Investment grade ratings for Deutsche Lufthansa AG‘s debt secure its financial flexibilty.
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 is introduced (IFRS 16), it will also include financial obligations from the Group’s leases (also for property and aircraft).
|2017 in €m||2016 in €m||Change in %|
|Net indebtedness 1)||2,.637||2,454||7.5|
|Pension provisions||5,116||8,364||– 38.8|
|Adjusted Net Debt||7,753||10,818||-28.3|
|Adjusted Net Debt/|
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 2017 page 40.
As an aviation group with worldwide operations, the Lufthansa Group is exposed to exchange rate, interest rate and fuel price movement risks. Managing these is generally subject to the premise of a conservative approach which is reflected in a systematic financial management. The hedges smooth price fluctuations by means of rule-based processes.
Access to diverse forms of funding and maintaining appropriate liquidity
Optimising the funding mix reduces financing costs, maintains a balanced maturity profile and diversifies the Lufthansa Group’s portfolio of creditors. The majority of the aircraft fleet should remain unencumbered and wholly owned by the Lufthansa Group in order to maintain its great financial and operational flexibility. The Group aims to maintain liquidity of at least EUR 2.3bn at all times, in order to manage liquidity and refinancing risks for the Lufthansa Group, especially at times of volatile demand and financial markets.