An American Depositary Receipt (ADR) is a deposit certificate, which is traded instead of foreign shares on US stock exchanges. Share price and dividend are noted in US dollars. ADRs facilitate trading in Lufthansa stock in the USA, since they allow investors, who may only buy shares in foreign companies listed on a US exchange, to acquire Lufthansa shares. Investors have the same rights and obligations as ordinary shareholders: They receive a dividend, have the right to be informed and can exercise voting rights at the Annual General Meeting. One ADR has the same value as a Lufthansa share.
The annual get-together of shareholders in a joint stock company. It is also attended by the company's executive and supervisory boards. The AGM gives the shareholders an opportunity to exercise their rights: They select members for the supervisory board, vote on the distribution of profits, on the stewardship of the executive and supervisory boards, and amendments to the company statutes (capital increases, the issue of convertible bonds etc.) At companies with bearer shares, shareholders are notified and invited to the AGM by their depositary bank. Companies with registered shares have to invite their shareholders themselves, provided they are entered in the share register at a deadline of about six weeks prior to the AGM.
A method of collating all incoming applications to buy shares to reduce the risk of issuing shares on the stock exchange at a price that does not conform with market developments. The actual issue price is decided during a bookbuilding phase on the basis of a price margin, which is calculated after talks with major investors.
The right to purchase a specified amount of the underlying security within a specified period of time at an agreed price.
A measure of a company's financial and earnings potential. It is calculated as the difference between the inflow and outflow of cash and cash equivalents during the financial year.
A measure of asset creation. It is derived from cash flow and determines the shareholder value of a business unit - or net earnings after deduction of capital costs.
Institutionalised arrangements for ensuring that a company's management and staff duly comply with all statutory provisions and prohibitions. Lufthansa has established a Compliance Office for this purpose. It maintains an insider directory which comprises all persons with access to insider information. An ad hoc clearing team assembled from various departments monitors issues for their ad hoc relevance.
The term "corporate governance" denotes the responsible management and supervision of a company. Corporate governance standards were established to make the management structures of internationally active companies more transparent for investors. All listed German companies which submit to the recommendations of the German Corporate Governance Code are legally obliged to issue a compliance statement each year.
Abbreviation for a German share index traded at the Frankfurt Stock Exchange. The Dax® acts as a guide to overall market fluctuations It is based on the prices of 30 blue chip shares of leading German companies from diverse industries. Lufthansa is among them. > Share index
The D-Check is the most comprehensive overhaul in an aircraft's lifetime. The aircraft is taken apart and every individual component inspected in minute detail and, where necessary, renewed. By analogy with the technical name given to the general overhaul of an aircraft, the "D-Check" project launched in June 2001 subjected all the Lufthansa Group's operations to critical scrutiny. The project was concluded on 15 February 2004. Instead of the envisaged cash flow improvement of EUR 1.1bn, it actually generated a total of EUR 1.6bn.
Tax charges and accruals allocated for payment in a later financial year. Deferred taxes reflect the temporary differences between assets and liabilities recognised for financial reporting purposes and such amounts recognised for income tax purposes.
Transactions by members of a company's executive or supervisory board or their family members involving "their" company's securities. Under German law, any such dealings must be disclosed if they exceed EUR 25,000 within a period of 30 days.
The share of a company's profit paid to a shareholder. Dividends are usually expressed as a percentage of the nominal value of the shares. The amount is decided by the Annual General Meeting on the basis of proposals put forward by the company's executive and supervisory boards. Dividends are paid - normally through a depositary bank - on the day after the AGM on shares a shareholder possesses on the day of the AGM.
Indicator for assessing the profitability of an investment in equities. It is determined by dividing the dividend by the share price at the close of the reporting year and then multiplying it by 100.
A financial indicator denoting earnings before interest and taxes.
A financial indicator denoting earnings before interest, tax, depreciation and amortisation on tangible and financial assets and on securities held as current assets as well as amortisation on goodwill from equity method investments.
An accounting method to determine income derived from a company's investment in associated companies or joint ventures. Under the equity method, investment income equals a share of net income proportional to the size of the equity investment.
A financial measure showing the share of equity or own capital and reserves as a proportion of total assets.
Financial indicator expressing the cash flow remaining in the reporting period after deducting the net cash funds used for investing activities.
A financial indicator expressing the ratio of net debt to shareholders' equity.
A method of depreciating the amount paid for goodwill on the acquisition of a new business. Goodwill is an intangible asset reflecting a company's market position, brand, know-how and image. It is assessed by determining the difference between the present value of the company's assets/ debts and the price paid to acquire the company. It is amortised using the straight-line method over its estimated useful life.
Those subsidiaries in the Group which are included in the Group's consolidated financial statements. Usually the consolidating entity owns the majority of the subsidiary's equity.
While depreciation (amortisation) is the systematic allocation of the depreciable amount of an asset over its useful life, an impairment loss occurs when the recoverable amount of an asset declines below its carrying amount. The recoverable amount is the higher of an asset's net selling price and its value in use.
A financial indicator showing the ratio of investments financed from cash flow.
International Financial Reporting Standards / International Accounting Standards. They facilitate comparability of the financial statements of companies operating in different European countries. They are also designed to provide more comprehensive information for investors as anonymous participants in the organised capital markets. The IFRS standards were developed by the International Accounting Standards Committee (IASC) in London, which in 2001 was renamed IASB (International Accounting Standards Board) following a restructuring. The standards that had been adopted until then were gradually modified or replaced by new standards by the IASB. The new standards are called IFRS, while the earlier standards that continue to apply keep the name IAS. As of 2005 capital market-oriented companies must prepare their consolidated financial statements in accordance with IFRS. Lufthansa's consolidated financial statements have been prepared according to IFRS ever since 1998, and the new standards applicable as of 1 January 2005 have been applied since the beginning of 2005. Company-level financial statements must still be prepared according to HGB (German Commercial Code), however, for the purpose of calculating the dividend payment and taxation. (For more information on IFRS/ IAS see www.ifrs-portal.com.)
Company pension commitments exist for employees in Germany and staff seconded to other countries which are financed largely via provisions for retirement benefit obligations. In 2004 Lufthansa set up a dedicated fund of plan assets with a view to financing future pension payments. EUr 565m was transferred to the Pension Trust in 2004 and EUR 465m in 2005. The goal is to fully counterfinance the retirement pension obligations within 10 to 15 years. The pension provisions previously reported in the balance sheet were reduced by the value of the Trust’s assets as of the cut-off date. Lufthansa intends to transfer an average of €565 million each year to the Trust.
A financial indicator showing long-term financial debt less liquid funds and current asset securities.
A profit term denoting the profit from operating activities less book profits (and losses), write-back (or allocation of provisions), currency losses on valuation at the balance sheet date of long-term financial liabilities, and other periodic expenses and income.
Indicates the ratio of gross profit from ordinary activities to revenues.
Holders of registered shares have their name, address, profession and number of shares entered in the share register kept by the company: The details are transferred to the register by the depositary bank. Unlike holders of bearer shares, it is not the depositary bank but the company that invites registered shareholders to the annual general meeting and mails them admission cards. General proxy voting rights are not applicable with registered shares: That means - the shareholder must appoint a bank or representative to act as proxy and vote in his stead in accordance with the shareholder's instructions.
Allocation of retained profits to shareholders' equity for the purpose of strengthening a company's financial base.
A financial term indicating the ratio of net profit to shareholders' equity.
Identification number for securities (shares, investment funds etc). The six-digit number is intended to facilitate share trading.
An index number based on the prices of a parcel of representative shares. Among the better known share indices are the German DAX® , the FAZ Index (index of the Frankfurter Allgemeine Zeitung), the MSCI, the Dow Jones (USA), the Nikkei Index (Japan) and the Financial Times Ordinary Share Index (FTSE).
Electronic record listing the names of holders of registered shares. The depositary banks communicate any transfers electronically, and are solely responsible for ensuring the entries in the register are correct. Only shareholders, whose shares are listed in the share register on a specific date, are entitled to exercise voting rights at the Annual General Meeting (AGM). That deadline is usually about six weeks prior to the date of the AGM.
Earnings from flight operations. They include revenues from transporting passengers and cargo as well as related ancillary services.
This applies to registered shares and means they are only transferable with the issuer's (the company's) consent.
Financial indicator expressing the overall return that the investor earns from the increase in stock market value or share price plus the dividend payment. The total shareholder return is calculated from the share price at the close of the reporting year plus the dividend paid in respect of the previous year, multiplied by 100 and divided by the share price at the close of the previous year.
(Abbreviation for Versorgungsanstalt des Bundes und der Länder). State insurance fund which entitles public service employees to receive a supplementary retirement pension. All employees who joined the group before 1995 were also entitled to benefits under the VBL scheme because Lufthansa was majority-owned by the German government. After privatisation Lufthansa withdrew from the VBL scheme and committed itself in a collective bargaining agreement to providing staff with pension benefits equivalent to those provided by the VBL fund. For new staff recruited from 1995 onwards a contribution-based company pension scheme was set up. In summer 2003 Lufthansa replaced the existing non-contributory supplementary pension arrangements modelled on the VBL scheme by the company pension scheme with effect from 1 January 2002. Lufthansa now has a uniform Group-wide contribution-defined corporate pension scheme.
A financial calculation that is equal to a company's current assets minus its current liabilities.
Terms from air traffic
The time from the moment an aircraft leaves its parking position ("off-blocks time") to taxi to the runway for take-off until it comes to a complete standstill at its final parking position at the destination airport ("on blocks").
EU Eco-Management and Audit Scheme. The standard to which companies are certificated by an independent body in recognition of their adherence to specified environmental goals.
An airline's central airport to which passengers and goods from surrounding airports (spokes) are transferred via "feeder flights" before continuing their journey to their joint final destination
Aircraft leasing that bridges the interim period up to the delivery of newly ordered proprietary aircraft. Until receipt of its A330-300 fleet in the course of 2004/5 Lufthansa is deploying seven leased A330 and A340 aircraft.
The percentage of available capacity utilised. The overall load factor denotes how much of its total capacities (both seating and cargo) an airline has sold. The passenger load factor indicates the percentage of seats sold in proportion to those available.
The Passenger Transportation segment comprises the passenger airlines consolidated in the annual financial statements / interim financial statements: Lufthansa, Lufthansa CityLine, Air Dolomiti and, as of 31 December 2005, the Eurowings Group (incl. Germanwings). SWISS is currently included at equity in the segment result via AirTrust. The published traffic figures comprise the performance data of Lufthansa German Airlines – that is, Lufthansa plus its regional partner airlines Air Dolomiti, Augsburg Airways, CityLine, Contact Air and Eurowings.
Standard units of demand for air transport. A revenue seat/passenger-kilometre denotes one fare-paying passenger transported one kilometre. A revenue tonne-kilometre denotes one tonne of revenue passenger and/or cargo traffic transported one kilometre.
The leasing of aircraft inclusive of cockpit and cabin crews.
Return per unit of output. The yield shows the average revenue per revenue passenger/seat-kilometre or revenue tonne-kilometre. It can also show average revenue for traffic volumes - for example per passenger carried or per kilometre flown.