Sustainable value creation

The Lufthansa Group applies a value-based system of management. At its core is the return on capital, measured as the adjusted return on capital employed (Adjusted ROCE). If Adjusted ROCE exceeds the weighted average cost of capital (WACC), this means that the Company is creating value. The underlying capital base is adjusted for the Group’s cash and cash equivalents. The system of calculating the Adjusted ROCE was revised in the 2025 financial year: in future, the Company’s value creation before tax will be shown, rather than after tax.

The Company’s value creation was positive in the 2025 financial year. Adjusted ROCE after tax was 10.3% (previous year: 9.6%), while WACC increased to 8.6% (previous year: 8.5%) in the 2025 financial year. According to the new midterm targets, the pre-tax Adjusted ROCE is to amount to between 15% and 20% in the period from 2028 to 2030.

Sustainable value creation requires adequate profitability. This will in turn provide scope for entrepreneurial freedom and enable key stakeholders – investors in particular – to participate in the Company’s success.

The Company’s profitability is measured on the basis of its Adjusted EBIT margin, i.e. the ratio of Adjusted EBIT to revenue. Calculating the underlying Adjusted EBIT entails adjusting EBIT for write-downs and write-backs, earnings effects from disposals of non-current assets, effects of pension plan changes, restructuring expenses in the form of severance payments, significant costs of legal procedures and company transactions not arising in the normal course of business and other material non-recurring expenses caused directly by extraordinary external factors.

Adjustments were made in the reporting year, particularly due to book gains, especially from sales of aircraft and reversals of provisions recognised for extraordinary legal risks and restructuring, and offset by impairment losses, particularly for aircraft held for sale, and severance and restructuring expenses.

Adjusted EBIT came to EUR 1,960m in the 2025 financial year (previous year: EUR 1,645m). The Adjusted EBIT margin was therefore 4.9% (previous year: 4.4%).

The goal of safeguarding the Lufthansa Group’s future value creation underpins all of its investment and strategic decisions. The Group initiated comprehensive measures in the 2025 financial year in order to increase its future profitability. In particular, fleet renewal and fit-for-the-future programmes such as the turnaround programme at Lufthansa Airlines form part of a comprehensive process of change. This is intended to strengthen the Lufthansa Group in the long term and to boost its productivity and profitability. The Group also intends to leverage synergies and achieve greater efficiency through closer and more networked cooperation between Group Functions and airlines. For this purpose, the Lufthansa Group will also continue to pursue its process of digital transformation over the next few years.

The Lufthansa Group expects this to deliver significantly increased profitability by the end of the decade. According to new mid-term targets, an Adjusted EBIT margin of between 8% and 10% is to be realised in the period from 2028 to 2030.

Furthermore, the Lufthansa Group incorporates the specific carbon emissions into its management system to lower the associated costs by reducing environmental impacts. This facilitates sustainable value creation, positively affects financing conditions and is also factored into management remuneration. Specific carbon emissions per passenger-kilometre were 85.4 grammes in 2025, 2% lower than in the previous year (previous year: 87.5 grammes). Information about the long-term goals for reducing carbon emissions can be found in the combined non-financial declaration.

In the next few years, the Lufthansa Group envisages significant cost increases, in particular due to sustainability-related expenses which will arise on regulatory reasons, such as the SAF quota and the discontinuation of free CO₂ emissions certificates. Other cost items such as fees and charges and staff costs are also expected to increase. The Lufthansa Group therefore expects its unit costs to remain under pressure due to factors including ongoing cost inflation.

In response to unavoidable cost increases, it is focusing on increasing unit revenues through targeted revenue-increasing measures. The ongoing capacity restrictions in the market are expected to make an additional contribution to stabilising revenues across the market.

It is therefore necessary to carefully weigh up the different options of increasing market shares, boosting yields or allocating production capacity to different flight operations. The growth is intended to increasingly take place in flight operations with high productivity and low unit costs.

In order to preserve its competitiveness, the Company has also reviewed and implemented programmes to increase its cost-related efficiency and productivity as well as further cost-reduction measures. Operational units – from the Company’s fleet to its staff – and administrative functions must both contribute to this.

In response to cost pressure, efficiency improvement programmes were already launched for the Passenger Airlines in 2024. These target more efficient use of crews and the fleet. This involves, in particular, Lufthansa Airlines’ turnaround programme with a volume of measures planned to impact earnings with around EUR 1.5bn in 2026 and around EUR 2.5bn in 2028. In the reporting year, the Group-wide efficiency and earnings improvement programmes were combined and the Group Executive Board receives regular reports on them.