Lufthansa Group Company Presentation dbAccess German, Swiss & Austrian Conference June 2014 Page 1
Disclaimer in respect of forward-looking statements Information published in this presentation concerning the future development of the Lufthansa Group and its subsidiaries consists purely of forecasts and assessments and not of definitive historical facts. 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 occur, or may occur differently, it is possible that the Group’s actual results and development may differ materially from the forecasts. Lufthansa makes a point of checking and updating the information it publishes. However, the Company is under no obligation to update forward-looking statements or adapt them to subsequent events or developments. Accordingly, it neither explicitly nor implicitly accepts liability, nor gives any guarantee for the actuality, accuracy or completeness of this data and information. Page 2
Executive Summary � In 2013 operating profit was above SCORE starting point Clear progress in passenger business led to Group operating result excl. one-offs of 1,042 m EUR � Lufthansa Group's financial profile remains strong Non-cyclical profit base; strong free cash flow; low net debt; investment grade rating; dividend payments � Profit expectation for 2014 adjusted; strong increase expected for 2015 to approx. 2 bn EUR Cost reductions on track but revenue environment weakened, in particular lower pricing in passenger business and cargo � Restructuring and SCORE concept are continued; additional measures to be announced in July Network and fleet rationalization as well as product upgrades continued Page 3
Profit improvements made in FY 2013 and continued in Q1 2014 Key figures for the Lufthansa Group FY 2013 FY 2012 vs. PY Q1 2014 Q1 2013 vs. PY Lufthansa Group (in m EUR) Total revenue 30,028 30,135 -0.4% 6,462 6,628 -2.5% of which traffic revenue 24,565 24,793 -0.9% 5,161 5,338 -3.3% Operating result 697 839 -16.9% -245 -359 +31.8% One-off items* 345 -196 -- 55 64 -14.1% Normalized operating result 1,042 643 +62.1% -190 -295 +35.6% Net income 313 1,228 -74,5% -252 -458 +45.0% FY 2013 FY 2012 vs. PY FY 2013 Q1 2014 Passenger Airline KPIs Operating cash flow 3,290 2,842 +15.8% No. of flights -3.7% -1.2% Net invest 1,982 1,445 +37.2% ASK (capacity) +1.0% +0.4% Free cash flow 1,308 1,397 -6.4% RPK (volume) +2.3% -0.3% SLF (load factor) +1.0pts. -0.5pts. FY 2013 FY 2012 vs. PY Yield ex. currency -0.1% -1.0% Equity ratio 21.0% 16.9% +4.1 P. RASK (unit revenue) -1.1% -3.9% Net debt (excl. pensions) 1,697 1,953 -13.1% CASK** (unit costs) -2.4% -6.1% * adjusted for one-off items: ** adjusted for one-off items (at passenger business) 2012: -356 m EUR bmi & Austrian Airlines; +160 m EUR SCORE restructuring costs 2013: +245 m EUR SCORE restructuring costs, +100 m EUR project costs Page 4
Profit improvement mainly driven by changes in passenger business Development 2013 vs. 2011 (initiation of SCORE) FY 2013 vs. FY 2011 Explanation Fleet Size fleet rollover, -2.6% phase-out of small, non-efficient aircraft (no. of aircraft) Capacity capacity growth realized through +1.7% larger aircraft with more seats per aircraft (ASK) Volume +4.6% (RPK) Load Factor +2.2% (SLF) Pricing +1.2% (Yield) Unit Revenue increase driven by +4.1% higher load factor and yield increases (RASK) Unit Costs SCORE cost reductions: transfer of non-hub traffic to -1.9% Germanwings, Austrian restructuring, etc. (CASK ex fuel) Reduction mainly due to terminated joint ventures and Cargo Capacity -8.5% decrease in belly capacity Page 5
� In 2013 operating profit was above SCORE starting point Clear progress in passenger business led to Group operating result excl. one-offs of 1,042 m EUR � Lufthansa Group's financial profile remains strong Non-cyclical profit base; strong free cash flow; low net debt; investment grade rating; dividend payments � Profit expectation for 2014 adjusted; strong increase expected for 2015 to approx. 2 bn EUR Cost reductions on track but revenue environment weakened, in particular lower pricing in passenger business and cargo � Restructuring and SCORE concept are continued; additional measures to be announced in July Network and fleet rationalization as well as product upgrades continued Page 6
Lufthansa operates a broad portfolio incl. non-cyclical businesses 300-550 m EUR non-cylical profit base Revenue Operating result Op. margin range Airlines 23.5 bn 495 m +4.8% Passenger Airline Group -0.1% 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 77 m 2.4 bn +11.4% Logistics (Cargo) 2009 2010 2011 2012 2013 -8.0% 2009 2010 2011 2012 2013 Service Companies 4.2 bn +10.9% 404 m MRO 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 +6.9% 2.5 bn +4.3% 105 m non-cyclical profit base Catering of ca. 300-550 m EUR 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 +3.1% 0.6 bn 36 m +6.2% IT Services 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 +1.8% -420 m Others incl. Group Functions (burdened by restructuring costs) 2009 2010 2011 2012 2013 Page 7
Lufthansa Technik and LSG produced best ever results in 2013 Service companies as competitive advantage for the Lufthansa Group No. 1 Independent MRO-provider No. 1 Airline caterer 105 101 404 85 316 318 76 72 � Operating result 2013: 268 � Operating result 2013: 257 404 m EUR 105 m EUR � Global market leader as � Global market leader in 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 independent MRO-provider airline-catering � Product innovations and � Growth in demand and strategic partnerships geographical expansion lead enable access to new to increasing revenues customers and markets � Continuously enhanced � World-wide capacities and product and service flexibility portfolio � Increasing revenue and � Successful transfer of know operating result despite how in food and logistics to challenging market new adjacent markets environment Page 8
Strong cash flow generation and conservative financial setup Strong balance sheet, fleet in ownership 1. Lufthansa Group is profitable and 2. Conservative fleet structure and 3. Solid financial profile provides produces strong cash flows ambitious balance sheet targets provide competitive edge in financing conditions security buffer and allows for constant capex in bn EUR S&P Investment Grade Rating (BBB-, stable) confirmed in April 2014 1.7 1.8 1.7 1.8 3.7 bn high 1.5 EUR liquidity 1.0 0.8 0.8 0.7 >70% of fleet ca. 90% of fleet 0.1 1.6 bn moderate is financially is owned vs. 10% leased EUR net debt 2009 2010 2011 2012 2013 unburdened (not used as security for financing deals) Depreciation Operating Profit pension provision 5.4 bn flexible funding model, Current EUR no "margin call" Target Status for additional fundings 3.3 3.0 Status: 31.03.2014 2.8 Equity 25% 21% 2.4 Ratio mid-term 2.6 2.5 2.0 2.4 2.4 2.3 2.0 1.5 1.4 1.3 1.7 Debt 1.6 1.5 1.4 45% 0.7 Repayment 37% (min. 35%) 0.3 Ratio Minimum 2.3 4.7 2009 2010 2011 2012 2013 Liquidity bn EUR bn EUR 2009 2010 2011 2012 2013 Operating CF Free Cash Flow Gross Capex Net Capex Status: 31.12.2013 Page 9
Dividend policy is being currently reviewed/adjusted Lufthansa Group historical dividend pay-outs Group dividend policy � 30-40% pay-out ratio of operating result � Net profit of Deutsche Lufthansa AG (German GAAP/HGB) must allow for dividend payment � Further payments possibly from extraordinary income, if capital structure targets are met Lufthansa results and dividends 1.25 0.70 0.70 0.60 0.50 0.45 0.25 0.00 0.00 2005 2006 2007 2008 2009 2010 2011 2012 2013 Operating result 577 845 1,378 1,280 130 876 820 839 697 m EUR Net profit/loss (Group) 453 803 1,655 542 -34 1,131 -13 990 313 m EUR Net profit/loss (HGB) 455 523 1,123 276 -148 483 -116 592 407 m EUR Dividend paid (p. share) 0.50 0.70 1.25 0.70 - 0.60 0.25 0.00 0.45 EUR Payout ratio (Op. result) 40% 38% 41% 25% - 31% 14% - 30% Dividend yield (gross) 4.0% 3.4% 6.9% 6.3% - 3.7% 2.7% - 2.9% Page 10
� In 2013 operating profit was above SCORE starting point Clear progress in passenger business led to Group operating result excl. one-offs of 1,042 m EUR � Lufthansa Group's financial profile remains strong Non-cyclical profit base; strong free cash flow; low net debt; investment grade rating; dividend payments � Profit expectation for 2014 adjusted; strong increase expected for 2015 to approx. 2 bn EUR Cost reductions on track but revenue environment weakened, in particular lower pricing in passenger business and cargo � Restructuring and SCORE concept are continued; additional measures to be announced in July Network and fleet rationalization as well as product upgrades continued Page 11
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