Slide 1: Q2 2019 Analyst and Investor Conference Call
Q2 2019 Analyst and Investor Conference Call Ulrik Svensson, CFO and Member of the Executive Board Frankfurt, 30 July 2019
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: Lufthansa Group: Review of First Half Year 2019
Lufthansa Group: Review of First Half Year 2019 Significant improvement Financial results Awards confirm strength Clear Eurowings of operational burdened by market- of brand and product turnaround plan in place performance wide challenges EUR 418m (-60%) 28% Focus on short-haul Adj. EBIT 6M 2019 L
Slide 4: Network Airlines: Performance differs significantly by geography
Network Airlines: Performance differs significantly by geography Q2 6M +5.0% +5.3% Comments Europe 41% -0.4pts. -0.7pts. -3.5% -4.8% Yields in Europe, particularly ASK SLF Yield 1 ASK SLF Yield 1 Germany and Austria, remain under pressure because of market-wide +3.7% Yield NA: +3.5% Yield NA: over
Slide 5: Network Airlines: Volume growth more than offset by lower yields
Network Airlines: Volume growth more than offset by lower yields Q2 6M Revenue KPIs Comments +4.3% +4.9% Unit revenue performance affected +1.8pts. +0.9pts. by demand becoming more price sensitive -1.6% -2.8% -3.7% -3.2% 1 1 Higher MRO expenses related to ASK SLF Yield RASK ASK SLF Yield 1 RASK
Slide 6: Network Airlines: Profits hit by lower unit revenues and higher fuel costs
Network Airlines: Profits hit by lower unit revenues and higher fuel costs Q2 6M Fuel cost Comments +217 / +18% +378 / +18% Substantial fuel cost increase cannot be passed on to customers 1,207 1,424 2,162 2,540 Operating profit declines at all Network Airlines Q2 18 Q2 19 6M 18 6M 19 Adjusted E
Slide 7: Eurowings: Short-haul yields challenged by market pressures
Eurowings: Short-haul yields challenged by market pressures Q2 6M Comments +0.8pts. +1.9% +0.5pts. Short haul continues to suffer from Short-haul tough market conditions in domestic -0.8% 74% and European business Long-haul performance remains -4.0% -5.9% 1 1 below expectations despite ASK SLF Y
Slide 8: Eurowings: Unit cost reduction partly offsets revenue pressures
Eurowings: Unit cost reduction partly offsets revenue pressures Q2 6M Revenue KPIs Comments Second quarter unit revenue +1.6pts. +1.5% +0.9pts. performance supported by positive -0.4% mix effect from lower growth in long -1.9% -2.1% -4.1% haul -5.0% 1 1 1 1 ASK SLF Yield RASK ASK SLF Yield RASK
Slide 9: Eurowings: Adjusted EBIT below prior year levels
Eurowings: Adjusted EBIT below prior year levels Q2 6M Fuel cost Comments +38 / +15% +78 / +18% Fuel costs increase as expected Profits continue to be under 250 288 433 511 significant pressure Q2 18 Q2 19 6M 18 6M 19 Adjusted EBIT / Margin nmf. nmf. -8 -1.4% -14.1% -16 -0.7pts. -2.7pts. -220 -2
Slide 10: Weakness of global air cargo market affects Logistics business
Weakness of global air cargo market affects Logistics business Adjusted EBIT / Margin Q2 6M nmf. -88% Comments 55 -1.4% 1.2% 127 -9 -9.7pts. 15 -8.6pts. Weakness on routes to Asia burdens Q2 18 Q2 19 6M 18 6M 19 profits at Lufthansa Cargo -2% +7% Strong performance of engine maintenance business
Slide 11: First-time application of IFRS 16 distorts balance sheet presentation
First-time application of IFRS 16 distorts balance sheet presentation Gross Investments1 Adjusted Free Cash Flow Net Debt -11% -73% 2,393 79% 2,142 997 6,234 1,904 3,489 269 451 -182 269 -1,942 6M 18 6M 19 6M 18 6M 19 Op. CF Net Free CF IFRS 16 Adj. Dec 31, 2018 Jun 30, 2019 Investments effect2 Free
Slide 12: Lufthansa Group confirms financial outlook as presented in June
Lufthansa Group confirms financial outlook as presented in June Passenger Airlines Network Airlines Eurowings Capacity Growth (ASK) c. +4% c. -1% Unit Revenue (RASK, at constant currency) Down low single-digit Down mid single-digit Unit Cost (CASK, at c. currency, excl. fuel) 0% to -1% -6% to -8% Fu
Slide 13: Lufthansa Group remains focused on long-term profitable growth
Lufthansa Group remains focused on long-term profitable growth Group has Focus on long-term Market environment responded quickly drivers of profits remains challenging to changing market and cash flow conditions Page 13
Slide 14: Appendix - supplementary information
Appendix - supplementary information- Page 14
Slide 15: Financial guidance FY 2019 / 2018 Base
Financial guidance FY 2019 / 2018 Base Passenger Airlines Network Airlines Eurowings ASK 284,741m 64,748m RASK 8.1 Ct. 6.8 Ct. CASK 5.6 Ct. 5.7 Ct. Fuel cost 4,713m EUR 973m EUR Adjusted EBIT margin 10.7% -5.5% Non-PAX Logistics MRO Catering Others Revenue 2,713m EUR 5,918m EUR 3,217m EUR Adj. EBIT
Slide 16: Planned capacity growth for full year 2019
Planned capacity growth for full year 2019 Network Airlines Eurowings Comments Moderate growth in Summer schedule at Network Airlines Eurowings to exit long-haul 7% Domestic and North Atlantic routes grow slightly at Eurowings 4% 4% 4% 4% 1% -1% Europe Americas Asia Mideast/ Total -4% Pacific
Slide 17: Group P&L
Group P&L Lufthansa Group (in m EUR) Q2 ’19 vs. Q2 ’18 6M ’19 vs. 6M ’18 Total revenue 9,633 +4% 17,523 +3% Other operating income 586 +2% 1,114 +2% Total operating income 10,219 +4% 18,637 +3% Operating expenses 9,541 +7% 18,308 +8% Non-fuel operating expenses 7,739 +5% 15,083 +6% Cost of materials
Slide 18: Adoption of IFRS 16: Effect on Lufthansa Group
Adoption of IFRS 16 • New accounting standard IFRS 16 is applicable from 2019 onwards Context • Lease liabilities must be recognized in the financial accounts at the present value of the contractually agreed lease payments for leases with a term of more than twelve months Effect on Profit & Loss: Ef
Slide 19: Group revenue bridge
Group revenue bridge in m EUR Volume: +5% Currency: +2% 666 -583 243 Price: -4% 13,482 13,156 Traffic revenue (+2%) 4,041 Other revenue (+7%) 3,782 6M 2018 6M 2019 ∑ 16,938 ∑ Group revenue (+3%) ∑ 17,523 Page 19
Slide 20: Operating KPIs of Network Airlines by region
Operating KPIs of Network Airlines by region Total Q2 ’19 6M ’19 Europe Q2 ’19 6M ‘19 Asia / Pacific Q2 ’19 6M ‘19 Number of flights +3.1% +3.5% ASK +5.0% +5.3% ASK +2.8% +3.9% ASK +4.3% +4.9% RPK +4.5% +4.3% RPK +5.8% +5.3% RPK +6.6% +6.1% SLF -0.4pts. -0.7pts. SLF +2.4pts. +1.1pts. SLF +1.8pts. +0
Slide 21: Operating KPIs of Eurowings by region
Operating KPIs of Eurowings by region Total Q2 ’19 6M ‘19 Short-haul Q2 ’19 6M ‘19 Number of flights -0.9% +0.6% ASK -0.8% +1.9% ASK -0.4% +3.8% RPK +0.2% +2.5% RPK +1.5% +5.0% SLF +0.8pts. +0.5pts. SLF +1.6pts. +0.9pts. Yield -3.6% -5.4% Yield ex currency -4.0% -5.9% Yield -1.3% -3.6% Long-haul Q2
Slide 22: Exemplary calculation of operational airline KPIs
Exemplary calculation of operational airline KPIs Quarterly Data.xls 1 Network Airlines, FY 2018 Traffic Figures 1 (1) Traffic revenues 20,877 Yield (2) RPK 2 231,952 FY 2018 (restated) NETWORK AIRLINES EUROWINGS LOGISTICS MRO CATERING OTHER CONSOLDIATON LH GROUP Yield: (1) / (2) * 100 9.0 Profit an
Slide 23: Fuel cost bridge
Fuel cost bridge Hedging result by quarter (in m EUR) Q1 Q2 Q3 Q4 FY (YTD) 2018 107 229 336 2019 17 35 52 Change versus previous year in m EUR +449 Currency 3,225 Hedging +205 Volume 2,776 +101 +284 -141 Price 6M 2018 6M 2019 Page 23
Slide 24: Fuel cost outlook 2019
Fuel cost outlook 2019 Fuel cost Sensitivity to Brent and currency +550 FY 19 82 Average Brent rest of year 1,200 1,150 1,050 1,000 900 850 800 77 Full Year 18 / 19 1,100 1,000 950 850 800 750 700 6.1 6.6 6.1 72 950 850 800 750 650 600 550 67 (USD/bbl) 750 700 650 550 500 450 400 62 FY 18 FY 19e 600
Slide 25: Fuel and foreign exchange hedging strategy
Fuel and foreign exchange hedging strategy Hedging Strategy Fuel Hedging Approach Aim of hedging strategy 80 85 Lufthansa's hedging strategy is designed to 56 61 66 71 75 47 52 reduce volatility 28 33 38 42 19 24 No intention to outperform the market 5 9 14 Rolling approach up to 24 months goi
Slide 26: Cash flow statement
Cash flow statement Lufthansa Group (in m EUR) 6M ’19 vs. 6M ’18 1 Largely due to IFRS 16 EBT (earnings before income taxes) 112 -887 Depreciation & amortization (incl. non-current assets) 1,348 +271 1 Net proceeds from disposal of non-current assets 14 +16 “Correction” of EBT for non-cash effect in
Slide 27: Multi-Year financial overview
Multi-Year financial overview Lufthansa Group (in m EUR, as reported) 2014 2015 2016 2017 2018 Operating KPIs RASK ex currency -2.5% -3.0% -5.9% +1.9% -0.5% CASK ex currency, ex fuel -2.6% +2.4% -6.1% -0.4% -1.7% Profit & Loss Revenues 30,011 32,056 31,660 35,579 35,844 Fuel Cost 6,751 5,784 4,885 5