Lufthansa Group Conference & Roadshow Presentation 2.5% margin improvement in Q3 Adjusted EBIT margin improves to 15.5% Free cash flow doubles, net financial debt down 80% Good strategic progress: e.g., pilot deal and Air Berlin Strong trading continues Normalization of trading after last year’s burdens Constant currency RASK +4.5% in Q3 Unit cost stable (+0.2%), would be negative ex one-offs Aim to further increase financial strength At least 1% unit cost reduction every year Keep margins on higher level through the cycle Stabilize balance sheet further, create room to maneuver November 2017
Disclaimer The information herein is based on publicly available information. It has been prepared by the Company solely for use in this presentation and has not been verified by independent third parties. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. The information contained in this presentation should be considered in the context of the circumstances prevailing at that time and will not be updated to reflect material developments which may occur after the date of the presentation. The information does not constitute any offer or invitation to sell, purchase or subscribe any securities of the Company. Without the Company’s consent the information may not be copied, distributed, passed on or disclosed. This presentation contains statements that express the Company‘s opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results, in contrast with statements that reflect historical facts. While the Company always intends to express its best knowledge when it makes statements about what it believes will occur in the future, and although it bases these statements on assumptions that it believes to be reasonable when made, these forward- looking statements are not a guarantee of performance, and no undue reliance should be placed on such statements. Forward-looking statements are subject to many risks, uncertainties and other variable circumstances that may cause the statements to be inaccurate. Many of these risks are outside of the Company‘s control and could cause its actual results (positively or negatively) to differ materially from those it thought would occur. The forward-looking statements included in this presentation are made only as of the date hereof. The Company does not undertake, and specifically declines, any obligation to update any such statements or to publicly announce the results of any revisions to any of such statements to reflect future events or developments. 2
Lufthansa Group is the world’s largest aviation group based on three strong pillars - Portfolio of premium network airlines, profitably growing P2P airlines and world leading aviation services - Consistent modernization of all parts of the Group shows positive economic impact Constant profit improvement, Q3 and 9M 2017 pave the way for delivering further margin growth - Adjusted EBIT up by 370m EUR to 1,518m EUR; most profitable Q3 in Group’s history - Free cash flow almost doubled; net financial debt decreased; investment grade rated by Moody’s again Very strong 2017: Adjusted EBIT 2017 expected “above previous year” - Passenger Airlines drive strong result development; Aviation Services on par with previous year in Q4 - KPIs in Q4: CASK slightly negative; RASK slightly positive; 50m EUR headwind from fuel; no strikes Page 3
Modernization of the Lufthansa Group has made strong progress Highlights of first nine months Strong share price performance, leading in the German DAX 2017 Best nine-month result of all times – third consecutive year with record result expected Competitiveness strengthened through Premium positioning agreements with Vereinigung strengthened: Cockpit 1 and UFO LH: “Best Airline in Europe” Actively shaping and Strong growth of consolidating the industry: Eurowings to 210 aircrafts Acquiring parts of the Air Berlin Group 1 Union ballot still pending Page 4
Our objective remains: #1 for customers, shareholders, employees Set-up of Lufthansa Group Goal: #1 for customers, shareholders, employees Customer #1 Employee Shareholder #1 Network #1 Point-to-Point #1 Aviation Airlines Airline in home Services in Europe markets world-wide Aspirations Strategic focus topics Shape the industry Consolidation Grow the business Flexibilization Invest steadily …and others Digitalization Stay competitive Cost Optimization Page 5
Network Airlines Network Airlines: Customer centricity and cost reduction Current measures Commercial integration Network Airlines Customer centricity and Cost reduction and strengthening of premium positioning flexibilization Skytrax: Lufthansa = Focus on reducing unit costs of all „Best Airline in Europe“ airlines Agreement with Vereinigung Cockpit – Enhancing product and service offers (e.g. Introducing Premium Economy structural reduction of staff costs by 15%, 150 m EUR p.a. as of 2018 at Austrian Airlines) Short-term cost reduction in Improving digital services FRA and new cooperation (e.g. shopping en route) model in preparation Page 6
Network Airlines Comprehensive agreement on a long-term deal with pilots achieved Overview terms “New Deal” with pilots Comprehensive deal achieved after 5 year conflict Salaries Long-term Productivity One-off payment of 1.8 monthly Agreement lasts at least until 2022 Increased productivity and lower salaries supplementary pay for extra Stable fleet work 325 aircraft (LH, Cargo, 11.4% increase for 10 year Transitional pay Germanwings) crewed exclusively period (average yearly by pilots under this agreement Reduction of payment period increases of 1.1%) from 5 to 3 years on average New career perspectives New structure: Base pay Pensions At least 700 new pilot hires to (seniority based) + supplements compensate for attrition but no Full move from Defined Benefit per a/c type guaranteed growth to Defined Contribution scheme New and more competitive cockpit costs contribute to improving overall cost structure Page 7
Point-to-Point Airlines Eurowings: Europe’s third largest Point -to-Point Airline Key figures Eurowings Group ~40 80,000 additional flights and 50 new ~32 Passengers ~17 ~18 connections in the network as of 2018 (in m) 2015 2016 2017 2018 Eurowings has become third largest Point-to-Point-Airline in Europe with Aircraft 2018 2017 2016 2015 the highest concentration of aircraft (# in operation) ~210 ~80 ~90 ~160 per base 38 positive Eurowings expected to be Adj. EBIT profitable in 2017 (in m EUR) -91 2015 2016 2017 -10% in 2016 -20% Constantly reducing costs: ~10% CASK by 2020 1 CASK reduction achieved in 2016; (excl. Fuel, ETS, FX another 10% already in 9M 2017 and project costs) 2015 2016 2020 1 Incl. Brussels Airlines and wet leases of 33 a/c from Air Berlin Page 8
Point-to-Point Airlines Eurowings: Acquisition of parts of Air Berlin Group Key facts of the transaction Overview Timeline Taking over two AOCs of Air Berlin Group Signing Eurowings grows by 81 aircraft 1 13 October 2017 Eurowings grows by 3,000 employees (1,700 from LGW & Niki, 1,300 job postings at Eurowings) Anti-trust approval 17 x DH-8 Q400-aircraft Review by EU Commission 13 x A320-aircraft ~870 Employees Closing at beginning of January in 2018 20 x Aircraft of A320-Family ~830 Employees Expected closing of transaction after approval of anti-trust authorities Start of integration phase of Niki & LGW – 24 x Aircraft of A320-Family focus on operational stability 7 x Boeing 737-800 in wetlease from TUIfly Beginning of Tuifly wetlease Project volume in total: ~1.5 bn EUR, of which ~210 m EUR for LGW and Niki 1 Operational fleet Page 9
Aviation Services Aviation Services: Current developments and outlook Highlights Outlook Current developments • Extending partnerships • Significant increase in revenues (e.g. ANA Cargo, United) and freight load factor • Digitalizing business • Ongoing restructuring leads to (e.g. eFreight) reduction of unit costs • Key decisions taken regarding • Implementation of OEM partnerships production sites, efficiency improved (e.g. General Electric) • Successful implementation of new • Focus on digitalization and growth of LCC aircraft types (among others A350 maintenance services and B787) • Improved process orientation and • Transformation of European business efficient organizational structure • Growth of buy-on-board, in-flight • Selective expansion in growing Equipment and convenience retail business markets (e.g. Asia) Page 10
Consistent strategy implementation drives improving financial KPIs Development of financial KPIs Adj. EBIT Adjusted EBIT Margin Free Cash flow ~2x >3x >3x 2.635 7,6% 2.410 5,7% 5,5% 1.817 1.752 1.397 3,9% 1.307 1.171 3,3% 1.138 986 834 2,4% 725 2012 2013 2014 2015 2016 Q4 16 + 2012 2013 2014 2015 2016 Q4 16 + -297 9M 17 9M 17 2012 2013 2014 2015 2016 Q4 16 + 9M 17 Net financial debt Equity ratio Adj. ROCE (pre-tax) +5.4 -75% >2x %P. 3.418 13,3% 3.347 11,0% 2.701 9,3% 22,3% 21,0% 20,6% 1.953 18,0% 7,1% 1.695 16,9% 6,0% 13,2% 521 2012 2013 2014 2015 2016 Q3 17 2012 2013 2014 2015 2016 Q4 16 + 2012 2013 2014 2015 2016 Q3 17 9M 17 Page 11
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