations for earnings development in 2010 can be revised upwards. We are therefore now assuming an increase in revenue, which should be well
above last year’s, even after adjusting for the effects of consolidation. By continuing to focus on attaining our cost targets we expect
the operating result for the current financial year to exceed the
EUR 800m mark.
If the economy develops as forecast and the course of business
is not undermined by a disproportionate increase in fuel prices or
other unforeseeable factors, it can generally be assumed from a
current perspective that the result will continue to develop positively
in 2011, too. The extent to which the planned air traffic tax will
lead to a downturn in demand remains difficult to predict, however.
The volatility of the remaining variables remains high, and the current forecast is therefore subject to the usual risks for the industry.
The Passenger Airline Group reported particulary an operating
profit for the first nine months overall. It was nevertheless still lower
than last year’s due to the non-recurring effects from the first half
of the year and negative earnings contributions from the newly consolidated companies bmi and Austrian Airlines. Lufthansa Cargo
In the course of the operating recovery we are now also expecting
2010 to deliver a net profit for the period and positive earnings
per share. These are subject to diverse influences, however, and
therefore cannot be quantified more closely at present. We nevertheless assume from today’s perspective that the conditions for
paying a dividend for the financial year 2010 will be met.
Revenue and operating result by business segment (Jan. – Sept. 2010)
Operating result and net profit / loss for the period in €m (Jan. – Sept.)
Revenue
Change
­compared with
previous year
in €m
in %
Passagenger
Airline Group
Operating
Change
result ­compared with
previous year
in €m
in %
1,085
15,460
28.3
218
Logistics
2,014
45.0
230
MRO
2,983
– 0.8
211
438
– 2.9
12
0
1,674
5.5
50
– 5.7
IT Services
Catering
1,578
954
– 8.8
691
– 7.9
524
226
31
2006
2007
Operating result Lufthansa Shareholder Information November 2010
612
529
414
2008
Net profit / loss for the period
2009
2010
Portrait of a business segment:
Lufthansa Cargo
Leading European freight airline Lufthansa Cargo is the
­Lufthansa Group’s main provider for the logistics business as well
as one of the largest cargo airlines in the world. In addition to the
standard segment and the express segment, a special segment
for the transport of temperature-sensitive products, live animals,
airmail and particularly valuable goods rounds off the company’s
broad range of services. Lufthansa Cargo’s strategic goal is to
lead the industry in terms of profitability, quality and growth.
In a fluctuating economic environment Lufthansa Cargo has held
its ground very successfully. Since the end of 2009 freight traffic
has rebounded from the crisis faster than expected. Above all it
has been the resurgent German export economy that has driven
the recovery at Lufthansa Cargo. Furthermore, consistent cost
management contributed to a positive earnings performance.
The operating profit for the first nine months of 2010 came to
EUR 230m, which represents the best result in the company’s
­history.
The different production platforms at Lufthansa Cargo are one
important success factor. In addition to its own MD-11 fleet it uses
belly capacities in Lufthansa’s passenger aircraft as well as the
capacities of its joint ventures Jade Cargo International in China
and AeroLogic GmbH in Leipzig. Since July 2010 Lufthansa Cargo
has also been marketing the freight capacities of Austrian Airlines.
In Austria the new subsidiary of Austrian Airlines and ­Lufthansa
Cargo, Austrian Lufthansa Cargo GmbH, is responsible for the
continued development of Vienna as an additional hub. Overall,
this enables Lufthansa Cargo to benefit from its worldwide network,
which links 330 destinations in more than 100 countries via hubs
in Frankfurt, Munich, Leipzig/Halle and Vienna.
Lufthansa Cargo is expanding its route network in specific areas in
order to exploit market potential. The focus is on the Asia/Pacific
traffic region, which is one of the company’s engines of growth.
The last four MD-11 aircraft parked during the economic crisis
are also being reactivated to cover the additional routes. They will
be available again by the end of the year.
Outlook Lufthansa Cargo In view of the very positive economic
momentum Lufthansa Cargo is optimistic and expects to improve
revenue even further in the traditionally strong fourth quarter.
­Considerable seasonal demand is forecast, above all from Asian
markets. The rapid growth rates seen this year will increasingly
taper off, however, due to the base effect caused by last year’s
slump in demand. The growing AeroLogic fleet and the MD-11
­aircraft brought back into service ahead of schedule by Lufthansa
Cargo will provide much greater capacities for the pre-Christmas
increase in demand.
Sales performance in cargo tonne-kilometres in millions (Jan. – Sept.)
5,966
6,214
6,285
5,298
6,504
2006
2007
2008
2009
2010
Lufthansa Cargo therefore continues to expect a significant
increase in revenue for the full year 2010 and will maintain its strict
cost management. After the crisis-induced loss sustained last year,
the company is confident of generating an operating profit in the
fourth quarter of 2010 as well and adding to the result already
achieved.
Lufthansa Shareholder Information November 2010
Questions & Answers
Responsibility
Will Lufthansa be distributing a dividend for this year?
In view of the expected earnings development for the current financial year we are assuming as of today that the conditions defined in
our dividend policy for making a distribution will be met.
Analysis of transport modes: air traffic is compelling A recently
published study has shown that it is above all the intelligent networking of road, rail and air as modes of transport that ensures
­efficient, sustainable mobility. The Air Traffic for Germany initiative,
which combines DFS Deutsche Flugsicherung GmbH, Flughafen
München GmbH, Fraport AG and Deutsche Lufthansa AG under
the aegis of the German Federal Ministry of Transport, Building and
Urban Development (BMVBS), asked an independent group of
experienced authors (the research and advisory company INFRAS
Zurich and the Fraunhofer Institute for Systems and Innovation
Research) to carry out a study of transport modes. The analysis
includes aspects such as infrastructure costs, accident and environmental costs, operating and user-time costs. Today, the German
economy already benefits from a transport system in which road,
rail, sea and air transport complement one another well. In passenger traffic, for instance, Lufthansa only accounts for 15 per cent
of the competition with railways. Due to the system concepts there
are differences between the individual modes of transport. Air
transport is the only mode of transport to cover most of its own
costs itself, with a figure of 95 per cent. The corollary is that air
transport only receives four per cent of total transport subsidies
(rail accounts for 52 per cent and road for 24 per cent). If one looks
at the costs of the individual transport modes, air transport is well
ahead from distances of 400 to 500 km onwards and for longer
European routes there is effectively no alternative. The full transport
study can be viewed at i initiative-luftverkehr.de. You can find more
information about how we deal with our corporate responsibility on
our website at i lufthansa.com/­verantwortung.
What is the dividend policy at Lufthansa?
Our dividend policy is primarily aimed at achieving continuity in
the dividend ratio. Dividend payments largely depend on two financial indicators: the operating result and the net profit for the
year. The distribution is primarily based on the operating result:
in the past we have paid out 30 to 40 per cent of this result to our
share­holders. This is nevertheless subject to the condition that
­Lufthansa’s net profit for the year, as shown in the consolidated
and individual financial statements for the parent company, allow
a dividend to be paid.
Why does Lufthansa not distribute the same dividend per
share every year?
Our dividend policy reflects the cyclical nature of our business.
In good years we give shareholders a share of our success with
­correspondingly high dividends. The very good 2008 financial year,
for instance, resulted in a dividend payment of EUR 1.25 per share.
In poor years, however, the substance of the Company must not
be weakened. This means that for these years no dividends are
paid out to the detriment of the equity base. For the crisis year
2009 for example, no dividend was paid.
Contact
Financial calendar
Your contacts at Investor Relations:
7March2011Release of Annual Report 2010
1
3May 2011
Annual General Meeting, Berlin
5May 2011Release of Interim Report
January to March 2011
The next Shareholder Information will be published
in August 2011.
J. Honig
G. Schleussner
J. Hildenbrock
If you have any questions please do not hesitate
to ­contact us by telephone +49 69-696 28010,
or via email at investor.relations@dlh.de.
Address
Deutsche Lufthansa AG
Investor Relations
Lufthansa Aviation Center LAC
Airportring
60546 Frankfurt am Main
Germany
Disclaimer in respect of forward-looking statements
Information published in the Shareholder Information with regard to the future development of the Lufthansa Group and its subsidiaries consists purely of f­orecasts and
assessments and not of definitive historical facts. Its purpose is exclusively informational identified by the use of such cautionary terms as “believe”, “expect”, “forecast”,
“intend”, “project”, “plan”, “estimate” or “intend”. 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 or divergently occur, it is possible that the Group’s actual results and development may differ materially from those implied by
the forecasts. Lufthansa makes a point of checking and updating the information it publishes. It cannot, however, assume any obligation to adapt forward-looking
­statements to accommodate events or developments that may occur at some later date. Accordingly, it neither expressly nor conclusively accepts liability, nor gives
any guarantee, for the actuality, accuracy and completeness of this data and information.
Lufthansa Shareholder Information November 2010