Deutsche Lufthansa Ag · XETR:LHA
Deutsche Lufthansa — Investor Presentation (September 2021)
57 slides from Deutsche Lufthansa's investor presentation, September 2021
Slide 1: Company Presentation September 2021
Company Presentation September 2021
Slide 2: Disclaimer
Disclaimer IMPORTANT: The following applies to this document and the oral presentation of the information in this document by Deutsche Lufthansa Aktiengesellschaft (the “Company”, and together with its consolidated subsidiaries, the “Group”) or any person on behalf of the Company, any question-and-a
Slide 3: Disclaimer
Disclaimer This Presentation does not constitute or form part of, and should not be construed as, an offer to sell or issue, or the solicitation of an offer to purchase, subscribe to or acquire, securities of the Company, its affiliates or an inducement to enter into investment activity in the Unite
Slide 4: First Half Results 2021 and outlook
First Half Results 2021 and outlook Mid-Term Strategy Page 4
Slide 5: Surge in customer demand has enabled expanding our flight schedules
Surge in customer demand has enabled expanding our flight schedules H1 Group Airlines net new bookings by week Operational KPIs for calendar week 30 46% (2021 vs. 2019) Passengers (1,503,143) 2019 51% 84% Flights Destinations 2021 (12,514) (275) 534 Active aircraft CW 2 4 6 8 10 12 14 16 18 20 22 24
Slide 6: Cash flows turn positive in the second quarter
Cash flows turn positive in the second quarter –successful ramp up and restructuring progress limit operating losses (in EUR million) Q2 ’21 Q2 ’20 Change in % 6M ’21 6M ’20 Change in % Revenues 3,211 1,894 +70% 5,771 8,335 -31% Operating expenses 4,510 3,907 +15% 8,490 12,069 -30% Of which fuel 417
Slide 7: Network Airlines: Reduction of Q2 operating loss despite costs of ramp up
Network Airlines: Reduction of Q2 operating loss despite costs of ramp up Q2 2021 6M 2021 Comments ASK 29.1% ASK 26.0% Capacity (ASK) gradually expanded Operational KPIs to around 40% at quarter end vs. 2019 SLF 49.7% SLF 47.7% -33.6pts. -33.2pts. Effects from fixed cost reduction by around one
Slide 8: Eurowings: Significant fixed cost reductions limit operating loss
Eurowings: Significant fixed cost reductions limit operating loss Q2 2021 6M 2021 Comments ASK 25.0% ASK 18.5% Significant ramp up into summer – Operational KPIs capacity at quarter end >40% vs. 2019 SLF 70.5% SLF 66.3% -12.8pts. -13.6pts. Yield development better compared to low cost peers Yiel
Slide 9: Record results in Logistics, MRO and Catering achieve positive Adjusted EBIT
Record results in Logistics, MRO and Catering achieve positive Adjusted EBIT Adjusted EBIT in EUR million Q2 2021 6M 2021 Comments 326 299 640 277 Profits in Cargo business continue to Q2 ’21 Q2 ’20 6M ’21 6M ’20 benefit from belly capacity squeeze and high demand for air freight 86 102 Earnings
Slide 10: Operating cash drain further reduced to c. EUR 200 million per month in Q2
Operating cash drain further reduced to c. EUR 200 million per month in Q2 Adjusted EBIT / Adjusted free cash flow in EUR million 269 962 340 (356) 549 (132) -535 Monthly cash -952 Drain1: EUR 198m Adjusted Depreciation & Non-cash Operating Net new Remaining Net Adjusted EBIT Amortization items/ res
Slide 11: Available liquidity remains stable at above EUR 11 billion
Available liquidity remains stable at above EUR 11 billion compared to year-end 2020 in EUR million Comments 11.1bn 11.1bn 348 EUR 4.0 billion of stabilization (607) measures drawn – EUR 1.0 billion (2,672) 2.864 KfW loan was repaid in Q1 5.460 6.666 New financing transactions compensate negativ
Slide 12: Equity above year-end 2020 level even when excluding SPI drawdown
Equity above year-end 2020 level even when excluding the effect from the SPI drawdown – pension provisions decline by c. EUR 1.9 billion Net debt in EUR million Pension provisions in EUR million Shareholder equity in EUR million 10,430 9.531 3,145 9.922 1,500 Drawdown of SPI 7.607 Effect 1,500 from
Slide 13: Air traveling has started to become less restricted and easier again
Air traveling has started to become less restricted and easier again Travel restrictions and regulations are easing Digital initiatives to facilitate more seamless and safe travel Restrictions in destination countries 15% 15% 26% 37% “Where to travel” Covid-19 services in Contactless Biometric 85% 8
Slide 14: Recovery in bookings across all customer segments
Recovery in bookings across all customer segments, first green shoots in long-haul driven by the Transatlantic Leisure Demand by region Leisure sales to key markets1 2021 vs. 2020 (volume) Top 5 point of sales in June by absolute number of passengers +48% 2021 vs May 735,865 735.865 +92% 2021 2020 v
Slide 15: Ramp up expected to progress also in the remaining year 2021
Ramp up expected to progress also in the remaining year 2021 Key assumptions for ramp up Expected capacity ASK in % of 2019 c.60% Westbound Transatlantic travel c.50% c.50% c. 47% assumed to be possible again from late September onwards Recovery of corporate travel FY 2021 demand to gain momentu
Slide 16: Lufthansa Group expects operating cash drain to stop in Q3
Lufthansa Group expects operating cash drain to stop in Q3 2021 Adj. EBIT: Less negative than in 2020 No Operating cash drain in Q3 – Adj. EBIT to be positive (excl. restructuring expenses) 2021 Gross CapEx: c. EUR 1.5bn Page 16
Slide 17: Mid-Term Strategy
First Half Results 2021 and outlook Mid-Term Strategy Page 17
Slide 18: Lufthansa repositioned for the recovery
Lufthansa repositioned for the recovery Potential capital Decisive actions Structural increase to re- taken to respond transformation establish to unprecedented supporting new sustainable and disruption targets efficient capital structure Cash drain more than halved Targeted cost reduction of EU
Slide 19: Crisis requires long-term restructuring to right-size business
Crisis requires long-term restructuring to right-size business for future Targeted cost reduction1 by 2024 compared to 2019: EUR 3.5 billion A B C Personnel cost Operational Fleet Main drivers reduction simplification & modernization & overhead reduction standardization 1 2024 versus 2019, based on
Slide 20: Restructuring progress faster than planned
Restructuring progress faster than planned: Measures already implemented will account for more than half of the targeted cost savings Targeted cost savings in EUR billion Measures implemented and recognized in P&L Measures implemented, not recognized in P&L yet Measures not yet implemented ~3.5 ~1.8
Slide 21: Reduction of 5,000 positions in Germany and 2,000 in Switzerland fixed
Reduction of 5,000 positions in Germany and further 2,000 positions in Switzerland fixed Overview workforce reduction as of now Realized (GER): Workforce reduction through volunteer 3,0001 programs, fluctuation (Deutsche Lufthansa AG / Lufthansa Technik AG) and social plan (Germanwings) 2,000 2,00
Slide 22: Operational simplification and overhead reduction across the Group
Operational simplification and overhead reduction across the Group B Reduction of Discontinuation of passenger Closure of SunExpress organizational flight operations at Closure of multiple complexity Deutschland Germanwings other bases and sites Improvement of Increased synergies Digitalization and
Slide 23: Accelerated fleet restructuring will reduce complexity and costs
Accelerated fleet restructuring will reduce complexity and costs C New Normal Fleet renewal and harmonization reduce costs Large Very Large 3801 748 748 Fuel efficiency New generation of aircraft with up to 30% lower fuel consumption per ASK 744 779 Intercontinental 773 773 Low maintenance cost
Slide 24: Ongoing fleet modernization despite reduced investment
Ongoing fleet modernization despite reduced investment to strengthen free cash flow Reduction of fleet size before resumption of moderate growth… …with CAPEX far below pre-crisis levels Number of aircraft in Group Lufthansa Group Gross Investments2 in EUR billion July 2023 July 2019 New operating Fl
Slide 25: Group transformation accelerated – well positioned to seize opportunities
Group transformation accelerated – Lufthansa Group is well positioned to seize opportunities ahead Capturing Market Opportunities Enhancing Customer Centricity Enhancing our offering to secure share in Delivering an individual and seamless customer experience to strategic markets and capitalize on s
Slide 26: Multi-hub strategy caters to the unique structure of home markets
Market opportunities Customer centricity Digitalization Sustainability Ways of working Multi-hub strategy caters to the unique structure of the Group’s home markets Decentralized home markets… …require high share of feeding Unique characteristics Inhabitants in million, who reach airport within Ec
Slide 27: Well exposed to Transatlantic recovery, supplemented by Asian growth
Market opportunities Customer centricity Digitalization Sustainability Ways of working Well exposed to Transatlantic recovery - supplemented by future Asian growth potential Passenger Recovery by Region North America to Ramp-Up Quicker Longer Term Asian Growth Potential Expected Passenger Recovery b
Slide 28: Global joint venture network supports coordinated re-start in long haul
Market opportunities Customer centricity Digitalization Sustainability Ways of working Global joint venture network supports coordinated re-start in long haul Established network of Joint Ventures with leading global partners Clear strategic benefits in the New Normal 2019 figures Joint distribution
Slide 29: Capturing the varying speed of the recovery with a segmented offering
Market opportunities Customer centricity Digitalization Sustainability Ways of working Capturing the varying speed of the recovery with a segmented offering Aircraft retirements adapt premium offer Expected growth in Premium Economy will Leisure and VFR lead recovery to slower corporate recovery be
Slide 30: Edelweiss and Eurowings Discover serve premium leisure markets
Market opportunities Customer centricity Digitalization Sustainability Ways of working Edelweiss and Eurowings Discover serve premium leisure markets Edelweiss well established in Switzerland EW Discover launching in German market Home Integrated into Home Integrated in Lufthansa base SWISS feeder &
Slide 31: A transformed Eurowings to drive profitable recovery
Market opportunities Customer centricity Digitalization Sustainability Ways of working A transformed Eurowings to drive profitable recovery Robust yield premium Significant restructuring progress Strategic focus areas Yield Standardized, modern fleet of 75 a/c € per passenger Further strengthen po
Slide 32: Lufthansa Cargo: Structural supply/demand gap supports long-term outlook
Market opportunities Customer centricity Digitalization Sustainability Ways of working Lufthansa Cargo: Structural supply/demand gap and strategic initiatives support long-term outlook Market-wide capacity gap expected to remain until 2025 Strategy execution & cost reductions to support future resul
Slide 33: Lufthansa Technik well positioned to benefit from market recovery
Market opportunities Customer centricity Digitalization Sustainability Ways of working is well positioned to benefit from the market recovery Global footprint supports the recovery Strong, growing business pre-crisis Strategic focus areas Geographical split for 2019 third-party revenues Operating re
Slide 34: Stimulating demand and driving customer satisfaction through innovation
Market opportunities Customer centricity Digitalization Sustainability Ways of working Stimulating demand and driving customer satisfaction through innovation Customer Journey Inspiration Compare Book Plan & Get to airport Take flight Connect Arrive at Get to & stay Get to airport Take Arrive at Get
Slide 35: Consistent customer experience through digitization and Miles & More
Market opportunities Customer centricity Digitalization Sustainability Ways of working Consistent customer experience through digitization and Miles & More Development of a seamless customer experience… …integrated into Europe’s largest frequent flyer program 2019 figures One customer interface Alig
Slide 36: Direct distribution enhances market reach and individualizes the offer
Market opportunities Customer centricity Digitalization Sustainability Ways of working Direct distribution enhances market reach and allows to individualize the offer Focus on growing share of direct 45% >50% 75% 30% distribution channels 2015 2018 2019 Target 2024 Enhanced customer experience Incre
Slide 37: Target to halve carbon emissions over the next decade
Market opportunities Customer centricity Digitalization Sustainability Ways of working Target to halve carbon emissions over the next decade -50% Net CO2 by 20301: Avoid – Reduce - Compensate Key drivers Contribution to target reduction (Early) retirement of older aircraft Fleet renewal Addition
Slide 38: Three focus areas to reduce the Group's environmental footprint
Market opportunities Customer centricity Digitalization Sustainability Ways of working Three focus areas identified to reduce the Group’s environmental footprint Invest in Improve the Offset carbon Technology Infrastructure footprint 50% less net carbon 175 cutting-edge, SES needed: 3+millions
Slide 39: Proposed EU initiative Fit for 55 would disadvantage EU carriers
Market opportunities Customer centricity Digitalization Sustainability Ways of working Proposed EU initiative “Fit for 55” would place EU carriers at a competitive disadvantage Example Passenger travelling from Madrid to Tokyo deciding to connect via Frankfurt or Istanbul FRA all EEA1 Cost impact2 p
Slide 40: Development of the Group's organization and governance
Market opportunities Customer centricity Digitalization Sustainability Ways of working Development of the Group’s organization and governance to drive faster decision-making, reduce complexity and foster more efficient cooperation Integrated Aviation Group Airline Group with functional holding Deuts
Slide 41: Streamlining Lufthansa Group to a focused Airline Group
Market opportunities Customer centricity Digitalization Sustainability Ways of working Streamlining Lufthansa Group to a focused Airline Group Core business Evaluation of partial Divestiture targeted divestiture options once fair value can be ongoing realized Page 41
Slide 42: Lufthansa Group mid-term targets for the New Normal
Lufthansa Group mid-term targets for the New Normal Assumptions Drivers 2024 Targets Capacity (ASK) Revenues Adjusted EBIT margin Low single digit RASK decline at 90-95% of pre-crisis levels by 2024 Group Airlines; Aviation Services above 2019 levels At least 8% Recovery by region CASK (excl. fuel1)
Slide 43: Balance sheet strengthening rests on three key pillars
Balance sheet strengthening rests on three key pillars STRENGTHENING OF BALANCE SHEET Return to profitability Repayment of stabilization measures Divestments Achieve cost reductions to ensure Replace state aid funds through long- Divest non-core assets in part or in quick return to profitability and
Slide 44: Accelerating our Transformation
Accelerating our Transformation Decisive action taken to ensure Ongoing innovation drives convenient, liquidity and respond to industry individual and sustainable disruption product Key restructuring actions taken to Disciplined financial management create a stronger, more resilient to strengthen th
Slide 45: Appendix - supplementary information
Appendix - supplementary information- Page 45
Slide 46: Overview drawn and undrawn stabilization measures as of June 30, 2021
Overview drawn and undrawn stabilization measures as of June 30, 2021 Stabilization measures in billion EUR 8.01 1.0 Government loans AT, BE, CH 3.0 Silent Participation I SB I EUR 4 billion undrawn Government loans AT, BE, CH EUR 4 billion drawn 1.0 0.2 Government grants AT, BE, CH 0.3 WSF Equity p
Slide 47: Traffic Data
Traffic Data Q1 vs.2019 Apr vs.2019 May vs.2019 June vs.2019 Q2 vs.2019 6M vs.2019 Passengers in 1,000 3,043 -89.7% 1,446 -88.5% 2,201 -83.3% 3,328 -75.9% 6,976 -82.4% 10,022 -85.5% Available seat-kilometers (m) 16,843 -78.8% 7,455 -75.7% 8,943 -72.3% 10,919 -66.1% 27,317 -71.3% 44,171 -74.7% Revenu
Slide 48: Operating KPIs of Network Airlines by region vs. 2019
Operating KPIs of Network Airlines by region vs. 2019 Total Q2’21 6M’21 Europe Q2’21 6M’21 Asia / Pacific Q2’21 6M’21 Number of flights -73.8% -78.2% ASK -71.3% -76.9% ASK -82.2% -82.5% ASK -70.9% -74.0% RPK -77.8% -81.7% RPK -93.8% -93.1% RPK -82.6% -84.7% SLF -17.9pts. -15.7pts. SLF -55.1pts. -50.
Slide 49: Operating KPIs of Eurowings vs. 2019
Operating KPIs of Eurowings vs. 2019 Total Q2’21 6M’21 Number of flights -81.3% -86.0% ASK -75.0% -81.5% RPK -78.9% -84.6% SLF -12.8pts. -13.6pts. Yield -18.9% -10.4% Yield vs 2020 +31.7% -2.9% Yield ex currency vs 2020 +31.8% -3.0% RASK -31.3% -25.7% RASK ex currency vs 2020 -54.9% -15.6% CASK +48.
Slide 50: Calculation of operational airline KPIs
Calculation of operational airline KPIs Network Airlines, 6M 2021 Eurowings, 6M 2021 1) Traffic revenues (€m) 1,628 1) Traffic revenues (€m) 156 2) Not assignable (€m) 224 2) Not assignable (€m) 28 Yield Yield = 3) Basis for Yield (1)–(2) (€m) 1,404 = 3) Basis for Yield (1)–(2) (€m) 128 4) RPK (m) 1
Slide 51: Group P&L
Group P&L Lufthansa Group (in EUR m) Q2’21 vs. Q2 ’20 6M’21 vs. 6M ’20 Revenues 3,211 +69.5% 5,771 -30.8% Total operating income 3,571 +54.5% 6,459 -30.5% Operating expenses 4,510 +15.4% 8,490 -29.7% Of which fees & charges 404 +130.9% 689 -34.3% Of which fuel 417 +343.6% 692 -47.6% Of which staff 1
Slide 52: Walk from Adjusted EBIT to Net Income for H1 2021
Walk from Adjusted EBIT to Net Income for H1 2021 in EUR million Total EBIT adjustments: -19 421 -1.805 11 (24) 93 -2.095 (6) 8 (213) Adjusted Aircraft Bookgain/-loss, Book losses on Interest result Profit/loss Tax result Other Net EBIT impairments write-backs LSG share sales attributable to Income
Slide 53: Cash flow statement
Cash flow statement Lufthansa Group (in m EUR) 6M’21 vs. 6M ’20 Decrease related to non-recurrence of 1 crisis-related aircraft impairments in 2020 EBT (earnings before income taxes) -2,234 +2,185 and lower depreciation and amortization Depreciation & amortization (incl. non-current assets) 1 1,114
Slide 54: Liabilities from unflown flight documents
Liabilities from unflown flight documents in EUR million 5.602 5.798 3.969 4.071 4.499 4.487 3.089 2.064 2.093 Dec 31, 2018 Dec 31, 2019 Dec 31, 2020 Mar 31, 2019 Mar 31, 2020 Mar 31, 2021 Jun 30, 2019 Jun 30, 2020 Jun 30, 2021 Page 54
Slide 55: Fleet overview
Fleet overview thereof Change since Change since Aircraft Type LH LX OS SN EW LCAG Group fleet Lease 31 Dec 2020 30 Jun 2020 Airbus A220 30 30 +1 +1 Airbus A319 42 7 18 34 101 29 -5 -9 Airbus A320 100 32 29 16 56 233 36 -2 +5 Airbus A321 73 11 6 4 94 2 +3 +6 Airbus A330 261 16 8 50 8 -2 -2 Airbus A3
Slide 56: Multi-Year financial overview
Multi-Year financial overview Lufthansa Group (in m EUR, as reported) 2015 2016 2017 2018 20191) 2020 Operating KPIs RASK ex currency -3.0% -5.9% +1.9% -0.5% -2.5% -26.7% CASK ex currency, ex fuel 2) +2.4% -2.5% -1.8% -1.7% -1.5% +84.6% Profit & Loss Revenues 32,056 31,660 35,579 35,542 36,424 13,58
Slide 57: Maturity profile of borrowings as of June 30, 2021
Maturity profile of borrowings as of June 30, 2021 3.000 2.500 2.000 1.500 1.000 500 0 2021 2022 2023 2024 2025 2026 2027 2028 Straight Bond Hybrid Convertible Bond Schuldscheindarlehen Credit Lines Aircraft Finance (secured) Stabilization measures* Other** * As drawn on Jun 30 - predominantly sched
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