Slide 1: Q1 2019 Analyst and Investor Conference Call
Q1 2019 Analyst and Investor Conference Call Ulrik Svensson, CFO and Member of the Executive Board Frankfurt, 30 April 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: Group EBIT declines because of excess supply in Europe and fuel headwinds
Group EBIT declines because of excess supply in Europe and fuel headwinds Group Adjusted EBIT Long-haul -388 Unit cost reduction 52 MRO -336 Unit revenues Q1 18 Q1 19 Fuel cost Logistics Page 3
Slide 4: Network Airlines: Long-haul partly offsets yield pressures in Europe
Network Airlines: Long-haul partly offsets yield pressures in Europe Q1 +5.7% Comments Europe 39% -1.1pts. -6.5% Yields in Europe remain under ASK SLF Yield 1 pressure due to high market-wide capacity growth and the Group’s +3.2% Yield NA: response to increased competition Americas 1.5pts. -1.9% 3
Slide 5: Network Airlines: Volumes ups, yields down
Network Airlines: Volumes ups, yields down Q1 Revenue KPIs Comments +5.6% Volume growth and stable loads reflect ongoing solid customer -0.1pts. demand -5.0% -5.2% High levels of price sensitivity in ASK SLF Yield 1 RASK 1 Europe, in particular in Vienna CASK reduction driven by fleet moderniz
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 Q1 Fuel cost Comments +161 / +17% Fuel costs increase due to US dollar strength, volume growth and the 955 1,116 expiry of low price hedges Lufthansa German Airlines and Q1 18 Q1 19 Austrian Airlines record negative opera
Slide 7: Eurowings: Short-haul yields challenged by market-wide excess capacity
Eurowings: Short-haul yields challenged by market-wide excess capacity Q1 Comments +5.9% Results in short-haul impacted by +0.3pts. Short-haul intense competition in European 69% market caused by oversupply -8.8% Tough comparison base due to prior ASK SLF Yield 1 year capacity gap caused by Air
Slide 8: Eurowings: Unit cost reduction partly offsets revenue pressures
Eurowings: Unit cost reduction partly offsets revenue pressures Q1 Revenue KPIs Comments +9.6% Capacity growth still elevated as +0.2pts. ex-Air Berlin aircraft not fully operational yet in prior year quarter -7.0% -8.5% CASK reduction due to the non- ASK SLF Yield 1 RASK 1 recurrence of prior y
Slide 9: Eurowings: Adjusted EBIT below prior year levels
Eurowings: Adjusted EBIT below prior year levels Q1 Fuel cost Comments +40 / +22% Fuel costs increase as expected Unit revenue declines outweigh the 183 223 benefit from cost reductions Q1 18 Q1 19 Eurowings results below prior year in seasonally loss-making quarter Adjusted EBIT nmf. -212 -25
Slide 10: Logistics decline offsets result improvement at MRO and Catering
Logistics decline offsets result improvement at MRO and Catering Adjusted EBIT / Margin Q4 Comments -67% 3.9% 72 24 -7.3pts. Market-wide declines on routes Q1 18 Q1 19 between Europe and Asia depress Cargo results +17% Improving performance in engine 7.2% maintenance division drives MRO 107 125
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 +50% -78% 1,558 67% 1,236 800 5,830 826 3,489 178 279 178 -101 -1,279 Q1 18 Q1 19 Q1 18 Q1 19 Op. CF Net Free CF IFRS 16 Adj. Dec 31, 2018 Mar 31, 2019 Investments effect2) Free
Slide 12: Capacity growth in Europe set to moderate significantly in summer
Capacity growth in Europe set to moderate significantly in summer Europe Market-wide seat growth SU 19: +4% Market-wide capacity growth moderates compared to winter flight plan Capacity growth in Group’s home markets below the European average Americas Market-wide seat growth SU 19: +5% Good d
Slide 13: Full year 2019 guidance confirmed
Full year 2019 guidance confirmed Passenger Airlines Network Airlines Eurowings Capacity growth (ASK) c. +4% c. 0% Unit revenue (RASK, at constant currency) stable to down low-single digit stable to up low-single digit Unit cost (CASK, at constant currency, excl. fuel) -0.5% to -1.5% -7.0% to -9.0%
Slide 14: Appendix - supplementary information
Appendix - supplementary information- Page 14
Slide 15: Financial guidance 2019 / 2018 Base
Financial guidance 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 mar
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 focus on operational stability and complexity reduction 7% Domestic and North Atlantic routes 4% 4% 4% 4% grow slightly at Eurowings 0% 0% 0% Europ
Slide 17: Group P&L
Group P&L Lufthansa Group (in m EUR) Q1 ’19 vs. Q1 ’18 Total revenue 7,890 +3% Other operating income 528 +2% Total operating income 8,418 +3% Operating expenses 8,767 +8% Non-fuel operating expenses 7,344 +7% Cost of materials and services 4,553 +11% Fuel expenses 1,423 +17% Fees and charges 1,045
Slide 18: Effect on Lufthansa Group (Adoption of IFRS 16)
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: +5.0% 294 -332 Currency: +1.9% 110 Price: -5.7% 5,857 5,785 Traffic revenue (+1.2%) 2,033 Other revenue (+9.6%) 1,855 Q1 2018 Q1 2019 ∑ 7,640 ∑ Group revenue (+3.3%) ∑ 7,890 Page 19
Slide 20: Operating KPIs of Network Airlines by region
Operating KPIs of Network Airlines by region Total Q1 ’19 Europe Q1 ’19 Asia / Pacific Q1 ’19 Number of flights +3.9% ASK +5.7% ASK +5.1% ASK +5.6% RPK +4.1% RPK +4.6% RPK +5.5% SLF -1.1pts. SLF -0.4pts. SLF -0.1pts. Yield -5.3% Yield +3.6% Yield ex currency -6.5% Yield ex currency +1.9% Yield -3.0%
Slide 21: Operating KPIs of Eurowings by region
Operating KPIs of Eurowings by region Total Q1 ’19 Short-haul Q1 ’19 Number of flights +2.5% ASK +5.9% ASK +9.6% RPK +6.4% RPK +9.9% SLF +0.3pts. SLF +0.2pts. Yield -8.3% Yield ex currency -8.8% Yield -6.5% Long-haul Q1 ’19 Yield ex currency -7.0% ASK +15.6% RASK -6.1% RPK +15.0% RASK ex currency -8
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 107 107 2019 17 17 Change versus previous year in m EUR +202 Currency 1,423 Hedging +103 Volume 1,221 -48 +90 +57 Price Q1 2018 Q1 2019 Page 23
Slide 24: Fuel cost outlook 2019
Fuel cost outlook 2019 Fuel cost Sensitivity to Brent and currency +700 FY 19 90 Average Brent rest of year 1.450 1.350 1.250 1.150 1.050 950 850 85 Full Year 18 / 19 1.300 1.200 1.100 1.000 900 850 750 6.8 6.1 80 6.1 1.150 1.050 950 900 800 700 600 75 (USD/bbl) 1.000 900 800 700 650 550 450 70 FY 1
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) Q1 ’19 vs. Q1 ’18 5.4 4.1 EBT (earnings before income taxes) 412 -398 3.4 3.2 1.6 Depreciation & amortization (incl. non-current assets) 669 +122 Net proceeds from disposal of non-current assets 18 -21 FY 2015 FY 2016 FY 2017 FY 2018 Q1 2019 Result of e
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