Deutsche Lufthansa Ag · XETR:LHA

Deutsche Lufthansa — Investor Presentation (March 2022)

40 slides from Deutsche Lufthansa's investor presentation, March 2022

1. Slide 1: Investor Presentation March 2022

   Investor Presentation March 2022

2. Slide 2: Disclaimer

   Disclaimer IMPORTANT: The following applies to this document and the oral presentation of the information in this document by Deutsche Lufthansa Aktiengesellschaft (the “Company”, and together with its consolidated subsidiaries, the “Group”) or any person on behalf of the Company, any question-and-a

3. Slide 3: Disclaimer

   Disclaimer This Presentation does not constitute or form part of, and should not be construed as, an offer to sell or issue, or the solicitation of an offer to purchase, subscribe to or acquire, securities of the Company, its affiliates or an inducement to enter into investment activity in the Unite

4. Slide 4: Full Year 2021 Results and Outlook

   Full Year 2021 Results and Outlook Medium-Term Strategy Page 4

5. Slide 5: Strict cost discipline reduces full year loss by two thirds

   Strict cost discipline reduces full year loss by two thirds - Q4 performance in line with guidance despite Omicron (in EUR million) Q4 ’21 Q4 ’20 Change in % FY ’21 FY ’20 Change in % Revenues 5,833 2,594 +125% 16,811 13,589 +24% Operating expenses 6,634 4,501 +47% 20,773 20,846 0% Of which fuel 965

6. Slide 6: Group Airlines: Significant progress made in reducing costs

   Group Airlines: Significant progress made in reducing costs Operational KPIs vs. 2019 Adjusted EBIT in EUR million Comments ASK 40.2% -3,486  Leisure- and VFR-driven demand -4,674 Network Airlines recovery and cost savings reduce SLF 60.3% -22.3pts. operating loss EUR -3,142m, excl. restructuring 

7. Slide 7: Lufthansa Cargo reaches record Adjusted EBIT, MRO recovers strongly, Catering returns to profits

   Lufthansa Cargo reaches record Adjusted EBIT, MRO recovers strongly, Catering returns to profits Adjusted EBIT in EUR million Comments 1,493 772  Cargo tops prior-year record result FY’21 FY ’20 because of further yield increase and cost efficiency improvements 210  Lufthansa Technik benefits from

8. Slide 8: Cash focus has become deeply embedded in the organization

   Cash focus has become deeply embedded in the organization: FY Adjusted free cash flow close to zero before the payment of deferred taxes Full year 2021 Adjusted EBIT / Adjusted free cash flow in EUR million 1,187 (1,119) -90 (183) 160 -45 (810) -855 2,259 -2,349 Adjusted EBIT Depreciation Adjusted O

9. Slide 9: Significant progress made in strengthening the balance sheet in 2021

   Significant progress made in strengthening the balance sheet in 2021 STRENGTHENING OF BALANCE SHEET Return to profitability Repayment stabilization measures Divestments  Secured 2.7 billion of sustainable cost  Concluded EUR 2.2 billion equity raise  Initiated comprehensive portfolio review reduc

10. Slide 10: Successful financing measures enable full repayment of stabilization measures

    Successful financing measures enable full repayment of stabilization measures in Germany and ensure high levels of liquidity in EUR million Comments (3,300) 6,100  Year-end liquidity above long-term target corridor of EUR 6-8 billion 11.1bn (5,500)  Successful capital increase, issue of 2,100 (855

11. Slide 11: Equity financing and favorable interest rate environment strengthen the balance sheet

    Equity financing and favorable interest rate environment strengthen the balance sheet Net debt in EUR million Pension provisions in EUR million Shareholder equity in EUR million 9,922 9,023 4,490 9,531 6,676 1,387 9,023 Dec 31, 2020 Dec 31, 2021 Dec 31, 2020 Dec 31, 2021 Dec 31, 2020 Dec 31, 2021 Ca

12. Slide 12: Fuel hedging limits the impact of higher oil price

    Fuel hedging limits the impact of higher oil price Hedging portfolio as of February 28, 2022 Expected fuel cost sensitivity after hedging (FY 2022)1 ø Market price crude oil 2 117 800 650 550 450 400 Q1 Q2 Q3 Q4 FY 2022 107 500 400 300 200 100 97 200 100 5,600 -100 -150 Hedge 87 74% 65% 61% 55% 63%

13. Slide 13: The Group is benefitting from high demand heading into summer

    The Group is benefitting from high demand heading into summer Expected capacity offered by Group airlines ASK in % of 2019 Flexible adjustment of capacity depending on return of demand ~95% >90% ~85% ~85% >70% ~60% ~60% Q1 2022 Summer 2022/ FY 2022 … FY 2024 Q3 2022 Total Short-haul Ramp-up flexibil

14. Slide 14: Operating result forecasted to improve significantly over the course of 2022

    Operating result forecasted to improve significantly over the course of 2022 Full Year 2022 2024 targets Capacity (ASK): Adj. EBIT margin target: At least 70% of 2019 ASK at least 8% Adjusted EBIT: Adj. ROCE (excl. cash) : Q1 to be significantly negative at least 10% Significant improvement thereaft

15. Slide 15: Medium-Term Strategy

    Full Year 2021 Results and Outlook Medium-Term Strategy Page 15

16. Slide 16: Lufthansa Group mid-term targets for the New Normal

    Lufthansa Group mid-term targets for the New Normal Assumptions Drivers 2024 Targets Capacity (ASK) Revenues Adjusted EBIT margin Low single digit RASK decline at 90-95% of pre-crisis levels by 2024 Group Airlines; Aviation Services above 2019 levels At least 8% Recovery by region CASK (excl. fuel1)

17. Slide 17: Lufthansa Group's transformation is well under way

    Lufthansa Group’s transformation is well under way Decisive action taken to ensure Ongoing innovation drives convenient, liquidity and respond to industry individual and sustainable disruption product Key restructuring actions taken to Disciplined financial management create a stronger, more resilie

18. Slide 18: EUR 2.7bn of targeted EUR 3.5bn cost savings secured

    EUR 2.7bn of targeted EUR 3.5bn cost savings secured Targeted sustainable cost savings 2020 - 2024 in EUR billion Measures implemented and recognized in P&L Reduce labor costs Measures implemented, not yet recognized in P&L Measures not yet implemented  Headcount reduction 1.8bn  Productivity incr

19. Slide 19: Unprecedented workforce reduction in Germany successfully completed

    Unprecedented workforce reduction in Germany successfully completed Number of Group employees Personnel reduction in Germany since January 2021 -24% Contracted to leave in 2022 - 2024 -20% Already left 3,000 excl. LSG EU 138,000 105,000 7,000 Dec 31, 2019 Dec 31, 2021 Personnel reduction by work gro

20. Slide 20: Accelerated fleet restructuring will reduce complexity and costs

    Accelerated fleet restructuring will reduce complexity and costs New Normal Fleet renewal and harmonization reduce costs Large Very Large 3801 748  748 Fuel efficiency New generation of aircraft with up to 30% lower fuel consumption per ASK 744  779 Intercontinental 773 773 Low maintenance cost in

21. Slide 21: Shift of capacity to airlines with lower costs and higher productivity

    Shift of capacity to airlines with lower costs and higher productivity will drive unit cost declines Scheduled short-haul fleet for July 2022 number of aircraft in % of 2019 Comment ~110%  Regional and leisure-focused Group airlines ~95% offer significant cost and productivity advantages over Netwo

22. Slide 22: External cost pressures expected to be lower compared to peers

    External cost pressures expected to be lower compared to peers and compensated by pricing and cost savings Airport charges in 2022 Expected cost inflation in other cost areas in 2022 Airport charges in European hubs vs. 2021 Other fees and charges (incl. handling, ATC) 60.0% + 5-8% Wages Increase be

23. Slide 23: Clear action plan in implementation to meet the demands of our customers

    Clear action plan in implementation to meet the demands of our customers Accelerating process improvement Examples along customer journey Improve  Upgrade of hub infrastructure and service center performance lounges  Automation of document Optimize verification airport processes  Shorten call cen

24. Slide 24: Lufthansa Group airlines are ready to serve strong leisure demand

    Lufthansa Group airlines are ready to serve strong leisure demand Leisure and VFR lead recovery Short-haul and Transatlantic are leading the recovery Expected Demand Recovery by Segment RPK (% 2019) Yield strength expected to continue in 2022 105% 110% 2019 level 110% 100% Largest leisure offer of a

25. Slide 25: A transformed Eurowings to drive profitable recovery

    A transformed Eurowings to drive profitable recovery Robust yield premium Significant restructuring progress Strategic focus areas Yield  Standardized, modern fleet of 75 a/c € per passenger Further strengthen position as Touristic 93  Reduction to only one AOC in Germany segment Germany’s largest

26. Slide 26: Lufthansa Cargo: Structural supply/demand gap and strategic initiatives

    Lufthansa Cargo: Structural supply/demand gap and strategic initiatives support long-term outlook Market-wide capacity gap expected to remain until 2025 Strategy execution & cost reductions to support future results Global Air Cargo Market | Capacity Predictions  Strong growth expected for Indexed

27. Slide 27: Lufthansa Technik is well positioned to benefit from the market recovery

    is well positioned to benefit from the market recovery Global footprint supports the recovery Strong, growing business pre-crisis Strategic focus areas Geographical split for 2019 third-party revenues Operating results 2019 third-party revenues in EUR million  Re-organization from 8 to 5 business O

28. Slide 28: Lufthansa Group is leading the industry with its green agenda

    Lufthansa Group is leading the industry with its green agenda More green offerings for customers Target 50% “green offerings” by 2025 Fleet renewal ongoing Target 120 new technology aircraft until 2025, 180 until 2030 Our ultimate goal SAF leader Net carbon neutral Initial USD 250mn SAF investment u

29. Slide 29: Portfolio management aims at maximizing the value of the Group

    Portfolio management aims at maximizing the value of the Group and its businesses Core business Continued preparations Conclusion of sale for partial divestiture/ IPO agreement once full value can be realized Transaction targeted in the course of 2023 Page 29

30. Slide 30: Lufthansa Group is set to emerge from the crisis as a structural winner

    Lufthansa Group is set to emerge from the crisis as a structural winner New Normal. New Strength. Delivering on our promise. New Lufthansa Group. More efficient, faster and more flexible Retained more than 100k jobs and leading position Creating value. Connecting the world, Building on the best prot

31. Slide 31: Appendix - supplementary information

    Appendix - supplementary information- Page 31

32. Slide 32: Traffic Data

    Traffic Data 9M vs.2019 Oct vs.2019 Nov vs.2019 Dec vs.2019 Q4 vs.2019 FY vs.2019 Passengers in 1,000 29,664 -73.5% 7,261 -45.6% 5,360 -48.3% 4,664 -52.6% 17,285 -48.5% 46,949 -67.7% Available seat-kilometers (m) 94,073 -65.7% 18,033 -43.5% 16,195 -38.8% 16,838 -35.8% 51,066 -39.6% 145,139 -59.5% Re

33. Slide 33: Operating KPIs of Network Airlines by region vs. 2019

    Operating KPIs of Network Airlines by region vs. 2019 (unless stated otherwise) Total Q4’21 FY’21 Europe Q4’21 FY’21 Asia / Pacific Q4’21 FY’21 Number of flights -37.6% -59.9% ASK -27.9% -53.4% ASK -75.0% -80.0% ASK -40.5% -59.8% RPK -34.7% -58.7% RPK -84.8% -90.1% RPK -52.9% -70.6% SLF -7.2pts. -8.

34. Slide 34: Operating KPIs of Eurowings vs. 2019

    Operating KPIs of Eurowings vs. 2019 (unless stated otherwise) Total Q4’21 FY’21 Number of flights -49.0% -68.8% ASK -29.9% -57.0% RPK -37.3% -61.6% SLF -8.6pts. -8.7pts. Yield -22.1% -14.8% Yield vs 2020 +29.6% +1.0% Yield ex currency vs 2020 +29.6% +0.9% RASK -23.2% -18.1% RASK ex currency vs 2020

35. Slide 35: Adjusted EBIT by segment

    Adjusted EBIT by segment Adjusted EBIT (in EUR m) Q4 ’21 Q4 ’20 Change in % FY ’21 FY ’20 Change in % Network Airlines -586 -1,024 +42.8% -3,486 -4,674 +25.4% Eurowings -86 -237 +63.7% -230 -703 +67.3% 552 326 +69.3% 1,493 772 +93.4% 47 -175 nmf. 210 -383 nmf. -25 -15 -66.7% 27 -284 nmf. Others -232

36. Slide 36: Group P&L

    Group P&L Lufthansa Group (in EUR m) Q4 ’21 vs. Q4 ’20 FY ’21 vs. FY ’20 Revenues 5,833 +124.9% 16,811 +23.7% Total operating income 6,358 +95.8% 18,422 +18.1% Operating expenses 6,634 +47.4% 20,773 -0.2% Of which fees & charges 765 +118.6% 2,155 +20.0% Of which fuel 965 +264.2% 2,409 +28.5% Of whic

37. Slide 37: Fleet overview

    Fleet overview thereof Change since Aircraft Type LH LX OS SN EW LCAG Group fleet Lease 31 Dec 2020 Airbus A220 30 30 +1 Airbus A319 44 16 36 96 27 -10 Airbus A320 97 30 29 16 56 228 32 -7 Airbus A321 74 10 6 2 92 1 +1 Airbus A330 25 16 9 50 8 -2 Airbus A340 34 9 43 Airbus A350 17 17 1 Airbus A380 1

38. Slide 38: Maturity profile of borrowings as of December 31, 2021

    Maturity profile of borrowings as of December 31, 2021 3,000 2,500 2,000 1,500 1,000 500 0 2022 2023 2024 2025 2026 2027 2028 2029 Straight Bond Hybrid Convertible Bond Schuldscheindarlehen Aircraft Finance (secured) Stabilization measures* Other** * As drawn on Dec 31 - – predominantly scheduled re

39. Slide 39: Reporting changes from Q1 2022

    Reporting changes from Q1 2022 1 Adjusted EBIT 2 Adjusted ROCE 3 Segment reporting EBIT Previously Previously + Impairments of non-current assets Adj. EBIT + Interest on liquidity – - Reversal of impairment losses on assets Tax (25% of Adj. EBIT + Interest on liquidity) +/- Book gains/losses Ø Capit

40. Slide 40: Reporting changes from Q1 2022 (cont.)

    Reporting changes from Q1 2022 (cont.) 4 Adjusted Free Cash Flow – M&A activities 5 Operating Cash Flow – pension cash flows Free Cash flow Operating Cash Flow - Repayment portion of IFRS 16 leasing expenses From Q1 2022: Cashflow from/used for Cash flows relating investing activities (Net Capex) to

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