Deutsche Lufthansa Ag · XETR:LHA
Deutsche Lufthansa — Investor Presentation (November 2024)
43 slides from Deutsche Lufthansa's investor presentation, November 2024
Slide 1: Investor Presentation
Investor Presentation Deutsche Lufthansa AG November 2024
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: Recent Financial Results
Recent Financial Results Strategy Update Investment in ITA Airways Operational and Financial Outlook Appendix Page 4
Slide 5: In 2023 Lufthansa Group achieves third highest operating profit ever
Recap FY 2023 Recap Q1 2024 Recap Q2 2024 Details Q3 2024 In 2023 Lufthansa Group achieves third highest operating profit ever (in EUR million) FY23 FY22 Change in % Revenues 35,442 30,895 +15 Operating income 38,429 33,268 +16 Operating expenses 35,960 31,771 +13 Of which fuel 7,931 7,601 +4 Of whi
Slide 6: Q1 EBIT loss significantly impacted by strikes and lower Cargo results
Recap FY 2023 Recap Q1 2024 Recap Q2 2024 Details Q3 2024 Q1 EBIT loss significantly impacted by strikes and lower Cargo results compared to prior year Q1 ‘23 to Q1 ‘24 Adjusted EBIT bridge in EUR million Gross profit Strike impact Q1 2023 from growth less Cargo (excl. (Airlines, Q1 2024 Actuals cos
Slide 7: Evolvement of LHG yields in Q2 2024 differs between traffic regions
Recap FY 2023 Recap Q1 2024 Recap Q2 2024 Details Q3 2024 Evolvement of LHG yields in Q2 2024 differs between traffic regions and is shaped by market environment and structural shift in demand LHG Growth rates vs. 2023 Europe Asia / Pacific North America 10.2% 27.7% 10.1% 15.5% 20.6% 11.4% -0.2%p -3
Slide 8: In 2024 there is strong demand and strategic progress, yet operational limits
Recap FY 2023 Recap Q1 2024 Recap Q2 2024 Details Q3 2024 In 2024 there is strong demand and strategic progress, yet operational limits and regulatory challenges Passenger Airlines – excl. Lufthansa Robust global demand Consistent pursuit of our strategy Airlines – financially successful ▪ Passenger
Slide 9: Q3 revenues increased by 5%, while operating expenses increased 6% vs. PY
Recap FY 2023 Recap Q1 2024 Recap Q2 2024 Details Q3 2024 Q3 revenues increased by 5%, while operating expenses increased 6% vs. PY (in EUR million) Q3’24 Q3’23 Change in % Revenues 10,738 10,275 +4.5 Operating expenses 10,160 9,561 +6.3 Of which fuel 2,175 2,266 -4.0 Of which staff 2,218 2,066 +7.4
Slide 10: Passenger Airlines: Challenges at Lufthansa Airlines prevent fixed cost leverage
Recap FY 2023 Recap Q1 2024 Recap Q2 2024 Details Q3 2024 Passenger Airlines: Challenges at Lufthansa Airlines prevent the Group from fully exploiting its fixed cost leverage Passenger Airlines Passenger Airlines Lufthansa Comments excl. LH Airlines Airlines ▪ Compared to Q2 the y-o-y capacity incre
Slide 11: Ambition for LHA Turnaround: measures with EUR ~1.5bn impact by 2026
Recap FY 2023 Recap Q1 2024 Recap Q2 2024 Details Q3 2024 Ambition for LHA Turnaround: measures with EUR ~1.5bn impact by 2026 LHA Turnaround Gross Adjusted EBIT effect by 2026 Premium customer offer ~35% Revenue impact 35% Revenue Retail and Ancillary Revenue Improved Operational Stability ~65% Cos
Slide 12: Lufthansa Cargo faces upward trend – Lufthansa Technik contributes high profits
Recap FY 2023 Recap Q1 2024 Recap Q2 2024 Details Q3 2024 Lufthansa Cargo faces upward trend – Lufthansa Technik consistently contributes high profits Adjusted EBIT/(margin) in EUR million Comments 38 (4.9%) 1 ▪ Cargo profits rose significantly versus (0.1%) prior year due to high demand from Q3 ’24
Slide 13: Free cash flow in the first nine months of 2024
Recap FY 2023 Recap Q1 2024 Recap Q2 2024 Details Q3 2024 Free cash flow in the first nine months of 2024 was driven by strong incoming bookings for the summer and CAPEX shift YTD Adjusted EBIT / Adjusted free cash flow in EUR million Q3 ’24 (408) 3,423 Adj. FCF: 967 EUR 128m -2,155 1,687 1,177 -262
Slide 14: Lufthansa Group continues to have strong liquidity and a robust balance sheet
Recap FY 2023 Recap Q1 2024 Recap Q2 2024 Details Q3 2024 Lufthansa Group continues to have strong liquidity and a robust balance sheet Liquidity Net debt and net pension liabilities1) Comments in EUR billion in EUR billion 11.4 1.9x2) ▪ Leverage ratio of 1.9x2) – 10.4 reductions in net debt and 2.5
Slide 15: Strategy Update
Recent Financial Results Strategy Update Investment in ITA Airways Operational and Financial Outlook Appendix Page 15
Slide 16: Lufthansa Group is delivering on its key strategic priorities
Lufthansa Group is delivering on its key strategic priorities Customer New Product Multi-Airline Transformation into Experience Generation Multi-Hub an Airline Group Page 16
Slide 17: Increasing customer satisfaction is our number one priority in 2024
Customer Product Multi-Airline Airline Group Increasing customer satisfaction is our number one priority in 2024 Offer Reliable Operations • Schedule regularity • Punctuality • Baggage handling Empower our Customers Digitally Customer • Seamless digital processes • Expansion of self-service options
Slide 18: Comprehensive product and service innovations define premium in Europe
Customer Product Multi-Airline Airline Group Comprehensive product and service innovations underline our aspiration to define premium in the European airline industry Lufthansa Allegris ▪ First flight on May 1st from Munich to Vancouver ▪ Five Business Class seating options with EUR 2.5bn All-Aisle-
Slide 19: Technological and commercial innovation are key to decarbonization
Customer Product Multi-Airline Airline Group Technological and commercial innovation are key to decarbonization Technology drives Rising contribution Among top-ranked emission reduction made by customers airlines in CDP Specific CO2 emissions: More than one million Received top score (A-) in -2% FY
Slide 20: Emission reduction targets validated by Science Based Targets initiative
Customer Product Multi-Airline Airline Group Group’s emission reduction targets successfully validated by Science Based Targets initiative (SBTi) Index LHG CO2 Emissions (not to scale) 110 Major levers for CO2 Reduction: First European airline Growth Fleet (SBTi relevance) group and second Reduction
Slide 21: Multi-Hub and Multi-Brand strategy is key for success
Customer Product Multi-Airline Airline Group Multi-Hub and Multi-Brand strategy is key for the success of Lufthansa Group Customer centricity: • Strong national brands with unique identity • Customer offering tailored to market- specific needs • Connected networks offer maximum connectivity JOINT OP
Slide 22: Focus on the synergetic core of the Group further sharpened
Customer Product Multi-Airline Airline Group Focus on the synergetic core of the Group further sharpened Active consolidation Airline Synergetic core business aviation services 1) Passenger Airlines … MRO, Cargo Business, Portfolio cleanup IT Services, Aviation 2) Lufthansa Training … City Airlines
Slide 23: Investment in ITA Airways
Recent Financial Results Strategy Update Investment in ITA Airways Operational and Financial Outlook Appendix Page 23
Slide 24: Attractive transaction rationale for LHG: ITA, Italy, and Rome FCO
Attractive transaction rationale for LHG: ITA as a company, Italy as a market, and Rome FCO as a 5 Star hub LHG Italy Attractive investment case, Most important broader access to LHG market Italian market and outside our home Rome FCO resources markets and US ITA One of Newly established Europe’s be
Slide 25: Transaction terms minimize the Group’s financial risk and create optionality
Transaction terms minimize the Group’s financial risk and create optionality ▪ Acquisition of 41% of shares in ITA Airways through a capital increase ▪ Investment into the company’s equity, no payment to Italian Ministry of Economy and Finance (MEF) Key terms ▪ Capital increase of EUR 325 million fu
Slide 26: Remedy package addresses concerns of the European Commission
Remedy package addresses concerns of the European Commission while maintaining economic feasibility of the deal Concerns of EU Commission Remedies Overlaps on ‘neighborhood’ traffic New competitor (short-haul remedy taker) ➢ Transaction security: Closing and Short-Haul between Italy and existing LHG
Slide 27: The ITA acquisition is an extension of our multi-hub, multi-brand strategy
The ITA acquisition is an extension of our multi-hub, -brand and –AOC strategy that made Lufthansa Group Europe’s leading airline group Customer centricity ▪ ITA is a strong local brand with maximum identification ▪ New travel options for customers by offering connections via Rome 13 Internationaliz
Slide 28: Plug and Play system enables fast integration into Lufthansa Group
Plug and Play system enables fast integration into Lufthansa Group ITA Integration LUFTHANSA GROUP Steering Synergies and standards „One kitchen“ functions Sales & Network IT (Digital Fleet ▪ Large LHG team with revenue planning Delivery etc.) management dedicated experts ramped management up … Furt
Slide 29: Largest part of synergies can be implemented prior to full consolidation
Largest part of synergies can be implemented prior to full consolidation After full consolidation 100% Central aircraft Technical fleet Step 2: Financing of synergies ownership management & MRO Majority shareholding after option exercise Step 1: 2026 - 2027 Minority shareholding Star Alliance & Opti
Slide 30: Operational and Financial Outlook
Recent Financial Results Strategy Update Investment in ITA Airways Operational and Financial Outlook Appendix Page 30
Slide 31: Lufthansa Technik will continue its track record by Ambition 2030
Lufthansa Technik will continue its unprecedented track record as key source of value creation by “Ambition 2030” Global expansion Digital push Defense business Main target: remain global MRO leader – TechOps ecosystem expanded into Partnerships to strengthen defense underlined by global production
Slide 32: Hedging strategy allows Lufthansa Group to benefit from fuel price decrease
Hedging strategy allows Lufthansa Group to benefit from fuel price decrease in Q3 2024 – full year guidance at EUR 7.8bn LH fuel price exposure is well hedged1) in 2024 Expected fuel price sensitivity after hedging (FY 2024) LH mixed JET price in USD/to. as of October 22 Q4 FY 2024 126 916 920 923 9
Slide 33: Full year outlook assumes slightly adjusted capacity and RASK guidance
Full year outlook assumes a slightly adjusted capacity and RASK guidance, while Adjusted EBIT range still dependent on RASK variability FY 2024 Capacity ~91% of 2019 RASK Mid single-digit decline vs. PY CASK (ex fuel and emission costs) Low single-digit increase vs. PY Adj. EBIT EUR 1.4 – 1.8bn 1) A
Slide 34: Appendix - supplementary information
Appendix - supplementary information - Page 34
Slide 35: Traffic Data
Traffic Data Jul vs. 2023 Aug vs. 2023 Sep vs. 2023 Q3 vs. 2023 vs. 2019 Passengers in 1,000 13,683 +5.4% 13,617 +7.4% 13,011 +4.0% 40,311 +5.6% -5.7% Available seat-kilometers (m) 31,794 +7.0% 31,556 +7.3% 29,986 +5.0% 93,336 +6.4% -6.3% Revenue seat-kilometers (m) 27,930 +7.8% 27,683 +9.5% 25,748
Slide 36: Operating KPIs of Passenger Airlines by region vs. 2023
Operating KPIs of Passenger Airlines by region vs. 2023 (unless stated otherwise) Total Q3’24 Europe Q3’24 Asia Pacific Q3’24 ASK +6.4% ASK +18.1% Number of flights +3.4% RPK +7.2% RPK +16.5% SLF +0.7%p SLF -1.2%p ASK +6.4% RASK incl. currency1) +0.4% RASK incl. currency 1) -15.1% RPK +7.6% Americas
Slide 37: Calculation of operational airline KPIs RASK CASK
Calculation of operational airline KPIs Passenger Airlines, Q3 2024 1) Traffic revenues (€m) 8,385 1) Total Revenues (€m) 8,844 2) Not assignable (€m) 720 2) Other operating income (€m) 178 Yield = 3) Basis for Yield (1)–(2) (€m) 7,665 3) Reversal of provisions (€m) 34 RASK 4) RPK (m) 1) 81,362 4) F
Slide 38: Performance of Group Airlines in Q3 2024
Performance of Group Airlines in Q3 2024 ASK Revenue Adj. EBIT Adj. EBIT Q3 2024 vs. 2019 [m EUR] [m EUR] margin Lufthansa Airlines 87.3% 4,815 407 8.5% SWISS 99.6% 1,854 302 16.3% Austrian Airlines 101.2% 783 139 17.8% Brussels Airlines 85.7% 495 79 16.0% Eurowings 119.5% 954 239 25.1% Passenger Ai
Slide 39: Group P&L
Group P&L Lufthansa Group (in EUR m) Q3’24 vs. Q3’23 Revenues 10,738 +5% Total operating income 11,372 +4% Operating expenses 10,160 +6% Of which fees & charges 1,424 +14% Of which fuel 2,175 -4% Of which staff 2,218 +7% Of which depreciation 597 +7% Result from equity investments 128 0 Adjusted EBI
Slide 40: EBIT / Adjusted EBIT bridge Q3 2024
EBIT / Adjusted EBIT bridge Q3 2024 in EUR million 1.461 1.340 (7) 1 (2) 129 Sale of AirPlus and SLB transactions (A320 family) Adjusted EBIT Net book gains M&A and restructuring Impairment losses Others EBIT expenses and deviations Page 40
Slide 41: Cash flow statement
Cash flow statement Lufthansa Group (in m EUR) Q3’ 24 vs. Q3’ 23 EBT (earnings before income taxes) 1,348 -188 1 Depreciation & amortization (incl. repairable MRO materials) 630 +67 Decrease in the operating result compared Net proceeds from disposal of non-current assets -122 -131 1 to previous yea
Slide 42: Multi-year financial overview
Multi-year financial overview Lufthansa Group (in EUR million, as reported) 2016 2017 2018 20191 2020 2021 20224 2023 Operating KPIs (change vs. prior year) RASK ex currency -5.9% +1.9% -0.5% -2.5% -26.7% -6.1% -6.1% +11.0% CASK ex currency, ex fuel2 -2.5% -1.8% -1.7% -1.5% +84.6% -25.8% -25.8% +2.3
Slide 43: Maturity profile of borrowings as of September 30, 2024
Maturity profile of borrowings as of September 30, 2024 3.000 2.500 2.000 1.500 1.000 500 0 2024 2025 2026 2027 2028 2029 2030 2031 Straight Bond Hybrid Convertible Bond Schuldscheindarlehen Aircraft Finance (secured) Other* *Mainly bilateral loans – does not include operating lease payments Page 43
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