To our shareholders
Letter from Marc-Dominic Nettesheim,
Head of Investor Relations
In aviation, we have always mastered ups and downs. Market changes, increased operational demands, political conditions and global uncertainties constantly require us to be flexible and decisive. This year is no exception. But it shows once again that we have set the right strategic course for further growth in the past.
The third quarter 2024 was again characterized by capacity growth, albeit at a lower level than in previous quarters. In total, we welcomed more than 40 million guests on board our aircraft. Lufthansa Group revenues amounted to EUR 10.7bn - an increase of 5% compared to the previous year. It was the strongest revenue quarter in the history of the Lufthansa Group. The Group achieved an Adjusted EBIT of EUR 1.3bn in the third quarter 2024.
Global demand remains intact and bookings for the fourth quarter are also at a high level compared to the previous year, particularly in the premium classes. Overall we confirm our Adjusted EBIT guidance range of EUR 1.4bn to EUR 1.8bn for the full year 2024. The result of the fourth quarter will depend to a large extent on how demand develops, in both the passenger and cargo business. The fourth quarter is the peak season for Lufthansa Cargo in particular.
All our passenger airlines achieved positive results in the third quarter 2024, with Austrian Airlines, Brussels Airlines and Eurowings even posting record results. Lufthansa Cargo and Lufthansa Technik also developed positively as expected. At the same time, delayed aircraft deliveries, punctuality issues at our hubs in Germany and regulatory disadvantages are impacting our core brand Lufthansa Airlines.
Lufthansa Airlines reported a negative Adjusted EBIT of EUR -20m for the last nine months. This shows the importance of the turnaround program that has now been launched. External factors such as delayed aircraft deliveries and operational challenges at our hubs Frankfurt and Munich are hitting Lufthansa Airlines and Lufthansa CityLine particularly hard. In addition to these external difficulties, there are also internal structural problems and efficiency challenges. Improving these is crucial, and this is also where the turnaround program comes in.
The turnaround program is a critical step towards ensuring Lufthansa Airlines remains competitive and well-positioned for future growth. The program aims to increase efficiency, reduce complexity and improve quality to make the airline fit for the future. Key elements of the plan include optimizing the network, shifting more short-haul traffic and growth to more cost-efficient AOCs, closing productivity gaps in operations versus 2019, and increasing flexibility through digitalization and automation. In addition, once our widebody fleet harmonization is concluded with a significant higher “New-Technology” share, many inefficiencies in the system will disappear.
Across the group, we are continuing to invest in the largest fleet modernization in our history, in premium offers for our guests and in an even more international positioning. These three central pillars of our strategy will enable us to further expand our role as the leading airline group in Europe.
Together, we will push ahead with the development of the Lufthansa Group and create added value for all – for our passengers, our employees and our shareholders.
Many thanks for accompanying us on this journey.
Head of Investor Relations
Deutsche Lufthansa AG
Revenue €m
Adjusted EBIT €m
Despite continued capacity expansion, the earnings position of the Lufthansa Group deteriorated significantly in the first nine months of 2024 compared with the previous year. Market-wide capacity growth intensified price pressure for the Passenger Airlines, especially in the second quarter of 2024, causing yields to fall, particularly at Lufthansa Airlines. In addition, a number of strikes by different employee groups of the Lufthansa Group and by employees at system partners in the first quarter of 2024, as well as high costs due to irregularities in flight operations, particularly in the third quarter of 2024, had a negative impact.
In the Lufthansa Group’s passenger business, capacity in the first nine months of the financial year 2024 was expanded by 10 % compared with the previous year. Relative to the pre-crisis level, i.e. the first nine months of 2019, capacity stood at 90 %. However, it failed to meet the original target due to strikes and delayed aircraft deliveries.
Revenue at the Lufthansa Group increased by 5 % year-on-year to EUR 28,137m (previous year: EUR 26,681m), primarily due to the further expansion of the flight programme and strong growth in the MRO business segment.
However, the Lufthansa Group’s results for the first nine months of 2024 fell year-on-year. Adjusted EBIT was down by 48 % to EUR 1,177m (previous year: EUR 2,280m). The Adjusted EBIT margin was 4.2 % (previous year: 8.5 %).
The decline in earnings was largely due to the effects of the strikes, which reduced results by around EUR 450m, operating difficulties and the decline in yields combined with rising costs, particularly as a result of inflation, higher fees and staff costs. The cancellation of flights due to the Middle East conflict depressed earnings at the Lufthansa Group by around EUR 60m to EUR 100m.
Performance in the Logistics segment in the reporting period was shaped by a challenging environment in the airfreight sector as well as the strikes in the first quarter of 2024. A positive result was nonetheless achieved, but this represented a decline relative to the high basis for comparison in the previous year.
The MRO business segment reported a record result in the reporting period due to continued strong demand for MRO services.
The Lufthansa Group generated positive Adjusted free cash flow in the reporting period. At EUR 1,006m, however, this figure was 40 % below the previous year’s level (previous year: EUR 1,663m), mainly because of lower earnings, partially offset by positive effects from the change in working capital.
The balance sheet was further strengthened in the first nine months of 2024. Due to the positive free cash flow, in particular the effects from the sale of AirPlus and sale-and-lease-back transactions for five Airbus A320/A321 aircraft, net indebtedness in the amount of EUR 5,104m was EUR 578m lower than at the end of 2023 (31 December 2023: EUR 5,682m). Net pension obligations fell by EUR 95m to EUR 2,581m (31 December 2023: EUR 2,676m) due to the positive market development of plan assets.
| Jan - Sep 2024 | Jan - Sep 2023 | Change in % | ||
|---|---|---|---|---|
| Total revenue | €m | 28,137 | 26,681 | 5 |
| of which traffic revenue | €m | 23,578 | 22,583 | 4 |
| Operating income | €m | 30,179 | 28,746 | 5 |
| Operating expenses | €m | 29,140 | 26,571 | 10 |
| Adjusted EBITDA | €m | 2,915 | 3,937 | -26 |
| Adjusted EBIT | €m | 1,177 | 2,280 | -48 |
| EBIT | €m | 1,249 | 2,218 | -44 |
| Net profit/loss | €m | 830 | 1,606 | -48 |
| Jan – Sep 2024 | Jan – Sep 2023 | Change in % | ||
|---|---|---|---|---|
| Total assets | €m | 46,439 | 46,591 | 0 |
| Equity | €m | 10,212 | 10,464 | -2 |
| Net indebtedness | €m | 5,104 | 5,357 | -5 |
| Net pension obligations | €m | 2,581 | 1,943 | 33 |
| Net debt+net pension obligations/equity | ratio | 43:57 | 41:59 |
|
| Cash flow from operating activities | €m | 3,423 | 4,320 | -21 |
| Gross capital expenditure | €m | 2,433 | 2,406 | 1 |
| Net capital expenditure | €m | 1,815 | 2,421 | -25 |
| Adjusted free cash flow | €m | 1,006 | 1,663 | -40 |
| Jan – Sep 2024 | Jan – Sep 2023 | Change in % | ||
|---|---|---|---|---|
| Adjusted EBITDA margin | % | 10.4 | 14.8 | -4.4 pts |
| Adjusted EBIT margin | % | 4.2 | 8.5 | -4.3 pts |
| EBIT margin | % | 4.4 | 8.3 | -3.9 pts |
| Jan – Sep 2024 | Jan – Sep 2023 | Change in % | ||
|---|---|---|---|---|
| Share price as of 30 September | € | 6.58 | 7.51 | -12 |
| Earnings per share | € | 0.69 | 1.34 | -49 |
| Jan – Sep 2024 | Jan – Sep 2023 | Change in % | ||
|---|---|---|---|---|
| Employees as of 30 September | number | 100,518 | 117,187 | -14 |
| Jan – Sep 2024 | Jan – Sep 2023 | Change in % | ||
|---|---|---|---|---|
| Flights | number | 755,310 | 716,767 | 5 |
| Passengers | thousands | 100,609 | 93,210 | 8 |
| Available seat-kilometres | millions | 247,152 | 225,648 | 10 |
| Revenue seat-kilometres | millions | 206,094 | 188,332 | 9 |
| Passenger load factor | % | 83.4 | 83.5 | -0.1 pts |
| Available cargo tonne-kilometres | millions | 12,701 | 11,425 | 11 |
| Revenue cargo tonne-kilometres | millions | 7,261 | 6,379 | 14 |
| Cargo load factor | % | 57.2 | 55.8 | 1.4 pts |
1) Previous year's figures have been adjusted
Date of publication: 29 October 2024.
Starting from a year-end 2023 closing price of EUR 8.05, the Lufthansa share price declined over the first three quarters of the year, reaching a low of EUR 5.53 in mid-August 2024. Since then, an upward trend has been apparent again, with the share closing at EUR 6.58 on 30 September.
The initially negative share price development reflected market concerns that demand could weaken over the course of the year. In addition, analysts saw the strong capacity growth, particularly on long-haul routes, as a risk for the development of average yields for European network airlines, which was confirmed above all in the Asian market. The decline in unit revenues meant that the Lufthansa Group had to issue its second profit warning of the year in July, together with a downward revision of its annual targets. A profit warning, including a reduction in annual targets, had already been issued in the first quarter due to a large number of strikes.
Since mid-August 2024, the price of Lufthansa shares has risen again. On the one hand, the market considered the reduced annual targets to be achievable and, as such, valued them more positively. Other reasons included, in particular, a favourable development in fuel prices and analysts' expectation that the downturn in demand has bottomed out.
On 30 September 2024, the Lufthansa share was trading at EUR 6.58. This means that the share price fell by 18 % over the reporting period. Over the same period, the shares of the European low-cost airlines Ryanair and easyJet performed better, as did the shares of the main competitor IAG. By contrast, the shares of WIZZair and AirFrance-KLM underperformed, with AirFrance-KLM's share price suffering in particular from concerns about persistently high cost inflation.
On 30 September 2024, the MDAX benchmark index was trading close to its 2023 year-end level.
In view of the short booking cycles in the passenger business, the fact that freight business is driven mainly by the spot market, and uncertainty in the macroeconomic and geopolitical environment, the financial outlook for the Lufthansa Group is subject to a high degree of forecasting uncertainty.
Among other things, operating and financial performance are also subject to the further developments in Russia’s war of aggression against Ukraine and the Middle East conflict, in particular their impact on fuel costs and the temporary cancellation of flights.
Notwithstanding the above-mentioned uncertainty, the Lufthansa Group assumes that demand will continue to be strong over the rest of the year for sales to continue to rise. The private travel segment in particular, where demand is forecast to exceed its pre-crisis level, will also contribute to this trend. For this reason, flight capacity is to be expanded further compared with the previous year.
Overall, the Lufthansa Group anticipates that available capacity for Passenger Airlines in 2024 will be at around 91 % of its pre-crisis level in 2019.
In the year to date, the airlines in the Lufthansa Group have taken delivery of 13 aircraft. The Group expects that the airlines of the Lufthansa Group will receive up to five additional aircraft by the end of 2024. However, due to production problems affecting aircraft manufacturers and their suppliers as well as delays in certification, there have been repeated postponements in planned aircraft deliveries throughout the industry.
The Lufthansa Group expects revenue to increase significantly in the 2024 financial year in comparison with the previous year. The main drivers are expected to be further capacity growth in the Passenger Airlines segment and anticipated growth in the Logistics and MRO segments.
However, due to market-wide capacity growth which is intensifying price pressure on Passenger Airlines, the Lufthansa Group expects yields to decline year-on-year.
The Lufthansa Group expects revenue growth to be more than offset by ongoing cost increases and the effects of the strikes in the first quarter and for earnings to therefore decline relative to the previous year. Overall, for the 2024 financial year the Lufthansa Group predicts Adjusted EBIT of between EUR 1.4bn and EUR 1.8bn. This outlook is largely dependent on the earnings trend for Lufthansa Airlines as well as the traditionally important fourth quarter at Lufthansa Cargo.
The Lufthansa Group stands by its goal of generating a sustainable Adjusted EBIT margin of at least 8 %. The Group is striving to achieve this target margin as soon as possible.
Net capital expenditure by the Lufthansa Group in 2024 is expected to be roughly the same as in the previous year. This will mainly be for capital expenditure in aircraft.
Including the forecast earnings development, Adjusted free cash flow for the Group is projected to be significantly below EUR 1.0bn in the 2024 financial year, depending largely on the earnings performance, advance ticket payments and aircraft deliveries and financing. Cash flow from advance ticket payments in 2024 depends above all on the future development of demand and ticket prices, which is subject to forecasting uncertainty at the time of reporting.
Since 15 September 2024, Till Streichert has been a new member of the Executive Board of Deutsche Lufthansa AG.
Till Streichert, previously Chief Financial Officer at the Madrid-based Amadeus IT Group, is responsible for the Finance division, which includes Controlling and Risk Management, Corporate Finance, Accounting, Investor Relations, Taxes, Financial Services as well as Mergers & Acquisitions.
On 31 July 2024, the Lufthansa Group completed the sale of AirPlus International GmbH (formerly Lufthansa AirPlus Servicekarten GmbH). With the completion of the transaction, AirPlus with all international subsidiaries and branches will be transferred from the Lufthansa Group to SEB Kort Bank AB, based in Stockholm, after the sale was contractually agreed in June 2023. The purchase price amounts to around EUR 450m.
The sale of the payment expert is part of the Lufthansa Group's strategy to focus even more strongly on its core business. "Following the sale of the catering business last year and the recently conditionally approved investment in ITA Airways, the closing of the sale of AirPlus is further proof that we are consistently implementing our strategy," says Michael Niggemann, member of the Executive Board of Deutsche Lufthansa AG.
AirPlus will remain a member of the global payment network Universal Air Travel Plan, Inc. (UATP) after the sale.
The Lufthansa Group is extending its collaboration within the framework of a wet lease partnership with its long-standing and proven partner airBaltic (BT) for a further three years beyond the summer of 2025.
This partnership enables to flexibly deploy up to 21 additional aircraft of the fuel-efficient Airbus A220-300 in summer and five aircraft of this type in winter at various hubs.
Due to changing customer needs, the Lufthansa Group airlines are aligning their route networks to seasonal peaks in demand, particularly in the summer timetable. With the additional capacities of airBaltic, destinations in high demand in the route networks can be served even more flexibly in future. At the same time, this will strengthen the quality of connections to Lufthansa Group Airlines' intercontinental services at the Group's hubs.
As is usual with a wet lease, the aircraft and crews will be provided by airBaltic.
airBaltic is Latvia’s national and largest airline with its headquarters and hub in Riga. The Lufthansa Group has been working with airBaltic since 2019, which has proven itself to be a reliable and valuable partner.
The Lufthansa Group has been awarded the prize for the world's best airline app 2024 at the World Aviation Festival (WAF).
The Lufthansa Group app was previously evaluated by customers and nominated for the final round. A jury of experts compared the four nominees in a competition, the “Battle of the Airline Apps”, and rated the Lufthansa Group app as the best among the biggest players in the industry. The Lufthansa product came out on top against the apps from Emirates, Qatar Airways and Air India.
Dieter Vranckx, Member of the Executive Board Lufthansa Group, Global Markets & Commercial Airlines Hubs, says: “The Lufthansa Group App puts our customers at the center and provides them with user-friendly services, transparent information and support throughout their journey. I am proud of the entire team for the great progress we have made in recent years. The award for the Lufthansa Group app encourages us to continue developing our digital services for Lufthansa, Austrian Airlines, SWISS and Brussels Airlines.”
Oliver Schmitt, Head of Digital Customer Solutions and Managing Director Digital Hangar GmbH, says: “The digital travel experience of our guests is increasingly determined by their mobile devices. The app is playing a growing role as a travel companion. In recent years, we have worked specifically on service offerings, especially in the event of irregularities, on simplifications and better information for our guests, and created numerous benefits for frequent flyers.”
The World Aviation Festival is a leading global conference for the international aviation industry, focusing on technology, passenger experience, digitalization and sustainability in aviation.
An innovative research location that connects industry and student engagement: the Lufthansa Group, the Technical University of Munich (TUM) and Munich Airport are planning a new center of cooperation and innovation with the ‘TUM Convergence Center’. The new building complex is to be built on around 20,400 square metres of the LabCampus, the innovation hub at Munich Airport.
The signing of a letter of intent (LoI) took place on 1 October 2024 in the presence of Bavaria's Minister of Science, Markus Blume, and Minister of Finance, Albert Füracker. In addition to the President of TUM, Prof. Thomas F. Hofmann, Joerg Eberhart signed the document for the Lufthansa Group and CEO Jost Lammers for Munich Airport.
Joerg Eberhart said: "In order to efficiently and sustainably shape the future of aviation as the Lufthansa Group, we want to create a unique platform for collaboration between Munich Airport and TUM with the support of the Bavarian State Ministry of Science and the Arts at the Munich location through the joint research institute."
The new TUM Convergence Center will create a unique environment in which students, scientific talent, start-up teams, business partners, and citizens can work together on groundbreaking projects in an integrative and innovative way. The research priorities include the key areas of aviation, mobility, robotics, and security. The TUM Sustainable and Future Aviation Center is being newly established together with the Lufthansa Group and Munich Airport to develop viable solutions for more sustainable and efficient aviation.
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, accura-cy 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.
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