Deutsche Lufthansa Ag · XETR:LHA
Deutsche Lufthansa — Investor Presentation (January 2022)
46 slides from Deutsche Lufthansa's investor presentation, January 2022
Slide 1: Investor Presentation January 2022
Investor Presentation January 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 2021 Results and Outlook
Third Quarter 2021 Results and Outlook Medium-Term Strategy Page 4
Slide 5: Lufthansa Group returns to profits and generates positive Adjusted free cash flow in Q3
Lufthansa Group returns to profits and generates positive Adjusted free cash flow in the third quarter (in EUR million) Q3 ’21 Q3 ’20 Change in % 9M ’21 9M ’20 Change in % Revenues 5,207 2,660 +96% 10,978 10,995 0% Operating expenses 5,709 5,435 +5% 14,234 18,013 -21% Of which fuel 752 289 +160% 1,4
Slide 6: Network Airlines: Loads improve, yield above pre-crisis levels in Q3
Network Airlines: Loads improve, yield above pre-crisis levels in Q3 Q3 2021 9M 2021 Comments ASK 48.8% ASK 34.2% European short-haul business (ASK: Operational KPIs 65% in Q3) drives capacity expansion vs. 2019 SLF 67.5% SLF 57.9% -18.7pts. -24.9pts. Leisure demand drives 74% seat load factor (
Slide 7: Eurowings: Ramp-up into summer drives return to profits in Q3
Eurowings: Ramp-up into summer drives return to profits in Q3 Q3 2021 9M 2021 Comments ASK 61.7% ASK 35.4% Strong result of Sunexpress JV Operational KPIs contributes to positive Adjusted EBIT vs. 2019 SLF 78.1% SLF 74.4% in Q3 -8.9pts. -8.3pts. Significant ramp-up into summer – Yield1 -13.7% Yi
Slide 8: Unprecedented strength in Cargo continues, positive momentum in MRO accelerating
Unprecedented strength in Cargo continues, positive momentum in MRO accelerating Adjusted EBIT in EUR million Q3 2021 9M 2021 Comments 301 941 169 446 Cargo results remain on record levels Q3 ’21 Q3 ’20 9M ’21 9M ’20 also in the lower-volume summer months 61 163 Lufthansa Technik records positiv
Slide 9: Group generates positive free cash flow
Group generates positive free cash flow: Good working capital management and strong bookings compensate for payment of deferred taxes Adjusted EBIT / Adjusted free cash flow in EUR million 142 (342) Monthly cash in1: EUR 130m 282 (193) 456 389 (15) 565 Compares to significant 443 outflows in normal
Slide 10: The capital increase strengthens the balance sheet
The capital increase strengthens the balance sheet – strong cash flows and portfolio measures will make additional contributions STRENGTHENING OF BALANCE SHEET Return to profitability Repayment stabilization measures Divestments Adjusted Free Cash Flow expected to EUR 2.2 billion equity raise
Slide 11: Capital increase sets path to exit of German Economic Stabilization Fund
Capital increase sets path to exit of German Economic Stabilization Fund while maintaining liquidity in line with long-term targets Pro forma liquidity post equity raise of over EUR 8 billion Use of Proceeds in EUR billion 2.1 The proposed EUR 2.2 billion capital increase enables 11.9 building a s
Slide 12: Capital increase and reduction of pension provisions drive the deleveraging
Capital increase and reduction of pension provisions drive the deleveraging Net debt in EUR million Pension provisions in EUR million Comments EUR -1.5bn Supported by increase of Net debt significantly reduced to discount rate 10,506 from 0.8% to 1.3% EUR 8.4 billion on a pro forma basis, 9,922 re
Slide 13: Fuel hedging strategy reduces negative impact of rising oil prices for 2022
Fuel hedging strategy reduces negative impact of rising oil prices for 2022 Expected fuel cost sensitivity after hedging (FY 2022)1 Fuel hedging strategy ø Market price crude oil 2 103 Hedging was resumed in early 2021 for 2022 and beyond 800 700 600 500 400 93 450 400 300 200 100 Average price
Slide 14: Group targets to operate cash-positive even in challenging winter season
Group targets to operate cash-positive even in challenging winter season Capacity (ASK): ca. 60% in Q4, ca. 40% in FY 21, above 70% in FY 22 Strong focus on cash flow – EBITDA to be positive also in Q4 (incl. c. EUR 80 million of restructuring expenses) 2021 Gross CapEx: ca. EUR 1.5bn Page 14
Slide 15: Medium-Term Strategy
Third Quarter 2021 Results and Outlook Medium-Term Strategy Page 15
Slide 16: 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 17: Crisis requires long-term restructuring to right-size business for future
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 18: Measures for achievement of more than 70% of total savings implemented
Measures for the achievement of more than 70% or EUR 2.5 billion of the total savings volume implemented by the end of September Targeted sustainable cost savings 2020 – 2024, as of Sep 30, 2021, in EUR billion Measures implemented and recognized in P&L ~3.5 ~1.8 Measures implemented, not yet recogn
Slide 19: Group on track to structurally improve labor cost and productivity
Group on track to structurally improve labor cost and productivity compared to pre-crisis levels Workforce reduction in GER1 (as of Sep 30, ’21) Focus on rightsizing of organization and productivity increases fixed in 2021 realized in 2021 Reduction of 7,000 positions in Germany fixed in particula
Slide 20: Accelerated fleet restructuring will reduce complexity and costs
Accelerated fleet restructuring will reduce complexity and costs 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 in
Slide 21: Capital efficient fleet modernization to support strong capital returns
Capital efficient fleet modernization to support strong capital returns and cash flows Expansion of share of leasing… …ensures capital-efficient fleet modernization Expansion of leasing supports free cash flow, capital returns Lufthansa Group Investments1 in EUR billion and strategic flexibility
Slide 22: 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 23: 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 24: Well exposed to Transatlantic recovery - supplemented by Asian growth potential
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 25: 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 26: 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 27: 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 28: 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 29: 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 30: Lufthansa Technik is well positioned to benefit from the 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 31: 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 32: 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 33: Direct distribution enhances market reach and allows to individualize 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 34: Three focus areas identified 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 35: Commitment to sustainability is at the heart of the Group's transformation
Market opportunities Customer centricity Digitalization Sustainability Ways of working Commitment to sustainability is at the heart of the Group’s transformation Pilot customer for the first industrially produced power-to- SBTi liquid fuel in Germany Commitment for 2030 Leasing agreement Largest buy
Slide 36: Proposed EU initiative "Fit for 55" would place EU carriers at a disadvantage
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 37: 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 38: 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 38
Slide 39: Lufthansa Group's transformation is well under way
Lufthansa Group’s transformation is well under way 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 resilie
Slide 40: Appendix - supplementary information
Appendix - supplementary information- Page 40
Slide 41: 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 10,022 -85.5% 6,015 -58.9% 6,994 -50.6% 6,615 -52.7% 19,623 -54.1% 29,664 -73.5% Available seat-kilometers (m) 44,171 -74.7% 15,954 -52.8% 17,318 -48.4% 16,611 -48.5% 49,883 -49.9% 94,073 -65.7% Rev
Slide 42: Operating KPIs of Network Airlines by region vs. 2019
Operating KPIs of Network Airlines by region vs. 2019 Total Q3’21 9M’21 Europe Q3’21 9M’21 Asia / Pacific Q3’21 9M’21 Number of flights -46.5% -66.8% ASK -34.6% -61.0% ASK -79.9% -81.6% ASK -51.2% -65.8% RPK -41.4% -65.7% RPK -89.5% -91.8% RPK -61.8% -76.1% SLF -8.6pts. -9.4pts. SLF -42.4pts. -47.4p
Slide 43: Operating KPIs of Eurowings vs. 2019
Operating KPIs of Eurowings vs. 2019 Total Q3’21 9M’21 Number of flights -55.4% -74.6% ASK -38.3% -64.6% RPK -44.5% -68.2% SLF -8.9pts. -8.3pts. Yield -13.7% -12.8% Yield vs 2020 +2.4% -2.5% Yield ex currency vs 2020 +2.4% -2.6% RASK -22.5% -21.6% RASK ex currency vs 2020 +11.4% -7.3% CASK -25.2% +1
Slide 44: Group P&L
Group P&L Lufthansa Group (in EUR m) Q3’21 vs. Q3 ’20 9M’21 vs. 9M ’20 Revenues 5,207 +95.8% 10,978 -0.2% Total operating income 5,605 +83.2% 12,064 -2.3% Operating expenses 5,649 +32.1% 14,139 -13.5% Of which fees & charges 701 +76.6% 1,390 -3.9% Of which fuel 752 +160.2% 1,444 -10.3% Of which staf
Slide 45: Fleet overview (as of June 30, 2021)
Fleet overview (as of June 30, 2021) 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
Slide 46: 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
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