Slide 1: FY 2019 Analyst and Investor Conference Call
FY 2019 Analyst and Investor Conference Call Frankfurt 19 March 2020
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: Analyst and Investor Conference Call - Carsten Spohr
FY 2019 Analyst and Investor Conference Call Carsten Spohr, CEO and Chairman of the Executive Board Frankfurt 19 March 2020
Slide 4: Lufthansa Group achieves Adj. EBIT of 2 billion euros in a difficult economic environment
Lufthansa Group achieves Adj. EBIT of 2 billion euros in a difficult economic environment - Corona is the most challenging crisis in the Company’s history 2019 Corona Adj. EBIT of EUR 2bn Historical drop in demand despite significant headwinds Capacity reduced to 5% of original plan (in particular f
Slide 5: Radical steps and contributions from all stakeholders are required to overcome the crisis
Radical steps and contributions from all stakeholders are required to overcome the crisis Measures already taken Further contributions of stakeholders needed Drastic -95% Cash flow protection 80/20 Reduction of all costs Liquidity protection capacity reduction and investments rule suspension – e.g.
Slide 6: Analyst and Investor Conference Call - Ulrik Svensson
FY 2019 Analyst and Investor Conference Call Ulrik Svensson, CFO and Member of the Executive Board Frankfurt 19 March 2020
Slide 7: Improvement at Eurowings offset by higher fuel costs and decline in Logistics
Improvement at Eurowings offset by higher fuel costs and decline in Logistics Comments 2.836 Economic downturn and 628 overcapacities in the Group’s home 29 markets make it difficult to pass on 2.026 310 12 higher fuel costs to customers 145 Logistics business suffers from shrinkage of global ai
Slide 8: Network Airlines: Unit cost reductions partly compensate for top line pressure
Network Airlines: Unit cost reductions partly compensate for top line pressure FY 2019 Operational KPIs Comments RASK decline mainly related to +3.9% European and South American +1.0pts. business -1.0% Fourth consecutive year of CASK -3.1% -3.9% reductions mainly because of 1 1 2 ASK SLF Yield R
Slide 9: Eurowings: Financial turnaround progresses as planned
Eurowings: Financial turnaround progresses as planned FY 2019 Operational KPIs Comments Network rationalization results in sequential unit revenue +0.9pts. improvements over the course of the -0.4% -0.4% year -1.3% -3.7% CASK reductions driven by 1 1 ASK SLF Yield RASK CASK 2 productivity improv
Slide 10: MRO and Catering businesses increase profits
MRO and Catering businesses increase profits Adjusted EBIT / Margin FY 2019 -100% Comments 268 0.0% 1 -9.9pts. Underlying trends in Logistics FY 18 FY 19 business remain weak also in seasonally large fourth quarter +11% Profit increases in MRO business 493 7.1% driven by engine and aircraft syst
Slide 11: Net debt increase largely driven by accounting effects
Net debt increase largely driven by accounting effects Gross Investments1 Adjusted Free Cash Flow Net Debt Pension Provisions -5% -30% +91% Discount +14% Discount rate: rate: 3,757 3,559 288 6,662 2.0% 6,659 1.4% 5,865 IFRS 16- 203 related 3,489 4,276 FY 18 FY 19 FY 18 FY 19 Dec 31, 2018 Dec 31, 201
Slide 12: The spread of the Corona virus is having a significant impact on demand
The spread of the Corona virus is having a significant impact on demand Number of new bookings Comments (vs. previous year, in %) 20 Pressure in Asia extended from China 7% 5% and HK into rest of the region since mid-January 0 Breakout in Italy and increasing travel -4% -5% -4% -14% -8% restrict
Slide 13: Group has been early in cutting capacity in response to lower demand
Group has been early in cutting capacity in response to lower demand ASK (vs. previous year) 0% 0% -3% -2% -3% -5% -6% -6% -8% -8% Capacity -31% reductions to increase to 95% by March 24 -50% -59% -69% Calendar Week/ Day 1 2 3 4 5 6 7 8 9 10 11 Mar Mar Mar 15 16 17 Page 13
Slide 14: Capacity reductions immediately eliminate 60 percent of airline costs
Capacity reductions immediately eliminate 60 percent of airline costs Group Airline Costs (FY 2019: EUR 25.9 billion) Other variable ~30% 11% (Semi-)fixed cost Passenger related 11% 25% 8% Fuel Depreciation ~60% 16% Variable cost Fees & Charges Page 14
Slide 15: Target to reduce fixed costs by at least one third
Target to reduce fixed costs by at least one third Group Airline (Semi-)Fixed Costs Measures (FY 2019: ~EUR 8 billion) >-33% Kurzarbeit / short-time work Marketing stop in large parts of the Group Complete stop of all non- Reduction of over-time safety relevant projects Crew hours Shift of
Slide 16: Liquidity will be further strengthened by new financings
Liquidity will be further strengthened by new financings Liquidity further strengthened In the process of securing additional funds Liquidity Unused credit lines: High level of ownership facilitates access to additional c. EUR 800m (not included) funds +27% 86% of fleet owned vs. 14% leased 4,300
Slide 17: Suspension of dividend payment in light of Corona crisis
Suspension of dividend payment in light of Corona crisis Comments Dividend per share in EUR Spread of the Corona virus has pushed the global airline industry into 0.80 0.80 an extraordinary crisis Suspension of dividend payment reflects focus on liquidity 0.50 0.50 preservation in light of highl
Slide 18: Spread of Corona virus makes precise financial outlook impossible
Spread of Corona virus makes precise financial outlook impossible Group Adjusted EBIT in EUR million 2.026 Significant Adjusted EBIT decline expected in 2020 FY 19 FY 20e Page 18
Slide 19: Appendix - supplementary information
Appendix - supplementary information- Page 19
Slide 20: Group P&L
Group P&L Lufthansa Group (in EUR m) Q4 ’19 vs. Q4 ’18 FY ’19 vs. FY ’18 Compensation payments in Revenues 8,900 +0% 36,424 +2% 1 1 relation to EU Reg. 261/ Total operating income 9,726 +1% 38,998 +2% 2004 booked against gross Operating expenses 9,499 +4% 37,309 +6% revenues now Of which fees & char
Slide 21: Effect of IFRS 16 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 22: Group revenue bridge
Group revenue bridge in m EUR Volume: +4% 1,006 Currency: +2% -1,159 488 Price: -4% 28,136 27,801 Traffic revenue (+1%) 8,288 Other revenue (+7%) 7,741 FY 2018 FY 2019 ∑ 35,542 ∑ Group revenue (+2%) ∑ 36,424 Page 22
Slide 23: Operating KPIs of Network Airlines by region
Operating KPIs of Network Airlines by region Total Q4 ’19 FY ’19 Europe Q4 ’19 FY ‘19 Asia / Pacific Q4 ’19 FY ‘19 Number of flights -1.7% +2.3% ASK +0.2% +3.9% ASK +1.2% +3.4% ASK +2.1% +3.9% RPK +2.3% +3.9% RPK +3.7% +4.6% RPK +4.4% +5.2% SLF +1.5pts. +0.0pts. SLF +2.1pts. +1.0pts. SLF +1.7pts. +1
Slide 24: Operating KPIs of Eurowings by region
Operating KPIs of Eurowings by region Total Q4 ’19 FY ‘19 Short-haul Q4 ’19 FY ‘19 Number of flights -7.9% -1.6% ASK -7.6% -0.6% ASK -8.5% -1.3% RPK -4.0% +0.7% RPK -6.3% -0.2% SLF +3.0pts. +1.1pts. SLF +1.9pts. +0.9pts. Yield +1.0% -3.1% Yield ex currency +0.8% -3.4% Yield +4.7% +0.1% Long-haul Q4
Slide 25: 2019 regional yield development by quarter
2019 regional yield1 development by quarter Network Airlines Q1 Q2 Q3 Q4 H1 9M FY Europe -6.5% -3,8% -2.5% 2 -3.1% -5,0% -4.1% 2 -3.8% Americas -6.1% -2,2% -2.9% 2 -7.0% -3,9% -3.5% 2 -4.3% Thereof North America -1.9% +1,8% +0.4% 2 -6.2% +0,2% +0.3% 2 -1.3% Thereof South America -18.7% -20,4% -18.0%
Slide 26: Fuel cost bridge
Fuel cost bridge Hedging result by quarter (in m EUR) Q1 Q2 Q3 Q4 FY (YTD) 2018 107 229 245 108 689 2019 17 35 -46 -45 -39 Change versus previous year in m EUR +628 Currency 6,715 Hedging +337 Volume 6,087 +72 +728 -509 Price FY 2018 FY 2019 Page 26
Slide 27: Cash flow statement
Cash flow statement Lufthansa Group (in m EUR) FY ’19 vs. FY ’18 1 Largely due to IFRS 16 EBT (earnings before income taxes) 1,860 -924 Depreciation & amortization (incl. non-current assets) 2,837 +636 1 Net proceeds from disposal of non-current assets 20 +54 “Correction” of EBT for non-cash effect
Slide 28: 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
Slide 29: Lufthansa pension accounting
Lufthansa pension accounting Schematic overview of cash flows (Example for FY 2019) Lufthansa Group Cash Flow Statement Proceeds from asset divestitures Cash Flow from operating activities 3 1 to finance payments to non- German Retirees EUR 138m Lufthansa Pension Group Fund Net Cash from / used in i