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Conference & Roadshow Presentation Conference & Roadshow Presentation June / July 2019 Disclaimer The information herein is based on publicly available information. It This presentation contains statements that express the Company‘s has been prepared by the Company solely for use in this opinions, expectations, beliefs, plans, objectives, assumptions or presentation and has not been verified by independent third parties. projections regarding future events or future results, in contrast with No representation, warranty or undertaking, express or implied, is statements that reflect historical facts. While the Company always made as to, and no reliance should be placed on, the fairness, intends to express its best knowledge when it makes statements accuracy, completeness or correctness of the information or the about what it believes will occur in the future, and although it bases opinions contained herein. The information contained in this these statements on assumptions that it believes to be reasonable presentation should be considered in the context of the when made, these forward-looking statements are not a guarantee circumstances prevailing at that time and will not be updated to of performance, and no undue reliance should be placed on such reflect material developments which may occur after the date of the statements. Forward-looking statements are subject to many risks, presentation. 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 The information does not constitute any offer or invitation to sell, negatively) to differ materially from those it thought would occur. purchase or subscribe any securities of the Company. Without the The forward-looking statements included in this presentation are Company’s consent the information may not be copied, distributed, made only as of the date hereof. The Company does not undertake, passed on or disclosed. 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. Conference & Roadshow Presentation June / July 2019 Page 2 Agenda 01 Strategy 02 Q1 2019 Results 03 Outlook 04 Appendix Conference & Roadshow Presentation June / July 2019 Page 3 Unique investment case to create value for our shareholders Best positioned to . Brand and product strength drive sustainably high yields at Network Airlines leverage brand, product . and market strength Focus on profitable growth: capacity up c.2% p.a. at Network Airlines, c.1% at Eurowings . Commercial strategy innovation at Network Airlines: 3% RASK contribution by 2022 In control of major . Efficiency gains & operations improvements: CASK down 1% to 2% p.a. at Network Airlines profitability drivers . Eurowings turnaround: CASK down 15% by 2022, break-even 2021, >7% margin long-term Clear focus on cash flow . Strict ROCE focus will drive improvements over the cycle generation . Free cash flow to grow to >EUR 1bn medium-term Committed to disciplined . Higher returns to shareholders: payout of 20% to 40% of net income capital allocation . Disciplined M&A strategy based on clear set of objectives and criteria Conference & Roadshow Presentation June / July 2019 Page 4 Shareholders Stakeholders: Customers #1 Employees Group strategy balances the interests of all stakeholders Cost Focus & Operational Quality Conference & Roadshow Presentation June / July 2019 Page 5 Balanced approach creates value for all stakeholders allows Strong financial performance & Investments in own employees & shareholder return best product Shareholders generates #1 improves Customers Employees Customer loyalty & strong revenues Customer experience drives Conference & Roadshow Presentation June / July 2019 Page 6 Shareholders Network Airlines Customers #1 Employees and Eurowings: Two leading airline groups Cost Focus & Operational Quality Conference & Roadshow Presentation June / July 2019 Page 7 Lufthansa Group is clear market leader in its home markets 2018 market shares [by number of passengers] Intra DACHB DACHB – EU DACHB – World 1 Unrivalled brand strength and yield premium 80% 36% 34% 2 Maximum connectivity due to largest destination network and portfolio of attractive slots 3 Strong negotiation position with key suppliers and Market share vs. 2016 system partners Conference & Roadshow Presentation June / July 2019 Page 8 Lufthansa Group holds attractive market positions in its hubs Slot allocation at group hubs Slot share other airlines Slot share Lufthansa Group 67% 63% 68% 59% Frankfurt Munich Zurich Vienna Expected average growth of runway capacity until 2024: 0-1% Conference & Roadshow Presentation June / July 2019 Page 9 Our two airline groups complement each other Network Airlines Eurowings 1 Hub and spoke model 1 Point-to-Point model 2 Premium positioning & product innovator 2 Value positioning & lower cost 3 Moderate capacity growth 3 Focus on turnaround, renewed growth afterwards Conference & Roadshow Presentation June / July 2019 Page 10 Integrated business model, individual setup where value-creating Capital allocation Full integration Fleet management, standardization & allocation Infrastructure, procurement, fuel Resources Customer loyalty, product design Sales & distribution Network & revenue management Commercial Operations standards Lufthansa SWISS Austrian Airlines Eurowings Platform A Platform B … Platform A Platform B … Platform A Platform B … Platform A Platform B … Individual/airline specific Operations Conference & Roadshow Presentation June / July 2019 Page 11 Three strongly positioned brands Multi-Brand Strong Brands Strong Positioning Network Airlines Customer recognition Best Airline in Europe Best Business Class in Europe #1 most trusted brand (Germany) Aligned Business Model #5 strongest brand value growth (Airlines) Common Governance Joint Steering Recent Awards Conference & Roadshow Presentation June / July 2019 Page 12 Multi-Hub strategy generates benefits for customers and flexibility for production Multi-Hub Network Airlines Multi-Hub System Commercial Benefits 549 aircraft Customer 19,000 . Maximum connectivity weekly flights . Broad range of choices 273 . Strong identification with local brand Long-haul 74 Short-haul 140 destinations Production Long-haul 31 Short-haul 108 86 countries . Increased reliability Long-haul 35 Short-haul 81 . Risk diversification 104m Long-haul 12 . Flexible capacity management Short-haul 68 Passengers in 2018 Joint commercial steering 53% transfer share as key success factor Conference & Roadshow Presentation June / July 2019 Page 13 Joint Ventures expand the Multi-Hub system to a global network Multi-Hub Multi-Hub + JVs form Network of Networks Joint Ventures . Joint capacity management . Joint pricing . Joint product strategy A++ . Mutual market access J+ . Revenue sharing C+ JV share of long-haul revenues S+ 70% EUR 28 airlines 13bn >1,300 airports >18,800 flights per day Conference & Roadshow Presentation June / July 2019 Page 14 Tailored products represent our USP in a “world of commodity“ – monetarization of added value is part of our commercial success Robust Ancillary Revenue Growth Tailored Offers & Services [in m EUR] Flight-related Non-Flight-related Individual food offers 100% +50% New variety of seat options Innovative retail marketplace 284 585 Dynamic ancillary pricing 2015 2016 2017 2018 2019 2022 Conference & Roadshow Presentation June / July 2019 Page 15 Revenue maximization by bundling the right offers and pricing them according to the customers’ willingness to pay Today – Static Branded Fares Future – Need based bundles & upselling structure Economy Light Economy Classic Economy Flex BASE 100 100 1 carry-on bag Seat reservation Earlier flight Efficiency Package +50 150 Bundles Efficiency Package Plus +70 170 Snacks & 1 checked bag Priority boarding Efficiency beverages Priority lanes 1 carry-on bag Seat reservation Snacks & beverages 1 checked bag BASE 100 100 1 carry-on bag Family Package +30 130 Family Snacks & Bundles Pamily Package Plus +60 160 beverages BASE 100 100 Rebooking Rebooking Rebooking Traveler Package +10 110 Refund Refund Refund Bundles Traveler Traveler Package Plus +30 130 Conference & Roadshow Presentation June / July 2019 Page 16 We are building the foundation for a truly customer-centric retailing model Traditional Static Offering Future Dynamic Offering First Business Economy First Business PE Economy 670€ J 580€ Comfort C 529€ 465€ D 325€ Z 235€ P Price Price Family . Fixed booking classes & limited offer portfolio . Efficient capacity utilization & distribution . Outdated distribution technology & inferior product placement . Tailored offers for customers & trade partners . 26 booking classes clustered with 41k O&Ds . Individual O&D price steering Conference & Roadshow Presentation June / July 2019 Page 17 Customer access and Multi-Channel push are key to our distribution strategy Multi-Channel Growing Direct Distribution Share [by number of bookings] Modern Retail Capabilities >50% . Offer and order control . Product placement 45% . Dynamic cross- and upsell 30% Multi-Channel Reach & Interaction . Direct customer access . Own platform & digital players 2015 2018 2019 . Chatbot, voice interaction, social selling Direct Distribution: Own platform & NDC Indirect Distribution: GDS Conference & Roadshow Presentation June / July 2019 Page 18 Our airlines’ premium positioning generates industry-leading
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