Deutsche Lufthansa Ag · XETR:LHA
Deutsche Lufthansa — Davy Annual Transport Conference 2023
44 slides from Deutsche Lufthansa's conference presentation, Jun 28, 2023
Slide 1: Davy Annual Transport Conference
Davy Annual Transport Conference Dennis Weber, VP IR Svenja Lang, IR June 28th, 2023
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: First Quarter 2023 Results
First Quarter 2023 Results Strategy Investment in ITA Airways Operational and financial outlook Appendix Page 4
Slide 5: Q1 result improves significantly year-on-year despite seasonality and costs
Q1 result improves significantly year-on-year despite even increased seasonality and costs related to the summer ramp-up (in EUR million) Q1 ’23 Q1 ’22 Change in % Revenues 7,017 5,002 +40 Operating expenses 7,979 6,096 +31 Of which fuel 1,686 987 +71 Of which staff 1,922 1,632 +18 Of which deprecia
Slide 6: Passenger Airlines: Losses more than halved due to higher yields and loads
Passenger Airlines: Losses more than halved due to higher yields and loads Operational KPIs Adjusted EBIT Comments in EUR million ▪ 19% yield increase versus 2019 Q1 ’23 vs. 2022 vs. 2019 indicative of ongoing strong pricing -512 power especially in long-haul, seat load ASK 59,347 +30% -25.3% -1,114
Slide 7: Lufthansa Cargo's profits normalize – Adjusted EBIT up in all other segments
Lufthansa Cargo’s profits normalize – Adjusted EBIT up in all other segments Adjusted EBIT in EUR million Comments 495 151 ▪ Cargo profits normalize from prior year Q1 ’23 Q1 ’22 record base – yields still up >60% compared to 2019 levels in Q1 135 ▪ Lufthansa Technik result benefits from 129 strong
Slide 8: Adjusted free cash flow performance driven by strong operating cash flow
Adjusted free cash flow performance driven by strong operating cash flow Q1 Adjusted EBIT / Adjusted Free cash flow in EUR million (244) (424) (99) (228) 1,581 2,314 (1,032) 482 (67) 535 -273 Adjusted D&A Liability from Ticket-related Receivables Remaining Other1 Operating Net CAPEX2 Repayments Adju
Slide 9: Further progress on the way back to an investment grade rating
Further progress on the way back to an investment grade rating Liquidity Net debt and net pension liabilities Shareholder equity EUR billion EUR billion EUR billion 10.4 10.5 2.1 2.1 8.9 8.7 Target liquidity: 8.5 EUR 8-10bn 7.6 2.0 2.0 8.3 8.4 6.9 6.7 Dec 31, 2022 Mar 31, 2023 Dec 31, 20221 Mar 31,
Slide 10: Option-based fuel hedging offers protection while leaving opportunity to benefit
Option-based fuel hedging offers protection while leaving the opportunity to benefit from lower prices Expected fuel cost sensitivity after hedging (FY 2023)1 Hedging portfolio excl. LH Cargo as of April 26, 2023 102 Q2 FY 2023 1,000 850 750 650 500 ø Market price crude oil2 92 700 550 450 350 250 H
Slide 11: Strategy
First Quarter 2023 Results Strategy Investment in ITA Airways Operational and financial outlook Appendix Page 11
Slide 12: 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 12
Slide 13: Driving customer satisfaction is the key priority of the Lufthansa Group
Customer Product Multi-Airline Airline Group Driving customer satisfaction is the key priority of the Lufthansa Group Customer Journey Inspiration Compare Book Plan & Get to airport Take flight Connect Arrive at Get to & stay Get to airport Take Arrive at Get to Stay & planning & select travel prepa
Slide 14: Comprehensive product and service innovations underline premium aspiration
Customer Product Multi-Airline Airline Group Comprehensive product and service innovations underline our aspiration to define premium in the European airline industry New Premium Introduction of 27 Economy already in the air New First hirings in at SWISS ground Class suite 7 seat options in Business
Slide 15: Lufthansa Group accelerates fleet modernization
Customer Product Multi-Airline Airline Group Lufthansa Group accelerates fleet modernization Order book well filled with nearly 100 NewGen long-haul aircraft Today New Normal 380 748 748 744 789 34x 779 773 773 779 20x 772 6 older A/C 35K types to be 35K 10x phased out 359 359 completely in 789
Slide 16: 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: New Green fares launched Received top score (A-) in -11%
Slide 17: Multi-Hub and Multi-Brand strategy is key for the success of Lufthansa Group
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 18: Sale of LSG Group and Airplus is a major step in the transformation
Customer Product Multi-Airline Airline Group Sale of LSG Group and Airplus is a major step in the transformation into an airline group Sale of LSG Group to private equity investor AURELIUS announced in April - Transaction expected to close in Q3 2023 Sale of Airplus to SEB Kort announced in June Tra
Slide 19: Investment in ITA Airways
First Quarter 2023 Results Strategy Investment in ITA Airways Operational and financial outlook Appendix Page 19
Slide 20: ITA provides even better access to the attractive Italian market
ITA provides the Group even better access to the very attractive Italian market and regional diversification Italy– aiskey market for Lufthansa Group Italy ITA & Lufthansa Group 3rd largest Economy in ▪ Attractive proposition to grow a profitable long- the EU (GDP) haul business in Rome Fiumicino ▪
Slide 21: 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 22: ITA Airways has been fully restructured and set up as cost-competitive
ITA Airways has been fully restructured and set up as a structurally cost- competitive airline with no legacy issues associated with the old Alitalia 2019 2020 / 2021 2022 Crew and cabin contracts renegotiated Passengers Italia Passengers: 10.1m Nov & no pension obligations from Alitalia Trasporto 2
Slide 23: Lufthansa Group has a sound plan to turn ITA into a profitable airline
Lufthansa Group has a sound plan to turn ITA into a profitable airline Optimizing the network Driving profitable growth Maximizing synergies ▪ Ensure that ITA’s network is ▪ Capitalize on ITA’s favorable ▪ Unlock the significant potential complementary to the existing cost position for revenue and c
Slide 24: Rome Fiumicino as new Southern Hub and Milan Linate as premium airport
Network Profitable growth Synergies Rome Fiumicino as new Southern Hub and Milan Linate as premium point-to-point airport will interconnect the ITA and LHG networks Feeder network Rome Fiumicino Milan Linate ▪ Enhance the short-haul network for ▪ Focus the long-haul network on ▪ Expand the touristic
Slide 25: Competitive cost base and homogenous, modern fleet form a solid base
Network Profitable growth Synergies Competitive cost base and homogenous, modern fleet form a solid base for future growth Favorable cost position Modernized fleet 94 NewGen Highly competitive A330-900neo ▪ Homogeneous, all Airbus labour cost A350-900 fleet, allowing for 66 A320 efficiencies in oper
Slide 26: In combination with Lufthansa Group, ITA can realize its full potential
Network Profitable growth Synergies In combination with Lufthansa Group, ITA can realize its full potential by benefitting from the size and synergies of a global group COMMERCIAL & Global network management Access to global airline partner network (e.g. A++ JV with United and Air Canada) Global Int
Slide 27: Investment in ITA Airways has significant value for our shareholders
Investment in ITA Airways has significant value for our shareholders Upgrade picture ITA Airways is a perfect addition to the quality portfolio of Lufthansa Group airlines Restructured and structurally cost-competitive airline: Sound plan in place to turn ITA profitable Investment approach minimizes
Slide 28: Operational and financial outlook
First Quarter 2023 Results Strategy Investment in ITA Airways Operational and financial outlook Appendix Page 28
Slide 29: The Group's airlines are ready for a strong summer
The Group’s airlines are ready for a strong summer Close alignment Strong booking with 787 infrastructure Short-haul momentum touristic continues partners demand exceeds 4,500 2019 levels Stable operational new staff recruited in the first 3 months performance over Easter peak Premium leisure demand
Slide 30: Lufthansa Cargo's unique market position expected to support performance in 2023
Lufthansa Cargo’s unique market position expected to support performance also in 2023 Evaluation of At the Modern aircraft k retirement of all forefront of Pure 777F aircraft >25 years digitization long haul fleet Yields will normalize in 2023 but eCommerce remain above pre-crisis level push LCAG yi
Slide 31: Lufthansa Technik well positioned to remain a leader in a very attractive market
Lufthansa Technik well positioned to remain a leader in a very attractive market Leading position in highly Strongest portfolio of At the forefront of the attractive MRO market customers and OEM industry’s digital partnerships transformation ▪ >4,000 aircraft under exclusive ▪ Leading MRO portfolio
Slide 32: Group expects significant progress in 2023 towards the 2024 targets
Group expects to make significant progress in 2023 towards the 2024 targets Q2 2023 Full Year 2023 Full Year 2024 Capacity (ASK) Capacity (ASK) Adjusted EBIT margin c.82% of 2019 levels c.85-90% of 2019 levels At least 8% Yield Adjusted EBIT Adjusted ROCE (excl. cash) Up to 25% above 2019 Significan
Slide 33: Lufthansa Group is well positioned for a successful future
Lufthansa Group is well positioned for a successful future Lufthansa Group has delivered on its recovery plan ✓ Completed the financial turnaround ✓ On track for the achievement of our 2024 financial targets ✓ In the process of implementing significant product and service improvements for our custom
Slide 34: Appendix
First Quarter 2023 Results Strategy Investment in ITA Airways Operational and financial outlook Appendix Page 34
Slide 35: Traffic Data
Traffic Data Jan vs.2019 Feb vs.2019 Mar vs.2019 Q1 vs.2019 Passengers in 1,000 6,621 -27.0% 6,602 -27.1% 8,420 -25.4% 21,643 -26.4% Available seat-kilometers (m) 19,931 -24.3% 17,964 -26.6% 21,451 -25.1% 59,347 -25.3% Revenue seat-kilometers (m) 15,483 -22.9% 14,094 -24.8% 17,739 -23.2% 47,316 -23.
Slide 36: Operating KPIs of Passenger Airlines by region vs. 2019
Operating KPIs of Passenger Airlines by region vs. 2019 (unless stated otherwise) Total Q1’23 Europe Q1’23 Asia / Pacific Q1’23 Number of flights -29.8% ASK -23.7% ASK -41.3% ASK -25.3% RPK -18.4% RPK -39.3% RPK -23.6% SLF +5.0pts. SLF +2.8pts. SLF +1.8pts. RASK incl. currency1) +16.6% RASK incl. cu
Slide 37: Calculation of operational airline KPIs
Calculation of operational airline KPIs Passenger Airlines, Q1 2023 1) Traffic revenues (€m) 4,806 1) Total Revenues (€m) 5,211 2) Not assignable (€m) 518 2) Other operating income (€m) 303 Yield = 3) Basis for Yield (1)–(2) (€m) 4,288 3) Reversal of provisions (€m) 66 RASK 4) RPK (m) 1 47,316 4) FX
Slide 38: Group P&L
Group P&L Lufthansa Group (in EUR m) Q1 ’23 vs. Q1 ’22 Revenues 7,017 +40.3% Total operating income 7,693 +39.2% Operating expenses 7,979 +30.9% Of which fees & charges 909 +34.1% Of which fuel 1,686 +70.8% Of which staff 1,922 +17.8% Of which depreciation 545 -2.5% Result from equity investments -2
Slide 39: EBIT / Adjusted EBIT bridge Q1 2023
EBIT / Adjusted EBIT bridge Q1 2023 in EUR million 10 8 13 -273 -304 EBIT Impairment of non-current Book losses Exceptional M&A expenses Adjusted EBIT assets / assets held for sale Page 39
Slide 40: Adjusted EBIT / Net Income Q1 2023
Adjusted EBIT / Net Income Q1 2023 in EUR million -273 (31) (90) (2) 109 (136) (44) -467 Adjusted EBIT Adjustments Interest result Profit/loss Profit/loss from Tax result Other Net EBIT attributable to discontinued Income minority interests operations Page 40
Slide 41: Adjusted EBIT by Airline
Adjusted EBIT by Airline Adjusted EBIT (in EUR m) Q1 ’23 Q1 ’22 Change in % Lufthansa German Airlines -366 -715 +48.8% SWISS 77 -62 n.m.f. Austrian Airlines -73 -109 +33.0% Brussels Airlines -43 -62 +30.6% Eurowings -103 -163 +36.8% Passenger Airlines -512 -1,114 +54.0% Page 41
Slide 42: Cash flow statement
Cash flow statement Lufthansa Group (in m EUR) Q1 ’23 vs. Q1 ’221 EBT (earnings before income taxes) -575 +115 Positive working capital effect driven by Depreciation & amortization (incl. repairable MRO materials) +592 -24 EUR 2,070 million net cash effect from new bookings (New bookings EUR 2,314 m
Slide 43: Multi-year financial overview
Multi-year financial overview Lufthansa Group (in EUR million, as reported) 2016 2017 2018 20191 2020 2021 2022 Operating KPIs RASK ex currency -5.9% +1.9% -0.5% -2.5% -26.7% -6.1% -6.1% CASK ex currency, ex fuel2 -2.5% -1.8% -1.7% -1.5% +84.6% -25.8% -25.8% Profit & Loss Revenues 31,660 35,579 35,5
Slide 44: Maturity profile of borrowings as of March 31, 2023
Maturity profile of borrowings as of March 31, 2023 3,000 2,500 2,000 1,500 1,000 500 0 2023 2024 2025 2026 2027 2028 2029 2030 Straight Bond Hybrid Convertible Bond Schuldscheindarlehen Aircraft Finance (secured) Other* *Mainly bilateral loans – does not include operating leases Page 44
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