Deutsche Lufthansa Ag · XETR:LHA
Deutsche Lufthansa — H1 2020 Earnings Presentation
35 slides from Deutsche Lufthansa's earnings presentation, September 2020
Slide 1: Investor Meeting Presentation
Investor Meeting Presentation September 2020
Slide 2: Disclaimer
Disclaimer The information herein is based on publicly available information. It This presentation contains statements that express the Company‘s has been prepared by the Company solely for use in this opinions, expectations, beliefs, plans, objectives, assumptions or presentation and has not been v
Slide 3: Agenda
Agenda 01 First Half Year Results 2020 02 Financial stabilization package 03 Outlook Page 3
Slide 4: Path to "New Normal" requires a restructuring of the business
Path to “New Normal” requires a restructuring of the business Grounding Restart Recovery New Normal Competitiveness & Ability to invest Transformation & Restructuring Expected 2023 Flexibility As of Q3 2020 -99% Passengers As of May Page 4
Slide 5: Restart of flight operations in May followed by gradual capacity expansion
Restart of flight operations in May followed by gradual capacity expansion ASK Group Airlines (vs. previous year) -1% -2% -51% -81% -96% -93% -97% January February March April May June July Page 5
Slide 6: Network Airlines: Almost complete standstill of business in Q2
Network Airlines: Almost complete standstill of business in Q2 Q2 2020 6M 2020 Operational KPIs 33.7% Comments Lufthansa and SWISS mainly operate -9.3pts. -5.0% repatriation flights in April and May, -34.2pts. Austrian Airlines and Brussels Airlines grounded until mid-June -95.5% -60.3% Gradual
Slide 7: Eurowings: Operating profit declines despite significant cost reductions
Eurowings: Operating profit declines despite significant cost reductions Q2 2020 6M 2020 34.0pts. Operational KPIs Comments -1.1pts Significant reduction of flight -7,5% schedule in the second quarter -38.4% Operating expenses down 66% in the second quarter, primarily driven by -95.0% -64,8% imp
Slide 8: Fixed cash cost reduction limits monthly cash burn to c. EUR 550 million
Fixed cash cost reduction limits monthly cash burn to c. EUR 550 million Airline fixed cash costs reduced significantly Q2 Group cash burn -34% Key drivers: c. EUR 550 million • Implementation of short-time average monthly operating cash burn work (up to 90k employees) (excluding working capital, in
Slide 9: Profits in Logistics segment up strongly, losses in MRO and Catering
Profits in Logistics segment up strongly, losses in MRO and Catering Adjusted EBIT / Margin Q2 2020 6M 2020 nmf. nmf. Comments 299 39.0% 277 21.0% -9 +40.4pts. 15 +19.8pts. Profits in Cargo business benefit Q2 ’19 Q2 ’20 6M ’19 6M ’20 from doubling of yields in the second quarter as a result of ca
Slide 10: Impairments and fuel hedging losses burden net income
Impairments and fuel hedging losses burden net income Adjusted EBIT / Net Income 6M 2020 Comments Aircraft impairments relate to 65 planes which will be permanently grounded Goodwill impairments relate to LSG US, Eurowings and JV operations of Total adjustments: EUR 569 million Lufthansa Technik
Slide 11: Investments reduced drastically in response to the crisis
Investments reduced drastically in response to the crisis Gross Investments1 Comments Strong progress made in negotiating 3,757 adjustment of aircraft payment and 3,529 3,559 delivery schedules with aircraft manufacturers -53% 23 aircraft deliveries planned in 2020 (9 received in H1), 12 in 2021
Slide 12: Group-wide focus on cash preservation limits free cash flow decline
Group-wide focus on cash preservation limits free cash flow decline Working Capital Contribution Adjusted Free Cash Flow Comments to Operating Cash Flow Strict focus on cash preservation implemented across the Group 1,452 1,434 269 Receivables reduction and successful negotiations with suppliers
Slide 13: Net debt increases only moderately relative to earnings decline
Net debt increases only moderately relative to earnings decline Net debt Pension provisions Comments Discount Discount Only moderate decline of net debt +10% rate: +11% rate: 1.4% 1.5% compared to year-end 7,314 7,422 Pension provisions increase due to 6,662 6,659 negative asset performance Ad
Slide 14: Stabilization measures ensure the Group's going concern
Stabilization measures ensure the Group’s going concern Centrally available liquidity & Stabilization package (undrawn as of Jun 30, ’20) Conclusion EUR 9.0 billion c. EUR 11.8 billion Total available liquidity as of June 30, 2020 Guaranteed loans in ~4,250 3.0 D, CH, AT, BE Group fully funded for
Slide 15: Agenda
Agenda 01 First Half Year Results 2020 02 Financial Stabilization Package 03 Outlook Page 15
Slide 16: Financial Stabilization Package - Key Points
Financial Stabilization Package - Key Points Stabilization package agreed with the German Economic Stabilization Fund (ESF) ensures going concern and viability of the Lufthansa Group Result of intense negotiations with the ESF and EU Commission Secures the necessary strategic and operational f
Slide 17: Key facts around the stabilization package
Key facts around the stabilization package EUR 5.7 billion silent participation EUR 4.7 billion accounted as equity1 (“Silent Participation I” and grant in AT) Key elements of the EUR 1.0 billion accounted as financial debt1, incl. conversion rights for ESF (“Silent Participation II”) stabiliz
Slide 18: Overview of the ESF stabilization package
Overview of the ESF stabilization package EUR 9.0 billion Syndicated loan; 80% backed by KfW 1.0 Syndicated KfW loan Maturity of 3 years with margin grid linked to rating State-guaranteed Debt 2.0 State-guaranteed loans of EUR 1.4 billion in Switzerland, loans CH, AT, BE EUR 300 million in Aus
Slide 19: Key elements of the silent participation and equity instruments
Key elements of the silent participation and equity instruments Silent Participation I and II Share issuance and conversion rights Direct share issuance Silent Participation I Deeply subordinated / only senior to equity 119.5 million shares issued at EUR 2.56 EUR 306 Subject to full repaymen
Slide 20: Syndicated KfW loan with three year maturity
Syndicated KfW loan with three year maturity Key terms Comments EUR 1 billion syndicated revolving credit facility with EUR 1 billion 80% held and backed by KfW, and syndicated credit facility 20% syndicated to a bank consortium Loan backed by shares in Lufthansa’s aircraft holding companies
Slide 21: Other key terms and conditions of the stabilization package
Other key terms and conditions of the stabilization package 2x seats on the Supervisory Board of LH Group to be filled in agreement with the German Board representation government (“Airbus model”), 1x of which is to become a member of the Audit Committee Except in the event of a takeover, the ES
Slide 22: Slot remedies agreed with the EU Commission
Slot remedies agreed with the EU Commission Overview of slot transfers Key facts and conditions Total of 48 slots Lufthansa Group to transfer a total of 48 take-off and landing rights transfers (slots) to a competitor 3 take-off and 3 landing rights per aircraft per day for the stationing of up
Slide 23: Agenda
Agenda 01 First Half Year Results 2020 02 Financial stabilization package 03 Outlook Page 23
Slide 24: Lufthansa Group remains the leading European airline group
Lufthansa Group remains the leading European airline group Sustainable balance of all stakeholders’ interests Based in economically strong home markets: Germany, Switzerland, Austria, Belgium Flexible multi-hub model with premium network airlines as core Strategically increasing point-to-point
Slide 25: Ambitious targets for the New Normal
Ambitious targets for the New Normal Business unit restructuring Maximum payback of stabilization plans achieved package 22,000 FTE reduced to Targets 15% productivity increase to reach adjust to new size 2023 ASK level of 2019 in 2023 Redimensioned Corporate Headquarter and LH Group minus 100 A/C i
Slide 26: Core elements of the restructuring program ReNew
Core elements of the restructuring program ReNew ReStructure Business Business unit restructuring Units ReBoot++ Sunrise2 … ReFocus ReOrg RePay Corporate Portfolio optimization, Corporate and functional Capital market initiatives and partnering opportunities restructuring refinancing of credit facil
Slide 27: Crisis measures agreed with Vereinigung Cockpit and UFO
Crisis measures agreed with Vereinigung Cockpit and UFO Pilots – Vereinigung Cockpit (VC) Cabin personnel - UFO Ground staff – ver.di Short-term agreement concluded in Long-term agreement concluded in Negotiations of long-term crisis August June, confirmed by union members agreement aims at 20
Slide 28: Lufthansa Group intends to restore half of its capacity by year-end
Lufthansa Group intends to restore half of its capacity by year-end Total Capacity LHG Hub Airlines (% of 2019 ASK) 80% 82% Restoring network width: 95% of continental and 70% of intercontinental destinations by year-end ~55% ~50% ~40% Stronger focus on touristic: 90% of leisure destination portfoli
Slide 29: Financial outlook continues to be challenged by the effects of the Corona crisis
Financial outlook continues to be challenged by the effects of the Corona crisis Expansion of flight schedules will moderately reduce cash burn compared to Q2 levels of ca. EUR 550 million Restrictions in long-haul business and lower loads and yields expected to result in substantial Adjusted EB
Slide 30: Appendix - supplementary information
Appendix - supplementary information- Page 30
Slide 31: Traffic Data
Traffic Data Jan yoy Feb yoy Mar yoy Q1 yoy Passengers in 1,000 9,043 -0.4% 8,799 -2.9% 3,914 -65.3% 21,756 -26.1% Available seat-kilometers (m) 26,173 -0.6% 24,006 -1.9% 14,117 -50.7% 64,296 -19.1% Revenue seat-kilometers (m) 20,387 1.5% 18,087 -3.5% 8,625 -62.7% 47,099 -24.0% Passenger load-factor
Slide 32: Group P&L
Group P&L Lufthansa Group (in EUR m) Q1 ’20 vs. Q1 ’19 Revenues 6,441 -18% Total operating income 6,976 -16% Operating expenses 8,162 -6% Of which fees & charges 874 -16% Of which fuel 1,227 -14% Of which staff 2,143 -4% Of which depreciation 680 +4% Result from equity investments -34 nmf. Adjusted
Slide 33: Operating KPIs of Network Airlines by region
Operating KPIs of Network Airlines by region Total Q1 ’20 Europe Q1’20 Asia / Pacific Q1’20 ASK -18.6% ASK -25.5% Number of flights -19.6% RPK -24.5% RPK -30.9% ASK -18.6% SLF -5.2pts. SLF -6.0pts. RPK -23.9% RASK ex currency1) -10.2% RASK ex currency -17.8% SLF -5.1pts. Americas Q1’20 Middle East /
Slide 34: Cash flow statement
Cash flow statement Lufthansa Group (in m EUR) Q1 ’20 vs. Q1 ’19 Includes regular depreciation and crisis- 1 EBT (earnings before income taxes) -2,647 -2,264 related impairments Depreciation & amortization (incl. non-current assets) 1,145 +476 1 Net proceeds from disposal of non-current assets 6 -12
Slide 35: Multi-Year financial overview
Multi-Year financial overview Lufthansa Group (in m EUR, as reported) 2015 2016 2017 2018 20191 Operating KPIs RASK ex currency -3.0% -5.9% +1.9% -0.5% -2.5% CASK ex currency, ex fuel 2 +2.4% -2.5% -1.8% -1.7% -1.5% Profit & Loss Revenues 32,056 31,660 35,579 35,542 36,424 Fuel Cost 5,784 4,885 5,23