Generation of strong free cash flows and effective capital allocation

The generation of strong free cash flows is a clear focus of the Lufthansa Group’s financial strategy, with the aim of creating value for its shareholders and further reducing its volume of debt in the long term. In addition to increasing the operating result, the key levers for this are strict cash and working capital management as well as focused investing activities.

Free cash flow also plays a major role for the variable remuneration of many employees, particularly of managers, and in the performance dialogues with the business entities. With this, the organisation is continuously made aware of its influence on company value and incentives are established to increase the level of free cash flows. According to the new mid-term targets, Adjusted free cash flow is to exceed EUR 2.5bn per year in the period from 2028 to 2030. The Lufthansa Group achieved a positive Adjusted free cash flow of EUR 1,188m in the 2025 financial year (previous year: EUR 840m).

Working capital management is to be further intensified. This includes targeted measures such as strict receivables management, optimising payment terms with suppliers, improvements to procurement processes and maintenance of inventories, in particular at Lufthansa Technik.

The strategic goals of the Group and its business segments, and the portfolio roles of the different Group companies provide the framework for the allocation of capital and for investment decisions. All investment projects should contribute to sustainable value creation, i.e. profitability above and beyond the weighted average cost of capital (WACC).

The Lufthansa Group is extensively investing in the modernisation of its fleet, on-board and ground products, digitalisation and infrastructure. It is largely replacing older, less efficient aircraft with new models and thereby sustainably increasing its profitability through increased fuel efficiency and reduced maintenance costs, for example. The allocation of new aircraft to the different airlines and bases follows value-based criteria and is continuously optimised.

Sale-and-leaseback transactions to finance the modernisation of the fleet were completed in the reporting year: a total of 19 aircraft were sold to lessors and then leased back.

The Lufthansa Group increased its investment volume in the reporting year. Compared with the previous year, net capital expenditure (without acquisition and disposal of equity investments) declined by 9% to EUR 2,460m (previous year: EUR 2,698m). Advance and final payments for aircraft and aircraft components along with aircraft and engine overhauls account for most of this expenditure.

The Company plans for its shareholders to regularly participate directly in its success with an attractive dividend. This is intended to make the Company more attractive, including for investors with a long-term investment horizon.

The Lufthansa Group’s dividend policy is to distribute to its shareholders 20% to 40% of the Group’s net profit, adjusted for non-recurring gains and losses. One condition for the payment of a dividend is that the net profit for the year as shown in the individual financial statements of Deutsche Lufthansa AG that are drawn up under German commercial law allows for a distribution of the relevant amount. The Group’s dividend policy has been confirmed in its new mid-term targets.

In line with the dividend policy, the Executive Board and Supervisory Board will table a proposal at the Annual General Meeting on 12 May 2026 to distribute a dividend of EUR 0.33 per share to shareholders for the 2025 financial year. This represents a total dividend payment of EUR 396m or 30% of net profit for 2025, which is a higher percentage than the previous year, when 26% of net profit was distributed.