Slide 1: Analyst and Investor Conference Call – FY 2017
Analyst and Investor Conference Call – FY 2017 Frankfurt, 15 March 2018
Slide 2: Disclaimer
Disclaimer The information herein is based on publicly available information. It has been prepared by the Company solely for use in this presentation and has not been verified by independent third parties. No representation, warranty or undertaking, express or implied, is made as to, and no reliance
Slide 3: Carsten Spohr, CEO
Analyst and Investor Conference Call – FY 2017 Carsten Spohr CEO and Chairman of the Executive Board Frankfurt, 15 March 2018
Slide 4: Lufthansa Group achieves best result in its history
Lufthansa Group achieves best result in its history Development of financial KPIs 20 million more passengers Revenue increases 12% Unit cost1 down 0.4% +20m +12% -0.4% 130 35.6 7.0 6.6 6.5 6.5 6.5 106 108 110 32.1 31.7 105 30.0 30.0 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 20
Slide 5: Balancing stakeholders’ interests is key to our success
Balancing stakeholders’ interests is key to our success Drivers of record results in 2017 New digital customer services Lufthansa: 5 Star Airline LH, LX, OS: Best three European Airlines Customers Employees #1 Shareholders Long lasting labor agreements 3bn EUR Adj. EBIT 3,000 new jobs in 2017, reven
Slide 6: Ulrik Svensson, CFO
Analyst and Investor Conference Call – FY 2017 Ulrik Svensson CFO and Member of the Executive Board Frankfurt, 15 March 2018
Slide 7: Positive unit revenue development despite strong growth in most regions
Positive unit revenue development despite strong growth in most regions Operating KPIs Passenger Airlines Q4 ‘17 FY ‘17 +22.9% +19.0% +1.7pts. +1.7% +2.0pts. Q4 ‘17 FY ‘17 Q4 ‘17 FY ‘17 +5.0% 9.1% +3.0pts -1.6% +1.4pts. +0.6% +2.1% +1.2% +6.5% +0.5pts. 0.6% +1.4pts. 0.6% -0.6% North America +1.0% +6
Slide 8: Underlying unit cost reduction in line with long-term target
Underlying unit cost reduction in line with long-term target Unit cost reduction in 2017 Adverse effects on unit costs FY 2017 Reported CASK -0.4% excl. fuel excl. currency incl. accruals for higher variable pay due to the strong result development -0.6pts. incl. passenger related cost from the high
Slide 9: Unit cost to be reduced between 1% and 2% every year
Unit cost to be reduced between 1% and 2% every year Key cost drivers 2018 Labour deal Pilots (150m EUR cost reduction) Reorganization (200m EUR profit contribution) Labour deal Cabin Crews 1% to 2% Short term savings + strategic dialogue (structural cost improvement) CASK (two-digit million Euro in
Slide 10: Airlines drive strong profit improvement
Airlines drive strong profit improvement Q4 and FY 2017 operating KPIs and key profit figures at a glance Network Airlines Point-to-Point Airlines Aviation Services Q4 ‘17 FY ‘17 in m EUR Q4 ‘17 FY ‘17 ASK +15.7% +12.7% Adj. EBIT2 148 616 RASK +2.3% +1.9% Δ year-on-year +224 +315 (constant currency)
Slide 11: High cash generation and stronger Balance sheet
High cash generation and stronger Balance sheet Key balance sheet and cash flow figures at a glance Network Airlines Point-to-Point Airlines Aviation Services Balance Sheet in m EUR FY ‘17 vs. FY ‘16 Cash Flow in m EUR FY ‘17 vs. FY ‘16 Net financial debt 2,884 +6.8% Operating cash flow 5,035 +55.1%
Slide 12: Focus on value creation
Focus on value creation Financial strategy • Improve Profitability • Focus Capital Allocation • Maintain Financial Stability Focus • Sustainable value generation • Continuous shareholder • Stable Investment Grade Rating participation • Intense cost management • Hedging of financial risks • Balanced
Slide 13: Passenger Airlines and Cargo drive growth and margin improvement
Passenger Airlines and Cargo drive growth and margin improvement Segment overview Q4 and FY 2017 Network Airlines Point-to-Point Airlines1 in m EUR Q4 FY Q4 FY Q4 FY Q4 FY Q4 FY Revenue 5,622 23,317 3,974 16,441 1,159 4,727 544 2,358 1,010 4,041 vs. 2016 +388 +1,453 +330 +1,029 +35 +256 +28 +205 +51
Slide 14: Adjusted EBIT expected to be slightly below previous year
Adjusted EBIT expected to be slightly below previous year Unchanged operating KPI and profit forecast 2018 Forecast Comments • Network Airlines: Organic Driven by short-haul growth in FRA, upgauging in MUC, ZRH and VIE Capacity Growth c. +7% • Point-to-Point Airlines: (ASK) Driven by annualization o
Slide 15: Carsten Spohr, CEO
Analyst and Investor Conference Call – FY 2017 Carsten Spohr CEO and Chairman of the Executive Board Frankfurt, 15 March 2018
Slide 16: Our goal remains: #1 for customers, employees and shareholders
Our goal remains: #1 for customers, employees and shareholders Set-up of Lufthansa Group Customers Employees #1 Shareholders Network Airlines: Point-to-Point Aviation Services: #1 in Europe Airlines: #1 in #1 world-wide home markets Strategic focus topics Aspirations Shape and lead the industry Cons
Slide 17: Network Airlines: Focus on premium and efficiencies
Network Airlines: Focus on premium and efficiencies Strong competitive position Focus on premium and brand refresh Efficiencies and flexibilization Lufhansa brand refresh: 100 years of the crane, Harmonized A320 cabin specification visible sign of moderniziation New product initiatives: e.g. à la ca
Slide 18: Eurowings: Strong growth in home markets and focus on operations
Eurowings: Strong growth in home markets and focus on operations Established as leading point-to-point airline Eurowings growth in home markets Operational ramp-up Growth path aircraft 2019 Eurowings is successfully growing through inte- 2016 2017 2018 gration of former AB Group assets, especially
Slide 19: Aviation Services: Current development and outlook
Aviation Services: Current development and outlook Highlights Current developments Outlook Successful turnaround, profit improvement Strong demand situation continues in 2018 of approx. 300m EUR vs. PY Restructuring program “C40” ahead of plan, Targeted investments into high yield to be comp
Slide 20: The modernization of the Lufthansa Group continues
The modernization of the Lufthansa Group continues Executive Summary • Best results in history are the basis for gaining further strength through the full cycle Modernization of Lufthansa Group continues • Lufthansa Group is well prepared also for challenging market environments Cost reduction and f
Slide 21: Thank you for your attention
LUFTHANSA GROUP Thank you for your attention
Slide 22: Appendix - supplementary information
Appendix - supplementary information -
Slide 23: Proposed dividend of 0.80 EUR per share equals to 11.4% pay out ratio
Proposed dividend of 0.80 EUR per share equals to 11.4% pay out ratio Dividend payment and policy Cumulative Dividend Payments in m EUR 2,500 2,000 1,500 ~ 4% 2.3bn EUR since 2008 average 1,000 dividend yield 500 p.a. since 2008 1 Year of payout 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Slide 24: Adjusted EBIT expected “slightly below previous year”
Adjusted EBIT expected “slightly below previous year” Forecast 2018 per segment Segment Adj. EBIT 2017 (m EUR) Adj. EBIT Forecast for 2018 Lufthansa German Airlines 1,627 slightly below previous year SWISS 542 slightly below previous year Austrian Airlines 94 slightly below previous year Network Air
Slide 25: Passenger Airlines growing capacity into a consolidating market
Passenger Airlines growing capacity into a consolidating market Lufthansa Group capacity growth 2018 per region 12% 9% 23% Network Airlines P2P* (organic) (organic) 4% Network Airlines P2P* 12% (organic) (organic) 5% 7% Organic growth 9.5% Total growth Network Airlines P2P* 13% 13% P2P (inorganic) *
Slide 26: IFRS will structurally improve the Adj. EBIT margin by around 0.4 pts.
IFRS 15 will structurally improve the Adj. EBIT margin by around 0.4 pts. Profit & Loss effect of IFRS 15 Context • IFRS 15 relates to the accounting of revenues arising from contracts with customers • Netting of revenues and related expenses required in some cases (e.g. ticket related taxes) Effect
Slide 27: Appendix - financial figures Q4 / FY 2017
Appendix - financial figures Q4 / FY 2017 -
Slide 28: Fuel costs expected 700m EUR above previous year
Fuel costs expected 700m EUR above previous year Fuel forecast and sensitivities FY 2018 Lufthansa Group fuel expenses after hedging (in bn EUR) Lufthansa Group price curve for 2018 110 5.9 6.2 (+20%) 6.0 (+10%) Sensitivities 5.2 5.6 (- 10%) (deviating oil price) LH price 2018 2017e 5.3 (- 20%) 100
Slide 29: Revenue increases faster than absolute costs in Q4 and FY 2017
Revenue increases faster than absolute costs in Q4 and FY 2017 Operating costs and revenues Lufthansa Group (in m EUR) Q4 ‘17 vs. Q4 ‘16 FY ‘17 vs. FY ‘16 Total revenue 8,818 +13.2% 35,579 +12.4% Other operating income 635 -0.5% 2,382 +4.5% Total operating income 9,453 +12.2% 37,961 +11.9% Operating
Slide 30: Free cash flow increases strongly despite higher capex
Free cash flow increases strongly despite higher capex Cash flow statement 5.0 Lufthansa Group (in m EUR) FY ‘17 vs. FY ‘16 3.4 3.3 3.2 EBT (earnings before income taxes) 3,187 +939 2.0 Depreciation & amortization (incl. non-current assets) 2,009 +189 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Net proc
Slide 31: Positive RASK development despite high growth in most regions
Positive RASK development despite high growth in most regions Operating KPIs Passenger Airlines Total Q4 '17 FY '17 Europe Q4 '17 FY '17 Asia/Pacific Q4 '17 FY '17 Number of flights +14.7% +10.6% ASK +22.9% +19.0% ASK +5.0% +2.1% ASK +15.7% +12.7% RPK +25.6% +22.2% RPK +6.9% +5.8% RPK +17.2% +15.2%
Slide 32: Group revenue and currency impact
Group revenue and currency impact FY 2017 vs. FY 2016 Currency influence on EBIT (in m EUR) in m EUR Q1 Q2 Q3 Q4 FY (YTD) -39 34 -73 +77 -1 Price: +2.6% Volume: +8.6% 647 -320 Currency: -1.3% 2,092 Brussels Airlines: +5.3% 1,319 28,399 Traffic revenue (+15.2%) 24,661 Other revenue (+2.6%) 7,180 6,99
Slide 33: Fuel cost development
Fuel cost development FY 2017 vs. FY 2016 Hedging result by quarter (in m EUR) Q1 Q2 Q3 Q4 FY (YTD) 2016 -336 -235 -219 -115 -905 2017 -30 -63 -29 +55 -67 in m EUR Change versus previous year 347 Price Volume +831 -838 Brussels Airlines 5,232 4,885 +285 +194 -125 Hedging Currency FY 2016 FY 2017 Pag
Slide 34: Adjusted EBIT and one-off effects
Adjusted EBIT and one-off effects Quarterly results 2016-2017 in m EUR Q1 Q2 Q3 Q4 6M 9M Full Year Adjusted EBIT 2016 -53 582 1,148 75 529 1,677 1,752 Strikes 0 0 0 -100 0 0 100 Adjusted EBIT ex one-off factors -53 582 1,148 175 529 1,677 1,852 Adjusted EBIT 2017 25 1,017 1,518 413 1,042 2,560 2,973
Slide 35: EBIT and Adjusted EBIT per quarter 2017
EBIT and Adjusted EBIT per quarter 2017 in m EUR Q1 Q2 Q3 Q4 6M 9M FY EBIT 16 1,015 1,404 875 1,031 2,435 3,310 pension changes +32 0 +9 -592 +32 +41 -551 book gains / losses on asset disposals -23 -5 -6 -3 -28 -34 -37 impairments / badwill 0 +7 +111 +133 +7 +118 +251 Adj. EBIT 25 1,017 1,518 413 1,
Slide 36: EBIT and Adjusted EBIT per quarter 2016
EBIT and Adjusted EBIT per quarter 2016 in m EUR Q1 Q2 Q3 Q4 6M 9M FY EBIT -49 567 1,812 -55 518 2,330 2,275 pension changes 0 0 -721 +43 0 -721 -678 book gains / losses on asset disposals -5 -37 -7 +11 -42 -49 -38 impairments / badwill +1 +52 +64 +76 +53 +117 +193 Adj. EBIT -53 582 1,148 75 529 1,6