Sustainable value generation
The Lufthansa Group applies a value-based system of management. At its centre is the profitability of the Company. In addition to the continuous improvement of revenue quality, this particularly calls for further efforts in cost management.
The Company’s profitability is measured by Adjusted EBIT. It is derived from EBIT (earnings before interest and tax), which is then adjusted exclusively for non-recurring effects from the valuation and disposal of assets as well as the valuation of pension provisions.
The return on capital employed (Adjusted ROCE) is measured for the Lufthansa Group and the individual companies.
In addition to the return on capital employed, the absolute amount of value added is measured by earnings after costs of capital (EACC). EBIT is the starting point for calculating EACC.
If the EBIT exceeds the taxes due on earnings and the return expected by investors and lenders on the average capital employed (Weighted Average Cost of Capital „WACC“), the Company is creating value.
Tighter cost management
In addition to generating revenue potential, the Lufthansa Group aims to increase its profitability by continuously and sustainably reducing its costs. Cost-cutting measures are devised and implemented in all operating segments.