Deutsche Lufthansa Ag · XETR:LHA

Deutsche Lufthansa — Investor Presentation (October 2020)

35 slides from Deutsche Lufthansa's investor presentation, October 2020

  1. Slide 1: Investor Presentation October 2020

    Investor Presentation October 2020

  2. 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

  3. Slide 3: Agenda

    Agenda 01 First Half Year Results 2020 02 Financial stabilization package 03 Outlook Page 3

  4. 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

  5. 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

  6. 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

  7. 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

  8. 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

  9. 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

  10. 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

  11. 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

  12. 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

  13. 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

  14. 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

  15. Slide 15: Agenda

    Agenda 01 First Half Year Results 2020 02 Financial Stabilization Package 03 Outlook Page 15

  16. 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

  17. 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

  18. 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

  19. 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

  20. 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

  21. 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 filled in agreement with the German government with Board representation Angela Titzrath (CEO HHLA) and Michael Kerkloh (ex-CEO Munich Airport)  Except in the event of a takeover, the ESF agrees not to e

  22. 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

  23. Slide 23: Agenda

    Agenda 01 First Half Year Results 2020 02 Financial stabilization package 03 Outlook Page 23

  24. 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

  25. 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 by 2023 adjust to new size 2023 Redimensioned Corporate Headquarter and LH Group minus 150 A/C in 10 AOCs portfolio restru

  26. 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

  27. 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

  28. Slide 28: Third package within restructuring program decided on 21 September

    Third package within restructuring program decided on 21 September  Capacity in Q4 amount to between 20 and 30 percent of the prior year level (revised from ca. 50% before)  Permanent, Group-wide capacity reduction of 150 aircraft  Aircraft retirements (long-term storage of eight A380s and ten A3

  29. 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  Target to reduce the monthly cash burn to an average of EUR 400 million in winter 2020/21  Substantial Adjusted EBIT losses also in H2  Full year outlook remains highly uncertain: Expectation of significant Adjusted

  30. Slide 30: Appendix - supplementary information

    Appendix - supplementary information- Page 30

  31. 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

  32. 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

  33. 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 /

  34. 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

  35. 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

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