Slide 1: Q1-Q3 2014 Results Press and Analysts' Conference
Q1-Q3 2014 Results Press and Analysts' Conference Carsten Spohr Chairman of the Executive Board and CEO Simone Menne Member of the Executive Board and CFO Frankfurt, October 30th 2014 Page 1
Slide 2: Disclaimer in respect of forward-looking statements
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
Slide 3: Carsten Spohr – Chairman of the Executive Board and CEO
Carsten Spohr – Chairman of the Executive Board and CEO – JANUARY 2 0 1 4 Commerzbank German Investment Seminar Simone Menne, Member of the Executive Board and CFO New York, 13 Jan 2014 Page 3
Slide 4: Lufthansa Group with good nine-months-results
Lufthansa Group with good nine-months-results Operating profit forecast 2014 confirmed but outlook for 2015 reduced in m EUR Jan-Sep 2014 vs. previous year Revenue 22,624 -0.6% Operating Result 849 +28.1% Normalized Operating Result 1,004 +16.6% Net Income 482 +95.1% Lufthansa Group on track to reac
Slide 5: All segments with positive results in first nine-months
All segments with positive results in first nine-months Strong portfolio of profitable businesses 849 m€ Passenger Airline Group MRO Catering Logistics IT 473 m€ 335 m€ 66 m€ 51 m€ 21 m€ Page 5
Slide 6: Our Way Forward: Group Setup 2020
Our Way Forward: Group Setup 2020 Focus on profitability improvement for hub airlines, growth in other businesses Lufthansa Aviation Group - Key Advantages Integrated Value Chain Financial Stability Strong Brand Family Favoured Employer Deep Customer Insights Natural Hedging Hubs Point-to-Point Avia
Slide 7: Our Way Forward: Seven areas of action
Our Way Forward: Seven areas of action Lufthansa Group is tackling the challenges ahead Customer New concepts centricity & for growth quality focus Constantly Innovation & improving digitalization efficiency Value based Effective & lean steering organization Culture & leadership Page 7
Slide 8: Lufthansa Group is constantly improving efficiency
Constant ly improving efficiency Lufthansa Group is constantly improving efficiency SCORE approach to be continued beyond 2015 program generated gross measures targeting minimum gross measures of >3 bn EUR of ca. 700 m EUR p.a (during program timeframe 2012-2015) (to compensate 2% cost inflation and
Slide 9: The Group's portfolio is being constantly optimized
Effective & lean organization The Group's portfolio is being constantly optimized Outsourcing of IT Infrastructure to IBM Airline Solutions: Industry Solutions: IT Infrastructure One-time charge in 2014 Airline IT Professional of c. 240 m EUR in IFRS and HGB Services net results (non-operating) Aver
Slide 10: Good progress is being made with labour partners
Constant improvement in efficiency Good progress is being made with labour partners Agreements with VC and Aeropers remain open issues Preliminary agreement with cabin personnel Agreement with flight crews -20% costs for 14 Lufthansa A340s New terms effective as of Dec 2014 move from DB to DC pensio
Slide 11: Lufthansa Group is responsible for about 120,000 employees
Lufthansa Group is responsible for about 120,000 employees Any labour agreement must be fair and sustainable for everyone c. 120,000 employees Lufthansa Group Others Eurowings Lufthansa Cityline Austrian Airlines SWISS c. 10,000 Lufthansa Cargo Lufthansa Group Germanwings pilots Lufthansa Passenger
Slide 12: Growth focus is on low cost platform with focus on P2P-leisure
New concepts for growth Growth focus is on low cost platform with focus on P2P-leisure >100 aircraft or one sixth of Group fleet on lower unit costs platforms Network Carriers Short-haul New P2P-Platforms 23 A320 ex GER, A, CH, BE starting 2015 c. 60 A320 ex GER c. 350* in full swing in 2015 LH Pass
Slide 13: We want to be the #1 choice for customers
Customer centricity & quality focus We want to be the #1 choice for customers Strong investments and accelerated roll-out of new products New First Class: New Business Class: New Premium Economy Class: Passenger satisfaction at 98% New full flat seat More exclusivity & delight 75 % of retrofit compl
Slide 14: Summary
Summary Lufthansa Group on track to reach full year operating profit of approx. 1.0 bn EUR in 2014 excl. further strike cost Operating profit excl. one-offs expected at 1.3 bn EUR; Cost from all strikes until today (170 m EUR) included in forecast Operating profit outlook 2015 reduced to "significan
Slide 15: Simone Menne – Member of the Executive Board and CFO
Simone Menne – Member of the Executive Board and CFO – Page 15
Slide 16: Overview Financials
Overview Financials Lufthansa Group on track to reach full year operating profit of approx. 1.0 bn EUR in 2014 excl. further strike cost Operating profit excl. one-offs expected at 1.3 bn EUR; cost from all strikes until today (170 m EUR) included in forecast First nine months 2014 operating profit
Slide 17: 9M and Q3 2014 at a glance
9M and Q3 2014 at a glance Key figures for the Lufthansa Group Lufthansa Group (in m EUR) 9M 2014 9M 2013 vs. PY Q3 2014 Q3 2013 vs. PY Total revenue 22,624 22,767 -0.6% 8,458 8,303 +1.9% of which traffic revenue 18,460 18,664 -1.1% 6,994 6,884 +1.6% Operating result 849 663 +28,1% 735 590 +24.6% On
Slide 18: Operating expenses grew less than revenue in Q3, stable in 9M
Operating expenses grew less than revenue in Q3, stable in 9M Operating costs and revenues Lufthansa Group (in m EUR) 9M 2014 vs. PY Q3 2014 vs. PY Total revenue 22,624 -0.6% 8,458 +1.9% Other operating income 1,348 -4.0% 496 +15.1% Total operating income 23,972 -0.8% 8,954 +2.5% Operating expenses
Slide 19: Cash flow reduced due to working capital and higher investments
Cash flow reduced due to working capital and higher investments Cash flow statement Group Cash Flow Statement in m EUR 9M 2014 vs. PY 3.3 3.0 2.8 2.4 EBT (earnings before income taxes) 634 +275 2.1 Depreciation & amortisation (incl. D&A for non-current assets) 1,064 -368 Net proceeds from disposal o
Slide 20: Profit increase driven by lower one-off costs and depreciation effect
Profit increase driven by lower one-off costs and depreciation effect Segment Overview 9M Share of LH Group’s 76.0% 7.7% 8.8% 6.6% 0.9% external revenue 9M 2014 vs. 9M 2013 Passenger Others & in EUR m Airline Group Logistics MRO Catering IT Services Consolidation Revenue 17,694 1,767 3,200 1,960 483
Slide 21: Record volumes but pricing remained weak in passenger business
Record volumes but pricing remained weak in passenger business Operating KPIs of Passenger Airline Group Total 9M '14 Q3 '14 Europe 9M '14 Q3 '14 Asia/Pacific 9M '14 Q3 '14 Number of flights -2.2% -2.2% ASK +1.1% +0.3% ASK +1.7% +4.0% ASK +2.2% +4.0% RPK +2.3% +2.6% RPK +2.4% +4.8% RPK +2.6% +5.0% S
Slide 22: Operating trading assumptions and unit cost target unchanged
Operating trading assumptions and unit cost target unchanged Trading assumptions FY 2014 Full Year 2014 assumptions Explanation Fleet Size Fleet rollover: Phase-out of small, non-efficient aircraft (no. of aircraft) overall stable Capacity growth mainly achieved through more seats per Capacity c. +3
Slide 23: Fuel cost forecast unchanged at 6.7 bn EUR
Fuel cost forecast unchanged at 6.7 bn EUR Fuel forecast and sensitivities 150 Lufthansa Group fuel expenses after hedging LH price (in bn EUR) 140 2014 Sensitivities costs with deviating 7.4 oil price 130 7.1 6.7 7.0bn (+20%) 6.8bn (+10%) 6.3 120 6.6bn (-10%) USD/barrel Market price 6.5bn (-20%) 11
Slide 24: Profit guidance for 2014 unchanged
Profit guidance for 2014 unchanged Operating profit expected at around 1 billion Euros Result 2013 Forecast for 2014 Segment (m EUR) Lufthansa Passenger Airlines 265 on par with previous year SWISS 226 significantly above previous year Austrian Airlines 25 below previous year, but positive Consolida
Slide 25: Operating profit outlook of around 1 bn EUR confirmed
Operating profit outlook of around 1 bn EUR confirmed New operating profit outlook "significantly above previous year" Lufthansa Group Reported Operating result Actual and Forecast Financial Year 2014 1,378 "significantly above previous year" 1,280 Operating profit expected at ca. 1.0 bn EUR Operati
Slide 26: Appendix – Financial Figures 9M & Q3 2014
Appendix – Financial Figures 9M & Q3 2014 – Page 26
Slide 27: Group Revenue 9M 2014 vs. 9M 2013
Group Revenue 9M 2014 vs. 9M 2013 in m EUR Volume: +2.3% Price: -1.2% 226 421 Currency: -2.2% 399 Traffic revenue (-1.1%) 18,664 18,460 4,103 4,164 Other revenue (+1.5 %) 9M 2013 9M 2014 22,767 Group revenue (-0.6%) 22,624 Page 27
Slide 28: Fuel Cost 9M 2014 vs. 9M 2013
Fuel Cost 9M 2014 vs. 9M 2013 in m EUR -269 m EUR +5,449 Volume Price +2 -73 Hedging -46 Currency -152 +5,180 9M 2013 H1 2014 Page 28
Slide 29: Operating Result 9M 2014 vs. 9M 2013
Operating Result 9M 2014 vs. 9M 2013 in m EUR 9M 2014 9M 2013 vs. PY Profit from operating activities 889 584 +305 Net book gains / losses on assets and financial investments -82 -10 -72 - thereof aircraft disposals -14 -9 -5 Reversal of provisions -80 -75 -5 Past service costs 0 -2 2 Valuation from
Slide 30: Earnings figures 9M 2014 vs. 9M 2013
Earnings figures 9M 2014 vs. 9M 2013 in m EUR 9M 2014 9M 2013 vs. PY Profit from operating activities 889 584 +52.2% Income from subsidiaries, joint ventures and associates 94 101 -6.9% Other financial items -139 -69 -101.4% - thereof changes in time value of hedge options -104 -6 n.m. EBIT 844 616
Slide 31: Excluding one-off items operating profit shows improvement
Excluding one-off items operating profit shows improvement Normalized operating results for 9M and Q3 1,004 861 849 125 30 30 663 168 9M 2013 restructuring costs project costs 9M 2013 9M 2014 restructuring costs project costs 9M 2014 operating profit normalized operating profit normalized operating
Slide 32: Operating Results and one-off factors
Operating Results and one-off factors Quarterly operating results 2013-2014 in m EUR Q1 Q2 Q3 Q4 6M 9M Full Year Reported operating result 2013 -359 432* 590* 36 73* 663* 699* incl. SCORE restructuring costs -64 -7 -97 -77 -71 -168 -245 incl. Project costs 0 0 -30 -70 0 -30 -100 Normalized operating
Slide 33: Operating margins (normalized) 9M 2014 vs. 9M 2013
Operating margins (normalized*) 9M 2014 vs. 9M 2013 11.0 10.5 10.7 all numbers in % 10.0 9.0 8.0 7.0 6.8 6.0 5.7 5.0 4.4 4.3 4.0 3.6 3.8 3.4 3.4 3.3 3.0 3.0 2.9 3.0 2.6 2.5 2.0 1.2 1.0 0.0 -1.0 -0.4 Lufthansa SWISS Austrian Passenger Logistics MRO Catering IT Services LH Group Passenger Airlines Air