Deutsche Lufthansa Ag · XETR:LHA

Deutsche Lufthansa — UniCredit and Kepler Cheuvreux German Corporate Conference (November 2020)

40 slides from Deutsche Lufthansa's conference presentation, November 2020

  1. Slide 1: UniCredit and Kepler Cheuvreux German Corporate Conference

    UniCredit and Kepler Cheuvreux German Corporate Conference Carsten Spohr (CEO), Remco Steenbergen (CFO), Dennis Weber (VP Investor Relations)

  2. Slide 2: Strategy update, Financial stabilization package, Outlook

    01 Strategy update 02 Financial stabilization package 03 Outlook Page 2

  3. Slide 3: Leading European airline group – highest profits in the Group's history in 2017-2019

    Leading European airline group – highest profits in the Group’s history in 2017-2019 135,000 28 employees from 140 countries million registered customers (Miles & More) 4,600 aircraft under contract 2019 2018 2017 2,969 (LHT) 2 million 2,836 763 metric tons of freight transported 2,026 (2019, LCAG)

  4. Slide 4: Aviation industry grounded – 2020 world passenger traffic collapses

    Aviation industry grounded – 2020 world passenger traffic collapses Commercial flights in thousands up to European Sky -500 bn $ gross passenger Apr- 112 19 During Corona -74% revenues Apr- 29 20 vs previous year -3 bn (-65%) up to >16,000 aircraft European Sky passengers Parked worldwide Pre-Corona

  5. Slide 5: Rapid implementation of cost-saving and restructuring measures

    Rapid implementation of cost-saving and restructuring measures What has been achieved so far … … and the key measures we focused on Overhead reduction Suspension of leased >1000 ReStructure programs across all BUs up and throughout all business labor ReStructure units and functions running measures

  6. Slide 6: Recovery of air traffic expected to be slow

    Recovery of air traffic expected to be slow - return to pre-crisis levels only forecast by mid of the decade IATA forecast of passenger development Global RPK, trillions per year Faster recovery of  Short-haul traffic vs. long- haul traffic  Private travel demand (general tourism, visit 'Family an

  7. Slide 7: 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

  8. Slide 8: Transformation will turn Lufthansa Group into a significantly different company by 2024

    Transformation will turn Lufthansa Group into a significantly different company by 2024 Reduction of ca. 29,000 FTEs and -150 aircraft ca. 20% of management staff Portfolio review LH Group remains innovation driver Evaluation of subsidiary divestments Dynamic One Star Alliance Future Intercont NDC P

  9. Slide 9: Workforce restructuring will adjust the Group's size to a smaller market

    Workforce restructuring will adjust the Group’s size to a smaller market Number of employees reduced by almost Overview of labor negotiations 14,000 already  Agreement on crisis package for 2021 with pilot's union Vereinigung Cockpit, covering c. 5,000 pilots Group-wide LSG: ~10,500 NW Airl.: ~2,00

  10. Slide 10: Lufthansa Group committed to sustainability and CO2 reduction

    Lufthansa Group committed to sustainability and CO2 reduction CO2 balance Customer and sustainability Further ESG aspects  Target: CO2-neutral aviation until 2050,  Sustainability increasingly influences  Active noise reduction 50% reduction of net emissions versus customers’ buying decisions – 

  11. Slide 11: Third Quarter 2020 Results

    01 Strategy update 02 Third Quarter 2020 Results 03 Outlook Page 11

  12. Slide 12: Positive trends in early Restart phase reversed in September

    Positive trends in early Restart phase reversed in September Capacity (ASK) in % of PY, seat load factors Comments 25%  Performance in July and August 24% supported by good leisure demand 19%  European short-haul routes perform significantly better than long-haul  Deterioration in September cause

  13. Slide 13: Network Airlines: Further step-up of cost reductions limits operating loss

    Page 13 Network Airlines: Further step-up of cost reductions limits operating loss Q3 2020 9M 2020 Operational KPIs +7.9% Comments -2,9%  Capacity and seat load factors -16.3pts. decline significantly -36.5pts.  Yields in Q3 benefit from mix effect -66,9% (higher share of continental traffic), -78

  14. Slide 14: Eurowings: Touristic focus supports recovery in summer months

    Page 14 Eurowings: Touristic focus supports recovery in summer months Q3 2020 9M 2020 Operational KPIs Comments -6.6pts -15.5pts. -15,8% -10,5%  Capacity decline less pronounced compared to Network Airlines  High share of touristic traffic -65.8% -67.2% supports recovery in summer months 1 1 ASK S

  15. Slide 15: Logistics: On course for record result in 2020

    Page 15 Logistics: On course for record result in 2020 Q3 2020 9M 2020 Operational KPIs +46,7% +46,0% Comments +12.6pts. +7.0pts.  Market-wide capacity squeezed by sharp reduction of available belly space in passenger aircraft -36.3% -42.1%  Demand remains high throughout the 1 1 quarter ATK CLF Y

  16. Slide 16: Results of the MRO and Catering segments burdened by the crisis

    Page 16 Results of the MRO and Catering segments burdened by the crisis Adjusted EBIT / Margin Q3 2020 9M 2020 nmf. nmf. Comments 116 -12% 351 -7%  Year-to-date loss at Lufthansa -86 -20pts. -208 -14pts. Technik largely due to write-downs Q3 ’19 Q3 ’20 9M ’19 9M ’20 of receivables and spare parts 

  17. Slide 17: Significant reduction of operating cash drain compared to the second quarter

    Significant reduction of operating cash drain compared to the second quarter Operating cash drain, EUR in million 1 Key drivers:  Successful capacity expansion -60%  Continued strength of Cargo business Monthly cash drain:  Fixed cost reductions incl. short-time EUR 520 million work and other per

  18. Slide 18: Impairments and fuel hedging losses burden net income

    Impairments and fuel hedging losses burden net income Adjusted EBIT / Net Income 9M 2020 Comments  Aircraft impairments relate to retirement of 110 planes/usage rights  EUR 1.1bn of impairments in Q3 relate to long-term storage and Total adjustments: EUR 1,696 million permanent decommissioning of

  19. Slide 19: Q3 free cash flow decline almost entirely driven by customer refunds

    Q3 free cash flow decline almost entirely driven by customer refunds Earnings before tax / Adjusted free cash flow, Q3 2020, EUR in million 1,837 2,022 51 23 85 239 175 -2,069 252 -2,493 Other Net Leasing Adjusted Earnings Depreciation/ Ticket Net new Remaining Tax operating CapEx payments Free befo

  20. Slide 20: Cash preservation continues to be the focus of Group financial management

    Cash preservation continues to be the focus of Group financial management for the remainder of 2020 and going into 2021 1 Reduction of operating cash outflows 2 Strict working capital management  Short-time work and other personnel measures (reduction of  Accelerated collection of receivables over

  21. Slide 21: Successful cash preservation has limited net debt increase to ca. EUR 2.3bn

    Successful cash preservation has limited net debt increase to ca. EUR 2.3bn Adjusted free cash flow 1 Net debt Pension provisions Discount Discount n.m.f. +34% rate: +21% rate: 1.4% 1.3% 685 8.930 8.073 6.659 6.662 -2.579 9M ’19 9M ’20 Dec 31, ’19 Sept 30, ’20 Dec 31, ’19 Sep 30, ’20 Page 21

  22. Slide 22: Stabilization package continues to sustain the Group's strong liquidity position

    Stabilization package continues to sustain the Group's strong liquidity position Lufthansa stabilization package Group available liquidity EUR 10.1 billion Grant AT 0,2 Drawdown: Cash at hand 3,8 State-guaranteed 2.0 EUR 2.7 billion loans CH, AT, BE WSF Equity 0,3 excl. EUR 1.6 bn Syndicated KfW loa

  23. Slide 23: Outlook

    01 Strategy update 02 Third Quarter 2020 Results 03 Outlook Page 23

  24. Slide 24: Outlook for 2021 dependent on further evolution of the pandemic

    Outlook for 2021 dependent on further evolution of the pandemic  Traffic recovery dependent on containment of the pandemic, broader vaccine deployment and wider acceptance of testing  Target to return to 50% of 2019 capacity levels in the full year of 2021  Operating cash flow expected to turn po

  25. Slide 25: 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

  26. Slide 26: #WeCare

    Connecting people, cultures and economies will remain core of our business Maximum flexibility Connecting for customers People, Cultures and Maintain Economies traffic infrastructure to/from Europe Best airline product in Europe #1 Sustainable and Industry-leading value-oriented hygiene measures gro

  27. Slide 27: Appendix – supplementary information

    Appendix - supplementary information- Page 27

  28. Slide 28: Financial Stabilization Package - Key Points

    Stabilization Package Q3 2020 Results Maturity Profile Financial Overview 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

  29. Slide 29: Key facts around the stabilization package

    Stabilization Package Q3 2020 Results Maturity Profile Financial Overview 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 d

  30. Slide 30: Overview of the ESF stabilization package

    Stabilization Package Q3 2020 Results Maturity Profile Financial Overview 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  State-guaranteed loans of EUR 1.

  31. Slide 31: Key elements of the silent participation and equity instruments

    Stabilization Package Q3 2020 Results Maturity Profile Financial Overview 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 

  32. Slide 32: Syndicated KfW loan with three year maturity

    Stabilization Package Q3 2020 Results Maturity Profile Financial Overview 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 co

  33. Slide 33: Other key terms and conditions of the stabilization package

    Stabilization Package Q3 2020 Results Maturity Profile Financial Overview Other key terms and conditions of the stabilization package  2x seats on the Supervisory Board filled in agreement with the German government with Angela Board representation Titzrath (CEO HHLA) and Michael Kerkloh (ex-CEO Mu

  34. Slide 34: Slot remedies agreed with the EU Commission

    Stabilization Package Q3 2020 Results Maturity Profile Financial Overview 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 ta

  35. Slide 35: Traffic Data

    Stabilization Package Q3 2020 Results Maturity Profile Financial Overview Traffic Data 6M yoy Jul yoy Aug yoy Sep yoy Q3 yoy 9M yoy Passengers in 1,000 23,475 -66.0% 2,905 -80.1% 3,265 -77.0% 2,512 -82.0% 8,681 -79.7% 32,157 -71.2% Available seat-kilometers (m) 68,604 -60.7% 6,449 -80.9% 8,288 -75.3

  36. Slide 36: Group P&L

    Stabilization Package Q3 2020 Results Maturity Profile Financial Overview Group P&L Lufthansa Group (in EUR m) Q3 ’20 vs. Q3 ’19 9M ’20 vs. 9M ’19 Revenues 2,660 -73.7% 10,995 -60.1% Total operating income 3,059 -71.5% 12,346 -57.8% Operating expenses 4,276 -55.2% 16,345 -41.0% Of which fees & charg

  37. Slide 37: Operating KPIs of Network Airlines by region

    Stabilization Package Q3 2020 Results Maturity Profile Financial Overview Operating KPIs of Network Airlines by region Total Q3 ’20 9M ’20 Europe Q3 ’20 9M ’20 Asia / Pacific Q3 ’20 9M ’20 Number of flights -71.3% -64.0% ASK -68.3% -63.9% ASK -84.8% -70.3% ASK -78.7% -66.9% RPK -75.5% -70.3% RPK -94

  38. Slide 38: Cash flow statement

    Stabilization Package Q3 2020 Results Maturity Profile Financial Overview Cash flow statement Lufthansa Group (in m EUR) 9M ’20 vs. 9M ’19 Includes regular depreciation and crisis- 1 related impairments for 110 aircraft and EBT (earnings before income taxes) -6,912 -8,545 aircraft usage rights Depre

  39. Slide 39: Maturity profile of borrowings as of December 31, 2020

    Stabilization Package Q3 2020 Results Maturity Profile Financial Overview Maturity profile of borrowings as of December 31, 2020 3.000 2.500 2.000 1.500 1.000 500 0 2021 2022 2023 2024 2025 2026 2027 2028 Straight Bond Convertible Bond Hybrid Schuldscheindarlehen Commercial Paper Credit Lines Aircra

  40. Slide 40: Multi-Year financial overview

    Stabilization Package Q3 2020 Results Maturity Profile 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 & L

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