Shareholder Information 4/2019

Dear Shareholders,

Lufthansa Group achieved an Adjusted EBIT of EUR 1.7bn in the first nine months of financial year 2019. Earnings of EUR 1.3bn in the third quarter were only slightly down on last year, although we were still faced with a number of challenges. These included, in particular, the downturn in the global economy – also in our home markets – and the ongoing overcapacities in the European market. The resulting price pressure has made it impossible for us to compensate for rising fuel costs with higher ticket prices.

The better earnings performance compared with the first half-year was a result of uninterrupted growth in our North Atlantic business, initial success in implementing the turnaround plan for Eurowings, significant unit cost reductions at Network Airlines and, not least, improved reliability and punctuality. Against this backdrop, we are able to confirm our outlook for the full year 2019.

The economic environment will remain challenging. That is beyond our control. But it makes it all the more important that we do our own homework and keep improving our cost efficiency, improve performance in those business segments that are not currently earning their cost of capital, and exploit growth opportunities where we are still comparatively small, for example in tourist traffic.

We would be pleased if you would continue to accompany us on this journey.

Dennis Weber

Head of Investor Relations
Deutsche Lufthansa AG

Key figures Jan - Sep 2019

27,700 (+3%)

Revenue €m

1,715 (-30%)

Adjusted EBIT €m

Business Development

Difficult market environment and higher fuel costs burden earnings for the Lufthansa Group

European business in the first nine months of the financial year 2019 was marked by price erosion due to overcapacities throughout the market and the general economic downturn in the Group’s home markets. In contrast, Network Airlines’ long-haul business still performed well, particularly on connections to North America.

Traffic revenue was up 2% year on year. Positive volume and exchange rate effects thereby compensate for lower pricing. Total revenue increased by 3% compared to the previous year.

Adjusted EBIT decreased by 30% in the first nine months of the financial year, especially due to lower unit revenues and higher fuel costs. The reduction in unit costs was insufficient to compensate this in full. Measures to cut unit costs having an increasing impact. The earnings decline in the third quarter was therefore significantly smaller than in first half-year.

Cash flow from operating activities decreased by 9%, mainly because of lower earnings. Adjusted free cash flow was down by 42%. Adjusted net debt/Adjusted EBITDA increased by 1.2 points on year-end 2018 to 3.0 due to discount rate-related higher pension provisions and the first-time application of IFRS 16.

Key Figures Lufthansa Group

5 year development

Development Revenue, Adjusted EBIT €m (Jan – Sep)
Adjusted EBIT margin in % (Jan – Sep)

Revenue and result

Revenue and result
  Jan – Sep 2019Jan – Sep 2018Change in %
Total revenue€m27,70026,8973
of whichtraffic revenue€m21,58121,1452
Operating expenses€m27,88026,1707
Adjusted EBITDA€m3,7154,078-9
Adjusted EBIT€m1,7152,458-30
EBIT€m1,6372,457-33
Net profit/loss€m1,0381,820-43

Key balance sheet and cash flow statement figures

Key balance sheet and cash flow statement figures
  Jan – Sep 2019Jan – Sep 2018Change in %
Total assets€m44,18738,83814
Equity€m8,99111,037-19
Equity ratio%20.328.4- 8.1 pts
Net indebtedness€m6,0832,477146
Pension provisions€m7,9144,80165
Cash flow from operating activities€m3,7354,124-9
Capital expenditure (gross) 1)€m2,7852,849-2
Adjusted free cash flow€m6851,181-42

Key profitability figures

Key profitability figures
  Jan – Sep 2019Jan – Sep 2018Change in %
Adjusted EBITDA margin%13.415.2- 1.8 pts
Adjusted EBIT margin%6.29.1- 2.9 pts
EBIT margin%5.99.1- 3.2 pts

Lufthansa Share

Lufthansa Share
  Jan – Sep 2019Jan – Sep 2018Change in %
Share price as of 30 Sep€14.5821.16-31
Earnings per share€2.183.85-43

Employees

Employees
  Jan – Sep 2019Jan – Sep 2018Change in %
Employees as of 30 Sep 138,350135,0332

Traffic figures2)

Traffic figures2)
  Jan – Sep 2019Jan – Sep 2018Change in %
Flightsnumber897,921877,5132
Passengerstsd.111,633108,2503
Available seat-kilometresmillions274,189264,1674
Revenue seat-kilometresmillions226,978216,7535
Passenger load factor%82.882.10.7 pts
Available cargo tonne-kilometresmillions13,10912,1418
Revenue cargo tonne-kilometresmillions7,9358,090-2
Cargo load factor%60.566.6- 6.1 pts


1) Without acquisition of equity investments.
2) Previous year’s figures have been adjusted.

Date of publication: 07 November 2019.

Share Price Development

Share price burdened by market situation in Europe

The Lufthansa share stood at EUR 14.58 at the end of the third quarter of 2019. This represents a decrease in the share price of 26% since year-end 2018. The share price development primarily reflects the challenging situation of the airline industry in Europe, which is marked by overcapacities, discount price and customers’ growing price sensitivity, particularly in the Group’s home markets. The DAX Index rose by 18% over the same period.

As of 30 September 2019, 5 analysts recommended the Lufthansa share as a buy, 17 as a hold and 4 as a sell. The average target price was EUR 15.96. The free float for Lufthansa shares was unchanged at 100 % at the end of the third quarter of 2019. 69% of Lufthansa shares were held by German investors.

Performance of the Lufthansa Share

Outlook

Forecast for financial year 2019 remains unchanged

Outlook for revenue and Adjusted EBIT margin for the Lufthansa Group remains unchanged compared with the forecast published in the 2nd interim report 2019.

For financial year 2019, revenue is still expected to grow at a low single-digit percentage rate, with an expected Adjusted EBIT margin between 5.5% and 6.5%.

Compared with the outlook published in the 2nd interim report, several assumptions for the business segments have changed. Details on this can be found in the forecast report within the 3rd interim report 2019.

Topics

Route Network

Lufthansa Group expands tourist-oriented long-haul program

Lufthansa Group is consistently continuing the expansion of its tourist-oriented longhaul program from its hubs in Munich and Frankfurt. Beginning with the 2020 summer flight schedule, leisure travelers in particular will benefit from attractive new destinations.

The focus is on North American destinations – as of next summer, Lufthansa Group will be expanding its services to include Las Vegas, Phoenix, Anchorage, Seattle, Orlando and Detroit. In addition, Bangalore, a destination in Asia, is added to the timetable in Munich.

The majority of the flights will operate in cooperation with Eurowings, which will be using a fleet of Airbus A330 aircraft with up to 270 seats. Eurowings is already present at Germany's largest hub in Frankfurt since the beginning of the 2019/2020 winter flight schedule, offering flights to the popular holiday islands of Barbados and Mauritius as well as to Las Vegas and Windhoek. From Munich, Eurowings has been offering long-haul connections to selected tourist destinations since summer 2018.

Corporate Responsibility

Lufthansa with broad commitment to climate protection

On the occasion of Germany’s national aviation conference in Leipzig on 21 August 2019, Carsten Spohr, CEO of Deutsche Lufthansa AG, emphasizes the importance of air traffic:

“We make a significant contribution to Germany’s export strength. In terms of value, almost one third of international freight is transported by air. Development aid or supplying medication all around the world would be no more possible without aviation than tourism, which provides economic stability in many regions. This is also something to keep in mind as we do everything we can in order make flying as climate-friendly as possible in future.”

Sustainability has been a central guiding principle of Lufthansa for many years. This year, the company is once again significantly increasing its commitment to climate protection. The most important measure: fleet renewal. Because in the short term, the greatest leverage lies in economical aircraft that emit up to one quarter less CO2 than their predecessors.

The continuous modernization of the fleet is paying off: on average, the airlines of Lufthansa Group only needed 3.65 liters of kerosene to fly a passenger 100 kilometers in 2018 – compared to 1990, this is an improvement of around 41 percent. And the new aircraft will decrease CO2 emissions even more, by about 1.5 million metric tons per year.

In addition to many other initiatives, the company supports the research and development of alternative fuels through its involvement in specific projects in Brandenburg and Schleswig-Holstein. Synthetic kerosene is a realistic option for carbon-neutral flying in the future. A further lever for major CO2 reductions would be to modernize the nationally organized European air traffic control. Because passenger aircraft have to take detours in Europe, they use up to 10 percent more kerosene. “The implementation of a Single European Sky would be a real climate protection measure,” says Carsten Spohr.

Innovation

Lufthansa Innovation Hub launches the "Compensaid" sustainability platform

CO2 neutral, synthetic fuel is one of the most promising alternatives for making the future of aviation climate-neutral. Industry and nationwide deployment has failed so far due to limited quantity and high cost.

With the launch of “Compensaid”, the new sustainability platform, the Lufthansa Innovation Hub and the Lufthansa Group are now making it possible for travelers to offset their individual carbon footprint using so-called Sustainable Aviation Fuel (SAF). This represents passengers an entirely new approach to offsetting CO2 with SAF in a transparent way.

"Compensaid" combines an innovative tracking tool for flights of all airlines worldwide with a sustainability platform that makes it possible to directly offset one’s personal CO2 emissions. Travelers then receive a detailed evaluation of their entire travel history, which not only includes flight distance, time and destinations, but also shows the efficiency of the respective aircraft type, individual fuel consumption, and the associated CO2 emissions.

Travelers have two options for CO2 offsetting: For the first time, they can replace fossil aviation fuels one-to-one with SAF. The platform calculates the marketbased surcharge in comparison to fossil kerosene. Travelers willing to pay this surcharge can use it to cover their individual kerosene consumption with the climateneutral fuel. The Lufthansa Group will continue to pay the basic rate for the kerosene. The SAF purchased as part of the offsetting process will be deployed on Lufthansa flights within a period of six months. This is the first online platform of its kind to provide end customers with a transparent, quick, and effective way to offset their CO2 consumption when flying using CO2 neutral fuels. As an alternative, travelers can also use "Compensaid" to support a reforestation project in Nicaragua and thus reduce CO2 emissions over the long term.

Compensaid's first partner is the Swiss climate protection foundation myclimate, a long-standing partner of the Lufthansa Group in the field of voluntary CO2 offsetting. Travelers can use the first test version of “Compensaid,” which launched in the beginning of August at www.compensaid.de. In response to expected customer demand, plans in the works to expand the partner network for offsetting and to extend the service to all means of transport and their CO2 emissions.

Corporate Responsibility

help alliance, the aid organization of the Lufthansa Group, celebrates 20th birthday

The help alliance celebrates its 20th anniversary on 25 September 2019. The globally active aid organization was founded in September 1999 as an association of employees from various areas of the Lufthansa Group. In the meantime it forms the central pillar of the Group’s activities in the area of social responsibility and stands for professional, sustainable help for self-help for disadvantaged people, especially young people worldwide.

To date, the help alliance has collected 17 million euros in donations, which have been used for 50 projects in Africa, 55 in Asia, around 25 in South America and 20 in Europe. The special feature: even today, the projects are proposed for support by Lufthansa Group employees and are also supervised by them on an honorary basis. Since 1999, 80 Lufthansa Group employees have volunteered as project managers. They regularly check on site to make sure that 100 percent of the donations go to the projects. This is in line with the guiding principle of the help alliance, which focuses on employee commitment.

All initiatives focus on education, work and income and thus contribute to the United Nations' global sustainability goals of "Quality Education" and "Decent Work and Economic growth". In the future, the Lufthansa Group would also like to offer its employees corporate volunteering in help alliance projects. Here, employees should use their individual skills to work for the benefit of the project.

Contact

Your contacts at Investor Relations

We are at your disposal to answer your questions.

Disclaimer in respect of forward-looking statements

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.