To our shareholders
Letter from Dennis Weber,
Head of Investor Relations
The interim report for the first quarter 2023 gives us the chance to take stock. Looking at the results from the first quarter, at the beginning of May, we have good visibility on how the upcoming summer months will develop, how well we are progressing in our key areas of action for the year and how robust and resilient our flight operations currently are. The result can be summarized in one sentence: The Lufthansa Group is on track.
In the seasonally weak first quarter, we halved our loss compared to the previous year and closed the quarter with an Adjusted EBIT of EUR -273m. We increased our Group revenues by 40% to EUR 7bn. The further increase in the number of our passengers is particularly encouraging. Our airlines welcomed a total of 22 million passengers on board - 9 million more than in the first quarter of last year. All in all, the first quarter shows: We are on track economically.
We are also on track regarding the operational stability and reliability of our flight operations. The Easter travel wave was the first major test of the year. We mastered it successfully. Over 4 million passengers flew with our airlines during the Easter vacations. Twice as many as in 2022. This gives us confidence. Nevertheless, the preparations for summer remain a top priority for all of our passenger airlines. This is key, as our advance bookings for the coming months are very good. On short- and medium-haul touristic routes, demand already exceeds 2019 levels. Many flights are already fully booked. We are on the verge of the strongest summer in our company's history in terms of traffic revenue.
Based on capacity offered between 85% and 90% of 2019 levels, for full year 2023, we expect a significant increase of Adjusted EBIT compared to the prior year level. Strong bookings, continued high yields and lower fuel costs provide additional support to our full year financial outlook.
The Lufthansa Group is also on track with regard to its strategic orientation. Our strategy is clear: multi-airline, multi-hub, multi-brand. We regard this diversity as a central and strategic success factor. The potential of our business model is particularly evident in the current phase of consolidation in Europe. Different airlines with their own identity and brand, firmly anchored in their home markets, successful at their respective hubs, differentiated by geography and segment, all under the umbrella of the Lufthansa Group. With this formula for success, we combine customer benefits and the creation of synergies. Only together can we achieve the scale to play in the top global league.
We consider the expansion of our airline group through the potential acquisition of a stake in Italy's ITA to be a beneficial and logical next step in the further development of our business model. Our talks are on the right track. The same applies to talks with potential investors on the possible sale of a minority stake in Lufthansa Technik. In the coming months we will make a decision on this issue as well. And the announced sale of the remaining parts of LSG was agreed at the beginning of April.
Almost three years ago to the day - on May 5, 2020 - our then Annual General Meeting took place. At the height of the pandemic. It was about saving Lufthansa. Today - three years later - we have not only overcome this unique crisis. We have put the Lufthansa Group back on track and optimally positioned it for a successful future.
We are pleased that you are accompanying us on our journey. And we look forward to welcoming you on board our aircraft again.
Head of Investor Relations
Deutsche Lufthansa AG
Revenue €m
Adjusted EBIT €m
In the first quarter of 2023, demand for flights continued to recover in the wake of the coronavirus pandemic. Earnings improved significantly relative to the same period in the previous year, when demand had still been strongly affected by the spread of the Omicron variant.
The Passenger Airlines segment thus further expanded its capacity, which, in the first quarter of 2023, was 30% higher than in the previous year, but still 25% below its 2019 pre-crisis level.
The Lufthansa Group’s revenue therefore increased by 40% year-on-year to EUR 7,017m (previous year: EUR 5,002m).
Adjusted EBIT in the first quarter of 2023 came to EUR -273m (previous year: EUR -577m). The Adjusted EBIT margin was -3.9% (previous year: -11.5%). The Lufthansa Group thus reduced its operating loss by more than half year-on-year. This operating loss is mainly attributable to the pronounced seasonality typical of the airline business and the still limited level of capacity by comparison with the planning for the remainder of the year.
Adjusted EBIT was positive in both the Logistics and MRO business segments. In the Logistics business segment, earnings declined due to the industry-wide normalisation of freight rates, while earnings in the MRO business segment picked up on account of the further rise in demand for maintenance and repair services.
Adjusted free cash flow decreased by 38% in the first quarter of 2023 to EUR 482m (previous year: EUR 780m). The increase in cash flow from operating activities was more than made up for by the rise in net capital expenditure. The latter was associated with the acceleration of the fleet modernisation as well as postponements of aircraft deliveries which had been planned for the previous year.
| Jan – Mar 2023 | Jan – Mar 2022 | Change in % | ||
|---|---|---|---|---|
| Total revenue | €m | 7,017 | 5,002 | 40 |
| of whichtraffic revenue | €m | 5,708 | 3,836 | 49 |
| Operating expenses | €m | 7,946 | 5,982 | 33 |
| Adjusted EBITDA | €m | 272 | -32 |
|
| Adjusted EBIT | €m | -273 | -577 | 53 |
| EBIT | €m | -304 | -608 | 50 |
| Net profit/loss | €m | -467 | -584 | 20 |
| Jan – Mar 2023 | Jan – Mar 2022 | Change in % | ||
|---|---|---|---|---|
| Total assets | €m | 44,904 | 44,386 | 1 |
| Equity | €m | 7,550 | 5,426 | 39 |
| Equity ratio | % | 16.8 | 12.2 | 4.6 pts |
| Net indebtedness | €m | 6,717 | 8,283 | -19 |
| Pension provisions | €m | 1,992 | 5,260 | -62 |
| Cash flow from operating activities | €m | 1,581 | 1,496 | 6 |
| Gross capital expenditure | €m | 1,000 | 640 | 56 |
| Net capital expenditure | €m | 1,040 | 637 | 63 |
| Adjusted free cash flow | €m | 482 | 780 | -38 |
| Jan – Mar 2023 | Jan – Mar 2022 | Change in % | ||
|---|---|---|---|---|
| Adjusted EBITDA-margin | % | 3.9 | -0.6 | 4.5 pts |
| Adjusted EBIT-margin | % | -3.9 | -11.5 | 7.6 pts |
| EBIT-margin | % | -4.3 | -12.2 | 7.9 pts |
| Jan – Mar 2023 | Jan – Mar 2022 | Change in % | ||
|---|---|---|---|---|
| Share price as of 31 March | € | 10.26 | 7.36 | 39 |
| Earnings per share | € | -0.39 | -0.49 | 20 |
| Jan – Mar 2023 | Jan – Mar 2022 | Change in % | ||
|---|---|---|---|---|
| Employees as of 31 March | number | 112,392 | 104,034 | 8 |
| Jan – Mar 2023 | Jan – Mar 2022 | Change in % | ||
|---|---|---|---|---|
| Flights | number | 185,930 | 135,577 | 37 |
| Passengers | thousands | 21,643 | 13,173 | 64 |
| Available seat-kilometres | millions | 59,347 | 45,656 | 30 |
| Revenue seat-kilometres | millions | 47,316 | 29,860 | 58 |
| Passenger load factor | % | 79.7 | 65.4 | 14.3 pts |
| Available cargo tonne-kilometres | millions | 3,457 | 3,140 | 10 |
| Revenue cargo tonne-kilometres | millions | 2,031 | 2,137 | -5 |
| Cargo load factor | % | 58.7 | 68.1 | -9.4 pts |
1) Previous year's figures have been adjusted due to the agreed sale of the LSG Group.
Date of publication: 03 May 2023.
Starting from a year-end price of EUR 7.77 in 2022, the Lufthansa share gained considerably in value in the course of the first quarter of 2023. On 31 March 2023 the Lufthansa share was trading at EUR 10.26. This means that the share price rose by 32% in the period under review.
The Lufthansa share was thus able to continue its strong performance from the previous year. Since the beginning of the year it has benefited, like the other European airlines, in particular from the fact that financial analysts and investors expect strong demand in the summer season.
The Lufthansa share thus performed better than the IAG share, which rose by 22%. By contrast, the Air France-KLM share, which had still lost considerable ground in 2022, performed even better than the Lufthansa share with an increase of 38%. The benchmark index MDAX rose by 10% in the same period.
The sale of the LSG Group to AURELIUS is not expected to have any significant impact on the Group’s financial development in 2023. The earnings of the LSG Group will be consolidated up to the completion of the transaction, which is expected to occur in the third quarter of 2023.
In view of booking cycles in the passenger business which remain shorter than they were prior to the crisis and the largely spot market-driven cargo business together with the uncertain macroeconomic and geopolitical environment, the Lufthansa Group’s financial outlook is subject to a high level of forecast uncertainty. Its operating and financial performance depends on factors including the further course of the war in Ukraine and its effects on fuel costs in particular. Uncertainty in relation to the macroeconomic outlook – above all, the unclear impact of the major global central banks’ current monetary policy stance on the development of the economy – may potentially have a significant effect on customer demand, particularly in the case of business travellers. In addition, persistently high inflation might result in higher than expected cost increases.
The Lufthansa Group assumes that the positive course of business in the previous year will continue in the 2023 financial year. This expectation is based in particular on the ongoing strong demand, which in the first quarter of 2023 continued to be reflected in the form of continued positive developments in new bookings in the passenger business.
Accordingly, the Lufthansa Group assumes that demand will continue to rise over the course of the year. In addition to the leisure travel segment, where demand is forecast to be almost as high as before the crisis, a contribution will come from the further recovery in demand in the business travel segment.
For this reason, flight capacity is to be continuously expanded over the course of the 2023 financial year. Capacity is also to be added for tourist traffic in the summer. On long-haul routes, the increase in capacity will be primarily shaped by the development of connections to Asia, above all due to the opening of major markets such as China and Japan.
Overall, the Lufthansa Group anticipates that available capacity for the Passenger Airlines segment in the 2023 financial year will be between 85% and 90% of its pre-crisis level. Capacity will thus increase by around 20% on the previous year.
The Lufthansa Group expects revenue to increase significantly in the 2023 financial year by comparison with the previous year. The continued recovery of the Passenger Airlines especially is expected to be the main factor here.
In the 2023 financial year, the Lufthansa Group expects Adjusted EBIT to improve significantly year-on-year, above all thanks to the positive performance forecast for the Passenger Airlines, the continued strong result in the Logistics segment compared with pre-crisis levels, and a further positive performance in the MRO segment.
Net capital expenditure by the Lufthansa Group in the 2023 financial year is expected to be between EUR 2.5bn and EUR 3bn.
Including the forecast earnings improvement and other improvements in working capital management, Adjusted free cash flow for the Group is therefore projected to be significantly positive in the 2023 financial year, but below the previous year’s figure.
On 18 January 2023, Deutsche Lufthansa AG submitted an offer in the form of a letter of intent to the Italian Economics and Finance Ministry to acquire an equity investment in Italy's national airline, ITA Airways. The Italian Economics and Finance Ministry and ITA Airways signed this letter of intent on 27 January 2023.
It is envisaged that Deutsche Lufthansa AG will initially acquire a minority interest. Furthermore, options are to be agreed for the purchase of the remaining interests at a later date. If an agreement is reached, the transaction would require the approval of the competent authorities in particular.
Deutsche Lufthansa AG signed an agreement with private equity group AURELIUS for the sale of the remaining LSG Group business. The European LSG Sky Chefs activities were already sold in 2019 to gategroup.
“We are pleased to have found the right investor for the LSG Group going forward that also has the full support of the LSG Group management. We are confident that AURELIUS will enable the LSG Group to be well positioned in the years ahead. In turn, it enables us to focus even more on further improving the profitability and capital returns of the Lufthansa Group core business,” said Remco Steenbergen, Chief Financial Officer, Deutsche Lufthansa AG.
The divestment of the catering segment is part of the Lufthansa Group's strategy to focus more on its airline business in the future. The transaction is expected to have a positive effect on Lufthansa Group’s operating margin (Adjusted EBIT) and capital return (Adjusted ROCE).
The carve-out transaction includes all classic catering, onboard retail and food commerce activities and brands of the LSG Group, with all 131 LSG Sky Chefs Customer Service Centers (CSCs) in the Americas (U.S. and Latin America), EMMA (Emerging Markets) and Asia-Pacific regions, plus onboard retail expert Retail InMotion (RiM), based in Europe, and SCIS Air Security Services in the U.S. It combines a total of around 19,000 employees worldwide and 36 joint ventures across the globe.
The transaction is expected to close by Q3 2023, subject to relevant external approvals and internal carve-out activities.
The Supervisory Board of Deutsche Lufthansa AG has appointed Carsten Spohr as CEO and Remco Steenbergen as CFO for five more years.
Dr. Karl-Ludwig Kley, the Chairman of the Supervisory Board of Deutsche Lufthansa AG, says: "I am delighted that the contract extensions for Carsten Spohr and Remco Steenbergen have been concluded. They will be particularly important in securing a successful future for the Lufthansa Group."
Carsten Spohr has been a member of the Executive Board of Deutsche Lufthansa AG since 2011 and its chairman since 2014. His contract has been extended until the end of December 2028.
Dr. Karl-Ludwig Kley: "Carsten Spohr successfully leads Lufthansa as CEO for the past eight years. During this time, he has not only mastered the most difficult crises and challenges but has also been responsible for the most economically successful years in the Group's history. With his experience, competence and personality, he is the right person to also master the challenges ahead."
The contract of Chief Financial Officer Remco Steenbergen, who has been a member of the Executive Board of Deutsche Lufthansa AG since January 1, 2021, was also extended. Remco Steenbergen was also appointed until the end of December 2028.
Dr. Karl-Ludwig Kley: "Remco Steenbergen joined Lufthansa during the company's most severe financial crisis, which was combined with tight regulation of the company. As Chief Financial Officer, he played a major role in quickly overcoming this difficult situation. At the same time, he was able to set strong impulses and lay important foundations for a successful realignment of the finance department. He will continue this work with great expertise."
Deutsche Lufthansa AG has invited its shareholders to the 70th Annual General Meeting on 9 May 2023 at 12:00 hrs. The meeting will again take place virtually.
The Annual General Meeting will be broadcasted as a livestream on the Lufthansa Group's website. Shareholders can participate in the voting via the Online Services. The registration closing date was 2 May 2023, 24:00 hrs.
The speech by Carsten Spohr, Chairman of the Executive Board of Deutsche Lufthansa AG, was already published on the website in advance of the meeting. This gives shareholders the opportunity to refer to the content of the speech when asking questions. Questions on the agenda can still be submitted to the Executive Board via the Online Services until 5 May 2023, 24:00 hrs., if the shareholder has already registered for the Annual General Meeting. The answers to questions submitted in time will be published on the website of the Annual General Meeting by 24:00 hrs on 7 May 2023 at the latest and will not be answered again during the virtual Annual General Meeting. In case of follow-up questions, shareholders may ask them on the day of the Annual General Meeting via a live video contribution through the Online Services.
Among the items on the agenda of the Annual General Meeting is the election of members of the Supervisory Board. The Supervisory Board of Deutsche Lufthansa AG recommends the election of Karl-Ludwig Kley, acting Chairman of the Supervisory Board, Carsten Knobel, Chairman of the Executive Board and CEO of Henkel AG & Co. KGaA and Karl Gernandt, Executive Chairman of Kühne Holding AG.
Other items on the agenda include the cancellation and creation of authorisations to acquire own shares as well as Authorised Capital B and amendments to the Articles of Association within the framework of virtual Annual General Meetings.
The Executive Board of Deutsche Lufthansa AG has resolved to order ten Airbus A350-1000 passenger aircraft, five Airbus A350-900 passenger aircraft and seven Boeing 787-9 ‘Dreamliner’ passenger aircraft. The Supervisory Board of Deutsche Lufthansa AG approved the acquisition of the aircraft on 2 March 2023.
The aircraft concerned will be delivered to the Lufthansa Group from the mid-2020s onwards. Based on list prices, the order is worth a total of about 7.5 billion US dollars and is in line with Group’s mid-term financial planning.
Carsten Spohr, Chief Executive Officer of Deutsche Lufthansa AG, says: “With our purchase of 22 further Airbus A350s and Boeing 787s, we have secured the delivery of more than 50 latest-generation long-haul aircraft for the member airlines of the Lufthansa Group since the pandemic began. These aircraft will be equipped with our new long-haul cabins, including the latest-generation seats in all classes of travel. And the combination of our superb employees on the ground and on board, these highly advanced aircraft and our latest seating product on board will position our airlines well to the fore again within the premium segment. These new aircraft will also play a decisive role in helping us achieve our carbon emission reduction goals by 2030 as fuel-efficient aircraft which incorporate the latest manufacturing technology are by far the greatest lever for providing more climate protection within the aviation sector.”
The Lufthansa Group will take delivery of 108 state-of-the-art long-haul aircraft such as the Airbus A350-1000, the Airbus A350-900, the Boeing 787-9 and the Boeing 777-9 over the next few years. In doing so, the Group will operate the quietest, most profitable and most economical long-haul aircraft that are currently in service. On average the new aircraft consume just 2.5 liters of fuel per passenger per 100 kilometers – some 30 percent less than their predecessor aircraft types.
On 21 April 2023, Lufthansa Group published its annual factsheet “Sustainability in 2022” together with the TCFD and SASB reports on its website.
The factsheet summarizes the most important topics and key figures on sustainability in the Lufthansa Group for the reporting year 2022. In addition to current key figures from the areas of environment, transport performance and personnel, further facts and figures are supplemented with selected highlights from the Lufthansa Group that go beyond the aviation sector.
In February 2023, the Lufthansa Group received in the global climate ranking 2022 of the non-profit organization CDP (formerly Carbon Disclosure Project) a top rating for its CO2 reduction strategy and its implementation, thus improving compared to the previous year.
On a scale from "A" (best result) to "D-," the company was placed in the highest ranking band with "A-" (previous year "B"). The Lufthansa Group is thus among the top 5 airlines worldwide with the best rating.
“The top rating in the CDP ranking confirms our pioneering role in the industry. I am proud that we were able to improve our ranking this year," says Christina Foerster, Member of the Lufthansa Group's Executive Board responsible for Brand and Sustainability.
The Lufthansa Group is further expanding its portfolio of sustainable travel offers and is the world's first airline group to offer a new product for more climate-friendly flying since February 15, 2023: The Green Fares.
The Green Fares make it possible to fly more sustainably in the future with just one click, as the new fares already include offsetting of flight-related CO2 emissions. This is achieved by using 20 percent Sustainable Aviation Fuels (SAF) and 80 percent by contributing to high-quality climate protection projects. The Green Fares also offer additional status miles and a free rebooking option.
The new Green Fares are offered by Lufthansa, Austrian Airlines, Brussels Airlines, SWISS, Edelweiss, Eurowings Discover and Air Dolomiti on more than 730,000 flights per year within Europe and to Morocco, Algeria and Tunisia. The fares can be booked via the airlines' websites as well as the NDC platform in Economy Class and Business Class. The new product for more sustainable flying now adds another pillar to the Lufthansa Group's fare structure, which has been in place since 2015.
The Lufthansa Group is leading the way in transforming the aviation industry with the goal of making flying more sustainable. End of March 2023, the Lufthansa Group became the first European airline group to join the First Movers Coalition (FMC). FMC is a global initiative led by the World Economic Forum and the U.S. Department of State. Since its launch at COP26 in 2021, it has been bringing together countries and companies worldwide to jointly promote the development and deployment of sustainable technologies of the future.
By joining the First Movers Coalition, the Lufthansa Group commits itself to the use of state-of-the-art and innovative aviation fuel and propulsion technologies. It affirms its ambition to further advance the future of flying together with partners worldwide through innovation and technical know-how. In this context, the Lufthansa Group is committed to covering at least five percent of its fuel requirements with Sustainable Aviation Fuel (SAF) by 2030.
help alliance, the aid organization of the Lufthansa Group, is further expanding its global commitment and is supporting a total of eight new aid projects this year. For the first time, projects in Namibia, Syria and the Dominican Republic will be supported. In total, help alliance is now active in 28 countries with 52 projects and is making an important contribution to the Sustainable Development Goals (SDG) of the United Nations.
Among the new projects are three initiatives that were developed in close cooperation with the Lufthansa Group airlines Eurowings Discover and Edelweiss Air.
In addition to its long-term projects, help alliance is also stepping up its emergency relief in crisis areas such as Ukraine or the earthquake-stricken regions of Turkey and Syria. With needs-oriented emergency aid and reconstruction measures, the organization supports the affected people quickly and effectively.
We are at your disposal to answer your questions.
Head of Investor Relations
Analyst and Investor Communication
Information published in this Shareholder Information with regard to the future development of the Lufthansa Group and its subsidiaries consists purely of forecasts and assessments and not of definitive historical facts. Its purpose is exclusively informational and is identified by the use of such terms as ‘believe’, ‘expect’, ‘forecast’, ‘intend’, ‘project’, ‘plan’, ‘estimate’, ‘assume’ and ‘endeavour’. These forward-looking statements are based on all discernible information, facts and expectations available at the time. They can, therefore, only claim validity up to the date of their publication.
Since forward-looking statements are by their nature subject to uncertainties and imponderable risk factors – such as changes in underlying economic conditions – and rest on assumptions that may not, or divergently occur, it is possible that the Group’s actual results and development may differ materially from those implied by the forecasts. The Lufthansa Group makes a point of checking and updating the information it publishes. It cannot, however, assume any obligation to adapt forward-looking statements to accommodate events or developments that may occur at some later date. Accordingly, it neither expressly nor conclusively accepts liability, nor gives any guarantee for the actuality, accuracy or completeness of this data and information.
The Lufthansa Group is a global aviation group with a total of more than 580 subsidiaries and equity investments.
Corporate responsibility, that is to say sustainable and responsible entrepreneurial practice, is an integral part of our corporate strategy. It means that we are committed to creating added value for our customers, employees and investors and to meeting our responsibilities toward the environment and society.
Current news from the Lufthansa Group
Detailed financial information
