The Lufthansa Group has decided to permanently hold liquidity of between EUR 6bn and EUR 8bn to protect against crises. This represents a significant increase compared to the pre-crisis level. For capital efficiency reasons, a material part of the strategic liquidity reserve will be held in the form of a revolving loan facility that will be financed by a consortium of banks.
After repaying the stabilisation measures in Germany, the focus is now on the long-term reduction in the level of indebtedness. Cash inflows from the operating business and proceeds from the disposal of non-core business segments are to contribute to reducing net debt.
Before the coronavirus crisis, the rating agencies Standard & Poor’s and Moody’s both rated the Lufthansa Group as investment grade. As a result of the coronavirus crisis and its impact, both agencies downgraded their rating. Scope Ratings rated the Lufthansa Group again in the investment grade range.
The Group aims to restore its investment grade rating with all of the significant rating agencies by 2024. Investment grade ratings for the Company’s debt ensure low funding costs and financial flexibility as a result. The conditions for an investment grade rating are a return to a positive operating result and a further reduction in net indebtedness.
In order to measure the Group‘s ability to service its debts the key figure Adjusted Net Debt / Adjusted EBITDA will be used. By using adjusted net debt, the ratio also includes pension provisions as well as classic net indebtedness. From 2019 onwards, when the new accounting standard for leases was introduced (IFRS 16), it also includes financial obligations from the Group’s leases (also for property and aircraft).
|2021 in €m||2020 in €m||Change in %|
|Adjusted Net Debt||15,452||19,206||–20|
|Adjusted Net Debt/|
|not meaningful||not meaningful|
1) In order to calculate net indebtedness, here 50% of the hybrid bond issued in 2015 (EUR 247m) has been discounted. Calculation of net indebtedness Annual report p. 50.