Dear Shareholders,

Despite the challenging geopolitical and macroeconomic environment, we once again can report very good quarterly results. After the publication of our best second quarter in our history in August, today we can present the second-best quarter in our company's history overall. All our airlines consistently achieved double-digit profit margins in the third quarter – proof that our strategic direction as a leading airline group is successful.

The Lufthansa Group achieved an Adjusted EBIT of EUR 1.5bn for the third-quarter period. Group revenues totalled EUR 10.3bn – an 8% increase compared to the previous year. We welcomed 38 million guests on board – 14% more than in 2022. From an economic perspective, we can look back on an excellent summer. However, even in recent months we have not yet reached the level of quality and punctuality that we are striving for. Not everything is in our own hands. In many areas, we are dependent on airports, suppliers and service providers. Nevertheless, it is also up to us to continue to improve. We work tirelessly to achieve this.

In time for summer 2024, we expect our first long-haul aircraft with the new Allegris cabin on board. We will be launching the new Economy, Premium Economy, and the long-awaited new Business Class. Our guests on short and medium-haul flights will also benefit from a more comfortable cabin in the future. Larger luggage compartments, USB ports and holders for tablets and smartphones on every seat and more legroom: Starting in spring 2025, we will gradually equip 30 Airbus A320s that are already in use for our airlines with this new cabin.

At the same time, we take our responsibility for the environment seriously. Modern aircraft are currently the most effective lever for more climate-friendly aviation. Each new model uses up to 30% less kerosene and correspondingly saves CO2. By 2030, our airlines will take delivery of more than 200 new, fuel-efficient aircraft – the most extensive fleet modernization in our history. We also continue to optimize our existing fleets. 16 aircraft of our fleet are already equipped with AeroSHARK, developed by Lufthansa Technik and BASF – a bionic film that optimizes the airflow and enables significant fuel savings.

At an unprecedented speed, we are driving forward our transformation from an aviation to a global airline group. We completed the sale of the remaining part of the LSG Group at the end of October. We expect the sale of AirPlus, our payment specialist, to be completed in the second quarter of 2024. This allows us to concentrate even more on the core of our business: our airlines. With our newly founded City Airlines, we will increase profitability of our short-haul network and enable growth without any limitations in scope. By taking on feeding and de-feeding alongside Lufthansa CityLine, it will enable us to continue to grow profitably in long-haul traffic from Frankfurt and Munich.

Dear shareholders, once again, we can look back on a very good quarter. Our flights are well booked. We expect all our airlines to end the year profitably. Lufthansa Technik continues to benefit from the industry's high maintenance requirements. Lufthansa Cargo's market environment continues to normalize, but yields remain significantly above pre-crisis levels.  For the full year 2023, we confirm our earnings outlook despite the increase in fuel costs in recent months. We expect the Group's Adjusted EBIT to reach at least EUR 2.6bn in 2023.

We are pleased that you are accompanying us on our journey. And we look forward to welcoming you on board our aircraft again.

Dennis Weber

Head of Investor Relations
Deutsche Lufthansa AG

Key figures January - September 2023

26,681 (+18%)

Revenue €m

2,280 (+143%)

Adjusted EBIT €m

Financial Development January - September 2023

Course of Business

The course of business at the Lufthansa Group was shaped by strong demand for flights and strong growth in the MRO business segment

The Lufthansa Group developed positively in the first nine months of the 2023 financial year. The recovery in demand for air travel after the coronavirus pandemic continued, and so passenger airline capacity was further expanded. In the reporting period, it was 17% above the previous year’s level. Compared with the pre-crisis level in 2019, this corresponded to 82%.

Revenue at the Lufthansa Group rose by 18% year-on-year to EUR 26,681m (previous year: EUR 22,539m), primarily due to the further expansion of the flight programme, increasing unit revenues and strong growth in the MRO business segment.

The Lufthansa Group’s results improved significantly year-on-year in the reporting period. The Adjusted EBIT increased by 143% to EUR 2,280m (previous year: EUR 939m). The Adjusted EBIT margin was 8.5% in the reporting period (previous year: 4.2%).

All passenger airlines and the MRO business segment achieved an increase in Adjusted EBIT in the reporting period. Only the Logistics business segment saw a decline in its results due to a normalisation across the industry.

Adjusted free cash flow fell by 50% to EUR 1,663m in the first nine months of the 2023 financial year (previous year: EUR 3,312m) due to the decline in operating cash flow and increased net capital expenditure. In the previous year, Adjusted free cash flow received significant support from the strong recovery in demand.

The balance sheet was further strengthened in the reporting period. Net indebtedness, at EUR 5,357m, was EUR 1,514m lower than the level at year-end 2022 (31 December 2022: EUR 6,871m) due to the positive free cash flow. Net pension obligations decreased by EUR 50m to EUR 1,943m compared to the level at year-end 2022 (31 December 2022: EUR 1,993m).
 

Key Figures Lufthansa Group

1) Previous year's figures have been adjusted due to the agreed sale of the LSG Group.

Date of publication: 02 November 2023.

Share Price Development

Lufthansa Share

Lufthansa share shows volatility over the course of the year

Starting from a year-end price of EUR 7.77 in 2022, the Lufthansa share was very volatile in the course of the first nine months of the financial year 2023. At the beginning of the year the price rose to EUR 10.95 at the beginning of March. The Lufthansa share benefited from the fact that financial analysts and investors expected strong demand during the summer season. As the year progressed, however, the share price declined. This reflects the fears of the financial market that the challenging macroeconomic environment and the current geopolitical situation could have a negative impact on the development of the airline industry in the medium term. Closely related to this, the uncertainties regarding the development of the paraffin price increased, especially due to the conflict in the Middle East.

On 30 September 2023, the Lufthansa share was quoted at EUR 7.51. The share price thus recorded a decline of 3 % in the period under review. The benchmark index MDAX rose by 4 % in the same period.

Performance of the Lufthansa Share

Financial year 2023

Outlook

Lufthansa Group expects significant increases in revenue and Adjusted EBIT

Outlook subject to material uncertainties

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 and the volatility of fuel costs, the Lufthansa Group’s financial outlook is subject to a high level of forecast uncertainty. Its operational and financial performance depends on factors including the further course of the Russian war of aggression against Ukraine and the Middle East conflict and their effects especially on fuel costs. Uncertainty in relation to the macroeconomic outlook may potentially have a significant effect on customer demand and lead to higher than expected cost increases.

Lufthansa Group expects to see continued recovery in demand and further expansion of capacity

The Lufthansa Group assumes that the positive course of business in the first nine months of the 2023 financial year will continue through the rest of the year. This expectation is based in particular on the ongoing strong demand, which in the reporting period continued to be reflected in the form of continued positive developments in new bookings in the passenger business.

In this respect, the Lufthansa Group assumes that demand will remain above previous year’s level for the rest of the year.

For this reason, flight capacity will continue to be expanded. On long-haul routes, the capacity increase will primarily be driven by expanding connections to Asia, particularly due to the re-opening of large markets like China and Japan.

Overall, the Lufthansa Group anticipates that available capacity for the Passenger Airlines segment in the 2023 financial year to be around 85% of its pre-crisis level in 2019.

Lufthansa Group expects significant increases in revenue and Adjusted EBIT

A significant year-on-year increase in revenue is forecasted for the Lufthansa Group in 2023. This will be driven above all by a recovery at the Passenger Airlines.

In the 2023 financial year, the Lufthansa Group expects Adjusted EBIT to amount to at least EUR 2.6bn, primarily due to the expected positive development of the Passenger Airlines and a further positive performance in the MRO business segment.

Adjusted free cash flow expected to be significantly positive

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.

Topics

Strategic alignment

Lufthansa Group concludes sale of the LSG Group

Deutsche Lufthansa AG concluded the sale of the remaining part of the LSG Group on 31 October 2023. With the sale transaction now completed, ownership of the LSG Group has passed from the Lufthansa Group to the Aurelius Group private equity company, as contractually agreed in early April of this year. The LSG Group’s European business activities were previously sold to gategroup in 2019.

“I would like to offer my thanks, on behalf of the entire Lufthansa Group, to everyone at the LSG Group,” says Remco Steenbergen, Chief Financial Officer of Deutsche Lufthansa AG. “They have been a vital element in our Group’s success story over the past few decades. That the Lufthansa Group is now number one in Europe is thanks in no small part to our LSG Group colleagues, their passion and their always outstanding work. In the Aurelius Group they now have a new owner who can provide new input and ideas, and who will continue to invest in the catering business segment. And I am particularly delighted that, as our partner for our on-board product and our service concepts, the LSG Group will continue to play a vital role for the guests of our Group’s member airlines.”

The sale of its catering arm is part of the Lufthansa Group’s broader strategy to focus even more firmly on its core air transport business and thereby further enhance the profitability of its member airlines. “Following the agreements earlier this year on the sale of AirPlus and on our acquisition of an equity holding in ITA, this closing on the sale of the LSG Group is further confirmation that we are consistently pursuing our strategy and, in doing so, are driving our Group’s transformation,” Steenbergen concludes.

The sale of the LSG Group comprises all the group’s classic catering activities along with its on-board retail and food commerce businesses. The sale further extends to all the brands of the LSG Group including the 131 LSG Sky Chefs catering operations in the Americas (the USA and Latin America), Asia-Pacific and Emerging Markets regions. Dublin-based on-board retail specialist Retail InMotion (RiM) and SCIS Air Security Services in the USA are also included. The LSG Group has a total workforce of some 20,000 personnel, and operates 36 joint ventures worldwide.

HR policy

Lufthansa Group and Vereinigung Cockpit conclude long-term collective agreement

The Lufthansa Group and the pilots’ union Vereinigung Cockpit have agreed to a long-term wage agreement for the pilots of Lufthansa German Airlines and Lufthansa Cargo. On 10 August 2023, the members of the union voted in favour of the negotiated outcome, which had been reached shortly beforehand.

The new wage agreement can be terminated at the earliest on 31 December 2026 and includes a basic salary in-crease of at least 18% over the term of the agreement. The framework agreement, which includes improved working conditions for pilots, can be terminated at the earliest on 31 December 2027.

The agreements still require completion of the legal drafting process and the approval of the responsible committees.

“This collective agreement with Vereinigung Cockpit will provide additional stability in our operations and thus also more reliability for our customers,” says Lufthansa Group Executive Board Member and Labor Director Michael Niggemann. “With it we are improving not only our pilots’ remuneration, but also their ability to maintain an effective balance between their profession and their private lives. This new agreement is not easy for us to conclude from an economic perspective,” Niggemann continues. “But its long-term nature provides Lufthansa German Airlines with a sound planning foundation for the years ahead, particularly for its intended long-haul growth. The fact that the new agreement was found amicably around the negotiating table strengthens our social partnership, too.”

Product & Services

City Airlines to start flight operations in Summer 2024

Lufthansa Group's newly established City Airlines will start flight operations in the summer of 2024. The airline was founded last year and received its Air Operator Certificate (AOC) from the German Federal Aviation Authority back in June. It will operate its flights from the Munich and Frankfurt hubs and thus also offer feeder flights for Lufthansa German Airlines. City Airlines will operate alongside Lufthansa CityLine. Recruitment of operational staff will begin in November 2023, with pilots and cabin crew members needed for the launch.

The competitive strengthening of the short-haul network is essential for the market position of Lufthansa Group and for the planned growth of the long-haul segment in the German market.

Lufthansa customers and passengers can look forward to a Lufthansa customer experience on board City Airlines aircraft. While City Airlines will start operations with Airbus A319 aircraft, Lufthansa Group is currently also evaluating the possibility of using Airbus A220 or Embraer aircraft.

Product & Services

Lufthansa equips short- and medium-haul aircraft with new cabins

Lufthansa German Airlines guests will experience a new cabin interior on short- and medium-haul routes starting in spring 2025. The company will successively equip 38 Airbus A320s already flying for Lufthansa German Airlines with the new innovative cabin.

The new cabin offers significantly more comfort and premium:

  • More space for carry-on luggage: Large overhead bins can hold up to twice as many carry-on suitcases or bags as the items of luggage can now be stowed vertically in the 40% larger compartments.
  • USB port: Lufthansa German Airlines installs a dedicated USB port in each seat, which can be used to charge mobile devices.
  • Tablet/smartphone holder: For the first time, Lufthansa German Airlines is equipping all seats with a special holder for tablets and smartphones. Guests can thus watch movies and series much more comfortably on their own devices without having to hold the devices in their hands or put them down on the folding table.
  • More legroom: The new seats also offer more legroom with the same seat spacing thanks to the ergonomic shaping of the backrests.

Corporate Responsibility

Technology cooperation for aviation fuels of the future

Representatives of Lufthansa German Airlines, the German Aerospace Center (Deutsches Zentrum für Luft- und Raumfahrt; DLR), Airbus, Flughafen München GmbH and MTU Aero Engines signed a Letter of Intent  in Berlin for a broad-based research collaboration on Power-to-Liquid (PtL) aviation fuels. PtL is considered the next generation of Sustainable Aviation Fuels (SAF). SAF are a crucial technological key for more sustainable flying and essential for the energy transition in aviation. The planned cooperation will combine the forces of leading aviation companies and academia to accelerate the technology selection, market introduction and industrial scaling of PtL aviation fuels in Germany.

Questions along the entire value chain, such as maintenance requirements or the benefits for local air quality, could also be addressed in the technology cooperation. Furthermore, the use of pure PtL, which means without the addition of fossil kerosene, could be tested in order to gain knowledge for the approval process.

In addition, the cooperation partners intend to examine the extent to which PtL fuels have the potential not only to save large quantities of CO2, but also to positively influence the so-called non-CO2 emissions.

"Research collaborations like this are essential for developing pioneering solutions for the climate-friendly transformation of air traffic. As Germany's largest airline, we are firmly committed to step by step making flying more sustainable. I am convinced that we will succeed with the combined know-how from aviation and science and that we will also strengthen Germany as a business location," says Jens Ritter, CEO of Lufthansa Airlines.

SAF are produced without the use of fossil feedstocks such as crude oil and also meet other sustainability criteria. The range of possible raw materials and technologies for the production of SAF is wide. In addition to SAF from biogenic residues, which are currently available in small quantities, the PtL-process appears particularly promising from an environmental and scaling perspective. In this next generation of SAF, regeneratively generated electricity, water and CO2 from the atmosphere are used to create a syngas from which sustainable aviation fuel can be produced.

Contact

Your contacts at Investor Relations

We are at your disposal to answer your questions.

Dennis Weber

Head of Investor Relations

Tel.: +49 69 696 - 28008
investor.relations(at)dlh.de

Cornelia Beier

Analyst and Investor Communication

Tel.: +49 69 696 - 28001
investor.relations(at)dlh.de

Erika Müller

Private shareholders

Tel.: +49 69 696 - 33589
investor.relations(at)dlh.de

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.