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 EBITDA

Adjusted Net Debt / Adjusted EBITDA
 2020 in €m2019 in €mChange in %
Net indebtedness1)9,6756,41551
Pension provisions9,5316,65943
Adjusted Net Debt19,20613,07447
Adjusted EBIT-5,4512,026 
Adjusted EBITDA-2,8904,718 
Adjusted Net Debt/
Adjusted EBITDA
not meaningful2.8 

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. 48.

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.