Slide 1: Press and Analyst Results Conference Q1-Q3 2015
Press and Analyst Results Conference Q1-Q3 2015 Carsten Spohr, Chairman of the Executive Board and CEO Simone Menne, Member of the Executive Board and CFO Frankfurt, 29th October, 2015
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: Lufthansa Group with positive performance
Lufthansa Group with positive performance Key financial figures January to September 2015 in m Mio. EUREuro 9M 2015 vs. vs. PY VJ Revenue Umsatz 24,304 24.304 +7% Adjusted EBIT 1,693 1.693 +71% Adjusted EBIT Margin EBIT-Marge 7.0% 7,0% +2.6p. +2,6PP Net Income Konzernergebnis 1,748 1.748 +263% Gross
Slide 4: Airlines, MRO and Catering report strongly improved results
Airlines, MRO and Catering report strongly improved results Adjusted EBIT for business segments from January to September 2015 1,693m EUR (+705m EUR vs. PY) Passenger Airline Group MRO Catering Logistics 1,350m EUR 398m EUR 76m EUR 35m EUR (+801m EUR vs. PY) (+50m EUR vs. PY) (+19m EUR vs. PY) (-34m
Slide 5: Result affected by oil price but also by successful measures
Result affected by oil price but also by successful measures Factors for positive development of results Oil price development favours positive earnings development Investment in premium products paying off Point-to-point traffic in the black Strict capacity discipline: 25 aircraft fewer than planne
Slide 6: Simone Menne - Member of the Executive Board and CFO
Simone Menne - Member of the Executive Board and CFO - Page 6
Slide 7: Key financial ratios develop positively
Key financial ratios develop positively 9M and Q3 2015 at a glance Lufthansa Group (in m EUR) 9M 15 9M 14 vs. PY Q3 15 Q3 14 vs. PY Total revenue 24,304 22,624 +7.4% 8,939 8,458 +5.7% of which traffic revenue 19,387 18,460 +5.0% 7,264 6,994 +3.9% EBIT 1,663 1,048 +58.7% 1,200 832 +44.2% Adjusted EBI
Slide 8: Fuel and currency effects provide significant relief
Fuel and currency effects provide significant relief Operating costs and revenues Lufthansa Group (in m EUR) 9M 2015 vs. PY Q3 2015 vs. PY Total revenue 24,304 +7.4% 8,939 +5.7% Other operating income 2,184 +48.0% 585 +10.4% Total operating income 26,488 +9.9% 9,524 +6.0% Operating expenses 24,941 +
Slide 9: Cash flow increases significantly, liquidity is on good level
Cash flow increases significantly, liquidity is on good level Cash flow statement Lufthansa Group (in m EUR) 9M 2015 vs. PY 3.3 3.2 2.8 2.4 EBT (earnings before income taxes) 1,995 +1,361 2.0 Depreciation & amortisation (incl. non-current assets) 1,286 +222 Net proceeds from disposal of non-current
Slide 10: Result improvement mainly driven by passenger airlines
Result improvement mainly driven by passenger airlines Segment overview 9M 2015 Share of LH Group‘s external revenue 75.0% 7.2% 9.7% 7.3% 0.8% 9M 2015 vs. 9M 2014 Passenger Others & in m EUR Airline Group Logistics MRO Catering Consolidation Revenue 18,739 1,763 3,723 2,258 -2,179 vs. PY in % +5.9%
Slide 11: Constant currency pricing improved in Q3
Constant currency pricing improved in Q3 Operative KPIs Passenger Airline Group Total 9M '15 Q3 '15 Europe 9M '15 Q3 '15 Asia/Pacific 9M '15 Q3 '15 Number of flights +0.2% +0.7% ASK +0.2% +1.6% ASK +4.7% +3.4% ASK +3.0% +2.4% RPK +1.6% +2.9% RPK +5.6% +5.8% RPK +3.6% +3.6% SLF +1.1pts. +1.1pts. SLF
Slide 12: Trading assumptions for 2015 updated
Trading assumptions for 2015 updated Trading assumptions FY 2015 Full Year 2015 assumptions Explanation Fleet rollover: No. of Flights slight increase Continued phase out of small, non-efficient aircraft Capacity c. +3% Capacity growth mainly achieved through more seats per (ASK) aircraft. Growth on
Slide 13: Fuel cost forecast lowered again
Fuel cost forecast lowered again Fuel forecast and sensitivities FY 2015 and 2016 Lufthansa Group fuel expenses after hedging Lufthansa Group price curve remainder of 2015 and 2016 (in bn EUR) 140 LH price 2015 130 Sensitivities with deviating oil price LH price 2016 6.8 Market price 5.9 (+20%) 120
Slide 14: Lufthansa Group expects Adj. EBIT FY15 of 1.75 – 1.95 bn EUR
Lufthansa Group expects Adj. EBIT FY15 of 1.75 – 1.95 bn EUR More precise forecast Lufthansa Group 2015 Lufthansa Group Adjusted EBIT Actual and Forecast Financial Year 2015 Profit increase in 2015 mainly driven by 1,750 – 1,950 passenger airlines Significant tailwind from lower oil price Positive e
Slide 15: Carsten Spohr - Chairman of the Executive Board and CEO
Carsten Spohr - Chairman of the Executive Board and CEO - Page 15
Slide 16: Lufthansa Group strategy with three strong synergetic pillars
Lufthansa Group strategy with three strong synergetic pillars Margin and growth-oriented goals for the business segments First Choice in Aviation Hub Airlines Secondary Brand Eurowings Aviation Services #1 multi-brand premium P2P airline: #1 in Aviation Services network airline system in #3 in Europ
Slide 17: Focus on customer satisfaction and competitive costs
Hub Airlines Focus on customer satisfaction and competitive costs Structural and cost-based measures for the hub airlines Customer Orientation Competitive Cost Structures and Revenue Optimization Consistent premium offers Reduction in fleet complexity by 6 sub-fleets Standardized, commercial process
Slide 18: Eurowings with innovative and competitive product offering
Eurowings Eurowings with innovative and competitive product offering Measures to establish Eurowings as top 3 P2P airline in Europe Integration under The New Eurowings Umbrella Brand Eurowings Pan-European P2P Competitive costs growth Intercontinental P2P Innovative brand and Eurowings Commercial &
Slide 19: Ambitious Eurowings concept implemented consistently
Eurowings Ambitious Eurowings concept implemented consistently Implementation and set-up of the new Eurowings Fleet Development1 95 aircraft 96 aircraft 85 aircraft 6 long-haul 7 long-haul 2 long-haul 89 short-haul +30% ASK 89 short-haul 83 short-haul +40% ASK2 Number of Aircraft 2015 2016 2017 1 ac
Slide 20: Aviation Services growing profitably
Aviation Services Aviation Services growing profitably Expansion of the diversified portfolio in existing and new markets Organic growth and partner Growth through consolidation Focus on special products activities (e.g. joint venture Expansion of growth portfolio and joint ventures (e.g. with with
Slide 21: We consistently implement our program “7to1 – Our Way Forward”
We consistently implement our program “7to1 – Our Way Forward” No. 1 for customers, shareholders, employees and partners Customer centricity & quality focus Constantly Innovation & improving digitalization efficiency Customer Value based steering Share- #1 New concepts for growth holder Employee Fin
Slide 22: Ongoing alignment with customer needs
Customer centricity & quality focus Ongoing alignment with customer needs Expansion of quality focus through tailored services Premium Products Tailored Services First Class • 5 stars at LH Passage • Up to 5pts. higher seat load On Board factor1 Business Class • Lie Flat Business Class in all hub ai
Slide 23: Additional revenues through innovative distribution concepts
Innovation & digitalization Additional revenues through innovative distribution concepts Implementation of new distribution strategy at the hub airlines Innovations at LH Example: Implementation of Future Distribution Strategy Top Products Top Products Top Products Top Products Initiatives in all bu
Slide 24: Consistent implementation of measures to increase efficiency
Constantly improving efficiency Consistent implementation of measures to increase efficiency Efficiency measures within the LH Group 2012 2013 2014 2015 2016 2017 2018 LHP: ‘Freeze’ fleet size Capacity & fleet Less growth: 25 dimensioning LHP: Introduction A380 and Boeing 747-8 fewer aircraft1 -20%
Slide 25: Group realignment making headway
Group realignment making headway Summary Positive development of business in 2015 Result of just under 1.7bn EUR after the 3rd quarter, more precise forecast of 1.75bn - €1.95bn EUR before possible strike costs in the 4th quarter, tailwind due to low oil price Airlines improve offers Passengers hono
Slide 26: Appendix – Financial Figures 9M 2015
Appendix – Financial Figures 9M 2015 – Page 26
Slide 27: Group revenue and currency influence
Group revenue and currency influence 9M 2015 vs. 9M 2014 Currency influence on EBIT (in m EUR) in m EUR Q1 Q2 Q3 Q4 FY (YTD) -134 -24 -18 -176 Currency: +7.4% Volume: +3.1% Price: -4.8% 549 1,199 -821 19,387 Traffic revenue (+5.0%) 18,460 4,917 4,164 Other revenue (+18.1%) 9M 2014 9M 2015 ∑ 22,624 ∑
Slide 28: Fuel costs
Fuel costs 9M 2015 vs. 9M 2014 Hedging result by quarter (in m EUR) in m EUR Q1 Q2 Q3 Q4 FY (YTD) 2014 -21 -2 -30 -96 -149 2015 -203 -205 -271 -679 -686 Volume Price 5,180 140 Currency 4,494 -2,580 1,128 Hedging 626 9M 2014 9M 2015 Page 28
Slide 29: Adjusted EBIT and one-off factors
Adjusted EBIT and one-off factors Quarterly results 2014-2015 in m EUR Q1 Q2 Q3 Q4 6M 9M Full Year Adjusted EBIT 2014 -240 418 810 183 178 988 1,171 incl. strikes -10 -60 -35 -127 -70 -105 -232 incl. Venezuela -38 -23 +7 -5 -61 -54 -59 Adjusted EBIT ex one-off factors -192 501 838 315 309 1,147 1,46
Slide 30: Adjusted EBIT margins 9M 2015 vs. 9M 2014
Adjusted EBIT margins 9M 2015 vs. 9M 2014 13.0 all figures in % 12.0 11.0 10.8 10.7 10.9 10.0 9.0 8.0 7.2 7.0 7.0 6.6 6.2 6.0 5.0 4.4 3.8 3.9 4.0 3.4 3.1 2.9 3.0 2.5 2.0 2.0 1.0 0.0 -1.0 -0.4 Lufthansa SWISS Austrian Airlines Passenger Logistics MRO Catering Lufthansa Passenger Airline Group Group A
Slide 31: Adjusted EBIT margins Q3 2015 vs. Q3 2014
Adjusted EBIT margins Q3 2015 vs. Q3 2014 all figures in % 18.0 16.0 15.7 15.5 14.5 14.0 13.7 12.2 12.0 11.1 10.9 10.8 10.0 9.6 9.0 8.1 8.0 6.2 6.6 6.0 6.0 4.3 4.0 2.0 0.0 -2.0 -2.7 -4.0 Lufthansa SWISS Austrian Airlines Passenger Logistics MRO Catering Lufthansa Passenger Airline Group Group Airlin
Slide 32: Reconciliation from EBIT to Adjusted EBIT per segment 9M 2015
Reconciliation from EBIT to Adjusted EBIT per segment 9M 2015 Book gains/losses Adj. EBIT 9M 15 Segment EBIT 9M 15 (m EUR) Impairments Pension changes on asset disposals (m EUR) LH Passenger Airlines 834 +26 -7 853 SWISS 407 -32 375 Austrian Airlines 61 61 Consolidation 55 +6 61 Passenger Airline Gr
Slide 33: Adjusted EBIT and EBIT per quarter 2014
Adjusted EBIT and EBIT per quarter 2014 in m EUR Q1 Q2 Q3 Q4 6M 9M Full Year Operating result -245 359 735 105 114 849 954 Adj. EBIT -240 418 810 183 178 988 1,171 pension changes 0 0 +15 +33 0 +15 +48 book gains / losses on asset disposals +10 +15 -1 -164 +25 +24 -140 impairments +13 0 +8 -100 +13
Slide 34: New system directly links profit figures and value creation metric
New system directly links profit figures and value creation metric EBIT, EACC and ROCE are transparent and can be calculated easily Total Op. Income Balance Sheet Total (Rev.+ Oth. Op. Income) ./. non-interest bearing ./. operating costs liabilities Capital Employed + Income from Current Year 50 Sub
Slide 35: Calculation for financial year 2014
New system directly links profit figures and value creation metric Calculation for financial year 2014 in m EUR 30,474 32,114 ./. 12,980 ./. 31,235 17,584 + 121 50 : 50 17,545 EBIT: 1,000 + 84 -48 ./. 271 +77 5.9% X ./. 1,036 +142 EACC: -223 Adj. EBIT: 1,171 (1,000 + 84 - 271) ROCE = = 4.6% 17,565 P
Slide 36: EBIT is a structurally higher number than operating result
EBIT is a structurally higher number than operating result Main difference is that income from subsidiaries is included 1,645 Operating profit EBIT 1,171 Adj. EBIT 972 936 986 954 1,000 820 864 839 725 699 2011 2012 2013* 2014 Total Operating Income 31,070 32,947 32,149 32,114 ./. Operating Expenses
Slide 37: WACC is based on a target capital structure of 50:50
WACC is based on a target capital structure of 50:50 Current WACC is 5.9% Cost of Debt1 Cost of Equity2 3.4% (FY 2014) 8.4% (FY 2014) Target Capital Structure 50 : 50 WACC: 5.9% 1 Currently no consideration of tax shield 2 Cost of Equity FY2014 = Risk-free market interest rate of 2.6% + (Market risk
Slide 38: Current capital employed is ca. 17.6 bn EUR
Current capital employed is ca. 17.6 bn EUR Weighted average cost of capital is 5.9% 18,101 17,526 17,545 17,565 Average Capital Employed WACC 7.0% 7.0% 6.2 % 5.9% 2011 2012 2013* 2014 Balance Sheet Total 28,081 28,559 29,108 30,474 ./. Non-Interest Bearing Liabilities 10,649 10,940 11,563 12,890 -