Deutsche Lufthansa Ag · XETR:LHA
Deutsche Lufthansa — Investor Presentation (November 2022)
36 slides from Deutsche Lufthansa's investor presentation, November 2022
Slide 1: Investor Presentation November 2022
Investor Presentation November 2022
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: Third Quarter 2022 Results
Third Quarter 2022 Results Operational update and financial outlook Appendix Page 4
Slide 5: Group generates high profits and strong free cash flow in the third quarter
Group generates high profits and strong free cash flow in the third quarter (in EUR million) Q3 ’22 Q3’21 9M ’22 9M ’21 Revenues 10,068 5,207 23,893 10,978 Operating expenses 9,629 5,415 24,593 13,685 Of which fuel 2,475 752 5,613 1,444 Of which staff 2,162 1,510 5,894 4,200 Of which depreciation 57
Slide 6: Passenger Airlines: Loads on pre-crisis level and record-high yields drive return to profits
Passenger Airlines: Loads on pre-crisis level and record-high yields drive return to profits Operational KPIs Adjusted EBIT in EUR million Comments Q3 ’22 vs. 2021 vs. 2019 Seat load factor almost at 2019 level Yield strength driven by ASK 77,690m +55.7% -22.0% intercontinental business, in part
Slide 7: Profits in Logistics and MRO reach new record levels
Profits in Logistics and MRO reach new record levels Adjusted EBIT in EUR million Q3 2022 Comments 331 302 Cargo yields up year-on-year, driven Q3 ’22 Q3 ’21 by still significantly reduced capacity compared to 2019 and resilient demand 177 149 Strong demand, good success in passing through cost
Slide 8: Operating profit, booking momentum and working capital drive positive free cash flow
Operating profit, robust booking momentum and strict working capital management drive positive free cash flow despite seasonal headwinds Q3 Adjusted EBIT / Adjusted free cash flow 9M Adjusted free cash flow in EUR million in EUR million In line with pre- crisis seasonality 575 1,132 (1,092) 3,312 88
Slide 9: Net debt reduced significantly, liquidity and equity rise
Net debt reduced significantly, liquidity and equity rise Net debt declines as a result of strong free cash flow Liquidity remains far above target corridor of EUR 6-8bn Net debt in EUR million Liquidity in EUR million +2.3bn -2.8bn Undrawn 9,023 11,783 credit lines 6,190 9,445 2,060 Balance sheet L
Slide 10: Structural cost reductions contribute to the mitigation of cost inflation
Structural cost reductions contribute to the mitigation of cost inflation Targeted sustainable cost savings 2020 - 2024 in EUR billion CASK1 2022 vs. 2019 Measures implemented and recognized in P&L Shift of EUR 0.4bn Measures implemented, not yet recognized in P&L measure volume 16.6% Measures not y
Slide 11: Financial hedging reduces the effects from price volatility
Financial hedging reduces the effects from price volatility and enables pass- through of cost increases to customers Fuel hedging Operational USD hedging 24 months layer hedging strategy, using option 24 months layer hedging strategy, target to hedge structures and Jet Crack swaps ~60% of net operat
Slide 12: Third Quarter 2022 Results: Operational update and financial outlook
Third Quarter 2022 Results Operational update and financial outlook Appendix Page 12
Slide 13: Industry-wide supply limitations will support financial performance in the New Normal
Industry-wide supply limitations will support financial performance in the New Normal I GROUNDING II RESTART III NEW NORMAL Ensuring solvency in the crisis Enabling the return of travel Competing on the next level SUPPLY Higher level of Aircraft delivery delays / lack of spare parts consolidation
Slide 14: Group well positioned to take advantage of favorable supply/demand dynamics
Group well positioned to take advantage of favorable supply/demand dynamics in the European aviation industry Revenue by point-of commencement Seat Load Factor1 in % Comments Q3 2022 2019 2022 88 88 Group benefits from high flexibility to 79 82 Q3 (flown) adjust the offer based on regional and DE
Slide 15: Improved relationships with labor unions led to 11 agreements since August 2022
Improved relationships with labor unions led to the conclusion of 11 agreements since August 2022 11 CLAs concluded with 10 unions in 4 countries New prospects for future employees Number of Group employees Cockpit (interim), Ground, Cabin Hiring focused on operations, MRO and IT Ground 138k ~115k 1
Slide 16: Overview of Deutsche Lufthansa AG labor agreements
Overview of Deutsche Lufthansa AG labor agreements Ver.di (Ground personnel) VC (Cockpit personnel) UFO (Cabin personnel) Agreement until December 2023 Agreement until June 2023 Agreement until December 2023 Agreement terms: Agreement terms: Agreement terms: − Fixed salary increase of EU
Slide 17: The Group continues to execute its plan to make flying more sustainable
The Group continues to execute its plan to make flying more sustainable Specific CO2 emissions SWISS first airline in the world to deploy the -9% 9M ’22 vs. 9M ’21 innovative AeroSHARK technology on passenger -2% 9M ’22 vs. 9M ’19 aircraft MoU signed with OMV – Lufthansa Group and >800,000 tons of S
Slide 18: Lufthansa Group scores well in relevant sustainability rankings
Lufthansa Group scores well in relevant sustainability rankings Improvement from BBB (2017-2020) to AA (2022) due to strong business ethics practices Leader among 16 companies in the airline industry Robust carbon reduction efforts Labor management: unions protest Product safety and qualit
Slide 19: Lufthansa launches biggest ever product and service campaign
Lufthansa launches biggest ever product and service campaign Digital solutions for seamless travel Premium travel New seats in all experience travel classes
Slide 20: Portfolio management aims at maximizing the value of the Group and its businesses
Portfolio management aims at maximizing the value of the Group and its businesses Core business Continued preparations Conclusion of sale for partial divestiture/ IPO agreement once full value can be realized Transaction targeted in the course of 2023 Page 20
Slide 21: Group expects to return to strong profits and to generate significant cash in FY 2022
Group expects to return to strong profits and to generate significant cash in FY 2022 2022 Forecast 2024 Targets Capacity (ASK) FY: c.75% of 2019 levels Adjusted EBIT margin: Q4: c.80% of 2019 levels At least 8% Adjusted EBIT Above EUR 1bn Adjusted ROCE (excl. cash): At least 10% Adjusted free cash
Slide 22: Third Quarter 2022 Results: Appendix
Third Quarter 2022 Results Operational update and financial outlook Appendix Page 22
Slide 23: Appendix - supplementary information
Appendix - supplementary information- Page 23
Slide 24: Traffic Data
Traffic Data 6M vs.2019 Jul vs.2019 Aug vs.2019 Sep vs.2019 Q3 vs.2019 9M vs.2019 Passengers in 1,000 42,382 -38.6% 11,208 -23.3% 11,257 -20.6% 10,875 -22.2% 33,340 -22.0% 75,722 -32.2% Available seat-kilometers (m) 115,617 -33.8% 26,096 -22.8% 26,589 -20.8% 25,005 -22.4% 77,690 -22.0% 193,307 -29.5
Slide 25: Operating KPIs of Passenger Airlines by region vs. 2019
Operating KPIs of Passenger Airlines by region vs. 2019 (unless stated otherwise) Total Q3’22 9M ’22 Europe Q3’22 9M ’22 Asia / Pacific Q3’22 9M ’22 Number of flights -25.4% -32.3% ASK -11.6% -20.2% ASK -58.1% -65.3% ASK -22.0% -29.5% RPK -10.9% -21.0% RPK -59.2% -68.5% RPK -22.2% -32.7% SLF +0.6pts
Slide 26: Calculation of operational airline KPIs
Calculation of operational airline KPIs Passenger Airlines, 9M 2022 1) Traffic revenues (€m) 14,899 1) Total operating expenses (€m) -17,652 2) Not assignable (€m) 1317 2) Reversal of provisions (€m) 82 Yield = 3) Basis for Yield (1)–(2) (€m) 13,582 3) FX losses (€m) -350 CASK 4) RPK (m) 1 152,868 4
Slide 27: Group P&L
Group P&L Lufthansa Group (in EUR m) Q3 ’22 vs. Q3 ’21 9M ’22 vs. 9M ’21 Revenues 10,068 +93.4% 23,893 +117.6& Total operating income 10,708 +91.0% 25,526 +111.6% Operating expenses 9,629 +77.8% 24,593 +79.7% Of which fees & charges 1,076 +53.5% 2,753 +98.1% Of which fuel 2,475 +229.1% 5,613 +288.7%
Slide 28: EBIT / Adjusted EBIT bridge 9M 2022
EBIT / Adjusted EBIT bridge 9M 2022 in EUR million 934 118 (55) 24 (22) 15 28 826 EBIT Impairments, Net restructuring Other Impairment Net book gains Past pension Other Adjusted EBIT material write-offs expenses on non-current service effects and other assets extraordinary expenses related to the Uk
Slide 29: Adjusted EBIT / Net Income 9M 2022
Adjusted EBIT / Net Income 9M 2022 in EUR million 934 (108) (8) (252) 225 484 (307) Adjusted EBIT Adjustments Interest result Profit/loss attributable Tax result Other Net EBIT to minority interests Income Page 29
Slide 30: Adjusted EBIT by Airline
Adjusted EBIT by Airline Adjusted EBIT (in EUR m) Q3 ’22 Q3 ’21 Change in % 9M ’22 9M ’21 Change in % Lufthansa German Airlines 224 -320 nmf. -574 -1,893 +69.7% SWISS 234 5 nmf. 279 -378 nmf. Austrian Airlines 110 2 nmf. 4 -196 nmf. Brussels Airlines 52 2 nmf. -37 -141 +73.8% Eurowings 103 108 -4.6%
Slide 31: Cash flow statement
Cash flow statement Lufthansa Group (in m EUR) 9M’22 vs. 9M ’21 Contains increase in unflown tickets liability 1 EBT (earnings before income taxes) 744 +3,062 of EUR 2,236m Depreciation & amortization (incl. non-current assets) 1,709 +15 Net proceeds from disposal of non-current assets -20 -35 Inclu
Slide 32: Adjusted EBIT / FCF bridge 9M 2022
Adjusted EBIT / FCF bridge 9M 2022 (99) 1,831 1,749 1,264 2,236 267 5,328 1,690 3,312 934 Adj. EBIT Depreciation & Liability for Trade receivables Trade payables Other1 Operating Net CAPEX2 Amortization Adj. Free Amortization unflown tickets Cashflow IFRS 16 leases cash flow 9M 1 Incl. other non-cas
Slide 33: Fuel cost hedging
Fuel cost hedging Expected fuel cost sensitivity after hedging (FY 2022)1 Hedging portfolio excl. Cargo as of September 30, 2022 116 Q4 FY 2023 ø Market price crude oil2 106 7,5500 7,600 7,650 7,650 7,700 96 7,550 7,550 7,600 7,600 7,650 Hedge ratio Crude (%) 64 50 86 7,7500 7,500 7,550 7,600 7,600
Slide 34: Hedging of USD exchange rate risk
Hedging of USD exchange rate risk Operative | USD net exposure CAPEX | 50% of exposure related hedged with a 24 months layer to aircraft purchases hedged strategy when contract is signed Natural hedge: 60% of USD fuel expenses Aircraft orders are constantly monitored and offset by USD revenues h
Slide 35: Multi-Year financial overview
Multi-Year financial overview Lufthansa Group (in EUR million, as reported) 2015 2016 2017 2018 20191) 2020 2021 Operating KPIs RASK ex currency -3.0% -5.9% +1.9% -0.5% -2.5% -26.7% -6.1% CASK ex currency, ex fuel 2) +2.4% -2.5% -1.8% -1.7% -1.5% +84.6% -25.8% Profit & Loss Revenues 32,056 31,660 35
Slide 36: Maturity profile of borrowings
Maturity profile of borrowings 3,000 2,500 2,000 1,500 1,000 500 0 2022 2023 2024 2025 2026 2027 2028 2029 Straight Bond Hybrid Convertible Bond Schuldscheindarlehen Aircraft Finance (secured) Stabilization measures* Other** * As drawn on Sep 30- – predominantly scheduled repayment of stabilization
Deutsche Lufthansa — Investor Presentation (November 2022) on 6ix