Maintaining financial stability

The coronavirus pandemic demonstrated that a sufficient level of minimum liquidity is vital in the event of global crises, which generally have a particularly severe impact on airlines. To ensure the requisite volume of liquidity for an extreme crisis scenario, as well as to cover operational expenses, it is also necessary to safeguard capacity to repay working capital liabilities, in particular advance payments received from customers for flight documents not yet used. The Lufthansa Group aims to achieve minimum liquidity of between EUR 8bn and EUR 10bn to reduce liquidity risks and thus protect the Group against possible crises. This has been confirmed in its new mid-term targets. For capital efficiency reasons, part of the strategic liquidity reserve is held in the form of a revolving line of credit.

Including its freely available credit lines at year-end 2025, the Company’s available liquidity amounted to EUR 10.7bn (31 December 2024: EUR 11.0bn).

The Lufthansa Group’s long-term financial strategy continues to focus on ensuring a low level of gearing, primarily by achieving strong free cash flows and optimising net indebtedness.

The gearing is measured as Adjusted net debt/Adjusted EBITDA; the ratio takes into account both net indebtedness (including the financial obligations arising from lease agreements, primarily for property and aircraft) and net pension obligations. These are actively managed. To limit any further increase in its liabilities, the Lufthansa Group has largely switched over to a defined contribution pension system. For its largest remaining defined benefit pension plans, the allocation of the pension assets has been adjusted in the context of the introduction of a liability driven investment (LDI) system. This is intended to align the sensitivity of plan assets to interest rates more closely to that of pension obligations in order to permanently reduce the level of volatility of pension provisions.

Net indebtedness stood at EUR 6,406m at the end of the 2025 financial year. Despite the positive free cash flow, net indebtedness was up by 12% on the previous year (previous year: EUR 5,744m) due to interest and dividend payments and additional lease liabilities, in particular from the sale and leaseback transactions. By contrast, due to interest rates, net pension obligations declined by 26% to EUR 1,902m in the reporting year (previous year: EUR 2,566m). In combination with the higher Adjusted EBITDA, the ratio of Adjusted net debt/Adjusted EBITDA fell to 1.8 (previous year: 2.0) as of year-end 2025.

¹⁾In order to calculate Adjusted net debt, 50% of the hybrid bond issued in 2015 (EUR 247m) and 50% of the hybrid bond issued in 2025 (EUR 250m) have been discounted here. Calculation of net indebtedness Annual report p. 46.

Deutsche Lufthansa AG has received an investment grade rating from all the leading rating agencies.

Standard & Poor’s, Fitch Ratings and Scope Ratings have all given Deutsche Lufthansa AG an investment grade rating of BBB-, outlook stable. Moody’s rating is Baa3, which is likewise investment grade, with a stable outlook.

The Group strives to be rated as investment grade on a lasting basis. Investment grade ratings for the Company’s debt ensure good access to the capital markets and low funding costs and thus financial flexibility. Conditions for an investment grade rating are good profitability and adequate gearing, among other aspects.

The Lufthansa Group successfully raised new funds on the capital market again in the 2025 financial year, benefiting from attractive conditions associated with its investment grade rating. It has borrowed a total volume of EUR 2,266m through the placement of a hybrid bond, a convertible bond, eight borrower’s note loans and six aircraft financing transactions. The Lufthansa Group also made use of various other financing instruments, such as sale-and-leaseback transactions and Japanese operating leases.

Future financing activities will likewise be based on the need for capital expenditure and will aim to minimise financing costs. Financing activities are mainly determined by the Lufthansa Group’s rating as well as market conditions. A broad financing mix, favourable financing costs, a balanced maturity profile and a diversified portfolio of lenders are achieved through the differentiation of financing instruments.

New loans or bonds generally have either fixed or floating rates of interest. The Lufthansa Group pursues a net fix hedging strategy. This means the volume of floating-rate liabilities should not exceed the volume of funds invested at a floating interest rate. Net debt is thus subject to a fixed interest rate and market-wide interest-rate changes do not have any material impact on the Group’s interest burden. This strategy is managed primarily by means of derivatives.

The Group’s financial stability is also ensured through integrated risk management. Hedging fuel, exchange rate and interest rate risks minimises the short-term financial risks for the Lufthansa Group. The hedges smooth price fluctuations by means of rule-based processes. Changes in fuel costs can therefore be taken into account in pricing at an early stage.