Maintain financial stabilty

Stabilise investment grade rating

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).

Adjusted Net Debt / Adjusted EBITDA1)
 2018 in €m2017 in €mChange in %
Net indebtedness 2)3,2422,63723
Pension provisions5,8655,11615
Adjusted Net Debt9,1077,75317
Adjusted EBIT2,8362,969

-4

Amortisation2,1802,040

87

Adjusted EBITDA5,0165,0090
Adjusted Net Debt/
Adjusted EBITDA
1.81.517

1) The figures for 2017 and 2018 include effects from the first-time application of new accounting standards and other accounting changes. Details can be found on p. 29f. of this Annual Report.
2) In order to calculate net indebtedness, here 50% of the hybrid bond issued in 2015 (EUR 247m) has been discounted. Calculation of net indebtedness p. 38.

Hedging of financial risks

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.