Key Data on Sustainability at Lufthansa Issue 2006 Company/Social

Home , Augsburg Airways, Condor (airline), Contact Air, Eurowings, Lufthansa Cargo, Lufthansa CityLine

p http://responsibility.lufthansa.com

iv Fleet overview: Noise and fuel consumption al al Key data on sustainability at Lufthansa Issue 2006 Fleet overview: Noise and fuel consumption The Aviation Group

Margins below the noise limits of ICAO Chapter 3* Specific fuel consumption by type of aircraft Lufthansa Group fleet (active fleet on 31.12.2005) Lufthansa Group fleet (active fleet in 2005) in EPNdB

in passenger transport Intercontinental in liters/100 passenger kilometers A330-200 DLH – 13.9 Total average 4.39 l/100 pkm A330-200 TCX – 18.7 A330-300 DLH – 18.9 Intercontinental 4.08 l/100 pkm A340-300 DLH – 21.1 A330-200 DLH 4.40 A340-600 DLH – 24.3 A330-200 TCX 2.77 B 747-400 DLH – 12.7 A330-300 DLH 4.10 B 767-300ER CFG – 9.4 Balance A340-300 DLH 4.02 MD-11F GEC – 13.4 A340-600 DLH 4.21 Company/Social responsibility/Environment/Corporate citizenship

B 747-400 DLH Balance Continental 4.27 A300-600 DLH – 11.4 B 767-300ER CFG 3.48 A319-100 DLH – 14.1 – Key data on sustainability at Lufthansa A319-100 GWI – 14.1 Continental 4.44 l/100 pkm A320-200 CIB – 10.4 A300-600 DLH 4.94 A320-200 DLH – 10.2 A319-100 DLH 6.40 A320-200 GWI – 11.5 A320-200 CIB 3.18 A320-200 TCW – 13.6 A320-200 DLH 5.59 A320-200 TCX – 13.6 A320-200 TCW 3.09 A321-100 DLH – 15.0 A320-200 TCX 2.94 A321-200 DLH – 13.3 A321-100 DLH 4.81 A321-200 DLH B 737-300 DLH – 10.3 4.61 B 737-300 DLH B 737-500 DLH – 10.8 7.57 B 737-500 DLH 8.56 B 757-200 CFG – 12.9 B 757-200 CFG 3.26 B 757-200 TCX – 21.5 B 757-200 TCX 3.06 B 757-300 CFG – 17.3 B 757-300 CFG 3.28 B 757-300 TCX – 17.3 B 757-300 TCX 2.78

Regional ATR42-500 DLA – 31.4 Regional 8.82 l/100 pkm ATR42-500 KIS – 31.3 ATR42-500 DLA 8.91 ATR72-500 DLA – 25.9 ATR42-500 KIS 9.89 ATR72-500 KIS – 25.9 ATR72-500 DLA 6.98 Avro RJ85 CLH – 17.1 ATR72-500 KIS 6.01 BAe 146-200 EWG – 17.8 ATR72-200/500 EWG 6.09 Avro RJ85 CLH BAe 146-300 DLA – 17.9 9.59 BAe 146-200 EWG Lufthansa is a member of or represented in: BAe 146-300 EWG – 17.9 12.76 CRJ200 CLH – 28.0 BAe 146-300 DLA 9.19 BAe 146-300 EWG CRJ200 EWG – 28.9 12.15 CRJ200 CLH 8.83 CRJ700 CLH – 16.3 CRJ200 DLA 10.62 DHC8-300 AUB – 21.2 CRJ200 EWG 9.76 DHC8-400 AUB – 24.1 CRJ700 CLH 7.62 DHC8-300 AUB 7.80 * New limits according to ICAO Chapter 4, binding from 2006 for new aircraft: Pro Recycling Paper Initiative –10.0 EPNdB compared with Chapter 3 DHC8-400 AUB 7.34 in freight transport in grams/freight ton kilometer AUB = Augsburg Airways MD-11F GEC CFG = Condor Flugdienst 174 CIB = Condor Berlin CLH = Lufthansa CityLine DLA = Air Dolomiti DLH = Lufthansa Passenger Airline Making ideas a success EWG = Eurowings Partner for Innovation GEC = Lufthansa Cargo GWI = Germanwings An aerial view of the roof of the new Lufthansa Aviation Center (LAC) KIS = Contact Air at Frankfurt Airport. This future-oriented office building, where an initial TCW = Thomas Cook Belgium

TCX = Thomas Cook UK Issue 1,800 employees will enjoy leading-edge working conditions, represents a healthy balance between economic and ecological requirements. As a “low-energy building,” it is expected to consume only a 2006 Forum for Sustainable German Environmental Manage- third of the energy needed for conventional office buildings. Development ment Association Photo taken in March 2006. ii At a glance iii Contact partners

At a glance Contact partners

Environment Human Resources/Social issues Economic issues

1 2, 3 Key business performance data 2005 2004 Change Environmental data 2005 2004 Change Environmental Concepts Human Resources Policies Business and financial issues

Revenue million € 18,065 16,965 + 6.5 % Resource consumption Dr. Karlheinz Haag Dr. Martin Schmitt Michael Göntgens tons 6,751,355 6,607,762 + 2.2 % of which traffic revenue million € 13,904 12,869 + 8.0 % Fuel consumption Head, Group Environmental Concepts Head, Group Human Resources Policies Telephone: +49 (0)69/696-673 38 l/100 pkm 4.39 4.36 + 0.7 % [email protected] Profit/loss from operating activities million € 719 954 – 24.6 % Fuel consumption, specific, passenger transport Telephone: +49 (0)69/696-949 74 Telephone: +49 (0)69/696-23 28 g/ tkm 185 186 – 0.4 % [email protected] [email protected] Net profit/loss for the period million € 453 404 + 12.1 % Fuel consumption, specific, freight transport You can find the latest data on business Operating result million € 577 383 + 50.7 % Emissions Jan-Ole Jacobs Change Management and Diversity and financial performance at Carbon dioxide emissions tons 21,293,772 20,840,883 + 2.2 % Capital expenditure million € 1,829 1,783 + 2.6 % Environmental Management p www.lufthansa-financials.com kg/100 pkm 11.07 11.0 + 0.7 % Monika Rühl Cash flow from operating activities million € 1,956 1,881 + 4.0 % Carbon dioxide emissions, specific, passenger transport Telephone: +49 (0)69/696-269 34 Head, Change Management and million € 19,272 18,070 + 6.7 % Nitric oxide emissions tons 97,281 97,609 – 0.3 % [email protected] Total assets Diversity Nitric oxide emissions, specific, passenger transport g/100 pkm 50.8 50.6 + 0.3 % Shareholders’ equity million € 4,522 4,014 + 12.7 % Telephone: +49 (0)69/696-283 00 tons 15,303 15,601 – 1.9 % Dr. Gerd Saueressig Carbon monoxide emissions [email protected] Noise Research Carbon monoxide emissions, specific, passenger transport g/100 pkm 8.4 8.5 – 1.5 % Telephone: +49 (0)69/696-908 90 tons 1,871 2,252 – 16.9 % Employee Safety Unburned hydrocarbons [email protected] Key personnel data 2005 2004 Change Unburned hydrocarbons, specific, passenger transport g/100 pkm 1.0 1.0 – 3.2 % Dr. Michael Hammerschmidt Dr. Andreas Waibel Telephone: +49 (0)40/5070-27 50 Number of employees (on December 31, 2005) 92,303 90,673 + 1.8 % Emissions/Climate [email protected] of these, in Germany 61,012 59,396 Telephone: +49 (0)69/696-938 16 31,291 31,277 of these, outside Germany [email protected] Bernd Schröder Transport performance data2, 3 2005 2004 Change Staff costs million € 4,853 4,813 + 0.8 % Telephone: +49 (0)40/5070-20 95 Revenue/employee € 198,000 182,000 + 8.7 % Size of active fleet (on December 31, 2005)4 489 454 + 35 Jürgen Briese [email protected] Cosmic Radiation Staff costs/revenue percent 26.9 28.0 – 1.1 % pts. Number of flights 714,775 706,089 + 1.2 % Telephone: +49 (0)69/696-939 64 HelpAlliance e. V. Average age years 40.1 39.6 – Passengers carried 65,344,048 65,268,016 + 0.1 % [email protected] Part-time ratio, absolute percent 24.6 24.6 ± 0.0 % pts. Freight carried tons 1,735,771 1,752,900 – 1.0 % Rita Diop percent 13.0 13.9 + 0.9 % pts. Chairwoman Part-time ratio, men Seat kilometers offered, SKO million pkm 187,284 181,753 + 3.0 % Environmental Sponsorship Program Telephone: +49 (0)69/696-696 70 Part-time ratio, women percent 41.1 40.4 + 0.7 % pts. Freight ton kilometers offered, FTKO million tkm 11,217 11,263 – 0.4 % Lutz Laemmerhold [email protected] percent 12.7 13.3 – 0.6 % pts. Share of women in management Ton kilometers offered, TKO million tkm 29,520 28,987 + 1.8 % Telephone: +49 (0)69/696-63 51 Passenger kilometers transported, PKT million pkm 155,192 150,100 + 3.4 % [email protected] Freight ton kilometers transported (incl. third-party performance), FTKT million tkm 7,053 7, 3 9 9 – 4.7 % Ton kilometers transported, TKT million tkm 22,368 22,209 + 0.7 % Environmental Communications Stefan Schaffrath Telephone: +49 (0)69/696-949 69 [email protected] 1 Source: Lufthansa Annual Report 2005. 2 Some deviations from the previous year’s report due to more recently available data. 3 The data presented in Balance 2006 are based on these companies: Lufthansa Passenger Airlines (including @ http://responsibility.lufthansa.com Lufthansa Regional: Lufthansa CityLine, Air Dolomiti, Eurowings, Contact Air, Augsburg Airways), Lufthansa Cargo, Condor Flugdienst GmbH, Condor Berlin GmbH, Thomas Cook Airlines UK and Thomas Cook Air- @ Order your copy of our Annual Report 2005 at www.lufthansa-financials.com lines Belgium. Editorial information 4 Please see also the overview “Group fleet” on page 27. Published by: Project management: Concept, text and editors: Design and production: Internet Balance was produced using the computer- Printed in the Federal Republic of Germany Deutsche Lufthansa AG Deutsche Lufthansa AG, Deutsche Lufthansa AG, F&L Plus GmbH, http://responsibility.lufthansa.com to-plate printing process. ISSN 1612-0906

i Corporate Communications FRA CI/B, Public Relations, FRA CP/U, Group Environmental Concepts; Agentur für Kommunikation, D–60546 Frankfurt am Main e-mail: [email protected] FRA PL, Group Human Resources Policies; D–60486 Frankfurt am Main Paper and printing process: Reprints, including excerpts, only with written Senior Vice President: Klaus Walther FRA CI/B, Public Relations; Recycling paper made from 100% recycled permission from the publisher and by citing © July 2006 Redaktionsbüro Petra Menke, Photo credits: paper. Produced without optical brightening “Deutsche Lufthansa AG” as the source (text D–60486 Frankfurt am Main Lufthansa Photo Archive, Frankfurt, Köln; agents, without chlorine bleach. Certificate: and images). In this case we ask that you send Balance is a registered title. Lufthansa Technik, Euronatur, Environmental label RAL UZ14 “Blue Angel.” us a copy or clipping. C.-A. von Treuenfels (pp. 62, 63, 64), Fraport AG (p. 55), Getty Images At a glance ii At a glance iii Contact partners

At a glance Contact partners

Environment Human Resources/Social issues Economic issues

1 2, 3 Key business performance data 2005 2004 Change Environmental data 2005 2004 Change Environmental Concepts Human Resources Policies Business and financial issues

Dear Readers,

Last year was a special year for Lufthansa in several ways: A record number of passengers and a highly positive business performance gave us good reasons to celebrate in the year of our 50th anniversary. We were able to strengthen our leading position and are presently flying into the future with an optimistic outlook.

In this latest issue of Balance, we demonstrate in an impressive manner that economic success and corporate policies guided by the principles of sustainability and environmental protection do not exclude – but rather depend on – each other. Our prospects are good, particularly when viewed from the standpoint of sustainability: Lufthansa’s strategy of profitable growth leads to improved products, generates more employment and allows us to make future-oriented investments in the latest technologies. The “3-liter” aircraft has already taken to the skies. Three-kilometer runways take us to the four corners of the Earth – and not just a distance of 3 kilometers as would be the case for rail or road transport. Noise imprints are shrinking to the areas immediately surrounding airports, and technology already has further advances in store, such as more lightweight materials, improved aerodynamics, modifications of existing engines and the development of new jets. We are far from having exhausted our technological options, while infrastructures in the air and on the ground hold enormous opportunities for reducing emissions. Here, we are working with the International Air Transport Association (IATA) and other organizations on necessary improvements.

To make Balance even clearer – and thus more reader-friendly – we offer you here comprehensive, consolidated Group data, in a departure from the previous format, which showed data by business segment. This gives you a better and faster overview of our performance in the areas of economy, ecology and social responsibility. I wish you a captivating read and look forward to pursuing the dialog with you.

Wolfgang Mayrhuber Chairman of the Executive Board and CEO Deutsche Lufthansa AG 4 Contents

Contents

ii At at glance

Introduction 3 Letter from the CEO 5 About this report 7 Highlights of sustainable development 8 Corporate Governance 12 General framework

Our business 14 Lufthansa on track for growth 20 Business segments 26 Transport performance: A positive balance sheet despite record-high oil prices 26 The Lufthansa fleet: Concluding one modernization means preparing the next

Social responsibility 30 At home around the world 34 Diversity: The strength lies in variety 36 Work-Life balance: Work and private lives in balance 37 Employment policy based on partnership: Working together for success 38 Training and continuing education: Foundation for the future 40 Employee safety and health care: Prevention is better than cure

Environment 42 Four pillars for climate protection 48 Environmental management: At the service of sustainability 50 Kerosene and emissions: Transport more, consume less 52 Noise emissions: Above the clouds – Below the threshold values 54 Intermodal transport: Integrating different modes of transport intelligently 55 Energy and resource management: There is always something more to be conserved 59 Environmental goals and measures

Corporate citizenship 62 Lufthansa protects its heraldic bird 66 Social projects and sponsoring: Lufthansa supports people, the environment and culture 70 Research at Lufthansa

74 Glossary iii Contact partners iv Fleet overview: Noise and fuel consumption

Balance 2006 About this report 5

About this report

This issue of Balance describes the activities and performance of the Lufthansa Group and its relevant subsidiaries in the areas of the environment, employees and society during the calendar year 2005.

Thus, the chapter “Our business” covers the economic developments at Luft- hansa, presents our business segments and the Lufthansa fleet, and provides information on transport performance. The chapter “Environment” focuses on flight operations – and by extension on the Group’s constant efforts to reduce its kerosene consumption as well as CO2 and noise emissions. In addition, readers learn what measures Lufthansa has implemented at its key locations to conserve energy and reduce the volumes of waste materials and wastewater. In the chapter “Social responsibility,” Balance explains the advantages that features like flexible work times or the appreciation for a heterogeneous workforce generate for the company – factors that help Lufthansa adapt at an appropriate pace to external conditions such as demographic changes. The chapter “Corporate citizenship” informs readers about Lufthansa-supported research projects investigating the effects of air transport on the environment, as well as about the Group’s social projects and sponsoring activities.

Scope of consolidation It is not always possible to gather standardized data for all Group areas. There are a number of reasons for this: For example, the environmental management systems operated by the individual, independently acting companies are at different stages of development. In addition, there are dynamic processes of change in the Group’s portfolio.

In certain cases, the data presented in this report is based on a scope of consolidation differing from that applied in the Lufthansa Annual Report. While the Annual Report must fulfill the requirements of economic evaluation, Balance emphasizes a comprehensive consideration of the effects of the company’s activities on the environment and society. This difference in perspective leads to differing values for transport performance and the size of the fleet.

Transport performance, kerosene consumption and emissions The economic performance indicators in the Annual Report are based on the number of revenue passengers. By contrast, this Sustainability Report takes into account all the passengers on board – including traveling employees and passengers taking advantage of “Miles & More” award tickets. The reason: Every traveler that boards an airplane affects the environment.

The data used for the calculation of transport performance, kerosene consumption and emissions includes the following companies: Lufthansa Passenger Airlines (including Lufthansa Regional: Lufthansa CityLine, Air Dolomiti, Eurowings, Contact Air, Augsburg Airways), Lufthansa Cargo, Condor Flugdienst GmbH, Condor Ber- lin GmbH, Thomas Cook Airlines UK and Thomas Cook Airlines Belgium. 6 Letter from the CEO / About this report / Highlights / Corporate Governance / General framework

Size of the fleet There are also differences with regard to the size of the fleet: The scope of consolidation applied in the Annual Report indicates the total number of aircraft in the Group fleet, which means all aircraft in the Group’s legal or economic possession and those currently under lease (432 aircraft). By contrast, the Sustainability Report takes only the operational fleet into consideration – as only these aircraft have an impact on the environment. In addition, it includes Lufthansa’s share in Thomas Cook (also see p page 27).

Evaluation and validation of Environmental management system data and information The data used in this report was collected by means of our Group-wide integrated environmental management system. This system also determines the methods for data verification and its transmission to the Group division “Environment.” The basis for data collection is our Database for Environment and Sustainability. Here, all environmentally relevant data are captured systematically (see also p page 48).

Methodology of calculations Emissions The calculation of emissions from flight operations is based on the actual transport performance and fuel consumption for the year in review. In this context, each aircraft-engine combination that exists in the fleet is considered separately, and the corresponding values are calculated by means of computer programs provided by the respective aircraft and engine manufacturers. The annual average flight profile of each such subset in the fleet is then fed into these programs. This allows us to determine emissions in relation to flight altitude, distance flown, thrust

and load. This approach is necessary for NOX, CO and UHCs in particular. CO2 emissions do not require special calculation methods, as they are generated in a fixed relationship to the quantity of kerosene burned.

Specific consumption and emission values Calculating specific consumption and emission values means expressing absolute values in relationship to transport performance. For example, the ratio “liters per 100 passenger kilometers” (l/100 pkm) is calculated on the basis of actual load factors, actual distances flown and actual kerosene consumption figures.

Accuracy The figures shown in the tables are rounded due to considerations of presentation. However, values indicating changes from the previous year always refer to precise figures. For this reason, it is possible that a specific value may remain the same from one year to the next, while a relative change is indicated.

Disclaimer of liability The data included in this report has been collected and processed with the utmost care. Nevertheless, errors in transmission cannot be ruled out entirely. In addition to retrospective observations concerning the past business year, this report contains statements regarding the future. These statements are based on present assumptions and expectations as well as on existing prognoses and currently available information. While such statements and calculations have been made with the utmost care, the developments and results projected in them are not to be understood as guaranteed, due to the large number of external variables which may influence the future.

Balance 2006 Highlights 7

Highlights of sustainable development

Lufthansa on track for growth In 2005, Lufthansa’s operating result increased from 383 to 577 million euros. Traffic revenue rose by 8 percent to 13.9 billion euros. And the seat load factor improved by a full percentage point to 75 percent.

Cooperation with workshops Be it for archiving tasks, file disposal, printing and photocopying jobs, packaging employing disabled people headphones and ear cushions, or producing belts to secure air freight: Since October 2004, the Lufthansa Passenger Airline has relied fully on the services of GDW, “Genossenschaft der Werkstätten für Behinderte Hessen und Thüringen eG” (Cooperative of Workshops Employing Disabled People in Hessia and Thu- ringia). Working together benefits all parties concerned. In this way, the airline receives a range of services from a single source, which employees can conveniently call up via the Lufthansa purchasing platform “trimondo.” In turn, GDW is able to offer disabled people a secure job and attractive career prospects. In the context of this cooperation, GDW acts as the interface between Lufthansa and a Germany-wide network of workshops employing disabled people.

Lufthansa trained In 2005, Lufthansa trained about 1,000 Service Professionals, who work primarily as 1,000 Service Professionals flight attendants or in passenger care. This is an increase of 40 percent over 2004. The number of newly-trained pilots at Lufthansa Flight Training GmbH in Bremen remained stable at 120.

Commercial airliners are a pillar Lufthansa has joined climate researchers to help develop a platform that allows of climatic research the observation of the Earth’s atmosphere on a global scale by means of civil aviation. For this purpose, lightweight and low-maintenance instruments to measure trace elements, aerosols and clouds are being developed in the framework of the European research project IAGOS. A key requirement is that these instruments can be integrated into standard airline operations in an efficient manner. Newly developed equipment is first thoroughly tested on board Lufthansa aircraft. In addition to IAGOS, Lufthansa is also committed to supporting MOZAIC and CARIBIC – and thus actively participates in three climate research projects (see “Research at Lufthansa” p pages 70 and 71).

New routes and flight procedures In 2005, Lufthansa conserved more than 30 million liters of fuel. This corresponds

help conserve kerosene to avoiding around 76,500 tons of CO2 emissions. This has been made possible by using variable flight speeds to compensate for winds on long-haul flights. An other contribution to fuel saving comes from optimized flight routings over Asia. In 2006 and 2007, these and other measures are to help conserve a total of

more than 63 million liters of kerosene and thus avoid about 158,000 tons of CO2 emissions (see “Environmental goals and measures” on p page 60).

New dishwashing system The engineers of Lufthansa catering subsidiary LSG Sky Chefs – in close coope- reduces water consumption ration with the companies Hobart and Ecolab – have developed a new conveyor- belt dishwasher. It was first deployed in 2005 in Brussels. The new dishwashing system is not only more economical than all other current models. It also does the job with half the quantity of water and uses less detergent. Operation of the new dishwasher meant that 181,000 liters of freshwater could be conserved in Brussels. 8 Letter from the CEO / About this report / Highlights / Corporate Governance / General framework

Corporate Governance Mission Statement of the Lufthansa Group Flying is one of mankind’s oldest dreams. Today, this dream has nearly become a self-evident part of daily life – at least for those living in the industrialized nations.

To help make this dream come true for everyone someday, Lufthansa has taken an active role in the development of the air transport industry ever since its founding. The ability to develop future-oriented ideas and to translate them into innovative products will remain an important driving force for the Group’s success in the future.

Over the past decades, the airline has evolved into a successful globally active company, which is positioned today as a focused Aviation Group. The airline’s key goal is profitable long-term growth. This requires strengthening and expanding the airline’s own leading position as well as those of its European partners.

Lufthansa’s corporate values are the basis on which this goal is to be achieved:

Focus on customer benefits The customer is central to our business activities. We consistently tailor our services to customers’ needs and offer a wide range of products for different target groups. All our efforts are service-oriented and synonymous with quality, innovation, competence and reliability.

Accent on core skills Our core skills consistently determine our activities. They enable us to manage our flight networks, nurture partnerships, streamline operative processes on the ground and in the air, and also provide and maintain infrastructure and production factors.

System integration sets the pace Intensive system integration strengthens our competitiveness over other locations, other airlines and airline alliances. We cooperate closely with major partners, suppliers and infrastructure providers in integrating and optimizing our core processes.

Attractive work environment Our staff is integral to our success. We offer them good working conditions, com- mensurate incentives for personal development and a stimulating, international corporate culture. That makes us an attractive employer for qualified, motivated and service-minded personnel.

Long-term profitability In the interests of our investors, we strive for sustainable and pacesetting value creation in the aviation business. That goal is furthered by sound risk and financial management.

Social responsibility We are committed to maintaining a balance between business and social pre- rogatives. Environmental protection and sustainable development are the over- riding objectives of our corporate policy. Active engagement in social projects is ingrained in our corporate culture.

Beyond this, the Lufthansa Group established Group-wide Environmental Guide- lines in 1996. You can find Lufthansa’s ten Environmental Guidelines on the Internet at http://responsibility.lufthansa.com. (see also “Environmental goals and measures” p pages 59 to 61.)

Balance 2006 Corporate Governance 9

Adding value – Creating values Those who strive to lead a company in a responsible manner must consider – alongside balance sheet, profits and sustainable added value – the interests of the company’s various stakeholders. For Lufthansa, therefore, economic success and a corporate policy oriented toward sustainable development and environmental care are two faces of the same coin. The goal of the focused Aviation Group is to secure the favorable market positions of its Group companies over the long-term and to continue to expand Lufthansa. For this purpose, the airline consistently counts on efficient structures, transparent processes and future-oriented strategies.

Management and corporate structures Lufthansa is a German stock company with headquarters in Cologne. The company employs the dual management structure ordinarily followed in Germany, consisting of an Executive Board and a Supervisory Board. While the Group’s Executive Board is solely responsible for steering the company, the Group’s Supervisory Board elects, monitors and advises the Executive Board. The basis for the organization of the management and monitoring structures of the Lufthansa Group is chiefly formed by the German Stock Corporation, Codetermination and Capital Market Acts, as well as the Articles of Association and the company-specific Corporate Governance Code.

Deutsche Lufthansa AG has a double role: It is not only the ultimate parent company, but also the largest operating company within the Group, responsible for the business segment “Passenger Airlines.” This and the other five business segments are responsible for their respective business and financial results, and report directly to the Group’s Executive Board. The Executive Boards of the Group companies are continuously monitored by the relevant Supervisory Boards.

Corporate Governance at Lufthansa Lufthansa complies with the German Corporate Governance Code – and thus with appropriate and responsible management for the benefit of shareholders. The Code’s goal is to further the trust of investors, customers, employees and the public in the management and monitoring of German companies listed on the stock exchange.

The Corporate Governance elements at Lufthansa reflect both German corporate law and international standards. The Group places great value on openness and clarity in corporate communication. As the airline has practiced the basic principles of the Corporate Governance Code for many years, a comprehensive adaptation of its structures to this Code was unnecessary. Lufthansa complies with all recommendations of the German Corporate Governance Code and fulfills in addition most of the optional suggestions – on a voluntary basis.

On December 7, 2005, the Supervisory and Executive Boards passed the following Declaration of Compliance regarding the German Corporate Governance Code in accordance with Article §161 AktG (German Stock Corporation Act). With it, the Group acknowledges “that the recommendation of the Governmental Commission 10 Letter from the CEO / About this report / Highlights / Corporate Governance / General framework

as published by the Federal Ministry of Justice in the official section of the electronic Federal Gazette have been complied with in full and will continue to be complied with in full.”

Lufthansa publishes all Declarations of Compliance on its website and provides information on its adherence to each individual recommendation or suggestion. p www.lufthansa-financials.com

Ethics at Lufthansa Lufthansa does not have its own Code of Conduct, as the company has committed itself in a number of ways to ethical business conduct through a broad array of memberships. This makes a “corporate law book” unnecessary. Moreover, many issues the airline defends are synonymous with basic principles of human coexistence, such as respect for human rights. Against this background, it goes without saying that legal and social standards are complied with.

In this spirit, the airline has supported the worldwide initiative “Global Compact,” Principles of the “UN Global Compact” which was launched by UN Secretary-General Kofi Annan, since 2002. This pact between companies and the United Nations commits its members to adhering Human rights The Secretary-General asks world business to: to social and ecological minimum standards. These ten principles have been Principle 1. support and respect the protection of inter- codified (see inset at left) and relate to respecting human rights, occupational national human rights within their sphere of safety and environmental protection standards and making a commitment to fight influence; corruption in all its forms with determination. In addition, the Group is a member Principle 2. make sure their own corporations are not of organizations such as the International Chamber of Commerce (ICC Deutsch- complicit in human rights abuses. land), Transparency International and Deutsches Netzwerk Wirtschaftsethik e. V. Labor (German Business Ethics Network). The Secretary-General asks world business to uphold: Principle 3. freedom of association and the effective Lufthansa has also adopted stringent guidelines for conduct and environmental recognition of the right to collective care through its membership in the International Chamber of Commerce (ICC, bargaining; World Business Organization), which dates back to 1955. In this way, the air- Principle 4. the elimination of all forms of forced and compulsory labor; line has not only implemented the recommendations of the ICC Commission Principle 5. the effective abolition of child labor; and “Business in Society,” which supports companies in developing responsible Principle 6. the elimination of discrimination in respect corporate guidelines, but it also complies with the “ICC Charter for Sustainable of employment and occupation. Development,” which defines 16 principles of environmental management. The latter includes environmentally oriented management as a primary corporate goal, Environment employee training concerning environmental issues, assessment of environmental The Secretary-General asks world business to: effects, as well as research work to catalog and reduce the effects of company- Principle 7. support a precautionary approach to environmental challenges; specific products, processes, emissions and wastes. The Group also adheres to Principle 8. undertake initiatives to promote greater the “ICC Guidelines for Fighting Corruption in Business.” environmental responsibility; and p www.icc-deutschland.de Principle 9. encourage the development and diffusion of environmentally friendly technologies; Responsibility for employees and society

Anti-corruption For Lufthansa, it is both an obligation and a commitment to create a harmonious Principle 10. businesses should work against corruption balance between the Group’s economic goals and its responsibility toward people in all forms, including extortion and bribery. and society as a whole. Even during times of economic crises, the company has always placed great importance on giving its employees reliable perspectives. This includes, for instance, avoiding operations-related layoffs as much as possible. Both parties – employees and management alike – benefit from maintaining social harmony.

Balance 2006 Corporate Governance 11

International alliances Lufthansa counts on the close cooperation between renowned airlines to offer its customers comprehensive worldwide services and to lighten the burden on the environment. For this reason, the airline initiated the founding of the aviation partnership Star Alliance in 1997. Ever since, passengers have benefited from the partners’ coordinated arrival and departure times as well as from a densely-knit route network. Additionally, the bonus programs of the individual members are also available for flights on the other Star Alliance partners. Today, the world’s first internationally leading airline cooperation comprises a total of 18 carriers. Airline affiliations make sense not only in economic terms – they also help to lessen the burden on the environment. They ensure higher utilization levels of aircraft and thus reduce the fuel consumption per passenger.

Yet stable partnerships do more than just advance passenger transport; they also play a key role in global freight services. Thus, the importance of the WOW alliance, which Lufthansa Cargo founded in 2000 together with Singapore Airlines Cargo and SAS Cargo, has continually increased over the past years. The advantage for customers lies in standardized express services, no matter which airline in the alliance actually carries the freight consignment. Express services have been coordinated since October 2001 as if they were provided by a single source – with the same product assurances and guarantees. In 2002, Japan Airlines Cargo joined the alliance as well, and its services are currently being adapted to WOW standards.

Lufthansa Cargo complements its activities within the WOW alliance with bilateral agreements it concludes with other respected freight carriers.

Risk management To handle opportunities and risks, Lufthansa operates a Risk Early Warning and Management System. It comprises numerous building blocks, which are embedded in the structural and operational organization of the Group as a whole and of the individual Group companies. All significant risks potentially affecting the company’s results or threatening its existence are documented in a continuously updated “risk landscape” and categorized by possible level of damage and probability of occurrence. This includes risks that might arise in the areas of the environment or social responsibility. Within the scope of its risk management, Luft- hansa also documents the planned measures for identifying these risks as early as possible, as well as for limiting and coping with them. 12 Letter from the CEO / About this report / Highlights / Corporate Governance / General framework

General framework Challenges for our business Air transport connects people around the globe and furthers the exchange of goods, ideas and cultures. Beyond that, it is a driving force behind globalization, which itself would be unthinkable without transport services.

Experts estimate that the air transport industry will grow by about 5 percent a year until 2025. A framework of optimum political and social conditions could help Luft- hansa exploit this potential and strengthen its competitiveness.

Infrastructure One approach could be to equip airports with demand-oriented infrastructures, as they are job engines. Experts estimate that following the expansion of Frankfurt Airport each additional aircraft movement per hour would create about 750 new jobs. Such a measure would also help increase the number of aircraft movements from currently 82 to more than 100 takeoffs and landings per hour – an important prerequisite to compete successfully with Charles-de-Gaulle Airport in Paris and Schiphol Airport in Amsterdam. These airports have four and five runways respectively and each handles up to 125 aircraft movements per hour. The construction of the planned runway in Frankfurt would not only generate long-term growth – but could also strengthen the role of this airport as a future-oriented international hub. The same applies to the expansion of Munich Airport, Germany’s second hub, which is set to reach its capacity limits in 2008 at its current annual growth Centrally-located hub Frankfurt: The airport’s planned expansion will generate growth over the long-term. rate of 8 percent.

Subsidies Waste of tax money on micro-airports Reducing the number of micro-airports, whose number has increased significant- Subsidy per passenger in euros * ly over the past years, could also help to boost competitiveness. In contrast to Subsidies for operation Germany’s eight most important civil airports, which handle more than 90 percent Investment aid 10 of passenger volumes, the micro-airports record fewer than 100,000 passengers per year. Micro-airports are often located within the catchment area of larger air- 5.30 8 ports. As real demand does not exist for these small airports, they adversely affect the tried-and-tested interplay of central air transport hubs and high-performance 6 regional airports. Stopping financial support for micro-airports and no-frills carriers could also help save tax money, as micro-airports are generally created with help

4 from state subsidies. Advantages would also be generated by reducing export credit guarantees. The latter allow airlines from affluent countries such as the Gulf 0.70 states, Australia or Japan to buy aircraft in Germany under favorable conditions 2.90 2 2.60 – only to return to the European market to offer cut-rate fares.

0.50 0 Hubs large medium-sized small A signal for more growth could also emanate from strengthening the position of airports airports airports Germany’s hub airports, which do their part to facilitate international exchanges * calculates for 1 ton of freight as 10 passengers – regardless of whether it is people or goods that are traveling. As a logical con- Source: Deutsches Verkehrsforum, DIW, ADV sequence, it is not only the German carriers that connect Germany’s large cities with hubs outside of Europe, but also airlines from the USA and the Gulf states. At first glance, not much has changed for passengers: Whereas before they changed planes in Germany on their way to New Delhi or Kuala Lumpur, they now have a stopover in Abu Dhabi or Doha. For business locations such as Frankfurt or Munich, however, this means less turnover, lower tax revenues and fewer jobs in the long run.

Balance 2006 General framework 13

Civil aviation treaties Indispensable for more growth are also successful foreign policy relations as a basis for a unified air transport market between Europe and the USA. The EU Commission has already achieved great strides along this path. If as the next step it also managed to conclude a civil aviation treaty with the USA, Lufthansa would be able to expand its strong market position abroad as well. The reason: In the case of an agreement flanked by well-balanced environmental, safety and subsidy regulations, the airline would be authorized for the first time in its history to fly from cities outside of Germany to destinations in North America. This would be especially attractive to those passengers who could then rely on the Aviation Group’s services on routes between London and Chicago or Amsterdam and New York as well.

Noise protection Lufthansa would certainly benefit from a new noise protection law, as the one dating to 1971 is no longer up to date. In February 2006, Germany’s federal government presented a revised bill. It aims to create balance between the interests of the aviation industry and the needs of people living close to airports – and to create a secure basis for planning the expansion or construction of airports, such as by providing binding parameters for tolerable noise levels. In this context, limits based on secured research results provide a sound basis. In the interest of a conclusive, research-supported noise protection concept, it has proven successful to use the year’s six most traffic-intensive months as a basis for calculations. These limits could also serve as the basis for future noise reduction planning. And not least, there is a strong need for intelligent land-use planning to allow commu- nities options for development without robbing airports of the space for necessary A Boeing 747-400 in the modern noise protection hangar at the site of Lufthansa Technik AG in Hamburg. This hangar growth. significantly lessens the burden of noise emissions on people living close to Hamburg Airport. Climate protection/Trading of emissions rights A detailed discussion of this subject can be found in the chapter “Environment,” starting on p page 42. 14 Our business / Social responsibility / Environment / Corporate citizenship

Our business Lufthansa on track for growth In the last few years, Lufthansa has significantly improved its competitiveness in the ever-growing air transport market. The best proof of this is the airline’s successful Financial Year 2005. By integrating SWISS, the Group has further strengthened its outstanding position as a European network carrier.

Balance 2006 Our business 15

On April 1, 1955, 17 passengers boarded a twin-engine propeller aircraft in Hamburg. Their flight on a Convair CV-340 to Munich rang in a new era in German civil aviation: Lufthansa had resumed scheduled air services. 50 years later, that small national airline has evolved into an internationally successful aviation company, one whose scheduled flights carry 140,300 passengers and 4,755 tons of freight a day. And while that first timetable was just a simple flyer with information on four domestic flights on weekdays only, today’s version offers Lufthansa customers a choice from a total of 1,790 daily flights.

Passenger services are and remain the Group’s core business. The airlines in the business segment Passenger Transport are supported and strengthened by the five independent business segments Logis- tics, MRO, Catering, Leisure Travel and IT Services, each of which acts as an airline service provider. In the context of international competition, our goal is to become the most attractive and profitable European network carrier with a global offering. And the odds are in Lufthansa’s favor, as air transport is a growth industry par excellence. Not only does it benefit from globalization and is currently growing twice as fast as the gross national product. But it is also one of the main forces driving globalization: The world simply could not grow closer without transport services for people and goods. In this market, Lufthansa has a highly advantageous starting position: It operates Europe’s densest route network. And in cooperation with the 17 partners in the Star Alliance – which has included SWISS and South African Airways since spring 2006 – it offers the largest flight network worldwide.

Lufthansa in the growth market China

In 2005, Lufthansa offered 43 direct connections per week between Germany and China; in 2006, this figure will increase to 52. While the number of passengers to China grew by 18 percent in 2005, it is expected to grow by as much as a quarter in 2006. In addition, the Chinese freight carrier Jade Cargo International, in which the Lufthansa Group holds a 25-percent share, is now being established. And Lufthansa Technik is opening up the Asian market for MRO (Maintenance, Repair and Overhaul) services through AMECO, a joint venture with Air China. For Lufthansa, the ties to China began 80 years ago: The first exploratory flight across central Asia was carried out by two Lufthansa Junkers G24s, which landed in Beijing on August 30, 1926 after making ten stops en route. Four years later, the airline and the Chinese government jointly founded Eurasia Aviation Corporation, which started up flight operations in 1931.

In Europe, air transport is growing above all in the eastern Euro- pean countries. It is Lufthansa’s strategy to be present either on its own or together with strong partners in these and other growth markets. On intercontinental routes, the Aviation Group is to con- centrate more strongly on China and India. “China is an extremely important market for us,” says Wolfgang Mayrhuber, Chairman of Lufthansa’s Executive Board. He emphasizes: “We want to remain Lufthansa aircraft at the number-one European carrier in Asia.” This makes the cooper- Frankfurt Airport’s ation with Air China and Shanghai Airlines, both quality carriers Terminal A. The and future Star Alliance members, especially important. airport is in direct competition with other international hubs, such as Paris, London or Amster- dam. 16 Our business / Social responsibility / Environment / Corporate citizenship

Competitiveness improved Over the last few years, Lufthansa has worked to renew its organizational structures and reduce its internal costs significantly. A successful effort: The airline’s competitiveness has improved substantially. Thanks to efficient processes, streamlined structures and concentration on core competencies, the Group is now well- positioned internationally – on a sound financial basis. This view is shared by the influential rating agencies: Lufthansa is one of three airlines worldwide to be given an Investment Grade Rating by Standard & Poor’s (“BBB”) and Moody’s (“Baa3”). This makes it the highest-ranked airline in Europe. The most important economic goal of the Lufthansa Group is to achieve sustainable, profitable growth, which not only adds value but also creates values. One of our most important assets in terms of competition is the Lufthansa brand. It is the core of the Group and stands for quality, innovation, reliability, competence and safety.

In 2005, the Lufthansa Group made decisive strides towards its goals.

This makes SWISS, in which Lufthansa has held an indirect share of 49 percent since July 2005, an ideal partner. With this acquisition, Lufthansa strengthens its outstanding position as a European network carrier and gains access to the attractive Swiss market. Right: An innovation in the premium segment: Its current hubs in Frankfurt and Munich are now joined by Zurich. Passengers traveling in The integration of SWISS is moving ahead successfully; synergistic First or Business Class effects were already clearly visible in 2005. Completion of this inte- on Lufthansa scheduled gration is expected for the end of 2006 at the earliest, after impor- flights from Frankfurt or tant traffic rights have been obtained. Munich can book individual connecting flights on the Lufthansa Private Jet In 2005, the Lufthansa Group made decisive strides towards its service to more than 1,000 goals: Despite the high price of crude oil, the airline’s operating airports across Europe. result improved significantly. All business segments contributed to this overall result with an operating profit. The Group’s airlines, even Below: Mobility à la carte without the Leisure Travel segment, carried more than 51.3 million – products for all needs, passengers, surpassing once again the record result of the previ- quality in all segments. ous year. In spring 2005, the frequent flyer program Lufthansa Miles & More welcomed its 10-millionth member and thus confirmed its leading position in Europe. The development in the premium Lufthansa Private Jet

customer segment is especially positive: The number of First Class Swiss Business Jet (C) passengers increased by 20 percent during the year in review. LH Business Jet (C)

Investments in innovation Swiss Intercontinental (Y/C/F) Throughout its history, Lufthansa has perceived itself as an industry Lufthansa Intercontinental (Y/C/F) pacesetter. As such, the airline has introduced numerous inno- Swiss Continental (Y/C) vations over the past few years: Sleeper seats in Business Class substantially increase passenger comfort on long-haul flights. On Lufthansa Continental (Y/C) flights within Europe, a vacant middle seat in Business Class cre- Thomas Cook

ates more privacy, personal space and room to store luggage. And German- thanks to new seats, Business and Economy Class passengers will wings No-frills Charter Economy Economy Business Executive First Executive enjoy perceptibly improved seating comfort on flights in Germany basic flexible Business Jet Class Service

and Europe from spring 2006. budget economy premium

Balance 2006 Our business 17

Lufthansa was the world’s first airline to offer its First Class passen- Lufthansa shares on course for success gers and HON Circle members a dedicated terminal in Frankfurt. There, travelers can step away from the hectic activity of a modern The company’s positive development is also reflected by the price of the Lufthansa share: It increased by 18.6 percent from January to December 2005. Shareholders airport and enter an oasis of calm and relaxation. This type of First also participated in the company’s success as their dividend increased from 0.30 to Class service has also been on offer at the Munich hub since July 0.50 euro per share. At the end of 2005, Lufthansa’s market capitalization stood at 2005. Beyond that, the Lufthansa Private Jet service, a flight offering about 5.7 billion euros. unique worldwide, has complemented the premium segment since The free float of Lufthansa shares, which is important for the calculation of the DAX March 2005. It blends the flexibility and convenience of a private share index, is 100 percent. Beyond that, the share is included in leading interna- aircraft with the high standards and advantages of a globally oper- tional indexes, including the Dow Jones EuroStoxx, MSCI EUR, FTSE Eurofirst 300 ating quality airline. More than 1,000 destinations in Europe alone and FTSE4Good. Almost all relevant national and international aviation analysts gave the Lufthansa share a “buy” or “hold” rating at year-end 2005. can thus be reached directly. “Lufthansa Private Jet has been a success right from the start. In this way, we offer mobility à la carte and complete our product portfolio in the top segment,” Mayrhuber observes. 18 Our business / Social responsibility / Environment / Corporate citizenship

With the Airbus A380, Lufthansa is set to shared IT platform is to ensure that all 18 alliance partners use the open up a new dimension of flying for its same type of data – be it for reservations, code-share management passengers. or check-In. The advantages: Customers enjoy even better service, and the airlines reduce costs.

When it comes to the communication needs of Lufthansa passen- Airbus A380 – The future flagship gers, there is now more freedom than ever: On long-haul flights, With the Airbus A380, Lufthansa is set to open up a new dimen- they can send e-mails, chat and surf as often and as long as they sion of flying for its passengers. The interior of the megaliner alone like. The reason is that Lufthansa has become the first airline world- illustrates this new dimension of travel, as in the future passengers wide to introduce broadband Internet access on board. In addition, will have two levels at their disposal: an exclusive, fully redesigned Lufthansa’s airport lounges are now equipped with WLAN hotspots. First Class and a high-quality Business Class on the upper deck, Currently being tested is a new bar-code technology for check-in and a comfortable, new Economy Class on the main deck below. via your own computer. Boarding cards printed at home thus allow For the first time, finely tuned lighting in the First Class cabin is to access to the aircraft without an additional stop at a counter or help passengers’ bio rhythms adapt to the parameters at the des- self-service machine. In September 2005, Lufthansa also decided tination of their long-haul flight. Another feature of First Class will to replace its own core IT systems for running flight operations with be to allow customers to determine individually how much privacy the Star Alliance’s “Common IT Platform” by 2010. The goal of this they wish.

Balance 2006 Our business 19

Moreover, the A380 combines ecological and economic advantages: With regard to kerosene consumption and emissions, it will fly more efficiently than any other aircraft. On the other hand, the four-engined wide-body aircraft will allow the Aviation Group to further increase passenger capacities, despite restricted slots and limited landing rights at many busy airports around the world. On a single scheduled flight, the Lufthansa Airbus A380 will be able to carry 555 passengers to their destination. As Europe’s first airline, Lufthansa will operate this extra-large long-haul Airbus on scheduled services from 2008. Lufthansa has ordered a total of 15 A380s.

At Frankfurt Airport, the future home base of the Lufthansa A380s, a new maintenance hangar for large aircraft is under construction: 350 meters long, 140 meters deep and 45 meters high. But it is not only the size of Germany’s largest industrial building – to be completed in two sections by 2015 – that is so special. Rather, the contents of this high-tech hangar help make all the difference. Another novelty is that engineers and technicians working to introduce the A380 are using electronic documentation right across the Left: For the first time at board. This approach ensures that they have a complete overview Frankfurt Airport: The new of the technical condition of the aircraft at all times, whether it is on Airbus A380 in front of the ground or in the air. Lufthansa Technik AG’s Hall 5 on October 29, On April 27, 2005 the eyes of the world were on the Airbus A380 as 2005. it completed its official maiden flight in Toulouse. Thus, almost 50 years to the day after Lufthansa’s fresh start, a single flight has once Below: Lufthansa’s A380 again rung in a new era in civil aviation. Yet the difference could maintenance hangar, where the airline is inves- hardly be more obvious: To carry the 555 passengers a Lufthansa ting 150 million euros Airbus A380 can seat at a single go, Lufthansa’s first long-haul (simulated model). aircraft, the Super Constellation, would have had to make seven trips back in 1955. •

Lufthansa’s growth in 2005:

p Lufthansa’s operating result increases from 383 to 577 million euros. p Traffic revenue increases by 8 percent to 13.9 billion euros. p The seat-load factor improves by 1 percentage point to 75 percent. 20 Our business / Social responsibility / Environment / Corporate citizenship

Business segments Lufthansa Passenger Airlines

The Lufthansa Aviation Group is one of the world’s leaders The core business of the Lufthansa Group is to in international air transport. It comprises more than 400 group and affiliated companies. The Group is active in carry passengers. In 2005, the Lufthansa Passenger six business segments: The strategic core segment is the Airlines achieved almost two thirds of the Group’s Passenger Business. The other segments are Logistics, Maintenance, Repair, Overhaul (MRO), Catering, IT Ser- revenue. vices and Leisure Travel.

Passenger transport 2005 changes compared to 2004

Revenue 12,047 million € + 7.5 % Operating result 135 million € – 49.1 % Number of employees on Dec. 31 37,042 + 6.7 %

p www.lufthansa.de

Passenger transport is the core activity of the Lufthansa Group. In international air transport, Lufthansa carries more passengers than any other airline belonging to the International Air Transport Association (IATA). In cooperation with Lufthansa Regional, Lufthansa offers its passengers a comprehensive high-quality range of direct and transfer connections to 185 cities. Lufthansa serves a total of 409 destinations in 97 countries in cooperation with its other partner airlines. Lufthansa is a founding member of the Star Alliance, the world’s first multilateral and leading airline cooperation.

At the end of 2005, the Lufthansa fleet numbered 413 aircraft. Quality, innovation, security and reliability characterize Lufthansa’s product and image. Its offerings cover a broad range and are targeted to the needs of different customer segments. The Group took a leading competitive position in the premium segment by launch- ing a novel spectrum of product features for First Class passengers along with the Lufthansa Private Jet service. In Financial Year 2005, the Lufthansa Passenger Business generated 63.9 percent of the Group’s total revenue. The Executive Board and Management of the Passenger Airline have their headquarters in Frankfurt. This is also the home base for the largest part of the airline’s flying personnel.

Balance 2006 Our business 21

Lufthansa Cargo Lufthansa Cargo holds a top position in international scheduled freight transport. The logistics company guarantees forwarding agents accurately timed freight services.

Logistics 2005 changes compared to 2004

Revenue 2,752 million € + 11.5 % Operating result 108 million € + 217.6 % Number of employees on Dec. 31 4,704 – 5.5 % p www.lufthansa-cargo.de

Within the Lufthansa Group, Lufthansa Cargo AG is responsible for the sale and operation of freight transport. The logistics company is among the market leaders in international air freight and operates one of the most environmentally friendly freighter fleets worldwide. The wholly-owned Lufthansa subsidiary markets both its own freighter services and space in the cargo holds of aircraft operated by the Lufthansa Passenger Airlines. Via its subsidiary “cargo counts,” Lufthansa Cargo also offers space in the holds of Condor, SunExpress, Spanair, Air Asia, Thai Air Asia and Air Luxor aircraft. The logistics company is known for its clearly defined transport times and high quality standards. Its performance guarantees also extend to shipments of special cargo and hazardous goods. Within the route network of Lufthansa Cargo, the freight and passenger aircraft as well as the trucks of associated freight forwarders serve more than 500 destinations.

The bulk of freight volumes is handled by the Lufthansa Cargo Center at Frankfurt Airport; in addition, the company operates a large cargo hub in Cologne for its European express services. Other important locations are New York and Shang- hai, where Lufthansa Cargo cooperates with partners to operate one of Asia’s largest cargo centers. The logistics company maintains a presence at about 100 stations worldwide. Besides Lufthansa Cargo AG, the business segment Logistics includes the Lufthansa Cargo Charter Agency GmbH, time:matters GmbH, cargo counts GmbH, Jettainer GmbH. The company’s headquarters is in Kelsterbach, near Frankfurt. 22 Our business / Social responsibility / Environment / Corporate citizenship

Lufthansa Technik The Lufthansa Technik Group counts on the internationalization of distribution and production – and successfully expanded its business with customers outside the Lufthansa Group in 2005.

MRO 2005 changes compared to 2004

Revenue 3,121 million € + 2.0 % Operating result 258 million € + 25.9 % Number of employees on Dec. 31 17,864 – 1.3 %

p www.lufthansa-technik.de

Lufthansa Technik AG is one of the worldwide leaders in Maintenance, Repair and Overhaul (MRO) services. This Lufthansa subsidiary specializes in maintaining and overhauling civil aircraft as well as in repairing and maintaining engines, electrical equipment and components. Among its customers are the airlines of the Lufthansa Group and more than 500 other airlines and operators of civil aircraft from around the world. Environmental care plays an important role at Lufthansa Technik. In 1996, it became the first company in the MRO industry to be validated under the EU eco-audit regulations. By developing innovative products and services – such as wireless on-board communication systems – Lufthansa Technik regularly confirms its leading position in the industry.

The Technik Group comprises six product divisions: Maintenance, Overhaul, Engines, Equipment, Landing Gears and Completion. Its most important location is the maintenance, development and logistics center in Hamburg. There, technicians overhaul wide-body aircraft and engines, and maintain aircraft equipment and components. At the Completion Center, they fit cabins of business and VIP aircraft to individual specifications. Lufthansa Technik operates major maintenance centers in Frankfurt and Munich. The company also has maintenance stations at the larger German airports as well as at about 50 locations around the world. In China and other Asian growth markets, Lufthansa Technik is present through AMECO, a joint venture with Air China. The Technik Group comprises 27 MRO operations worldwide. Currently, the Group has direct and indirect participations in 42 companies. Lufthansa Technik AG has its headquarters in Hamburg.

Balance 2006 Our business 23

LSG Sky Chefs In 2005, LSG Sky Chefs made significant progress in revitalizing and restructuring the company and achieved a positive operating result.

Catering 2005 changes compared to 2004

Revenue 2,215 million € – 5.1 % Operating result 5 million € – Number of employees on Dec. 31 28,295 – 1.1 % p www.lsg-skychefs.de

With a market share of 30 percent, LSG Sky Chefs is the world’s leading airline caterer. Currently, 140 companies are active under the umbrella of this international group: Just under 190 facilities deliver 369 million in-flight meals per year to around 270 airlines in 48 countries. The market leader’s strict quality controls set industry standards. As the world’s largest provider of integrated in-flight services, this Lufthansa subsidiary also supports its customers with a broad range of innovative onboard services. These range from procurement, equipment and onboard sales to comprehensive in-flight management. The production and distribution of high-quality frozen foods and complementary services – such as airport food services, controls of hygienic quality standards for the food industry, events catering and airport retailing – complete the company’s portfolio. Apart from Lufthansa, other key customers for LSG Sky Chefs include renowned carriers such as Ameri- can Airlines, SAS, Malaysian, Northwest, United Airlines, U.S. Airways, Thomas Cook, Air New Zealand, Alaska Airlines and Air Canada. This business segment achieved more than 50 percent of its revenue in Europe.

In 2005, the emphasis was on revitalizing and restructuring the company. With success: LSG Sky Chefs achieved a positive operating result for the year under review. This was possible because the business segment’s costs for production and administration were reduced significantly, its organizational structures were realigned, some of its operations in the USA were closed and consolidated, and its portfolio was streamlined. LSG Sky Chefs maintains its headquarters in Neu- Isenburg, near Frankfurt. 24 Our business / Social responsibility / Environment / Corporate citizenship

Lufthansa Systems In 2005, Lufthansa Systems reorganized itself as a global full-service IT provider and substantially increased its competitiveness in the process.

Lufthansa Systems is one of the leading IT service providers for the airline and aviation industry. The company’s core business is the planning, development and implementation of custom-made software applications. As a full-service provider, the wholly-owned Lufthansa subsidiary also offers its customers the option to out- source their entire IT infrastructure to one of the most advanced, secure and performance-oriented data centers in Europe. In addition to applications specifically for the airline and aviation industry, the company’s portfolio includes IT products and services for other business areas, such as industrial operations or the finan- IT Services cial sector. Many years of experience, technological competence and a consistent 2005 changes orientation towards its customers’ business processes have allowed Lufthansa compared to 2004 Systems to maintain its strong position in a difficult market. Revenue 635 million € + 1.1 % Operating result 63 million € + 3.3 % The organizational structure at Lufthansa Systems is based on five business seg- Number of employees ments, which are oriented toward the competitive situations in the market: Airline on Dec. 31 3,290 + 3.1 % Management Solutions, Passenger Airline Solutions, Airline Operations Solutions, Industry Solutions and Infrastructure Services. Over the past years, the company p www.LHsystems.com with headquarters in Kelsterbach, near Frankfurt, and a presence in 17 countries has managed to increase its revenues significantly, especially with customers outside the Lufthansa Group. In April 2006, the Lufthansa Systems Group changed its legal form from a limited liability company to a stock corporation. This step represents a harmonization of its legal form with that of other core companies within the Lufthansa Group.

Thomas Cook AG After successfully concluding its restructuring program, Thomas Cook AG reported a positive operating result in 2005 for the first time in four years.

Thomas Cook AG is one of the leading tourism groups worldwide. Lufthansa and KarstadtQuelle each hold a 50-percent share in the number two in tourism in Ger- many and Europe. More than 13 million customers took their holidays with one of the group’s 33 tour operator brands. Revenues reached 7.7 billion euros. The most important markets for this business segment are Germany, Britain, France, the Netherlands, Belgium and Austria. Thomas Cook has a 20-percent share in the German tour operator market. The company addresses all relevant target groups Leisure travel through its high-volume brand Neckermann Reisen, premium brand Thomas 2005 changes Cook Reisen, low-budget brand Neckermann Preisknüller and Bucher Last Minute. compared to 2004

Revenue 7,661 million € + 2.4 % Following its successful turnaround, the company has repositioned itself strategi- Net income/loss cally. Given massive overcapacities in the areas Flights and Hotels and increasing for the year 105 million € – price sensitivity among consumers, a step-by-step departure from the business Number of employees model of the integrated leisure travel group was decided. Instead of continuing to on Oct. 31 23,236 – 3.0 % invest in the acquisition of its own resources, the company now pursues a highly

p www.thomas-cook.de

Balance 2006 Our business 25

flexible business model with a minimum commitment of capital (“asset light”). As a result, the core business is now offering a broad range of inclusive tour packages, components and services. All established channels of distribution are used to sell these products.

The tourism group can look back on a successful financial year, and all signs again indicate growth. Thomas Cook AG has its headquarters in Oberursel, near Frankfurt.

Lufthansa service and financial companies Lufthansa complements the activities of its strategic business segments with those of companies active in the service and financial sectors.

Lufthansa complements its six strategic business segments with numerous service and financial companies. The participations of Lufthansa Commercial Holding GmbH (LCH), for example, extend Lufthansa’s activities beyond its core business into areas such as distribution, transport, training, aircraft fueling, real estate, logistics and aircraft leasing. LCH has its headquarters in Cologne. Lufthansa AirPlus Servicekarten GmbH offers solutions for the efficient management of business travel. The company has its headquarters in Neu-Isenburg, near Frankfurt, and gives support to more 29,000 corporate customers in 28 countries. Also among the service companies is Lufthansa Flight Training GmbH. The world’s largest provider of training and continuing education for cockpit and cabin crews and for flight operations staff comprises the Lufthansa Pilots’ Academy in Bremen, the training center for flight attendants in Frankfurt and simulator centers in Frankfurt, Berlin, Bremen and Zurich. A reliable partner for aviation and transport insurance within the Lufthansa Group is the Delvag Luftfahrtversicherungs-AG, with its subsidiaries Albatros Versicherungsdienste GmbH and Delvag Rückversicherungs-AG. 26 Our business / Social responsibility / Environment / Corporate citizenship

Transport performance A positive balance sheet despite record-high oil prices

The price of crude oil, which again increased substantially in 2005, has not affected Lufthansa’s transport performance. While in passenger transport the Group was Passenger transport changes compared to 2004 able to improve slightly its good result of 2004, its performance in freight transport Passengers 65,344,048 + 0.1 % remained at almost the same high level as in 2004. In this way, the Aviation Group Performance offered, SKO 187,284 million pkm + 3.0 % strengthened further its leading position in international competition. In the wake of hurricane “Katrina” and the resulting losses of production capacities, the price for Performance achieved, PKT 155,192 million pkm + 3.4 % crude oil of the Brent variety crossed the threshold of 70 U.S. dollars per barrel for Seat load factor 82.9 percent + 0.3 % pts. the first time in September 2005. In 2005, the aircraft operated by Lufthansa carried 51.3 million passengers safely to their destinations. Together with Thomas Cook, the Group even carried as many as 65.3 million passengers. In addition, Lufthansa aircraft carried about 1.74 million tons of freight. In terms of capacities offered and sold, passenger transport recorded a growth of 3.0 and 3.4 percent respectively when compared with 2004. Here, capacity increases in the Asia/Pacific area had an Freight transport changes compared to 2004 especially positive effect. Aircraft utilization improved in almost all traffic areas. The Freight carried 1,735,771 tons – 1.0 % North Atlantic routes achieved the highest seat-load factor with 81.4 percent, while Performance offered, FTKO 11,217 million tkm – 0.4 % demand increased by 2.2 percent and our offerings were lightly consolidated. In Performance achieved, FTKT 7,053 million tkm – 4.7 % the traffic area Europe including Germany, capacity offered was increased by 1.6 Freight load factor 62.9 percent – 2.8 % pts. percent. Sales rose by 2.5 percent, and the seat-load factor improved from 63.9 to 64.5 percent.

In freight transport, Lufthansa Cargo achieved significant growth in terms of quantity in 2004, which reflects the current upswing in the world economy. In 2005, this Group company took advantage of market conditions to achieve higher freight rates and thus stabilize average revenue. This resulted in a slightly lower transport perfor- Tot al changes compared to 2004 mance. Flights 714,775 + 1.2 % Performance offered, TKO 29,520 million tkm + 1.8 % In relationship to the total passenger transport to and from Germany, Lufthansa’s Performance achieved, TKT 22,368 million tkm + 0.7 % scheduled flights have a traffic share of more than 30 percent. Lufthansa’s share of Payload factor 75,8 percent – 0.8 % pts. the total number of passengers carried on scheduled flights worldwide is nearly 3 percent. In the area of cargo, Lufthansa’s share of 4.2 percent of the ton kilometers transported worldwide is even higher. Thus, Lufthansa holds a top position both in passenger and freight transport when compared internationally.

The Lufthansa fleet Concluding one modernization means preparing the next

On December 31, 2005, the fleet of the Lufthansa Group comprised 432 aircraft. This includes the aircraft of the Lufthansa Passenger Airline, those of the regional partners Lufthansa CityLine, Air Dolomiti, Eurowings, Augsburg Airways and Con- tact Air, and those of Germanwings. It also includes the freight aircraft of Lufthansa Cargo. However, of relevance for the environmental balance sheet is the total number of aircraft in operation across the Group. Assuming this perspective and taking the participation in Thomas Cook into consideration, the fleet comprised 489 aircraft at year-end. The average age of this fleet is 9.4 years. This makes the Lufthansa fleet two years younger than the IATA world fleet (2005: 11.4 years).

Balance 2006 Our business 27

The Group fleet on 31.12.2005 (changes compared to 2004) in possession1 in operation2 number 1 age number 11,1age (+ 0,5) Lufthansa Passenger Airline 255 (+ 6) 11.1 (+ 0.5) 231 (+ 10) 7,9 11.2 (+ 0,9)(+ 0.8) Lufthansa CityLine 80 (– 1) 7.9 (+ 0.9) 80 (– 1) 8,1 7.9 (+ 3,7) (+ 0.9) Air Dolomiti 19 (– 2) 8.1 (+ 3.7) 19 (– 2) 6,1 8.1 (+ 3.7) Germanwings3 20 6.1 24 11,5 6.4(+ 3,4) Eurowings 24 (– 12) 11.5 (+ 3.4) 30 (– 5) 6,1 9.0 (+ 0,1) (+ 0.9) Contact Air 15 (+ 6) 6.1 (+ 0.1) 11 (+ 2) 5.5 (– 0.5) Augsburg Airways 10 (± 0) 9,9 5.5 (+ 0,7) (+ 1.0) Passenger airlines 413 (+ 17) 9.9 (+ 0.7) 405 (+ 28) 8,0 9.7 (- 0,7) (+ 0.8) Lufthansa Cargo 19 (– 3) 8.0 (– 0.7) 19 (+ 4) 8,0 8.0(- 0,7) (+ 2.3) Logistics 19 (– 3) 8.0 (– 0.7) 19 (+ 4) 8.0 (+ 2.3) Condor Flugdienst GmbH 23 (± 0) 9.1 (+ 1.1) Condor Berlin GmbH 13 (+ 1) 6.3 (+ 0.8) Thomas Cook Airlines UK 24 (± 0) 8.3 (+ 0.9) Thomas Cook Airlines Belgium 5 (+ 2) 9.0 (+ 6.9) Leisure Travel 65 (+ 3) 8.2 (+ 1.2) 9,8 (+ 0,7) Group, total 432 (+ 14) 9.8 (+ 0.7) 489 (+ 35) 9.4 (+ 0.9)

1 Aircraft in the possession of the Group. Unlike the Annual Report 2005, this Report as a rule shows aircraft that are leased out to third-parties as being in the possession of the lessee. An essential component of the Group’s strategy is to secure its leading position 2 Aircraft operated by the Group. in international competition by continuously acquiring more fuel-efficient and low- 3 Newly included in the scope of consolidation. noise aircraft. For this reason, Lufthansa launched a modernization program for the intercontinental fleet in 2003, whose first phase was successfully concluded in November 2005, when the airline took delivery of the remaining four Airbus A330-300s of the ten it had ordered. Before that, ten new Airbus A340-600s had already joined the fleet. Seven more A340-600s are to be delivered to Lufthansa in 2006/07.

And the next round of fleet rejuvenation is already set to begin: When the summer timetable 2008 takes effect, the first of 15 Airbus A380-800s on order are to go into service. Even sooner, the modernization Lufthansa CityLine’s regional fleet will start in 2006: 12 new 84-seater CRJ900s will replace 20 CRJ200s. Currently, Lufthansa is planning to acquire a total of 52 new aircraft by the end of 2015.

With the completed integration of SWISS – expected at the end of 2006 – the Luft- hansa fleet is set to grow further. At the end of October 2005, SWISS operated 69 modern, efficient aircraft with an average age of 6.9 years. The youngest members of the SWISS fleet are nine Airbus A340-300s, which are only 1.9 years old on average. 28 Our business / Social responsibility / Environment / Corporate citizenship

Lufthansa Passenger Airline 29 aircraft, 103 seats, 2,500 km range Boeing 737-500

33 aircraft, 123/133 seats, 2,600/2,200 km range Boeing 737-300

16 aircraft, 126 seats, 3,500 km range Airbus A319-100

36 aircraft, 150 seats, 3,500 km range Airbus A320-200

26 aircraft, 182 seats, 2,900/4,100 km range Airbus A321-100/200

11 aircraft, 280 seats, 3,400 km range Airbus A300-600

2 aircraft, 229 seats, 11,000 km range Airbus A330-200

10 aircraft, 221 seats, 10,000 km range Airbus A330-300

29 aircraft, 247 seats*, 12,400 km range Airbus A340-300 *differing seat configurations in operation

10 aircraft, 345 seats, 12,200 km range Airbus A340-600

29 aircraft, 390 seats*, 12,500 km range Boeing 747-400 *differing seat configurations in operation

DLA: 6 aircraft, 46 seats, 900 km range Lufthansa Regional KIS: 5 aircraft, 44 seats, 900 km range ATR42-500

DLA: 8 aircraft, 64 seats, 900 km range KIS: 6 aircraft, 68 seats, 900 km range ATR72-500

CLH: 18 aircraft, 93 seats, 2,200 km range Avro RJ85

AUB = Augsburg Airways CIB = Condor Berlin DLA = Air Dolomiti EWG = Eurowings CFG = Condor Flugdienst CLH = Lufthansa CityLine DLH = Lufthansa Passenger Airline GEC = Lufthansa Cargo

Balance 2006 Our business 29

Lufthansa Regional EWG: 4 aircraft, 92 seats, 1,600 km range BAe 146-200

DLA: 5 aircraft, 99 seats, 1,800 km range EWG: 9 aircraft, 98 seats, 1,800 km range BAe 146-300

CLH: 42 aircraft, 50 seats, 2,000 km range EWG: 17 aircraft, 50 seats, 2,000 km range CRJ200

CLH: 20 aircraft, 70 seats, 2,300 km range CRJ700

AUB: 5 aircraft, 50 seats, 1,200 km range DHC8-300

AUB: 5 aircraft, 70 seats, 1,200 km range DHC8-400

Germanwings GWI: 21 aircraft, 144 seats*, 3,500 km range Airbus A319-100 *differing seat configurations in operation

GWI: 3 aircraft, 174 seats, 3,500 km range Airbus A320-200

CIB: 13 aircraft, 174 seats, 4,600 km range TCW: 5 aircraft, 180 seats, 4,000 km range Thomas Cook TCX: 5 aircraft, 180 seats, 3,900 km range Airbus A320-200

CFG: 1 aircraft, 220 seats, 6,800 km range TCX: 15 aircraft, 235 seats, 5,600 km range Boeing 757-200

CFG: 13 aircraft, 265 seats, 5,400 km range TCX: 2 aircraft, 280 seats, 4,000 km range Boeing 757-300

TCX: 2 aircraft, 354 seats, 11,000 km range Airbus A330-200

CFG: 9 aircraft, 269 seats, 10,600 km range Boeing 767-300

3 Lufthansa Cargo 19 aircraft, 516 m /89.4 t, 7,000 km range Boeing MD-11

GWI = Germanwings TCW = Thomas Cook Belgium Number of aircraft in operation Ranges indicated at maximum KIS = Contact Air TCX = Thomas Cook UK on 31.12.2005 passenger numbers 30 Our business / Social responsibility / Environment / Corporate citizenship

Social responsibility At home around the world Numerous studies have shown that teams which are heterogeneous in terms of ethnic origin, age and lifestyle tend to work more creatively – and thus more innovatively and efficiently – than homogeneous groups. As a result, companies that subscribe to such diversity are also more competitive.

Balance 2006 Social responsibility 31

Among all Europeans, Germans have the lowest birthrate. In workforces. This leads to teams in the workplace whose members 2005, the number of births in Germany declined to the lowest level differ substantially in age, ethnic origin, gender, religion, physical in 15 years – even in the postwar year 1946 significantly more abilities and sexual orientation. Such variety has entered the cor- children were born. Germany’s population is shrinking seriously, porate cultures of large companies under the banner of “diversity.” and at the same time it is getting increasingly older. For this reason, In 2001, Lufthansa became one of the first companies to set up a experts have been warning for some time of a coming lack of quali- separate department called “Change Management and Diversity.” fied personnel, which some even predict within the next ten years. Today, the airline is a good example of how heterogeneity and the Along with European integration and globalization, this demograph- appreciation of diversity pay off. ic trend in Germany amplifies the trend towards heterogeneous International teams are profitable Diversity Management supplies approaches for working with differences – for the benefit of employees and employers alike. This is an important consideration, as motivated and open-minded employees are the key resource of a globally active company. “Lufthansa has always had close links to countries abroad. As one of Germany’s ambassadors, the company is at home around the world,” explains Stefan Lauer, Member of the Executive Board and Chief Officer Aviation Services and Human Resources.

Against this background, a diverse workforce structure promotes an outward-looking and international perspective – key values of the Aviation Group’s identity. “A heterogeneous workforce fits into Lufthansa’s corporate strategy,” clarifies Dr. Martin Schmitt, Head of Group Human Resources Policies. “We take advantage of something that is valuable spiritually in an economic sense as well.”

For a globally active service provider, diversified staffing makes sense economically: The composition of Lufthansa’s employee teams reflects its heterogeneous customer base, which in turn clearly improves customer relations and customer loyalty. On its intercontinental flights, for example, a broad range of meals from different cultures help passengers feel more at home. Whether it is sushi or schnitzel, kosher foods or halal dishes: These meals are always prepared by chefs from the respective countries. At the Aviation Group, however, the feeling of being at home is not linked to culinary options alone. On flights to Beijing, Tokyo and Seoul, cabin crews include not only German but also Chinese, Japanese or Korean flight attendants, for whom Asian politeness is second nature. Lufthansa aims to blend its own German traditions with those of the international passengers on board its flights. “An international team also creates an open outlook and breaks down possible deficits in empathy toward other ethnic groups,” Schmitt observes.

Customers from around the world In the future, Lufthansa intends to keep an even closer eye on the highly varied preferences of its international clientele. “Intensifying competition has inspired us to accommodate the very diverse wishes of our customers from around the world and to offer a broad range of products,” Armin Herzwurm, Vice President Cor- porate Strategy and Head of the Chairman’s Office, outlines the airline’s approach. This goal is embedded in a corporate strategy that has counted for many years on alliances with entirely different Purser Jassin Kraft and companies around the globe and now increases its emphasis on flight attendant Oliver Fuchs in front of the Lufthansa Boeing 747-400 “Thüringen.” 32 Our business / Social responsibility / Environment / Corporate citizenship

At Lufthansa, 3.9 percent of pilots are female. Here Captain Katrin von Wechmar and First Officer Susanne Hertneck.

the ability to integrate. “That also means that the company needs to activities,” says Schmitt. These include the health care program at be open to other cultures. A staffing policy oriented towards diver- Lufthansa Technik, called “More than a job,” as well as the continuing sity fits this strategy fully and promotes it by increasing the level of education offered at the Corporate College and the Lufthansa School internationalization in a focused way,” explains Schmitt. of Business, which are designed with the requirements of lifelong learning in mind. All the same, Lufthansa’s present commitment will Diversity results not only from working closely with people from not suffice in the years ahead. “We are being forced to rethink the other cultures and recruiting personnel for the Group from all over phases of professional life and still have a lot to learn in companies the world – but also from such measures as promoting language – and in society as a whole – about how to deal with aging personnel abilities and giving cultural briefings to current employees. This structures. A cultural revolution will not be necessary, though. We strategy provides for further internationalization of Lufthansa’s already have many structures in place, such as internal advisory units workforce in a natural way, as the Group’s subsidiaries around the across the Group, which we can make increasing use of,” according globe are set to recruit their employees with support from a fully to the Head of Group Human Resources Policies. digitalized application management system. Thus far, most staffing selections have been made locally. Dismantling the glass ceiling About 40 percent of Lufthansa’s employees are women, so it is The new seniors hardly fitting to speak of a minority in this context. Diversity managers, However, diversity refers to more than just people with different nation- however, take an interest in women because they are not yet rep- alities. Lufthansa’s work teams are also heterogeneous with regard resented in senior positions in ways that would correspond to their to age. While many German companies have no employees older qualifications. The emerging lack of professionals and managers is than 50 years, Lufthansa greatly appreciates the experience of those an additional incentive for many companies to strengthen their ties to who have been with the company for a long time – and has done so female employees. Even if the share of women at the Aviation Group since long before increasing the retirement age to 67 forced people is above-average when compared with other German employers, in to come to terms with seniors in the workplace. With an average age the future “even more women are to break through the glass ceiling of 40.1 in 2005, the Aviation Group had a comparatively large number of experienced employees in its teams. Yet today it is anything but a matter of course to view “senior professionals” as an enrichment. In the future, Lufthansa intends to keep “We began back in 1998 to consider the needs of older employees an even closer eye on the highly varied more consciously. Today, we offer an entire bouquet of support preferences of its international clientele.

Balance 2006 Social responsibility 33

Flight attendant Jennifer Therr in conversation with a passenger in Lufthansa Business Class.

Diversity as a factor of business success to the highest levels of management,” explains Anne-Cécile Becker, who took up her duties as Commissioner for Equal Opportunities in Of 92,303 Lufthansa employees, there are … September 2005. Moreover, a lot more women could make a career as pilots. “We have fitting part-time models for most areas,” Becker p 41.2 % women assures. Flexible working hours help fathers and mothers to continue p 12.7 % women in management positions working at Lufthansa during the family phase as well. “With such instruments, which maintain a balance between work and private p 3.9 % of all pilots who are women lives and have a positive effect on people, we achieve a lot more than with legal measures,” Schmitt explains with reference to Germany’s p 145 nationalities represented worldwide emerging equal treatment law. p 66.1 % working in Germany This shows that diversity management is not simply a form of social p 12.6 % employees working in Germany romanticism, but rather a question of productivity in a globalized who do not have German market. Several national and international studies prove that diversity management promotes a company’s soundness, economic efficiency citizenship and attractiveness as employer. Heterogeneous teams are more inno- p vative, productive, motivated and loyal. The turnover rate is correspond- 40.1 years as the average age ingly lower, and the lower costs for recruiting replacement staff make p 18.9 % people over 50 years old economic sense. Besides, new markets open up especially when the behaviors and cultures of the target regions are well known within the p 3.4 % people with disabilities company. Thus, external publics see the Aviation Group as an attractive employer in the German market. “Every year, about 45,000 people “Appreciating this kind of diversity also creates opportunities for adding value,” says apply for a job at Lufthansa. This also gives us a strong position for the Monika Rühl, Head of Change Management and Diversity. “The balance between future as job markets get tighter,” outlines Schmitt. Stefan Lauer sums what is sensible in sociopolitical terms and necessary in economic terms leads up the company’s current position like this: “We have managed to to the success we desire. Nobody must feel excluded. Inclusion of all employees complement German virtues with international ones and to establish mobilizes productivity reserves. Mutual respect is the basis for this.” ourselves in a globalized market.” • 34 Our business / Social responsibility / Environment / Corporate citizenship

Diversity The strength lies in variety

Equal opportunities for women Given the dreaded lack of professionals and managers, more and more companies are thinking about strategies to strengthen their ties with women. The latest study by the Bertelsmann Foundation, “Karrierek(n)ick Kinder” (“Career Boost/ Break Kids”), published in March 2006, confirms yet again this growing interest in female employees. It refers to mothers in management positions as an asset for companies. And yet, only every tenth manager position is occupied by a woman; Women in management positions at the Lufthansa Group in top management the figure is even lower. In this way, Germany lags behind in percent many of its European neighbors.

% 15 While Lufthansa, with 12.7 percent female managers, is clearly positioned above 12.7 12.3 12.7 the German average, there is still a lot to be done with regard to international 9.5 9.5 13.5 13.3 10 compet itors. For this reason, the airline offers a cross-mentoring program, which 7.5 10.0 10.6 provides women support from managers in other companies. Female junior 8.8 managers benefit from the expertise of the external managers, plan their careers 5 in a more focused manner and at the same time become familiar with a different corporate culture. In exchange, experienced managers at Lufthansa act as men- 0 tors for junior managers of the other companies participating in the program. 95 96 97 9899 00 01 02 03 04 05 To awaken interest in Lufthansa as an employer among the youngest of the potential female recruits, the company participates regularly in the German initia- Women in management positions with staff tive “Girls’ Day.” On this day, about 250 girls visited the airline in 2005 to gather responsibility at the Lufthansa Group information about careers in the areas of maintenance and overhaul, information in percent technology and logistics. % 35.3 35 Young and old 32 32.5 An aging population also means far-reaching social changes, such as those in the 30.8 29.2 30 health care and pension systems. This demographic development also creates 28 new challenges for business. As junior employees are set to become a scarce 26.1 26.1 commodity sooner or later, the era that saw employees over 55 years of age 27.7 25 being sent off to early retirement is drawing to an end. Changes in the general social framework will close this option in the future. 20 The Lufthansa workforce reflects this demographic evolution: In 2005, the average 15 age of Group employees rose to above 40 years for the first time. The airline appreciates its “senior professionals” for their work experience and their social 10 competencies, as the cooperation between young and old is proven to increase productivity. For this reason, Lufthansa supports not only the young but also the 5 experienced. While the program “smART” (study & more – the ART of advance- ment) helps maintain contacts with outstanding trainees, the program “Pro 40” helps older employees define where they are with their careers. Here, participants 0 learn to assess their professional development in a realistic manner. And finally, 97 9899 00 01 02 03 04 05 the content and teaching methods of age-specific IT trainings are routinely adapted to the needs of different age groups.

People with disabilities Lufthansa evidences its commitment to people with limited physical or mental abilities not only by giving support to external workshops employing people with disabilities. The company’s appreciation can also be seen in the fact that at some companies within the Aviation Group almost every tenth employee has a physical

Balance 2006 Social responsibility 35

disability. Thus, the airline clearly exceeds legal minimum requirements. However, the Group’s overall ratio is pushed downward by the fact that flight operations place great physical demands on employees, demands which those with handi- caps are often unable to fulfill.

To increase the acceptance and presence of people with disabilities, Lufthansa People with disabilities at the Lufthansa Group has launched a countrywide mentoring program that is unique in Germany. In 2005, distribution in percent 2005, the program’s third year, 14 disabled employees received coaching from managers. In one-on-one sessions, these “mentees” received regular feedback Lufthansa Revenue Services GmbH 9.9 regarding their professional orientation. The mentors, on the other hand, appreci- LSG Group 8.5 Lufthansa Flight Training GmbH 4.7 ated the exchange of perspectives, through which they became more familiar with Lufthansa Technik AG 4.6 the everyday hurdles and coping strategies of people with physical disabilities. Lufthansa Cargo AG 4.8 Lufthansa Systems Group 3.0 In addition, the Aviation Group has an internal representation of handicapped per- Condor Cargo Technik GmbH 2.5 sons, which is in line with legal requirements. It not only provides those concerned Albatros Versicherungsdienste GmbH 2.7 with advice and support but also assists in adapting the workplace to the specific Lufthansa AirPlus Servicekarten GmbH 2.9 disabilities of individual employees. And last, but not least, the apprenticeship Delvag Luftfahrtversicherungs AG 4.3 program for deaf people in Hamburg has proven its worth. Again in 2005, two Deutsche Lufthansa AG 1.7 young persons learned technical professions with support from a sign language Lufthansa CityLine GmbH 0.9 interpreter and completed their training with distinction.

Other minorities The typical employee at a German company tends to be young, male and of Ger- man nationality. While the workforces of many companies are still mainly made up of such “mainstream employees,” Lufthansa teams comprise representatives from a total of 145 nations, some of whom have very diverse cultures and lifestyles. “In this context, we do not want to emphasize the differences in our employees, but rather to make it clear that everybody can contribute to the company’s success,” explains Monika Rühl, Head of Change Management and Diversity. Thus, individual differences are understood to be part of the shared corporate culture and seen by extension as an enrichment. Lufthansa promotes the common interest inher- ent in this difference. Accordingly, it aims its diversity management at avoiding misunderstandings between employees and thus at realizing the full potential of their creative and innovative forces for the airline.

Intercultural competence This makes an understanding of foreign cultures and ways of life a key qualifi- cation for the Group’s employees. Great importance is attached to knowledge of languages, and more and more job interviews and presentations are conducted in English. Every year, about 40 employees are sent to foreign countries because the experience of living abroad is the most immediate way of furthering intercultural competencies. This approach is taken with regard to working together within the company, cooperating with international allies and better understanding the varied preferences of customers from around world. In the area of training and continuing education, intercultural competence also has an established place at Lufthansa. Under the motto “Further with Education,” Lufthansa employees can voluntarily participate in a number of courses, including many in the area of intercultural competence and foreign languages. 36 Our business / Social responsibility / Environment / Corporate citizenship

Work-Life balance Work and private lives in balance

Flexible working hours More and more employees strive for an equilibrium between their work and private lives. Such “living and breathing” contracts do more than just increase satisfaction and motivation. They also enable the Group to use this flexibility whenever needed or in times of crisis for the benefit of the company as a whole. Making work time – and thus personnel costs – more flexible is thus becoming an important competitive factor.

For many years, Lufthansa has been actively shaping the area of modern work- time models. As well as full-time work, employees may choose part-time, part-time for seniors, flexible work time or unpaid special leave, whenever feasible from an operational point of view. The Aviation Group is also one of the few German companies to offer alternating tele-work. Team-coordinated shift models, whereby employees organize their own work and enter the hours they are to work into a master schedule, are another option. A Group-wide exchange of “Best Practice” examples takes places regularly. Especially innovative work-time models can be accessed in a database on the intranet to promote creative solutions within the Group.

Support for families The European report of “fast 4ward,” a project concerned with the compatibility of family and professional life, demonstrates that German companies still give too little support to employees with children. While Germany heads the European rank- ings with regard to regulations such as parental leave and financial support, the country’s birthrate is one of the lowest in Europe.

Part-time employment at the Lufthansa Group Lufthansa started early on to make it easier for employees to be parents as well in percent – whether by individually reducing working hours, working from home or getting continuing education during a “baby break.” These measures help to significantly 40.3 41.1 % reduce the duration of parental leave, which is criticized by experts as being too 40 long, and thus the related loss of professional qualifications. As a result, the con- 35.0 35.5 tact between company and employees is maintained; the reentry of mothers and 35 fathers takes place earlier and more successfully. 32.0 32.0 30.7 29.7 30 It is above all child care that poses an often insurmountable hurdle for working 27.6 parents. Therefore, Lufthansa assists them with finding a suitable solution through 25.2 24.6 24.6 25 its contractual partner “Family Service.” In Frankfurt, should an after-school care 23.5 22.5 center remain closed unexpectedly or should a child minder fall ill, the ad-hoc 20.1 child care of “Fluggi-Land,” organized by Fraport, can help. Since May 2005, this 19.2 19.2 20 18.0 option for bridging the gap has been offered by Family Service in 11 further Ger- man cities. At the same time, the Group takes the specific problems of an aging 15.6 15.1 15 13.0 society into account. Employees looking after a family member in need of care 14.7 13.4 13.9 may take special leave. And with “Elder Care” – a further component in the Family 12.4 10 Service portfolio – the airline also offers a care service for older family members. 9.9 9.9 9.6 5.7 8.4 5

0 96 97 9899 00 01 02 03 04 05 share of part-time among all female employees total part-time share of part-time among all male employees

Balance 2006 Social responsibility 37

Employment policy Working together for success based on partnership An employment policy based on partnership is a fundamental pillar of Lufthansa’s corporate strategy. The Aviation Group is well aware that motivated and committed employees are an important resource.

Employees’ average age at the Lufthansa Group Preserving jobs in years More than 60,000 people work for Lufthansa in Germany alone. This makes the airline one of the country’s largest employers, one that has proven itself “as a

42 reliable partner even in times of economic difficulty,” as CEO Wolfgang Mayrhuber emphasizes. Lufthansa pursues a human resources policy that aims at avoiding 41.1 41 operations-related dismissals. Slight variations in the number of people employed 40.6 by the Group are chiefly due to portfolio changes. In Munich, more than 350 new 40.1 40.2 40.2 40.1 employees were hired and 50 new apprentice positions were created last year. 39.8 39.9 40 39.6 In addition, more than 230 pilots of the long-haul fleet were stationed in Bavaria’s capital, doubling the number of flight captains there. In the years ahead, the 39.1 39 38.7 38.8 workforce in Munich is set to increase by more than one-third to a total of 10,000 38.5 38.4 38.3 38.3 people. The Aviation Group is similarly optimistic with regard to its operations at 38 Frankfurt Airport. Here, about 500 new employees are to be hired this year. In Ger- 37.7 many as a whole, the airline is set to create about 2,400 new jobs according to its 37.0 37 current planning.

36.3 36.4 36.1 This positive development is made possible by a proactive human resources poli- 36 cy, which does not react only when under pressure, but rather acts early on to formulate and discuss the issues and questions concerning the Group’s immediate 35 future. This approach also creates a framework for implementing policies. Thus, the present degree of flexibility in working conditions also enables the Group to 34 react effectively to fluctuations. This helps to keep know-how in the company. 99 00 01 02 03 04 05 average age of all female employees Codetermination within the company average age of all employees In the framework of the different forms of employee participation prescribed by average age of all male employees law, Lufthansa fosters a codetermination culture that tackles problems and conflicts of interests, discusses issues and shapes solutions in the spirit of fairness.

“An early, open and intense dialog is the key for maintaining the balance between the interests of the company and its employees, a balance that is all-important in jointly achieving success in a competitive environment,” explains Dr. Martin Schmitt, Head of Corporate Labor Relations.

Employee Feedback Management Age structure at the Lufthansa Group Possible conflicts of interests are also investigated by the employee survey Employ- 2005, distribution in percent ee Feedback Management (EFM), which takes place at regular intervals. Lufthansa launched this initiative in 1998 to obtain feedback concerning employee satisfaction. 60 and older 2.5 The goal is to identify weak spots within the Group and to remove them in a timely 55 to 59 7.2 fashion. About half of all employees have given their personal evaluations of general 50 to 54 9.1 45 to 49 12.2 conditions concerning their work, cooperation and management. The last survey, 40 to 44 19.9 the results of which were published in March 2005, showed that most employees 35 to 39 19.3 were largely satisfied with their working conditions. On a scale from 1 to 5 (highly 30 to 34 13.8 satisfied to highly dissatisfied), the average satisfaction index reached 2.61. Eight 25 to 29 11.4 of ten employees would again chose Lufthansa as their employer. And trust in the 20 to 24 3.8 Group’s competitiveness, with an average rating of 2.5, was shown to be good. At 18 to 19 0.6 the same time, many employees doubted that top managers especially had a genu- younger than 18 0.2 ine interest in the concerns of their employees. As a result, the airline adopted the goal of improving communications between the Group’s hierarchical levels. 38 Our business / Social responsibility / Environment / Corporate citizenship

Employment at the Lufthansa Group Profit sharing hirings vs. total retirements The employment policy based on partnership is also visible in the participation of employees in the Group’s business success. Employees paid according to 4,369 05 4,583 a wage agreement can chose between a cash payout, employee shares or 04 2,223 the program “LH-Chance,” whereby employees receive Lufthansa shares at no 2,320 cost alongside additional shares financed with an interest-free loan. In 2005, 3,605 03 4,395 Lufthansa employees received a payout of 200 euros for the fiscal year 2004 or shares valued at 255 euros. The program “LH-Chance” represented a value of 02 5,391 4,723 295 euros. Almost every second employee chose one of the two share options 01 9,340 6,808 in the context of the profit sharing for 2004. With “LH-Performance,” the Aviation Group has offered a program specifically for managers and employees below the 00 8,007 4,731 board level paid outside of wage agreements since 1997. This program blends 99 8,631 the employees’ own investments in Lufthansa shares with the granting of an out- 5,887 performance option, which applies if the Lufthansa share performs better than the 98 7,802 7,577 shares of direct competitors. All of these programs are popular. For good reason: 97 4,860 In September 2004, the investment fund “Union Investment” rated the program 4,280 “LH-Performance” as the best share program for managers of all 30 companies 96 5,581 4,171 represented in the DAX German stock market index – for the fourth time running. 95 8,321 5,402 Ideas management Every year, Lufthansa employees prove via “Impulses,” the airline’s idea manage- total hirings total retirements ment system, that they have a vast potential for innovative ideas. In 2005, these creative minds enabled their employer to save more than 5 million euros. About 2,400 employees presented their suggestions for improvements, most of them on the intranet “eBase.” Each idea that was implemented yielded an average savings of 9,000 euros per year for the airline. “Impulses” gathered ideas for improving cost efficiency in the areas of work environment, cooperation, quality and services. With support from the “Impulses” pages in “eBase,” interested thinkers can check very easily which suggestions have already been made and what kind of bonus they might expect. Then they can conveniently post their ideas online and check the status of processing at any time. This can pay off handsomely, as the highest bonus amounts to 102,000 euros.

Training and continuing Foundation for the future education Training At the Aviation Group, training is of great importance and opens up excellent opportunities for a successful start in a professional career – either directly or indirectly. In this spirit, for instance, Lufthansa Technik cooperates with a renowned company providing temporary employment to secure jobs for its former apprentices even in times when the company’s personnel needs are less pronounced. Last year, Lufthansa employed about 1,600 trainees in Germany. Interested young people can choose from almost 40 professional qualifications taught in Germany’s dual apprenticeship mode. These range from aircraft mechanic and Airline Ser- vice Professional to doctor’s assistant.

Beyond training its future junior employees in-house, Lufthansa has been part of the educational initiative business@school started by the Boston Consulting Group since 2001. In 2005, 34 airline employees taught high school students across Germany practice-oriented business knowledge from their firsthand experience.

Balance 2006 Social responsibility 39

Distribution of employees within the Lufthansa Group University studies 2005, in percent Dual training paths are increasingly popular, as ever-more employers recognize the necessity of complementing practical know-how with academic knowledge. Lufthansa Services and financial companies IT Services 1.20 % takes this development into account by participating in currently nine dual training 3.56 % courses. In the business area, for example, interested employees can obtain a double Logistics Passenger Business diploma in Business Management (BA) and as an Airline Professional from Lufthansa 5.10 % 40.13 % and the Berufsakademie Stuttgart (University of Corporate Education). Additionally, in MRO cooperation with the Berufsakademie Mannheim, Lufthansa Systems offers a degree 19.35 % course in Information Technology (BA) with an emphasis on Business. Furthermore, Darmstadt Technical University and the Aviation Group share the training for a degree course in Mechanical Engineering with an emphasis on Aviation.

In cooperation with the renowned European Business School (ebs), Lufthansa has Catering developed the innovative Bachelor’s degree course in “Aviation Management,” 30.65 % which is specifically tailored to the requirements of aviation in general and those of the airline in particular. To strengthen their intercultural competencies, the airline’s future junior managers also complete a one-semester internship followed by a turn of duty abroad. All courses and events take place in English. Social competencies and networked thinking are also important aspects of this course of studies. After two years, students take their final exams before the Frankfurt Chamber of Commerce to become Aviation Management Professionals. Anyone interested in this degree course can apply at www.be-lufthansa.com.

Continuing education In 2005, the Lufthansa School of Business (LHSB) again received the “International Best Practice” prize for professional development for managers, given by the Ameri- can organization Corporate University Xchange in cooperation with Fortune Magazine. Thus, the Aviation Group came out ahead once again in comparison with more than 100 internationally active companies. Lufthansa sets worldwide standards by linking management development and corporate strategy. Since its foundation in 1998, Germany’s first corporate university has received a wide range of awards, including the title of best European corporate university.

In 2005, the management consulting firm Hewitt Associates cooperated for the second time with Kienbaum to determine the most attractive employer for managers in Germany and Europe. With its system of talent identification and career development, Lufthansa managed to climb “from zero” to sixth place in the “Top Companies for Leaders” in Europe. The survey included 101 of Europe’s largest companies, including 38 German businesses.

In the programs of the LHSB, Lufthansa managers very often go “across borders” to learn specifically from differences in (corporate) cultures. For example, the “Interna- tional Master’s Program in Practicing Management” (IMPM) teaches them – together with participants from other companies, continents and cultures at different business schools in America, Europe and Asia – to be more aware of the numerous differences in markets and ways of thinking and how to harness these insights for their own management practice. In other custom-made courses which prepare participants for General Management tasks (GMP, F-Kurs), the exchange of experiences with other internationally active companies is an integral part of continuing education. Beyond that, the LHSB has initiated a program for experienced managers, “C-Experience,” which was already completed by 147 managers in its first year of existence. They, too, visited other companies, learned from their differences, expanded their intercultural competencies, and not least profited from the invaluable experience of their participating colleagues, who have many years of professional and management practice. 40 Our business / Social responsibility / Environment / Corporate citizenship

To help advance the professional and personal development of all the airline’s employees, the LHSB’s Corporate College offers courses on subjects including IT, business knowledge and personality development. Special programs, such as the recent course “Managing Volatility,” focus on current topics in well-attended presentations and offer participants concentrated information and tips on how to stay fit for continuous change. Increasingly, these courses use Internet-supported teaching materials, which employees can access from their computers at home. In 2005, more than 8,000 Lufthansa employees took advantage of the many learning options the LHSB offers.

For its Training Center in Seeheim, near Darmstadt, also widely known as the “Klaus Bonhoeffer House,” Lufthansa is planning a comprehensive renovation and modernization, expected to begin in August this year. At the same time, the airline will be developing some new concepts for the Training Center. Here, the airline’s employees were asked to turn in their suggestions by September 2005.

Employee safety Prevention is better than cure and health care Lufthansa sets standards in the area of travel medicine and preventative health care for its employees. Lufthansa Medical Services is present at three locations and has a team of ten physicians at its main office in Frankfurt. Another six medical doctors are available in Hamburg and Munich. The Lufthansa Base in Frankfurt also serves as headquarters for the Deutsche Akademie für Flug- und Reiseme- dizin (German Academy for Flight and Travel Medicine), which was founded by Deutsche Lufthansa AG and the Deutsche Gesellschaft für Luft- und Raumfahrtme- dizin (German Association for Aviation and Space Medicine). The purpose of this nonprofit institution is to provide training and continuing education for physicians specializing in aviation medicine and to carry out research on air travel medicine and other subjects.

Should health problems arise, the Group’s employees benefit from the professional knowledge of the Medical Services’ physicians specializing in industrial, aviation and tropical medicine. They are also available for advice on travel prepa- rations and preventive vaccinations.

The primary goal, however, is to ensure that health problems and accidents do not occur in the workplace. More than 20 employees of the department Group Employee Safety, most of whom are safety engineers, are available at the airline’s locations in Frankfurt, Hamburg, Munich and Berlin to identify work-related hazards and strains causing adverse health effects and to suggest effective coun- termeasures. The department’s efforts lead to numerous preventative activities, ranging from selecting appropriate work equipment and designing or adapting workplaces and work processes to auditing current operations with regard to maintaining high standards in technical installations, fire protection and emergency preparedness. These protective measures are especially important in the technical and operational areas on the ground and in the air, where they have a long tradition. Recent additions in the area of employee safety are recommendations concerning ergonomically designed work processes and equipment. There are also tips on how employees working in offices can improve safety and health protection, often by quite simple means. For this purpose, the department recently introduced a custom-made IT-based training and information program, specially designed for employees working in offices and at computer screens.

Balance 2006 Social responsibility 41

In addition, counseling, training and presentations on preventive health care are all provided to help Lufthansa employees learn more about how they can protect their health. More in-depth information on this subject is also featured on the intranet “eBase.” Lufthansa Technik has created the work group “LHT – more than a job,” which is designed as a network of all the company’s health care players and provides integrated health management. It comprises the works council, Human Resources, Medical Services, Social Counseling, the Lufthansa Sports Association LSV and the cafeteria. In 2005, the Medical Service once again offered free flu vaccinations, of which about 5,000 employees took advantage. This and the many other preventative measures demonstrate that corporate health care is a high-rank- ing concern at Lufthansa. This is also illustrated by the airline’s regular adaptation of its diverse workplaces to the latest insights in job safety.

Lufthansa Social Counseling is a service that enhances awareness of crises and conflicts in the workplace and helps to improve social competencies and communication among the airline’s employees. For example, it gathers the different parties in a conflictual situation around the same table in moderated group discussions to develop constructive solutions for the problems at hand. Beyond that, the Lufthansa Group adopted a new guideline for the prevention of addiction in February 2006. In this context, experts have compiled helpful information on addictive behaviors on the intranet, along with tips on how to broach the subject with superiors and colleagues. This concept integrates the competencies of Social Counseling, the Medical Service, withdrawal clinics and rehabilitation institutions. 42 Our business / Social responsibility / Environment / Corporate citizenship

Environment Four pillars for climate protection

To protect the Earth’s climate, emissions of “greenhouses gases” must be limited. One possible path in this direction could be the trading of emissions certificates. To ensure that this approach can take root in aviation as well, it should be tied into a global concept – together with other measures to cut emissions.

Balance 2006 Environment 43

The Earth is getting warmer. The year 2005 was the warmest ever nations: While Germany intends to cut greenhouse gas emissions since 1880, when temperatures were first recorded officially. And by 21 percent, Spain and Greece can increase them by 15 and 25 the six warmest years have all been since 1998. One of the main percent respectively. Beyond Europe’s boundaries, emerging coun- reasons for this trend, in the estimation of scientists, is the “green- tries such as India, China and the Arabic states are exempted from house gas” carbon dioxide (CO2). Its concentration in the Earth’s all regulations. And the USA, the world’s largest producer of green- atmosphere has increased significantly since the beginning of indus- house gases, has never even ratified the Kyoto Protocol. Despite trialization and the increasing combustion of coal, oil and gas. this, Europe is working on finding ways to include these countries in efforts to protect the Earth’s climate. To put the brakes on a further warming of the Earth, the signatory states of the Kyoto Protocol committed themselves in 1997 to limiting For comparison: Europe currently has a 14-percent share in the emissions of greenhouse gases that adversely affect the climate. The worldwide emission of greenhouse gases. This is expected to fall member countries of the European Union, for example, have agreed below 10 percent by 2050, as emissions in emerging countries are to lower their emissions from 2008 to 2012 by 8 percent compared set to increase substantially over this period. These figures show that with the base year 1990. But efforts are distributed unevenly among significant success in the fight against climate change cannot be achieved in Europe alone, but only by means of shared and global concepts.

Even if its own share in the total volume of global emissions is comparatively minor, Lufthansa has taken the issue of climate protection very seriously for many years.

Emissions trade for energy-intensive industries One mechanism to limit emissions that adversely affect the climate is the trading of emissions certificates, as agreed in the Kyoto Protocol. The European Union introduced this on January 1, 2005. But for the time being it applies only to energy suppliers and energy-intensive industries such as aluminum or cement production. For now, the transport sector is exempted. Yet in Europe it has a 21-percent share

of CO2 emissions , of which 92 percent is attributable to road traffic (passengers and goods) alone.

Aviation’s share in the total volume of greenhouse emissions is often overestimated: It stands at 3 percent worldwide. Between 1990 and

2002, worldwide CO2 emissions increased by 3,001 million tons

to 25,683 million tons. By comparison, the total CO2 emissions of air transport within Europe, at 52 million tons in 2004, are rather minor. Despite that, the European Commission plans to include the

Trading emissions rights:

In the framework of a trading system for emissions rights, national states issue certificates to the corporations concerned, giving the latter the right to emit a

certain quantity of CO2. Here, one certificate allows emissions of 1 ton of CO2. The total quantity of certificates issued is fixed for a predetermined period of time and is limited in accordance with the targeted reduction in emissions. Companies which reduce their emissions can in turn sell the certificates they no longer need. According to the systems’ proponents, this creates an economic incentive to invest in technologies that cause less burden on the environment. In other words,

investments will be made where the cost of avoiding CO2 emissions is lowest and efficiency highest. 44 Our business / Social responsibility / Environment / Corporate citizenship

aviation industry in the European market of emissions trading in the corresponds to avoiding emissions of 5,670 tons of CO2. These and years ahead because of its accelerated growth. Based on expected other measures have allowed Lufthansa to generate almost half of growth rates for air transport, the Commission has calculated that its growth since 1991 in an environmentally neutral way. aviation-related emissions of carbon dioxide are set to rise by 37 percent, from 52 to 71 million tons. Despite this increase, European Success stories like these are unthinkable without support from

air transport’s share in the total volume of CO2 emissions in the science and research. This is one reason why Lufthansa not only European Union will continue to be relatively minor. Today, aircraft advances technological progress but also supports a number of movements within Europe only have a share of about 1 percent of important climate research projects (see also “Research at Luft-

the total CO2 emissions in the EU. “In its future decisions, the EU hansa” p pages 70 to 72). Scientific insights are the very basis for must not lose track of proportionality,” exhorts Karlheinz Haag, Head focused environmental measures. This approach is illustrated by of Group Environmental Concepts at Lufthansa and adds: “Even if the five Airbus A340-300 long-haul aircraft that have been flying worldwide air transport were to be stopped altogether, only marginal since 1994 in the framework of the EU research program MOZAIC changes would result in the area of greenhouse gases.” (Measurement of ozone by Airbus in-service aircraft). In 2005, two of these were operated by Lufthansa. On their scheduled flights, Lufthansa increases efficiency and lowers emissions they continuously measure the concentrations of ozone and water Even if its own share in the total volume of global emissions is vapor in the atmosphere. A new era of basic atmospheric research comparatively minor, Lufthansa has taken the issue of climate was recently launched with the European project CARIBIC (Civil protection very seriously for many years. “This is proven by our Aircraft for the Regular Investigation of the Atmosphere Based on

successes in reducing kerosene consumption and thus also CO2 an Instrument Container). A highly advanced, mobile laboratory emissions,” explains Haag. In this way, Lufthansa has increased its aboard a Lufthansa Airbus A340-600 has been collecting data on efficiency by about 30 percent since 1991. Since then, its specific the atmosphere’s composition since December 2004. Scientists kerosene consumption has fallen by almost 2 liters per 100 pas- use this data to define climatic models, with the aim of calculating senger kilometers. climatic changes

One reason for such increases in efficiency is the operation of Emissions Containment Policy as a way out state-of-the-art aircraft. If Lufthansa Passenger Airlines had pro- The aviation industry is well aware of its responsibility to limit the duced its 2005 transport performance with its 1991 fleet, it would emissions of greenhouse gases. For this reason, the Association of have consumed about 2.3 billion liters more kerosene and emitted European Airlines (AEA) and other industry representations count 5.8 billion tons more carbon dioxide. Seen over a longer time on an integrated global master plan, the Emissions Containment frame, efficiency gains become even more distinct: While aircraft Policy, rather than on the hastily introduced emissions trading, in the 1970s consumed about 12 liters of kerosene to carry one which threatens to result in substantial competitive disadvantages passenger over a distance of 100 kilometers, a Lufthansa Airbus for European aviation. Measures such as improvements in air

A340-600 needs only about 4.2 liters per passenger to accomplish traffic management can lead to cuts in CO2 emissions faster, more the same task today. Lufthansa’s new flagship, the Airbus A380- efficiently and with less effort. The foundation for this concept is a 800, is expected to reduce this value yet again – to about 3.3 liters. four-pillar model consisting of technological progress, improved Furthermore, the Group optimizes the flight routings of its aircraft. infrastructure, operational measures to increase efficiency and Apart from economic efficiency, this complex task is also guided by complementary economic measures, such as global emissions legal requirements, territorial regulations and internal safety stan- trading. dards, all of which must be adhered to. Nevertheless, Lufthansa has been successful in devising a more direct route to Hong Kong, for example, which saves 15 to 20 minutes travel time on each flight. The positive effect: kerosene savings of 1,800 tons per year, which

1: Technological progress 2: Improved infrastructure 3: Operational measures 4: Economic measures p Innovations in aviation and p More efficient use of air p More efficiently-sized aircraft p Globally designed trade of engine technologies space p Optimized flight routes and emissions rights to comple- p Alternative fuels p Needs-adapted airport speeds ment the other three pillars, which have priority in any infrastructures p Optimized processes on the case. p No subsidies for micro-air- ground ports

Four pillars for climate protection

Balance 2006 Environment 45

Comparison air space Europe - USA Source: Eurocontrol, 2001

Pillar 1: Technological progress By harnessing technological innovation, the air transport industry has reduced its kerosene consumption – and thus its CO2 emissions per passenger and kilometer – by 70 percent since 1970. This approach is to be maintained resolutely. That is illustrated by the goals of the European air transport industry, which correspond exactly with the plans drawn up by ACARE (Advisory Council for Aeronautical Research in Europe): Kerosene consumption and

CO2 emissions are to be cut by a further 50 percent by 2020. And emissions of nitric oxides (NOX) are to be reduced by as much as 80 percent. Opportunities to achieve this are offered by advances in aircraft and engine technologies and in alternative fuels. The aviation industry supports and sponsors research programs in these areas. Lufthansa has adopted the ambitious goal of reducing Europe (air space 10.5 million sq. km) p 47 air traffic control service providers (civil and military) its specific fuel consumption by 38 percent between 1991 and 2012 p 58 air traffic control centers – of which 29.2 percent has already been achieved (see “Environ- p 22 operating systems mental goals and measures” p pages 59 to 61). p 30 programming languages p 480 flights per air traffic controller p Pillar 2: Improved infrastructure 687 US$ cost for air traffic control per flight Improving infrastructure on the ground and in the air can also open up considerable savings potentials. In 1999, the Intergovernmental Panel on Climate Change (IPCC) noted in a report that air traffic management and other operations-related measures can reduce the kerosene consumption of aircraft by 8 to 18 percent. The greatest potential in this area is linked to an improved use of air space. Experts estimate the savings potential here to be 6 to 12 percent by 2020. “There is a real need for action to optimize European air traffic control. Nothing has happened in this area for ten years,” Haag points out. “Fragmented control of Europe’s air space causes the airlines additional costs of more than 2 billion euros and means about 10 million tons of avoidable CO2 emissions. It is the responsibility of the EU member states to develop a joint mobility strategy.” USA (air space 9.8 million sq. km) p To drive the implementation of this initiative forward, 29 partners 1 air traffic control service provider (civil and military) p 21 air traffic control centers have joined forces in SESAR (Single European Sky Implementation p 1 operating system Programme). It unites airlines such as Lufthansa, airport operators, p 1 programming language air traffic control authorities and other players from the aviation p 900 flights per air traffic controller industry. In 2005, the aircraft of Lufthansa Passenger Airlines were p 380 US$ cost for air traffic control per flight forced to spend the equivalent of 420 days flying in holding patterns. By avoiding this type of delay alone, Lufthansa could have Fragmentation of control in European air space means higher costs, emitted about 110,000 fewer tons of CO2. This corresponds to greater inefficiencies and unnecessary fuel consumption. carrying more than 300,000 passengers from Frankfurt to Mallorca and back again.

Against this background, it is indispensable that bottlenecks at hubs and regional airports be avoided and that airport infrastructure be swiftly adapted to demand. Yet the reality looks quite different: State subsidies are still being used to expand micro-airports – without assessing demand. Not only does this lead to massive overcapacities, but it also causes avoidable burdens for the environment. “Phasing out such subsidies is therefore the most efficient contribution to worldwide climate protection that air transport could make,” Haag explains. 46 Our business / Social responsibility / Environment / Corporate citizenship

previous flight route optimized flight route L888

China

HKG

A more direct route to Hong Kong helps Lufthansa save not only time but also kerosene: In this way, 1,800 tons of fuel could be conserved in 2005. This corresponds to avoiding

5,670 tons of CO2.

In 2005, the aircraft of Lufthansa Passenger in CO2 emissions. Among the available economic instruments, the Airlines were forced to spend the equiva- International Civil Aviation Organization (ICAO) considers global lent of 420 days flying in holding patterns. trading of emissions rights – unlike taxes and fees – a suitable system over the long term to save CO2 emissions in those areas of the aviation industry where efficiency gains can be realized most readi- ly. “From our perspective, taxes on kerosene or fees for emissions are not a solution because they distort competition,” underlines the Pillar 3: Operational measures Head of Group Environmental Concepts at Lufthansa. “The econo- The third pillar in the model of the Association of European Airlines mic damage is much greater than the ecological advantages.” involves improved operational measures on the ground and in the air. More efficiently selected aircraft sizes, improved load factors, But before any trading system of emissions rights can be applied optimized flight routings and speeds, and optimized processes in to air transport, according to the International Air Transport Associa- ground handling can all contribute to reducing fuel consumption tion (IATA), significant criteria must be fulfilled: Firstly, it should be a

and CO2 emissions – as the example of Lufthansa illustrates. More global system that is not combined with taxes and fees. Secondly,

direct routings to Asia have opened up the potential to save a full it should focus on CO2, as other greenhouse gases that concern percent of fuel at Lufthansa alone. Moreover, the airline has been air transport are not included in the Kyoto Protocol and their effect increasingly using variable flight speeds since February 2005, on the Earth’s climate has not yet been demonstrated by sound which allows long-haul aircraft to take better advantage of winds research results. Thirdly, there should be broad access to the mar- and thus to reduce kerosene consumption and emissions. ket of emissions rights, which must not be obstructed or limited. And fourthly, the system should be transparent and easy to use. Pillar 4: Economic measures While economic instruments form the fourth pillar of the Emissions “Air transport is willing to make a constructive contribution to this Containment Policy, the AEA believes that priority should be given debate. At the same time, we need more discussion and analysis to the first three. Not only can these be implemented more easily, to understand the complex subject of climatic change and trading more rapidly and more fairly with fewer competitive distortions of emissions rights,” Haag explains. “Shooting from the hip doesn’t – but they also open up a substantially larger potential of savings get us any further.” For it is also important to consider the propor-

Balance 2006 Environment 47

En route in the service of climate research: On long-haul flights at an altitude of 12,000 meters, the air intake system under the fuselage of the A340-600 “Leverkusen” collects air samples that yield climate data. tions: A trading system for emissions rights covering air transport do 25 percent of global corporate revenues depend on aviation, within the EU alone would apply to only 9 percent of the CO2 but it also directly and indirectly creates 29 million jobs around the emissions from worldwide air transport. And in comparison to the globe, of which 7.5 million in Europe alone. total CO2 output in the EU, such a system would only cover about 1 percent of emissions. The aviation industry has long since seen the writing on the wall: It is well aware of its responsibility for the environment and willing to “It is important that a coherent EU air transport policy create an make its contribution in the fight against climate change. Therefore, equilibrium between economic and ecological parameters,” says the ICAO will develop concrete suggestions for an internationally Haag. “Less mobility also means less economic activity.” That binding trading system of emissions rights by 2007 – combined is because aviation provides the fastest transport network world- with suggestions on how emissions could be reduced by improved wide and represents one of the most important infrastructures for infrastructures and more efficient flight management. • ongoing economic development. Aviation expands markets, improves the efficiency of production and supports investments. Not only

Comparison of CO2 emissions per year:

Total CO2 emissions (2002) Worldwide: approx. 25,700 million tons Europe: approx. 5,000 million tons

CO2 emissions in civil aviation (2004)* Total worldwide air transport: approx. 607 million tons All flights taking off in Europe: approx. 130 million tons All flights within the EU: approx. 52 million tons

* Source: “Giving wings to emissions trading,” Report for the European Commission, DG Environment, July 2005 48 Our business / Social responsibility / Environment / Corporate citizenship

Environmental management At the service of sustainability

Environmental protection has long been a tradition at Lufthansa and is firmly anchored in the Group’s Mission Statement. As early as 1996, the airline passed Environmental Guidelines, which identify the careful use of resources as one of its central corporate goals. The best evidence that this is not merely lip service is the Group-wide environmental management: The employees working in this area systematically capture and evaluate every single corporate process and activity with an impact on the environment.

Group Executive Board Reporting Group Consultation

Guidelines for Reporting environmental care/ from Company legal requirements

Reporting Group/affiliated Group Environmental companies Concepts Consultation Implementation Reporting of guidelines/ Consultation Exchange legal requirements

Exchange Environmental Exchange Diagram of procedures and processes for environmental (Statutory) Contact partners Forum matters within German Group companies with environmental company representative environmental issues relevance and a Lufthansa majority interest.

The Group’s Executive Board bears the full responsibility for fulfilling environmental care tasks. The Head of Group Environmental Concepts, whose department coordinates Group-wide environmental goals, strategies and measures, reports directly to the Executive Board. The basis for this work is a comprehensive sustainability database, where annual data from all Group companies concerning energy and kerosene consumption, emissions, noise, waste materials, and freshwater and wastewater volumes are compiled. The database also includes important employee and economic data. Lufthansa’s environmental experts then derive key performance indicators, which then serve to measure and continuously improve the Group’s environmental performance. In addition, the Head of Group Environmental Concepts explains and represents Lufthansa’s position with regard to environmental care in political committees, associations and institutions.

Each Executive Board and each German Group company with environmental relevance has either an Environmental Commissioner or a contact person for such issues. In the framework of the Environmental Forum, the 25 Environmental Issues Contact Partners of the Lufthansa Group meet twice a year to consult on shared goals and activities in the area of environmental care, to coordinate measures and to exchange experiences.

Environmental training is also a top priority across the Group. As a result, pilots learn how to minimize kerosene consumption and noise emissions, and flight attendants are well acquainted with environmental care on board. And at Lufthansa Technik, the topics of environmental protection and job safety are systematically covered in its training programs. Committed to environmental care: The members of Lufthansa’s Environmental Forum regularly share their experiences. Communication with the public and employees also plays an essential role here. Lufthansa attaches great importance to a constructive and open dialog with all stakeholder groups. Now already in its 11th year, Balance informs readers about

Balance 2006 Environment 49

current developments at Lufthansa in the areas of air transport, environment and sustainability. More in-depth information concerning ecology, social responsibility, corporate citizenship – including information from the Group companies – can be found on the Internet at http://responsibility.lufthansa.com, which is currently being redesigned.

Lufthansa Technik – Environmental management now fully integrated In 2005, Lufthansa Technik started its work to implement an integrated environmental management system. It depicts requirements concerning quality control and aviation law together with those derived from environmental protection and job safety in a process-oriented manner. The advantage of system integration is that it will soon be much easier for all Lufthansa Technik employees to gain an overview of rules, regulations and guidelines. They have swift and easy access to relevant information. At the same time, operational processes are documented in a transparent and comprehen- sible way.

As early as 1996, Lufthansa Technik became the first company in the aircraft maintenance industry to introduce an environmental management system based on the European eco-audit regulations. Three years later, the company was certified according to the international environmental standard ISO 14001. Many of Lufthansa Technik’s international customers now require this certification as a condition for award- ing contracts. For 2006, this provider of technical aviation services is also planning its first certification in accordance with the international job safety standard OHSAS 18001.

In October 2005, Condor/Cargo Technik (CCT) transferred into Lufthansa Technik’s license under German aviation law. The environmental management system planned there is to correspond as closely as possible to that of the parent company. CCT is planning to implement this management system in 2006/07, following its move to a new maintenance hangar. As a subsequent step, certification according to the ISO 14001 standard has been planned. p www.lufthansa-technik.com

Lufthansa CityLine – A top position in environmental management Lufthansa CityLine has operated an environmental management system covering all business areas and the company’s three locations since 1999. Thus, the airline assumes a top position in international comparison. It also continues to be the only airline worldwide to be certified in accordance with both the European eco- audit regulations EMAS and ISO 14001. In 2003, Lufthansa CityLine introduced a process-oriented management system that includes all operations-related processes and has proven its worth in daily practice. This system anchors environmental management as a “management task.” This ensures that environmental protection is a “cross-sectional task” observed in all business processes. p www.lufthansacityline.com

LSG Sky Chefs – Environmental database for Europe/Africa In 2005, LSG Europe/Africa completed the creation of an environmental database, linking its 51 locations in Europe and South Africa. All environmentally relevant Lufthansa CityLine: Since June 2006, the airline has been revalidated for the third time in a row according to the Euro- performance ratios and information have since been captured centrally. The pean eco-audit regulations EMAS and recertified according to advantage is that data for the annual Environmental Report is ready for use. In the worldwide environmental standard ISO 14001. addition, this data shows managers which locations and areas still offer untapped energy conservation potentials.

Environmental goals and measures concerning environmental management are found on p page 59. 50 Our business / Social responsibility / Environment / Corporate citizenship

Kerosene and emissions Transport more, consume less

Fuel consumption For Lufthansa, saving kerosene became an economic and ecological given long absolute changes compared to 2004 before the latest substantial increase in the price of crude oil. This is well illustrated by its fleet, which at all times corresponds to the latest technological standards. This Kerosene passengers 5,447,814 tons + 4.1 % approach has allowed Lufthansa to continuously decouple the development of its Kerosene freight 1,303,541 tons – 5.1 % transport performance from that of the related environmental effects since 1991. Kerosene total 6,751,355 tons + 2.2 % While transport performance increased by 218.4 percent, fuel consumption rose by 115.6 percent. Thus, almost half of the airline’s growth took place with no additional burdens on the environment.

Emissions from flight operations But Lufthansa has further efficiency goals firmly in sight: The specific fuel consump- absolute changes compared to 2004 tion of the passenger fleets is to be reduced by 33 percent from 1991 to 2008 – and by 38 percent by 2012. Related to this is a simultaneous decline in specific emis- CO 21,293,772 tons + 2.2 % 2 sions of pollutants. In 2005, the Lufthansa passenger fleets had already achieved a NOx 97,281 tons – 0.3 % reduction of 29.2 percent. With an average kerosene consumption of only 2.8 liters CO 15,303 tons – 1.9 % per 100 passenger kilometers, the Airbus A330-200 of Thomas Cook Airlines again UHC 1,871 tons – 16.9 % won the title of most fuel-efficient type of aircraft in the Group. The most fuel-efficient aircraft operated by Lufthansa Passenger Airlines in 2005 was the Airbus A340-300, with an average consumption of 4.0 liters per 100 passenger kilometers. (See also the bar chart “Specific fuel consumption by type of aircraft” on p page iv, on the inside cover.)

How Lufthansa conserves kerosene and avoids emissions To reduce kerosene consumption and emissions, Lufthansa not only relies on its Specific emissions modern and environmentally compatible fleet. It also works continually on opti- in passenger transport mizing its flight routings in order to avoid detours – especially on routes to Asia. in kilograms, grams/100 passenger kilometers Thus, on those Asian routes that have already been optimized, Lufthansa has 13.1 been able to conserve about 1 percent of fuel. In 2005, for example, the route to kg/100 pkm 13 12.6 Canton was optimized. This resulted in an annual savings of about 1,000 tons of 13.0 kerosene and 3,150 tons of CO . 12.5 11.8 11.7 12 2 11.1 10.9 11 11.5 11.4 Beyond that, Lufthansa has increasingly been using variable flight speeds since 11.0 February 2005, with the aim of letting long-haul aircraft take better advantage of 10 winds. In 2005, this measure resulted in a fuel savings of about 22,500 tons and

avoided CO2 emissions of about 71,000 tons. In 2006, fuel consumption is to be g/100 pkm 60 reduced by 27,000 tons in this way. Furthermore, an optimized contingency fuel 56.6 system is to lower kerosene consumption by calculating the quantities of fuel 54.9 54.7 54.8 55 reserves with greater accuracy. Thanks to this project launched in February 2006, 56.3 54.4 50.9 50.8 Lufthansa is planning to conserve about 17,000 tons of fuel and avoid 54,000 tons 53.8 53.3 50 of CO emissions per year. 50.6 2 45 And starting in spring 2006, all aircraft operated by Lufthansa Passenger Airline will be fitted with new seats. Not only will the passengers flying Lufthansa within 20 Germany and Europe in Business and Economy Class be delighted by a signifi- 15.1 cant increase in seating comfort. The new seats also contribute automatically to 13.9 15 12.3 reducing the consumption of fuel and the emission of pollutants by the Lufthansa 11.3 10.4 9.8 10.1 9.7 8.8 8.5 8.4 10 fleet. The reason: They are lighter than the predecessor model. It is expected that the European fleet will consume 4.7 million liters of kerosene less per year as a 5 2.9 result. 2.7 2.3 2.0 1.7 1.5 1.6 1.3 1.1 1.0 1.0 0 But there are also external factors that influence Lufthansa’s consumption balance 95 96 97 9899 00 01 02 03 04 05 sheet, factors that the airline cannot influence. These include delays during the

CO2 NOx CO UHC approach phase and detours due to military restrictions. Lufthansa and other Euro-

Balance 2006 Environment 51

Decoupling of transport performance and environmental burden Change compared with 1991 in percent, values for the fleet of the Lufthansa Group percent + 218 200

180

160

+ 144 140

120 + 116 100

40 + 30 20

–20

–40 – 47

19911992 1993 1994 1995 1996 1997 19981999 2000 2001 2002 20032004 2005

Transport performance (TKT) NOx emissions Fuel consumption, CO2 emissions CO emissions UHC emissions

Specific emissions in freight transport in kilograms, grams/freight ton kilometer pean airlines have therefore adopted the goal of working towards an optimized European air traffic control system. The so-called “Single European Sky” would kg/tkm 0.8 entail fewer flights in holding patterns and fewer detours, with a positive impact on 0.75 kerosene consumption and CO2 emissions. 0.76 0.76 0.7 0.74 0.63 0.60 0.58 0.58 0.6 Specific kerosene consumption reached 4.39 liters/100 pkm in 2005 Lufthansa Passenger Airlines increased its transport performance again in 2005, 0.59 0.58 0.59 0.5 which also increased the Group’s kerosene consumption and emissions of car-

bon dioxide (CO2). By contrast, emissions of carbon monoxide (CO) declined, and those of unburned hydrocarbons (UHCs) fell even more perceptibly. Emissions of g/tkm 4.5 nitric oxide (NO ) remained at 2004 levels. 4.1 4.1 X 4.0 4.0 4.0 Kerosene consumption in passenger transport came to 4.39 liters per 100 pas- 3.5 3.5 senger kilometers, a slight increase over the previous year (plus 0.7 percent). This 3.2 3.0 2.9 3.0 2.9 3.0 is due above all to increased comfort levels for passengers traveling in Business 2.6 Class, who have been enjoying more space on board since spring 2004. The 2.5 disadvantage: More legroom means fewer seats, which increases the specific consumption per passenger.

0.75 In contrast to kerosene consumption, specific CO emissions per 100 passenger 0.6 0.5 0.5 0.5 0.5 0.50 kilometers declined to the lowest value recorded so far. For unburned hydrocar- 0.4 0.40.4 0.4 0.4 0.3 bons, the low emissions levels of the preceding year were maintained. Specific

0.2 0.2 0.2 0.2 0.2 0.25 NOX emissions rose, but remained significantly below the levels routinely observed 0.1 0.1 0.1 0.1 0.1 0.1 until 2002. 0 95 96 97 9899 00 01 02 03 04 05

CO2 NOx CO UHC 52 Our business / Social responsibility / Environment / Corporate citizenship

Specific fuel consumption in passenger transport in liters/100 passenger kilometers

l/100 pkm 5.5 5.14 4.98 5.0 5.14 4.68 Specific kerosene consumption in freight transport fell slightly to 185 g/tkm – and 4.97 4.65 4.5 4.31 4.39 thus by more than 37 percent since 1991. More positive thrust in this area came 4.57 4.51 from the particularly environmentally friendly Boeing MD-11 freighter, which 4.36 4.0 replaced the previous model, the Boeing 747-200, in 2004 and consumed 16 95 96 97 9899 00 01 02 03 04 05 percent less fuel. Its specific kerosene consumption, at 174 g/tkm, was below the average kerosene consumption for Lufthansa’s total freight transport. The values of

specific NOX and CO emissions, along with UHC emissions, reached record low Specific fuel consumption in freight transport levels in 2005. in grams/freight ton kilometer Fuel dumps: Downward trend for quantity released g/tkm 240 242 250 No airline is immune to the events that can make a fuel dumping necessary. In the 237 234 case of an unscheduled landing, the pilots may need to empty the fuel tanks until 225 the maximum permissible landing weight is reached. Thanks to the most stringent maintenance standards being applied to its aircraft, flight terminations due to 188 189 200 186 technical irregularities and the safety-related dumping of kerosene in flight are 199 184 185 185 175 extremely rare at Lufthansa. Out of its 76,366 intercontinental flights in 2005, Luft- 95 96 9798 99 00 01 02 03 04 05 hansa pilots were forced only 25 times to abort a flight due to technical reasons or a medical emergency. The quantity of kerosene thus released came to 653 tons, which is 6 percent less than during the previous year. Fuel dumps are only possible on long-haul aircraft, as short- and medium-haul aircraft are not equipped to Fuel dumps change compared to 2004 dump fuel.

Events, total 25 + 6 Environmental goals and measures concerning fuel consumption and emis- Quantity, total 653 tons – 5.6 % sions are found on p page 60. Medical reasons 8 + 3 Technical reasons 17 + 6 Other reasons 0 – 3

Noise emissions Above the clouds – Below the threshold values

All traffic in our mobile industrialized society is inevitably linked to noise. Noises that are often experienced as being unpleasant cannot be entirely avoided, but can be limited to an acceptable level – as the example of Lufthansa demonstrates. For many years, the airline has been committed to decoupling its growth in transport performance from its noise emissions. Its strategy here is threefold: Apart from firstly buying low-noise aircraft, Lufthansa is secondly working on developing noise-reduction measures for the existing fleet. And thirdly, the airline has joined forces with partners in industry and research to improve flight procedures for arrivals and departures within the limits of operational possibilities.

In 2005, all aircraft operated by Lufthansa Passenger Airlines already complied with the more stringent Chapter-4 limits of the International Civil Aviation Organization (ICAO). (See also the bar chart “Margins below the noise limits of ICAO Chapter 3” on p page iv, on the inside cover.) These new regulations applying to new aircraft come into effect in 2006 and require that noise emissions be another 10 decibels lower than those previously permitted under ICAO Chapter 3. The fleet at regional carrier Luft- hansa CityLine boasts 42 CRJ200s, which are considered to be the world’s quietest passenger aircraft. Outside airports, this aircraft is usually not louder during takeoff than a car passing by in traffic.

Balance 2006 Environment 53

The investments Lufthansa makes in an environmentally compatible fleet pay divi- dends not only with regard to kerosene consumption – but also when it comes to noise. More and more airports charge fees based on the measured noise of arriving and departing aircraft. And often quiet aircraft are allowed to take off earlier and land later in the day. This gives Lufthansa operating advantages as well.

New aircraft ease the burden around airports Noise and environmental performance are becoming increasingly important criteria in selecting new aircraft. With the latest additions to its fleet, the Airbus A340-600 and the Airbus A330-300, Lufthansa has set new benchmarks in this domain. Thanks to state-of-the-art engine technology and aerodynamically ad vanced wings, these two long-haul aircraft perceptibly ease the noise burden on the areas surrounding airports. The 85 dB(A)-noise footprint generated by the A340-600 measures only 3.5 square kilometers, or only a quarter of that associated with its predecessor, the Boeing 747-200. As a result, the noise footprint is contained within the boundaries of airport grounds. This noise level resembles Comparison of noise footprints that of a truck passing by in city traffic at a distance of 5 meters. B 747-400 versus A380-800 And the A330-300 convinces above all with its “internal values”: With the Trent

14.000 700 manufactured by Rolls-Royce, Lufthansa has selected the quietest engine currently available for this type of aircraft. A derivative of this engine, the Trent 900, will power the Lufthansa Airbus A380, the Group’s future flagship, which will 12.000 enter service in 2008. Thanks to these particularly quiet, efficient engines and other improvements in aerodynamics, the A380 is up to 30 percent quieter than 10.000 the Boeing 747-400, the largest long-haul aircraft up to now. At the same time, the Lufthansa A380 will carry 40 percent more passengers.

8.000 A look at the history of the so-called “noise footprints” clearly illustrates how much has been achieved in lessening the noise burden by operating modern aircraft: 6.000 Until 1970, Lufthansa operated the Boeing 727-100 on short-haul routes. Its 85 dB(A) contour covered an area of 19 square kilometers. Its successor, the Boeing 737-200, reduced this noise footprint by 5 square kilometers. And the aircraft currently in oper- 4.000 ation, the Airbus A320, has again reduced the area by a factor of 6. At 2.35 square kilometers, the noise of this aircraft is entirely restricted to the airport area itself. 2.000 Taking off quietly, landing quietly Beyond aircraft engines, another noise reduction potential is opening up: The 0 m noise relevant for people and the environment is primarily generated during takeoff and landing. Therefore, it pays to optimize the procedures for the departure –2.000 and approach phases with regard to noise avoidance. But flying higher does not –2.000 0 m 2.000 –2.000 0 m 2.000 necessarily mean flying more quietly. The pivotal question that engineers and Point of brake-release technicians are investigating is: How much sound reaches the ground just below Boeing 747-400 Airbus A380-800 the flight path and to the side of it? The situation is similar for the approach phase: take-off weight 394 tons, max. take-off weight An aircraft flying low and with its flaps retracted can be quieter than an aircraft currently operated by 560 tons, will be operated Lufthansa by Lufthansa from 2008 flying higher with its flaps extended. The latter generates more aerodynamic noise as it has higher drag and may need more thrust, depending on the flight situation.

Shown are the maximum noise footprints for one takeoff Research to date has shown that the take-off procedure used by Lufthansa is each at the take-off weight indicated. Within the respective contours, a maximum noise level of 85 dB(A) is either superior to other variants currently in use with regard to environmental criteria. reached or exceeded. For comparison: A maximum noise The same is true for the “low drag/low power” approach, also called the “Frankfurt level of 85 dB(A) is produced by a truck passing by in city procedure,” which Lufthansa favors and in whose development it played a deci- traffic at a distance of 5 meters. sive role. Here, pilots extend flaps and lower landing gears relatively late. Such landings not only generate less noise – but also help conserve kerosene. 54 Our business / Social responsibility / Environment / Corporate citizenship

Lufthansa Passenger Airlines has set itself the ambitious goal of reducing the noise burden in the areas surrounding airports even further. For this reason, the airline supports the Continuous Descent Approach (CDA) to reduce noise emissions, a procedure that has been used for nighttime landings in Frankfurt since 2005. (See also “Lufthansa and Research,” p page 73.)

Environmental goals and measures concerning noise emissions are found on p page 59.

Intermodal transport Integrating different modes of transport intelligently

AlRail – A building block for the future of travel Kerosene can also be conserved and emissions avoided by integrating different modes of transport in an intelligent way. A prime example for this is the AIRail project, which Lufthansa launched in 2001 together with German Rail and Fraport, the operator of Frankfurt Airport. AlRail’s long-term goal is to shift short-haul flights to the railways – at comparable travel times. Apart from ecological aspects, there are also economic advantages that speak in favor of driving links between air and rail services forward.

Currently, AIRail allows Lufthansa passengers to travel between Frankfurt Airport and Cologne or Stuttgart aboard ICE high-speed trains. More than 166,000 passengers took advantage of this offer in 2005. While passenger numbers declined on both routes compared with 2004, the drop in demand for AIRail services was 2 percent less than that for the flights offered in parallel. The key advantage for AIRail travelers is the time savings. They may choose, for example, from up to 26 daily rail connections between Cologne and Frankfurt Airport, which has allowed Lufthansa to withdraw two of its six daily flights on the same route. Furthermore, the trip by train takes only 57 minutes. By taking “the train to the plane,” travelers can reduce their connection time in Frankfurt as well as their total travel time from Cologne to, say, Dallas, Singapore or Johannesburg. Passengers receive their boarding passes for all connecting flights from Frankfurt at special Lufthansa check-in counters located in the train stations. There, they can also check in their baggage for their entire itinerary.

Experts have calculated that under optimum conditions as many as 20,000 short- haul flights a year in Frankfurt alone could be replaced long-term by train services within Germany, following the AIRail model. This corresponds to about 4 percent of all aircraft movements in Frankfurt. As meaningful as such shifts are – they are not a solution for the existing capacity bottleneck: With a potential of merely 4 percent, the cooperation between transport modes is an important building block in the transport concept of the future, but it is not an alternative to a capacity-oriented expansion of Frankfurt Airport.

time:matters – More flexibility, less particulate matter Another example of an environmentally friendly intermodal system is the logistics service provider time:matters. This Lufthansa Cargo subsidiary uses aircraft, trains and cars to get urgent and high-priority shipments to their destinations – and since 2005 it has even been using bicycles. This novelty makes the logistics network not only faster and more flexible, but also more environmentally friendly.

Balance 2006 Environment 55

Currently, the bicycle couriers in 18 German cities are linked to the countrywide railway courier service of time:matters. This innovation earned the specialized service provider for particularly urgent cases the so-called Environmental Share, an award from the Bundesverband Fahrradkurierdienste (German Association of Bicycle Courier Services). The use of the swift cyclists shortens pickup and delivery times in central city locations and produces neither particulate matter nor other emissions, is how the jury justified its decision.

Environmental goals and measures concerning intermodal transport are found on p page 59.

Energy and resource There is always something more to be conserved management At Lufthansa, sustainable business operations do not stop on the ground. All across the integrated Aviation Group, careful attention is paid to making operational processes – whether in aircraft maintenance or the production of in-flight meals – as resource-friendly as possible. The following examples demonstrate how the airline and its subsidiaries successfully conserve energy and freshwater while avoiding waste materials and wastewater.

Energy

EnergieCheck@LHT: Employees help to conserve energy Our employees are at the heart of the latest energy-conservation initiative launched by Lufthansa Technik. This provider of technical aviation services has adopted the ambitious goal of increasing its competitiveness while advancing climate protection. The first step in the framework of the initiative EnergieCheck@LHT is to lower non-production-related energy needs in Hamburg, Lufthansa Technik’s largest location, by 12 percent by the end of 2007. By acting in more environmentally- aware ways, employees can make big contributions to this goal. Last year, Lufthan- sa Technik started using creative ideas to motivate employees to conserve energy. “We distributed flyers with thermometers stuck on them, for instance, containing many tips on heating and airing out,” says Ralf Wunderlich, who is responsible for environmental protection at Lufthansa Technik. An example: Just lowering a room’s temperature by a single degree can save as much as 6 percent in terms of the energy needed to heat it. “We also used heat-sensitive cameras to take pictures of our buildings at night,” Wunderlich continues. This step was aimed to demonstrate to employees the energy lost from windows left open overnight. Clearly, the project EnergieCheck@LHT can only be successful if employees grasp the issue of energy conservation from the vantage point of their own experience. In this spirit, showing them the electricity bill for Lufthansa Technik in Hamburg also left a lasting impres- sion: In 2005, it came to 17,260 euros – per day.

LSG Hamburg – “When we freeze, we’ve got to cool” At its Hamburg production plant, LSG Sky Chefs Deutschland is working to implement an energy conservation project that is to serve as a model for the other facilities in Germany and Europe. In 2005, the catering operations in the Hanseatic city produced about 1.72 million in-flight meals. “We’re having an entirely new cooling system installed,” reports Walter Vreden, who is responsible for environmental and resource management at LSG Europe/Africa. In spring 2005, an analysis carried out by an external engineering firm showed that the industrial- 56 Our business / Social responsibility / Environment / Corporate citizenship

scale kitchen could save about 15 percent of the energy consumed in its cooling, ventilation, heating and hot-water systems. The refit that began in December 2005 is to be completed by September 2006. At the center of this project, sponsored by the City of Hamburg, is an innovative type of cooling system, a “frequency- controlled integrated cooling system with needs-oriented defrost function and heat recycling.” The fully adjustable system ensures the low temperatures needed in the deep-freeze and low-temperature areas to store meals. Energy can be saved above all by defrosting evaporators only when they are iced over. “So far, evaporators have been defrosted at regular intervals, whether they’re iced over or not,” Vreden describes the savings effect. Additionally, waste heat from the cooling system’s compressors is to be used to heat work spaces. “When we freeze, we’ve got to cool,” the environmental expert says with a wink. Given rising energy prices, he assumes that the refit will have recovered its cost in three to four years.

Award-winning commitment of LSG Denmark Over the past years, LSG Sky Chefs Denmark has been especially successful in conserving energy. For its efforts, the wholly-owned LSG subsidiary received the Electricity Conservation Prize 2005 from the Danish energy suppliers. Connie Hedegaard, Denmark’s Minister for the Environment, presented the award on Octo- ber 25, 2005 in Copenhagen. LSG Sky Chefs Denmark, which employs 960 people and produces about 6.2 million meals per year, started optimizing its electricity consumption at the end of 2002. At that time, consumption stood at 5.2 billion kilowatt hours per year, a value since reduced by 20 percent. Lighting and ventilation offered the greatest potential: “We saved 630,000 kilowatt hours per year alone by operating our ventilation systems in an efficient manner,” says facility manager Susanne Kannov. A pleasant side-effect: Energy consumption for heating fell by 29 percent because now less heat escapes from the system. In addition, the Danish company Group portrait with the Minister: Erik Hansen, Manager of LSG currently uses 38 percent less water. Now the entire LSG Group is to benefit from operations in Copenhagen (far left), receives the Electricity the experience gathered in Denmark. “We’re passing our insights concerning ener- Conservation Prize 2005 from Connie Hedegaard, Denmark’s gy conservation to headquarters in Germany,” says Susanne Kannov. Minister for the Environment (far right). Also pictured (from left): Christina Rasmussen and Søren Hansen (Facility Management LSG Sky Chefs Denmark), Arne Bo Hansen Training Center Seeheim – Renovation with priority for the environment (ELFOR), Susanne Kannov (Facility Management LSG Sky Sustainability is playing an important role in the planned refurbishment of the Lufthan- Chefs Denmark) and Jesper Hansson (Kopenhagens Energi). sa Training Center in Seeheim, near Darmstadt. In early 2005, the airline commission- ed a study to make the building, which opened its doors in 1973, fit for the future in terms of both use and structural fabric. In the beginning, the boarding-school-like training center was used by the Group’s apprentices; in the meantime, the focus has shifted to continuing education of employees 30 to 55 years of age. “The issue of lifelong learning is gaining more and more importance,” explains Marco Camboni, who is responsible for the renovation project. Therefore, the Center is to become a venue for training courses and events. Lufthansa selected a fitting design in the context of an architectural competition. What made this competition so different? The Aviation Group gave the participating architects specific guidelines concerning environmental care. Operating the building’s technical systems is to consume as little energy as possible, and solar energy is to be used as well. The Center is to be heated in an environmentally compatible way by using earth heat. “We also didn’t want full air-conditioning. As the building is located in a forest, it is to be ventilated naturally via the windows,” says Camboni. Other measures include optimum insulation of the facade and treatment of wastewater. A further goal is to use materials from the region. “We have granite right here in the Odenwald, for instance. That we don’t need to import from another country,” the project manager explains. If the Supervisory Board approves current planning, the building’s renovation will kick off in August 2006. The inauguration of the new Training Center in Seeheim is scheduled for the third quarter of 2008.

Balance 2006 Environment 57

Freshwater / Wastewater

Bright idea – The dry cleaning process for aircraft Wash my back, but don’t get me wet – this formula sums up a process that Lufthansa Technik has been using since 2001 to clean aircraft: the dry cleaning process. It requires no water at all. In 2005, the innovative process was used 103 times, or for a little more than a third of all aircraft cleanings. “The dry cleaning process can always be used whenever aircraft have to stay on the ground a little longer, as it takes up to three times longer than wet cleanings,” explains Ralf Wunderlich, Head of Environmental Protection Operations at Lufthansa Technik. As the cleaning agent corrodes the paint in the long run and as landing gears, rims and aircraft undersides cannot be cleaned using the dry process, a wet cleaning takes place after about every three dry cleanings. Lufthansa CityLine has also been using the environmentally friendly procedure since 2004. Thus, 73 of 140 aircraft were cleaned dry in Hamburg in 2005, while this came to 57 of 77 in Cologne. Even if wet cleanings remain indispensable for the time being, Charles Hofer, Environmental Commissioner at Lufthansa CityLine, sees clear advantages: “During wet cleanings, maintenance work cannot take place. With dry cleanings, both can be done simultaneously – and that saves time.” In 2006, Lufthansa Cargo also adopted the dry cleaning process to clean its MD-11s.

When it comes to recycling industrial wastewaters, Lufthansa Technik sets a good example: In 2005, the treatment of industrial wastewater allowed the conservation of 22,650 cubic meters of freshwater in Hamburg, according to Ralf Wunderlich. And the company used 18,000 cubic meters of rainwater in its paint shop and tool shop, enough to cover 53 percent of the paint shop’s operations-related water needs. For comparison: In 2004, this was only 6,700 cubic meters (or 40 percent).

Dish Wash 21: LSG Sky Chefs reinvents doing the dishes Introducing the dry-cleaning process for aircraft in 2001 has Every year, LSG Sky Chefs washes enormous quantities of dishes. To cut the helped particularly to reduce the consumption of solvents and cleaning agents. This innovative procedure uses only a biode- related consumption of water, the catering specialists have developed a unique gradable polishing agent. conveyor-belt dishwasher. Test operations of the prototype in Brussels were so successful that other European LSG locations have been equipped with an additional 21 machines of this type. And for good reason: The dishwashing train does more than just cut water consumption in half and save one-third of dishwashing detergent. It also puts an end to the tiresome sorting of items to be cleaned, as it washes glasses, cutlery and porcelain just as reliably as plastic plates and trays. This became possible because the engineers separated the water tank from the machine and equipped it with its own water treatment system. This smart move means that up to three dishwashing machines can be connected to a single tank and supplied with dishwater via several pump systems – even trolley dishwashers. Used water flows off, is cleaned and is then fed back into the circuit.

The water savings speaks for itself: “In Brussels, both absolute and relative water consumption per meal fell in 2005,” says Walter Vreden, Head of Resource Management at LSG Sky Chefs. He adds: “In absolute terms, we estimate that 4,000 of the 9,385 cubic meters of water conserved can be traced back to the new dishwashing technology.” Starting in spring 2006, Flugservice International now also benefits from the economic and ecological advantages of the dishwashing train. This LSG Sky Chefs operation at Frankfurt Airport had four of these line-type machines and one trolley dishwashing machine installed. They replace nine conventional dishwashers and one trolley dishwashing machine and receive their water supply from two water tanks. Unlike the prototype, they conserve “only” one-third of water. While the majority of dishes in Brussels come from short-haul 58 Our business / Social responsibility / Environment / Corporate citizenship

flights and are only slightly dirty, the Frankfurt dishwashers have to fight against the dried-up food remains from long-haul flights. As this increases the degree of dirtiness, the dishwater needs to be exchanged every three days. In Brussels, by contrast, it may be used up to seven days.

Waste

Ideas for waste – Careful use of hazardous substances Avoiding waste is the best type of waste management. As this is not always possible, the Lufthansa Group continuously evaluates its waste management for hidden optimization potentials. Thus, Lufthansa Technik systematically collects used oil and kerosene, along with many other substances, for recycling. There An ionic chromatograph in the chemical laboratory for water analysis at Lufthansa Technik in Hamburg. are up to 160 types of waste at the Hamburg location, including many hazardous substances. Ralf Wunderlich, Environmental Commissioner at Lufthansa Technik, explains why: “In the process of maintenance, we strip aircraft down to their parts. As each part requires a specific treatment, we’re quickly dealing with a multitude of substances. These range from cleaning agents for wheel rims, paint strippers and glues to paints, acids and caustic solutions. And of course, all of these have to be disposed of in individual and environmentally compatible ways.”

To regulate the handling of substances that are harmful for health and the environment in a uniform manner, Lufthansa Technik has employed a companywide hazardous-substances policy for over 10 years. This policy is also binding for all suppliers. “Our goal is to replace hazardous substances with less dangerous ones – without lowering the safety or quality standards associated with our maintenance processes,” Wunderlich adds. Moreover, a web-based information system called eGIS explains how to handle hazardous substances correctly and describes their characteristics. All technicians have access to this database via the company’s intranet.

With the goal of reducing solvent emissions, two closed units for cleaning spray paint pistols went into service in Hamburg in fall 2005. As solvents now stay in a closed circuit, they can be used several times. In this way, the consumption of solvents is set to decline substantially over the years ahead – as will the volume of related emissions.

Environmental goals and measures concerning energy and resource management are found on p page 61.

Balance 2006 Environment 59

Environmental goals and measures Goal reached Not reached Goal remains valid! New goal

Environmental management / Communications / Training / Suppliers and contractual partners Key environmental goals Environmental measure(s) Degree of attainment Status Improve internal and external sustain- Reporting of environmental and social issues in Issues related to sustainability have been included in the ability communications. Lufthansa’s Annual Report, organization of regular internal Lufthansa Annual Report since 2004 (in the Annual Report road shows on environmental and social issues within the 2005, the subject of sustainability was covered in the Group. Expansion of our Internet presence. Situation Report for the first time). The Internet presence is continuously updated and improved (relaunch planned for 2006). Quantitative and qualitative expansion of text covering social responsibility issues in the report Balance. Expand and optimize the Group-wide Integration of further environmental data; development Environmental database was introduced in 2003. Transfer environmental database. of a module to automatically import performance and to SAP base took place in 2005. consumption data from Route and Network Profitability for Lufthansa Passenger Division. Expand the offerings of detailed envi- Integration of issues related to the environment into exist- Environmental subjects are an integral part of basic ronmental information for employees ing training concepts (ongoing). training for flight attendants and basic courses for pilots, and integrate environmental subjects as well as training and continuing education of technical into existing communications concepts. employees. Influence suppliers and contractual Information to suppliers and contractual partners about Ongoing process. partners. Lufthansa’s environmental standards. High standards of environmental efficiency for acquisitions Are continuously applied in the purchase process of new of new aircraft, engines and equipment. aircraft, engines and equipment.

Noise Key environmental goals Environmental measure(s) Degree of attainment Status

Reduce noise emissions in the vicinity Support for the use of the Continuous Descent Approach The procedure was introduced in 2005 in Frankfurt. of airports. (CDA) to reduce aircraft noise during nighttime hours. Launch research and development Initiation and guidance of an interdisciplinary research Project was launched at the start of 2004. Initial milestones project to identify noise-reduction project (FREQUENZ) in coordination with eight partners have been reached successfully. options on the aircraft frame and in from industry, universities and large research institutions. flight procedures. Goal is to develop and validate concepts and refitting measures to reduce noise at the source. Project duration until end of 2007. Main project partner in the interdisciplinary research By carrying out noise measuring flights, Lufthansa contrib- project “Noise-Optimized Approach and Departure Proce- uted decisively to creating (A319: 2001) and expanding dures” (LAnAb). Using an advanced simulation program (A319: 2004) a database on aircraft noise sources, which from DLR, the assessment of flight procedures with regard is necessary to run the simulation program. to noise development is set to improve significantly. Proj- ect runs until end of 2006.

Intermodal transport Key environmental goals Environmental measure(s) Degree of attainment Status

Create intelligent mobility concepts in Introduction of AIRail connections on certain short-haul In March 2001, AIRail connections between Frankfurt cooperation with railway operators in routes. Airport and Stuttgart Central Station were launched order to shift short-haul traffic to the (currently 13x daily). In May 2003, the route Frankfurt rails. Airport–Co logne Central Station was added (currently 26x daily). Thus, two of six flights between Frankfurt and Cologne could be withdrawn. The route Frankfurt Airport– Dusseldorf Central Station is to be assessed as soon as Deutsche Bahn’s timetable better suits our requirements. Create intelligent mobility concepts in Support an IT-based exchange of dynamic car pools via In January 2006, a working version of software was cooperation with Fraport. mobile phone. available. Expand the combined rail-and-road Add further routes. Since January 2003, Lufthansa Cargo has used 50-55 transport at Lufthansa Cargo. scheduled rail services a week (including ad-hoc capacities) between Freiburg (southern Germany) and Novara (Italy) and between Wörgl (Austria) and Trento (Italy). This helps avoid about 750,000 truck kilometers a year. 60 Our business / Social responsibility / Environment / Corporate citizenship

Environmental goals and measures Goal reached Not reached Goal remains valid! New goal

Fuel consumption / Emissions Key environmental goals Environmental measure(s) Degree of attainment Status

Reduce 1991 specific fuel consumption From 1991 to 2005 the Group’s passenger fleets achieved of the passenger fleets by 33 percent an overall reduction of 29.2%; thus, 89% of the reduction by 2008, and by 38 percent by 2012. goal set for 2008 has already been achieved. Achieve related reduction in specific emissions of pollutants. Acquisition and operation of modern and environmentally Acquisition and operation of 17 A340-600s (since Oct. compatible types of aircraft. 2003), 10 A330-300s (since 2004), 5 MD-11s (since 2005), 15 A380-800s (from 2008), 12 CRJ900s (from June 2006). On Dec. 31, 2005, 10 A340-600s, 10 A330-300s and 5 MD-11s were being operated. Use of variable flight speeds to take greater advantage of Launched at the end of February 2005. In 2005, this jet streams and other variables during long-haul flights. measure helped conserve about 22,500 tons of fuel. This

corresponds to avoiding about 71,000 tons of CO2 emissions. In 2006, this measure is expected to help conserve about 27,000 tons of fuel. Introduction of an optimized reserve fuel procedure, to Launched in February 2006. This measure is expected minimize fuel consumption and emissions of pollutants by to help conserve about 17,000 tons of fuel per year. This

determining fuel requirements more accurately. corresponds to avoiding about 54,000 tons of CO2 emissions a year. Optimization of the of freshwater quantities carried on This measure is expected to help conserve about 1,500 long-haul flights. tons of fuel per year; this corresponds to about 4,700 tons

of CO2 emissions. Optimization of flight routings in the Asian region and On routes where this procedure has been introduced, about resulting reduction in fuel consumption and emissions. 1% of fuel has been saved and emissions reduced accordingly. In 2004, work began to optimize the Hong Kong route specifically. This has resulted in a time savings of 15-20 minutes per flight, a reduction of fuel consumption by about

1,800 tons per year and a reduction of 5,500 tons of CO2 emissions. In 2005, the route to Canton was optimized. This resulted in an annual savings of about 1,000 tons of fuel

and a reduction of about 3,150 tons in CO2 emissions. By flying at lower speeds, the average kerosene con- Measure is to be implemented in 2006. sumption of the continental and intercontinental fleets is to ! be reduced. A new, efficient and cost-effective procedure for regular engine cleanings is to increase engine efficiency and thus ! reduce consumption at the same level of performance. Installation of new-generation seats manufactured by The installation of the new seats is to be completed by Recaro and B/E Aerospace on the aircraft of Lufthansa’s October 2006. For the entire European fleet, the annual European fleet. These new seats have been specifically reduction in kerosene consumption (adjusted for capacity ! adapted to Lufthansa’s requirements. Their weight is lower, changes) is expected to be about 3,750 tons (which cor-

which will mean a reduction in fuel consumption and responds to about 12,000 tons of CO2 emissions). re lated emissions of pollutants for the Lufthansa fleet. Development of a concept for the statistical analysis of See Environmental Report of Lufthansa CityLine. quantities of extra fuel actually used by Lufthansa CityLine; ! in addition, measures to make pilots sensitive to this issue (by 12/2006). Development of a concept for equipping the CRJ 200 Concept to be developed by 12/2006. fleet with an automated thrust management system (by ! 12/2006). Work toward the introduction of uniform Coordination of discussions within the AEA’s Environmen- Concept has been developed. Coordination within the standards to calculate specific fuel con- tal Working Group. AEA has not yet been obtained. Goal to remain valid until sumption at the AEA level by 2005. 2007.

Balance 2006 Environment 61

Energy and resource management / Alternative energy sources Key environmental goals Environmental measure(s) Degree of attainment Status

Improve the Group-wide energy Establish a Group-wide energy forum in the context of A forum for regular information exchanges concerning management. Facility Management. energy issues has been established. Installation of a new, software-supported capture and To be implemented at Lufthansa’s Frankfurt Base in 2006. analysis system for energy consumption data. This allows ! timely and accurate localization of performance and consumption peaks. Continuous data capture enables structured purchase of electricity. Take aspects of energy and resource Construction of the Lufthansa Aviation Center as a “low The new office building is to be occupied in July 2006. conservation into account when plan- energy building” by using a system of thermoactive con- ning, constructing and modernizing struction components, highly insulating elements for the buildings of Deutsche Lufthansa AG. facade, a heat recycling system and other measures. As a result, the new building will require only up to one-third of the energy a comparable conventional building would consume. The airline has set high utilization and environmental New measure. Start of the renovation in August 2006. standards for the renovation and redesign of the Lufthansa ! Training Center in Seeheim. Currently, the feasibility of integrating a photovoltaic installation into the building and installing a solar thermal energy collection system on the roof are being evaluated from a planning perspective. Furthermore, the use of a geothermal energy system to generate heat is being assessed. In addition, materials primarily from regional production are to be used whenever possible. For planning and construction of a new catering building, New measure. The start of construction in planned for contemporary heat and energy technology are taken into 2006/2007. ! account. Among other measures, the use of a rainwater seeping system, roof planting, preconditioning of air in a low-elevation basement and the use of a heat recovery system are being assessed. In addition, closed ramp doors and the use of district heating instead of conventional heating can help achieve substantial energy savings.

Reduction of non-production-related energy consumption Program EnergyCheck@LHT introduced. ! at Lufthansa Technik by 12% by the end of 2007. Reduce the specific energy consump- Increase utilization of catering operations. Conduct In 2005, the average specific energy consumption per tion per meal at LSG’s European and de tailed monitoring of energy consumption at the meal was 1.61 kWh. ! African locations to 1.45 kWh on aver- individual locations. age by 2010. Reduce consumption of. Increase the share of aircraft cleaned with a dry process. Lufthansa Technik has further increased the number of dry aircraft cleanings. Lufthansa CityLine also uses the dry process at its Cologne and Hamburg locations. In 2006, the dry cleaning process is also to be introduced at the Munich location. Reduce the specific water consumption Increase utilization of catering operations. Step-by-step In 2005, average specific water consumption per meal per meal at LSG‘s European and African introduction of newly developed high-efficiency dish- was 7.73 liters. ! locations to 6.8 liters on average by the washing machines at the European locations. Detailed end of 2010. monitoring of energy consumption at individual locations. Reduce average weather-related con- Use of a monitoring system developed in-house to reduce Due to cold temperatures during the winter 2005/2006, sumption of deicing fluid by 10% below the consumption of deicing fluid (HUSKY). average consumption of deicing fluid increased by 5% 2002/2003 levels by 2007. over the preceding year. Nevertheless, the consumption of deicing fluid in winter 2005/2006 could be reduced by 7.6% below winter 2002/2003. Despite heavy snowfall at times, consumption levels could be cut significantly. Make consistent use of paper-free Installation of a suitable IT infrastructure as an alternative Step-by-step digitalization of documents and files. Digita- means of communications. for paper archiving; adherence to and monitoring of lization of documents has lead to a reduction in paper ! processes. consumption of 20% in some areas. The digitalization of paper documents will be intensified. In some areas, laser printers with a second paper tray Ongoing process. have been purchased, allowing used paper (reverse side) to be used for internal printouts.

Reduce the use of paper made from Conversion of Lufthansa’s internal and external media as Conversion of additional internal media has been accom- fresh fibers. well as all printing and photocopying for internal use from plished. Lufthansa CityLine has already changed all paper fresh-fiber paper to recycling paper. used for internal copying and printing to recycling paper. The Lufthansa Sustainability Report Balance has been printed on 100% recycling paper since 2005. 62 Our business / Social responsibility / Environment / Corporate citizenship

Corporate citizenship Lufthansa protects its heraldic bird

Lufthansa’s Environmental Sponsorship Program has been committed to protecting the bird depicted in its “coat of arms” and its habitats for many years – at both the national and international levels. Since 2003 Lufthansa has also supported the South African Crane Working Group, which combines the protection of endangered species with educational programs.

The gray crowned crane (Balearica regulorum) is one of the most beautiful, but also one of the most threatened crane species.

Heralds from heaven, bearers of good luck: The crane has given ment in the area of Corporate Social Responsibility (see table on wings to human fantasy since time immemorial. Yet despite the p page 65). “Lufthansa operates worldwide, and that’s why we also almost mystical reverence it enjoys in many cultures, this big, assume responsibility for environmental protection on a worldwide charismatic bird is flying into an uncertain future. The culprit here scale. Especially since our core business is linked to burdens is the advancing destruction of crane habitats, which has resulted for the ecosystems,” emphasizes Lutz Laemmerhold, Head of in ten of 15 crane species worldwide joining the endangered list. A Lufthansa’s Environmental Sponsorship Program. sobering bottom line, not only for ornithologists. Advocate of South African cranes To counteract this development, Lufthansa has taken an active part For this reason, financial support for the South African Crane Work- in the protection of the bird in its corporate logo for more than 30 ing Group (SACWG) has been one of the project emphases of years. What once began as the ad-hoc sponsorship of isolated Lufthansa’s Environmental Sponsoring for the last three years. Fully activities has since evolved into a central focus of Lufthansa’s Envi- committed to ensuring the survival of the South African cranes, ronmental Sponsoring. The airlines’ support for numerous crane SACWG has successfully championed the cause of the wattled protection projects in Germany and abroad underlines its commit- crane, blue crane and gray crowned crane since 1995. Population

Balance 2006 Corporate citizenship 63

figures demonstrate that this fight can bear no delay: For example, Crane Protection Germany the highly endangered wattled crane, at a mere 235 birds, is now In 1991, Lufthansa, Naturschutzbund Deutschland (NABU) and WWF-Deutschland facing extinction. There is also cause for concern regarding the jointly founded the syndicate “Crane Protection Germany.” The goal of this species gray crowned crane, which is considered the undisputed star protection organization is to conserve the most important breeding, gathering and among cranes due to its colorful plumage and impressive head resting areas for cranes in Germany. As a member of this initiative, Lufthansa also feathers. In its native habitats in South Africa and Zimbabwe, popu- supports the Crane Information Center in Groß Mohrdorf, near Stralsund. This info point and meeting place is located at one of the biggest crane resting areas in lations have dropped to a total of 8,000 to 12,000 birds. central Europe. Every spring and fall, up to 40,000 of these large, elegant birds find varied food sources and undisturbed rest in the coastal waters of the National Park Only the blue crane is doing comparatively well at the moment. “Vorpommersche Boddenlandschaft.” Furthermore, Lufthansa supports numerous It has benefited from a dedicated protection program, which has scientific research projects that collect data on the evolution of populations and helped to boost its numbers from 15,000 in 1990 to 25,000 birds migrating behaviors. today. Even if South Africa’s national bird has managed to avoid the threat of extinction thus far, the situation remains serious. 64 Our business / Social responsibility / Environment / Corporate citizenship

Balance 2006 Corporate citizenship 65

On the one hand, this perilous state is the result of unrelenting create a linguistic bridge to people living in rural areas. Intensive urbanization pressures caused by unrestrained growth of human lobbying of local institutions, municipalities and environmental pro- populations. On the other hand, South Africa is an arid country, tection authorities is also a fixed item on the agenda of the South with only 11.4 percent of its surface being suitable for agriculture. African Crane Working Group. To satisfy their hunger for ever more land surfaces, human beings increasingly drain the few wetlands and construct on pastures. In Importance of local initiatives the fields, in particular, misfortune never seems to let up for the There is no doubt that cross-border agreements, laws and cooper- “lucky” birds: Many who become entangled in discarded bits of ations are indispensable in order to protect migrating species of string are unable to free themselves – so they die in agony. Colli- animals. Nevertheless, the impact of such measures is limited. The sions with the pylons of high-voltage lines and fences around pas- global conference on the protection of biodiversity, which closed tures are also fatal in many cases. Mining, forestry, erosion, tourism in March 2006 in Brazil with no discernible results for species pro- and the illegal trade in crane eggs contribute further to driving the tection, again illustrated this fact. Local initiatives such as SACWG, Earth’s largest flying bird out of its habitats. therefore, will only gain in importance. Meanwhile, the environmental conservationists on the Cape can count on continued active support from Lufthansa. • The goal of the educational programs is to sensitize farmers and those living in rural areas to the importance of protecting nature and species – by teaching basic knowledge of crane biology and hands-on Lufthansa supports the crane-protection activities of these organiza- tips on how to avert dangers to cranes. tions with financial, logistical and communications resources: Organization Sponsored activities Crane Protection Germany p Measures to protect crane breeding, p www.kraniche.de gathering and resting areas in Ger- Education in ecology many and abroad. To ensure their survival, the South African cranes need a function- p Crane Information Center in Groß ing network of resting, gathering and nesting areas. Ecological Mohrdorf, in the Rügen-Bock region of Mecklenburg-Western Pomerania. measures to ensure their existence are no longer sufficient. That is why made-to-measure educational programs also have a central p Delivery of a new VW van in March role in the species protection concept of SACWG. 2006. This “Crane Shuttle” takes groups of visitors to the cranes’ resting areas and is used for observation The goal of the educational programs is to sensitize farmers and and research purposes. those living in rural areas to the importance of protecting nature European Nature Heritage p Nature conservation projects in and species – by teaching basic knowledge of crane biology and Fund – Euronatur Spain and Israel. In northern Israel’s hands-on tips on how to avert dangers to cranes. This is urgently p www.euronatur.org Hula Valley, for example, the work of necessary: Given that its original habitats have been destroyed, the ornithologists, farmers, nature conser- blue crane lays its eggs ever more frequently in grain fields and vationists and regional administrations sheep pastures. But many farmers do not know that crane parents is reinforced to conserve habitats for millions of migratory birds. protect their nests by crouching flat on the ground. Should the p farmers then work the fields with their tractors, this amounts to the International Crane Projects to protect the crane in the Foundation (ICF) USA (where the organization has death penalty for the birds and their nests. p www.savingcranes.org its headquarters) and worldwide. Financial and logistical support for To convince farmers to protect cranes, regional SACWG coordina- the organization of crane conventions tors travel up and down the country. In the Western Cape province and congresses, which serve to and in KwaZulu-Natal, conservationists also run a successful exchange and transfer knowledge. cooperation with other organizations such as the Overberg South African Crane p Projects to protect the South African Crane Group and the KZN Crane Foundation. Thanks to a series Working Group (SACWG) crane species wattled crane, blue of brochures co-financed by Lufthansa, the crane enthusiasts p www.ewt.org.za crane and the South African gray crowned crane, and their habitats. no longer need to knock on doors empty-handed. As these brochures are available in both English and Afrikaans, they also 66 Our business / Social responsibility / Environment / Corporate citizenship

Social projects and Lufthansa supports people, the environment and sponsoring culture Companies have responsibilities toward society as a whole. Shareholders and stakeholders, therefore, also take an increasing interest in a company’s ecological, social and ethical goals. Such goals have a firm place in the policies of the Lufthansa Group.

For many years, the airline has supported projects to conserve habitats and biodiversity, to make globalization socially responsible and to help improve understanding between peoples. Here is an overview:

HelpAlliance – Employees build bridges around the world The HelpAlliance’s name sums up its program: Founded in 1999 by Lufthansa

Lufthansa employees lend a helping hand employees, the globally active association supports about a dozen social aid projects in the “third world.” These include start-up businesses, educational facilities, orphanages, street-kid projects and rural hospitals. The HelpAlliance, whose A full dozen – HelpAlliance projects in 2005 members monitor these projects on location, has received financial and logistical support from Lufthansa since its inception. In addition, Lufthansa has been collect- p Benin: School and training programs for girls and ing foreign-exchange coins and bills donated by passengers on long-haul flights young women in rural areas since 2001 in the framework of its on-board campaign “Small Change for Big p Bangalore, southern India: Education and training for Help.” Close to 295,000 euros were collected in this way in 2005 alone – this is children and adolescents in difficulty 57,000 euros more than the year before. p Brazil: Support for a children’s home in a social troub- le spot For the HelpAlliance, the year 2005 was marked by two natural disasters: the tsu- p Rumania and Zambia: Aid supplies for orphanages and a children’s village for AIDS orphans nami in southeast Asia in December 2004 and the major earthquake in Pakistan in October 2005. In those areas of India, Sri Lanka, Thailand and Indonesia that p Kenya: Construction of bush hospitals were especially hard hit by the tidal wave, the Group-board-supported aid initiative p Senegal: Infrastructure and training projects in a slum “A Future for Kids,” launched immediately in 2004, was continued successfully last p Obizi, Nigeria: Renovation of a bush hospital year. Here, 5,000 employees donated a total of 14,000 work hours. Not only did p Khandwa and Indore, central India: Operation of Lufthansa turn the value of this time into cash – 300,000 euros – but the airline boarding schools also made a starting donation of 100,000 euros. As both amounts were doubled p Thailand: Schooling for orphans by the company’s Board of Management and cash donations were received from p Bangalore, southern India: Opening of two kindergar- employees and people around Germany, the HelpAlliance’s tsunami aid reached tens and one preschool a total of 1.05 million euros in 2005. p Chennai, India: Kindergarten project in a slum p Lagos, Nigeria: Orphanage and village school project Shortly following the earthquake on October 3, 2005, 35,000 euros donated by concerned Lufthansa employees had already been transferred to a special In addition, the HelpAlliance supported other projects account set up by the HelpAlliance. In December, the employee organization de- in 2005 with one-time donations. cided to invest some of this money in the construction of 35 emergency housing units – a project of Germany’s Technical Relief Organization, which was completed successfully at the end of March 2006. Each of the simple tunnel-shaped buildings offers living space for one family and gives people living in a region shaken by earthquakes and landslides a safe intermediary solution, until they have rebuilt their destroyed houses. The remaining money is to help other homeless families put a roof over their heads again. p www.help-alliance.com

Balance 2006 Corporate citizenship 67

Worldwide sponsoring Development of donations from the HelpAlliance’s onboard collection program “Small Change for Big Help” All around the world, Lufthansa employees offer their aid and support to people who do not find themselves “on the sunny side of the street.” Thus, our employ- p 2001: € 207,175 ees in Singapore regularly sponsor tickets to support cultural and charity events. LSG Sky Chefs in London volunteered their culinary expertise again in 2005 to p 2002: € 232,692 pamper residents and visitors in care homes for the elderly. Donations collected and coordinated by Lufthansa employees in New York are meanwhile ensuring p 2003: € 216,539 basic survival for victims of the tsunami in southeast Asia and hurricane Katrina in p 2004: € 238,023 New Orleans. Last but not least, Lufthansa employees in Teheran have committed themselves to helping the victims of the earthquake in Bam. p 2005: € 294,870 “Junior Round Table” – Young Lufthansa employees are highly motivated

Program launch: May 2001 Social involvement is not the hallmark of the HelpAlliance alone. In a similar spirit, Start of Condor’s participation: October 2003 the network program “Junior Round Table” offers junior employees opportunities to contribute to public welfare outside of their working hours. In September 2005, many of these young Lufthansa employees participated in the “Run for More Time,” which benefited an AIDS support organization in Frankfurt. A month later, they lent a helping hand to a winegrower in Eltville for the harvest of pinot noir grapes. Moreover, the airline’s youngsters organized a stand at a flea market, whose proceeds are to fund future activities of the Junior Round Table. In Decem- ber, they surprised the boys and girls at a Frankfurt children’s home with 111 colorfully wrapped Christmas packages, containing toys, books, DVDs, cassettes and other popular items; Lufthansa employees from as far afield as Singapore and Verona took part in this project. With the gifts also came a donation of 1,660 euros for child therapy sessions. The Junior Round Table network is currently active in Frankfurt, Hamburg and Cologne and counts 400 members. Besides presentations from members of the Executive Board and other top managers, the junior employees benefit from regular guided visits, social gatherings and cultural events. For 2006 the “juniors” have again set their sights high.

Corporate citizenship set to music – The Lufthansa Festival of Baroque Music All paths lead to London – at least for the lovers of early European music. Every year, in early summer, the British capital offers a special treat for the ears: the renowned Lufthansa Festival of Baroque Music. For more than 20 years, Lufthansa has sponsored this musical highlight to the delight of people from all around the world. The cultural event features ten to fifteen concerts of Baroque music performed according to historical practices – which took place in the St. James’s Church in Piccadilly until 1997. As the venue had become far too small for the ever-growing audiences, the festival moved to the Baroque church of St. John’s Smith Square in 1998. In addition, one concert is given each year at the venerable Westminster Abbey. The festival is famous for its exquisite programming and first- rate musicians. In 2006, it will expand its traditional Baroque repertoire for the first time – embarking on a musical exploration that is to investigate the common roots of baroque, contemporary, jazz and world music. p www.lufthansafestival.org.uk

A highlight of London’s cultural life: The Lufthansa Festival of Baroque Music. James O’Donnell conducts the St. James’s Award-winning – The international network “Living Lakes” Baroque Players and the Westminster Abbey Choir. Water is life. To help preserve the most important resource for human beings and animals, Lufthansa has given its support to the international network “Living Lakes” for the last eight years. Since its foundation by Deutsche Umwelthilfe and the Glob- al Nature Fund (GNF) in 1998, it has been working for the protection, promotion, revitalization and rehabilitation of lakes and wetlands on all five continents. The network currently counts 41 lake regions worldwide, including Lake Constance, 68 Our business / Social responsibility / Environment / Corporate citizenship

Lake Baikal in Russia and Lake St. Lucia in South Africa. Not only do such lakes play a key role as nursery and habitat for countless species of fish, insects and birds, but they also supply vital freshwater for human consumption. In the framework of the “United Nations Decade of Education for Sustainable Development, 2005-2014,” Living Lakes was designated as official Decade Project. Lufthansa supports this project with financial and in-kind contributions and by promoting the specific nature protection projects of the local lake partners.

Furthermore, Lufthansa has been a partner of “Nature Summer Camps,” an initiative launched by the GNF, since 2004. It gives Lufthansa employees and their family members the opportunity to make a contribution to environmental protection by doing volunteer work in one of the Living Lakes regions. In 2005, a total of 57 participants traveled to Estonia, Russia, China or South Africa to experience a vacation of a slightly different kind. On location, they worked hand in hand with local environmental protection organizations for two to four weeks to help conserve natural and cultural landscapes and to promote sustainable tourism. This summer, Lufthansa Group employees are again making a commitment to environmental care projects in selected Living Lakes regions. p www.livinglakes.org p www.globalnature.org

Regenerating instead of despoiling – Pilot project “Rainforestation- Farming” Uncontrolled logging and fire clearances have destroyed the greatest part of rain forests on the 7,000 islands of the Philippines: While 60 percent of the surface was covered by rain forest about 40 years ago, this figure has plummeted to a mere 7 percent today. To help put an end to this demise of nature, Lufthansa supports the pilot project “Rainforestation-Farming” – an initiative of the environmental foundation Euronatur, Hohenheim University (Stuttgart) and Leyte State University – on the Philippine island of Leyte. The project’s goal is to regenerate cleared rain forests by planting species-rich secondary forest and thus to conserve unique biodiversity. Besides, the future-oriented pilot project permits small farmers to apply methods of sustainable agriculture in harmony with nature. The proof: In the northern part of Leyte, the combination of close-to-nature forestry and agricultural production has turned previous palm monocultures into natural forests in just a few years’ time. These forests produce fruit, rattan, hardwoods and softwoods, all products that give farmers an economic base without destroying the forest.

In 2005, the reforestation project on Leyte included 30 experimental areas; beyond that, another 11,000 hectares of land were revitalized countrywide. Lufthansa hopes that “Rainforestation-Farming” will take root all over southeast Asia and in other tropical countries. “Natural disasters, such as the mudslides in February 2006 in the southern part of Leyte, demonstrate just how important such projects are,” emphasizes Lutz Laemmerhold, Head of Lufthansa’s Environmental Sponsorship Program. The reason: Reforesting cleared surfaces with species-rich woods is the key to stabilizing soils over the long term and to preventing further erosions. The chances are good here: At Hohenheim University, visiting scholars from Leyte State University acquire the basic knowledge in the field of tropical ecology they later need to guide small farmers in a targeted manner. p www.euronatur.org

Balance 2006 Corporate citizenship 69

Lufthansa in-flight video goes to battle for endangered species Statistically, yet another animal or plant species is lost forever every 20 minutes. This includes many species whose very existence is never known to humans. The causes of this widespread extinction of species, however, are known: habitat destruction, overfishing and commercial interests. Not least, tourism contributes to this development as well, especially when it does not take the ecological characteristics of destination countries sufficiently into account. To make travelers more sensitive to species protection, the Lufthansa Environmental Sponsorship Program joined the environmental protection foundation Euronatur, Germany’s Federal Ministry for the Environment and Nature Conservation, and the Bonn Convention on the Conservation of Migratory Species (CMS) to produce a short video. Under the title “Living Planet – Fascination Nature,” this seven-minute documentary, which is shown on selected long-haul flights, promotes the respectful treatment of natural resources in holiday regions – by showing fascinating shots of tropical rain forests, underwater worlds and other natural landscapes. Thanks to numerous

High standards for animal protection

Lufthansa Cargo respects animals as feeling creatures – and therefore transports them only according to the strictest of regulations. For starters, before each shipment shippers have to prove beyond a doubt that animals are of legal origin. Since 2001, this Group company has been especially strict when it comes to animals caught in the wild. If they are to be transported for purely commercial motives, Lufthansa Cargo refuses the shipment. Whales and dolphins, as well as species covered by the Washington Convention on International Trade in Endangered Species (CITES), are generally excluded from carriage. Tarsiers have become the symbol of the rain forest revitaliza- Whether animal shipments take place successfully depends above all on the conditions under which tion project “Rainforestation Farming.” they are performed. To this end, Lufthansa Cargo has been cooperating with international animal and species protection organizations for many years.

practical tips and facts regarding environmentally-aware ways of behaving on location, this film and the accompanying 16-page brochure create an excellent medium for environmental education for people of all ages. It can be ordered at http://responsibility.lufthansa.com.

Focus on migratory species In 2004, the Convention on the Conservation of Migratory Species of Wild Animals (CMS) celebrated its 25th anniversary. Since 1979, it has held a protecting hand over 8,000 to 10,000 species, which include not only migratory birds – such as CMS the crane – but also whales, sturgeons, butterflies, bats, antelopes and elephants. To mark this anniversary, Lufthansa and National Geographic Deutschland have endowed an international dissertation prize. The “UNEP / CMS Thesis Award,” which includes prize money of 10,000 euros, was given for the first time in 2005. American biologist Dr. Zeb Hogan was honored for his work on the migratory giant Mekong catfish: This freshwater fish, which can reach a length of 3 meters and a weight of 350 kilos, is fighting for its survival in the southeast-Asian river Mekong.

To support and promote the convention, Lufthansa also takes an active role in the newly-founded support network “Friends of CMS.” p www.cms.int 70 Our business / Social responsibility / Environment / Corporate citizenship

Research at Lufthansa Assessing the effects of air transport on the environment objectively requires target-oriented research. That is why Lufthansa supports a broad range of scientific projects. The results such research generates form the basis for effective environmental care at the Aviation Group.

EU network AERONET Network for the coordination of European research projects on aviation issues The network AERONET gathers together important players in European aviation: the aircraft industry, airlines, airport operators, research institutions, public authorities and political representatives. The project’s goal is to facilitate the exchange of experience and knowledge, and to smooth the path for the competitive and environmentally compatible development of Europe’s aerospace industry.

AERONET is particularly committed to advancing aircraft and engine technology. Besides, the network is investigating measures related to traffic organization aimed

at lowering emissions of CO2 and other pollutants. In this context, AERONET has not only adopted the “Vision 2020 for European Aviation,” but it also counts on the related Strategic Research Agenda of the Advisory Council for Aeronautics Research in Europe (ACARE). The latter has formulated concrete reduction goals:

CO2 emissions are to be cut by 50 percent by 2020, and nitrogen oxide emissions by even 80 percent. p www.aero-net.org

EU research project MOZAIC Atmospheric research on long-haul flights In the context of MOZAIC (Measurement of ozone, water vapor, carbon monoxide and nitrogen oxides aboard Airbus in-service aircraft), five long-haul Airbus A340- 300s did daily duty in 2005 – two of these at Lufthansa. These aircraft have been equipped with highly sensitive sensors, which during flight continuously measure the atmosphere’s content of ozone, water vapor, carbon monoxide and nitrogen oxides. The results of this research have made an important contribution to in- creas ing the accuracy of global climatic models, which are used in turn to calculate climate changes. About 2,300 flights per year have taken place since 1994. At the beginning of 2004, ten years after the project’s launch, the EU’s financial support for this project ran out. Given the project’s pivotal role for climate research, the participating airlines and research institutes have decided to continue the En route every day: For the last 12 years, the MOZAIC sensors measurements under their own financing until 2007. have routinely supplied data for climate research. p www.fz-juelich.de

EU research program CARIBIC Atmospheric measurement laboratory aboard the “Leverkusen” Like MOZAIC, the European project CARIBIC (Civil Aircraft for the Regular Investigation of the Atmosphere Based on an Instrument Container) serves basic research on the atmosphere. Since December 2004, a container filled with scien-

Balance 2006 Corporate citizenship 71

tific instruments weighing 1.6 tons has been regularly loaded into the cargo hold of the Lufthansa Airbus A340-600 “Leverkusen.” During these flights, 20 scientific instruments installed in the container measure numerous trace gases as well as the concentration and distribution of aerosols.

For this purpose, ambient air is fed to the container by means of a dedicated air inlet system on the aircraft’s fuselage. There, the air is analyzed online. In addition, 28 air samples are stored for later analysis in a laboratory. The schedule for 2005 comprised 32 flights. Emphasis was placed on the routes Frankfurt–Sao Paulo–Santiago de Chile and Frankfurt–Canton–Manila. This approach allowed an investigation not only of the differences between the northern and southern hemi- spheres but also of the effects from air pollution in Asia. p www.caribic-atmospheric.com

EU research project IAGOS Development of an infrastructure to observe the Earth’s atmosphere on a global scale with support from civil aviation IAGOS (Integration of routine Aircraft measurements into a Global Observing System) is a further development of the MOZAIC project. Ten partners from the research sector and the aviation industry participate in it. Launched in April 2005, IAGOS is to make a substantial contribution to the creation of an atmosphere- monitoring network by 2008. The goal is to set up a measuring infrastructure that allows civil aircraft in flight to routinely record data on trace gases, aerosols and clouds – worldwide and on a broad basis. At the center of these research efforts are lightweight low-maintenance instruments that can be integrated into an airline’s operations in an efficient manner. These newly developed instruments are to be tested initially aboard Lufthansa aircraft. The data IAGOS is set to generate will be of central importance for climate research and the Numerical Weather Report. p www.fz-juelich.de/icg/icg-ii/iagos

Nitrogen concentrations over Asia between January 2003 and June 2004, as measured by satellites: Such air mass Measuring the emissions of jet engines measurements made by satellites need to be validated. This Determining engine emissions characteristics over the long term can be done ideally with measurements made by aircraft, In 2001, Lufthansa Technik and the Institute for Meteorology and Climate Research which, unlike satellites, measure on the spot. in Karlsruhe (imk-ifu) jointly launched a measuring program. Its goal was to obtain accurate data on changes in emissions and the overall efficiency of engines, depending on hours of operation, maintenance and flight cycles. For this purpose, emissions components were measured in the exhaust jets of specific engines on two Lufthansa Airbus A340-300s after every 1,000 hours of operation. The data allowed scientists to formulate emissions indices that characterize the corresponding state of an engine. Data analysis has been concluded, and the final report is currently being worked on. p imk-ifu.fzk.de

EU research project TBCplus Development of highly resistant ceramic coatings for engine combustion chambers In cooperation with renowned European aviation institutions, Lufthansa Technik has developed an innovative ceramic protective coating for the combustion chambers and turbine fan blades of aircraft engines. It remains stable under extremely high temperatures and thus protects these components better against 72 Our business / Social responsibility / Environment / Corporate citizenship

overheating. With the thermal barrier coatings (TBCs) used thus far, changes in the surface of these materials have been observed repeatedly, particularly in hot areas. Such changes might decrease heat insulation properties or lead to flaking. The consortium expects that using the new-type TBCs will improve the component life span and performance of the engines in use today. After licensing by the aviation authorities, the material’s improved protective properties are to be tested and compared in operations for several years. Based on these findings, the new TBCs are expected to influence new engine designs and contribute to increasing efficiency and reducing emissions.

Interdisciplinary research network “Quiet Traffic” Joint research projects to lower traffic-related noise emissions To reduce traffic-related noise emissions, the research network “Quiet Traffic,” initiated by the German Aerospace Center (DLR), counts on interdisciplinary cooperation between industry, research institutions and transport industry. Within the network, three working groups examine the specific issues from the areas of road, rail and aircraft noise. Two other working groups analyze issues concerning all modes of transport, such as noise effects, traffic management and noise optimization.

The program section “Aircraft Noise” is led by the Head of Group Environmental Concepts at Deutsche Lufthansa AG. This working group coordinates the following projects:

• The joint research project LEXMOS (Quiet engine nozzle systems and ad vanced methods for the localization of noise sources) is headed by Rolls- Royce Deutschland. Computer simulations and experimental settings are used to investigate how sound is generated at the edges of engine nozzles.

• In the joint research project NASGeT (Innovative active/passive systems for noise reduction on engines), researchers investigate how sound generation can be influenced actively via adjustable engine components. This project is headed by the EADS Corporate Research Center.

• The joint research project FREQUENZ (Research on reducing and determining the source noises on civil aircraft by experimental and numeric means) is headed by Lufthansa and consists of three sub-projects following one from Wind tunnel trials aimed at determining the noise reduction potential on landing gears the other. In a first step, new aero-acoustic calculation methods are developed; these are subsequently verified in wind-tunnel experiments and finally used for the development of exemplary retrofit measures to reduce noise at the source. As well as Lufthansa and the DLR, the FREQUENZ consortium includes manufacturers and universities.

The project can build on existing work jointly conducted by Lufthansa, manufacturers, various authorities and the German Aerospace Center (DLR). This includes noise measuring flights with a Boeing MD-11 of Lufthansa Cargo and an Airbus A319 of the Lufthansa Passenger Airline. The goal of these flights was the recording of the aircraft-specific characteristics of noise sources and the formulation of appropriate noise-reduction measures.

Balance 2006 Corporate citizenship 73

• Joint research project LAnAb (Noise-optimized approach and departure procedures) Using approach procedures such as “low drag/low power” or the Continuous Descent Approach (CDA) can contribute significantly to reducing aircraft noise in the vicinity of airports. Here, advanced simulation methods, which have been further developed in the context of the project and allow the greatest degree of accuracy thus far, are used to analyze the sound generation of aircraft. A second set of fly-over measurements was recorded in June 2004, using an Airbus A319, with the purpose of expanding and improving the database of the simulation tool.

The joint project is set to end in December 2006. In addition to Lufthansa, the LAnAb consortium includes Deutsche Flugsicherung, the DLR, the EADS Cor- An acoustic camera allows scientists to pinpoint noise sources on an aircraft within a decimeter. In the process, the porate Research Center and others. aircraft’s position must be accurately recorded as well. All the joint research projects described here receive funding from Germany’s Federal Ministry of Economics and Technology in the framework of numerous programs. p www.fv-leiserverkehr.de

EU research program SEFA Investigation of possibilities to influence the tonality of aircraft noise SEFA (Sound Engineering for Aircraft) is working to develop design criteria for low-noise aircraft and provide instruments for the evaluation of these criteria. The project works to identify those “noise signatures” in aircraft noise that are perceived as least annoying. To do so, the researchers evaluate the influence of the sound spectrum and the direction in which noise is emitted. Deutsche Lufthansa AG’s Head of Group Environmental Concepts is a member of a consulting panel of experts, which accompanies and appraises the project’s work in a discerning manner.

Epidemiological study of cosmic radiation Continuation of a research project concerning possible mortality risks for cockpit and cabin crews As early as 1997, epidemiologists at Bielefeld University investigated whether cosmic radiation has measurable health effects on flying personnel. Together with the German Cancer Research Center and the Professional Association of Vehicle Operators, they analyzed cases of death among all flying personnel who worked for Lufthansa or LTU between 1960 and 1997. The study concluded that there were no indications that work-related increased exposure to cosmic radiation leads to a general significantly increased mortality risk due to diseases associated with radiation. To further increase the validity of this study, the investigation period will be extended in a follow-up project to the year 2003. The project’s scientific supervision is shared by Bielefeld and Mainz Universities. Initial results are to be presented in 2007. 74 Glossary

Glossary

ACARE Advisory Council for Aeronautics Research humans. Per ton of fuel, 3.154 tons of CO2 result from pain threshold is 1:10 billion. To depict this enormous in Europe. Created in 2001, the ACARE council con- the combustion process. Currently, about 2 percent of range objectively, acoustics uses the logarithmic

sists of representatives from the EU member states, man-made CO2 emissions are due to air traffic. decibel scale. On this scale, the value “0” is assigned EU Commission, Eurocontrol, EU aerospace industry, to the perception threshold (for a sound of 1,000 EU research institutions and others. Its main task is to Carbon monoxide (CO) Chemical compound con- Hz) and the pain threshold at the value “130.” An develop and implement the strategic research agenda sisting of one carbon and one oxygen atom, formed increase of 10 dB corresponds to a tenfold increase (SRA) for Europe’s aerospace sector. in the incomplete combustion process of substances in the sound’s intensity. For the perceived volume, p www.acare4europe.org containing carbon. For aircraft engines, the level of a difference of 10 dB corresponds to half or double CO emissions depends greatly on the thrust level: the volume. However, the human ear is not equally AEA Association of European Airlines. The emissions per kilogram of fuel burned are higher sensitive across the entire range of frequencies. Low p www.aea.be at idle settings, while taxiing and on approach than and high sounds are not perceived as being equally during the climbing and cruising phases. loud even at the same intensity. For measurements, ASPI Advanced Sustainable Performance Indices. this difference is equalized and noted accordingly. The Lufthansa is listed in these indices set up by Vigeo Catering Internationally used term for the supplies best known such notation is the “A value,” marked by and Stoxx; they comprise the 120 leading Eurozone loaded aboard an aircraft, including in-flight meals and the index dB(A). To measure aircraft noise, the EPNdB companies listed in the DJ Euro Stoxx indices. service items. (Effective Perceived Noise Decibel) unit is used internationally. Atmosphere The whole mass of air surrounding the CDA Continuous Descent Approach. Procedure for a Earth. It is divided into various layers, distinguished flight’s approach phase that reduces noise emissions Deicing An aircraft cannot take off with ice and from one another by distinct differences in vertical 20 to 40 kilometers ahead of the runway threshold snow on its wings and horizontal stabilizers. Such bands of temperature. Important for air traffic are (Frankfurt). At Frankfurt Airport, it can only be used at accumulations alter the aerodynamics and thus imply the two lower layers: the troposphere and the strato- night due to capacity restrictions. an enormous safety risk. For this reason, aircraft are sphere, lying above that. The troposphere’s upper forbidden to take off when they are covered by hoar- boundaries vary depending on season and latitude. Change Management Change Management com- frost, snow or ice. Under wintry weather conditions, They lie at altitudes of 16 to 18 kilometers above sea prises all the measures a company uses to introduce an aircraft’s critical surfaces must be deiced with a level at the equator, and at 8 to 12 kilometers above or adapt to change. The more intensively employees mixture of water, propylene glycol and alcohol, which sea level at the poles. The temperature in the tropo- are informed about and involved in the processes of also protects them from icing over again (deicing/anti- pause, the transition layer between troposphere and change, the more successful these changes will be. icing). On average, about 900 liters of deicing fluid are stratosphere, drops to only about minus 60 degrees required to deice a Boeing 747 each time. By compar- Celsius. It rises again in the stratosphere. There the Chapter-4 aircraft Aircraft that meet the regulations ison, only 300 liters are needed for a Boeing 737. This concentration of water vapor is extremely low. The so- of the strictest noise protection standard currently in deicing fluid is almost completely biodegradable and called ozone layer is also located in the stratosphere force – the Chapter-4 noise standard. The Environ- poses no danger for the environment. On an average at altitudes of about 25 to 30 kilometers. Today’s mental Committee (CAEP) of the ICAO agreed on this winter day, about 65,000 liters of deicing fluid are commercial aircraft fly at cruising altitudes of between standard in September 2001. As a result, all aircraft used at German airports. On dry days with freezing 8 and 13 kilometers. According to the latest research, newly certified from 2006 must remain cumulatively temperatures, this figure is significantly lower. It is even air traffic emissions do not have a direct impact on the below the Chapter-3 noise levels by 10 decibels entirely possible that on dry days with very cold tem- ozone layer. or more. The maximum noise emission values for peratures, such as those occurring at Russian airports, aircraft were introduced by the ICAO under Annex no deicing is required at all as no ice builds up due to B.A.U.M. Bundesdeutscher Arbeitskreis für Umwelt- 16 to the convention on international civil aviation. the cold, precipitation-free weather conditions. bewusstes Management e. V. (Federal Working Group Noise levels are measured at three measuring points: for Environmentally-Aware Management). B.A.U.M. at 6,500 meters from the beginning of the runway Deutsches Netzwerk Wirtschaftsethik (dnwe) Ger- was founded in 1984 as the first independent envi- (break-release point) and 450 meters to the side of the man Network for Business Ethics. dnwe is a nonprofit ronmental initiative of German business. At currently runway for takeoffs (sideline), and at 2,000 meters in organization, in which Lufthansa has been a member 450 members, it is the largest of its kind in Europe. front of the runway threshold (approach) for landings. since January 1998 (Lufthansa double membership in Lufthansa has been a member of the Working Group The latter corresponds to a flyover altitude of about 120 dnwe and EBEN since January 1998). dnwe has about since 1997. meters. The permitted values depend on the aircraft’s 450 current members, including many from German p www.baumev.de maximum take-off weight and number of engines. business, politics, religion and science. At the same time, dnwe is a national association of the European business@school Educational initiative of the Corporate Social Responsibility (CSR) Business Ethics Network (EBEN). international consultancy Boston Consulting Group, in A company’s responsibilities toward society at large, p www.dnwe.de which Lufthansa has taken part since 2002. The goal or “corporate citizenship.” CSR refers to a company’s here is to improve business education at high schools. voluntary efforts in the areas of society and the envi- Diversity In a corporate context, diversity refers to ronment. all characteristics that distinguish employees from one

Carbon dioxide (CO2) Gas resulting in nature from another. Diversity management offers approaches for the burning or decomposition of organic masses Corporate university Corporate education institution handling human differences for the benefit of company (e.g. plant material) and from the breathing process for professionals and managers. See also Lufthansa and employees alike.

of humans and animals. CO2 is an important green- School of Business (LHSB) house gas in the atmosphere, where it remains for DLR German Aerospace Center. The DLR serves about 100 years. Scientists attribute the increase Decibel (dB) Measuring unit for the intensity and scientific, economic and social purposes. It maintains

of atmospheric CO2 over the last 100 years to the pressure of sound. The difference in intensity between 30 institutes, testing facilities and operational sites. burning of fossil fuels (e.g. coal, oil, natural gas) by the softest sound the human ear can perceive and the Its goal is to help – using the means of aviation and

Balance 2006 Glossary 75

space flight – to secure and shape the future. In its 767, MD-11) before unscheduled landings (e.g. in the 1919 as the World Business Organization. More than work, the DLR also seeks cooperation and allocation event of technical problems or serious passenger ill- 1,500 business organizations and over 5,000 corpo- of research tasks among European partners. ness) to decrease the aircraft’s weight to the maximum rations are organized in the worldwide framework of p www.dlr.de permissible landing weight. In the event of a fuel dump, the ICC. special airspace is assigned to the aircraft, if possible p www.icc-deutschland.de econsense econsense – Forum for Sustainable above unpopulated or thinly populated areas. Fuel is Development of German Businesses is an association usually dumped at altitudes of 4–8 kilometers. A mini- Initiative Pro Recyclingpapier Founded in 2000, the of globally active corporations and organizations in mum altitude of 1,500 meters and a minimum speed of initiative unites various industries and aims at improv- German industry that have integrated the guiding prin- 500 km/h are required. The aircraft may not fly a fully ing the acceptance of recycling paper. Lufthansa is one ciple of sustainable development into their corporate closed circle. The dumped kerosene forms a fine mist of the initiative’s founding members. strategies. Lufthansa has been a member of this cross- in the turbulence behind the aircraft. Despite the use of p www.papiernetz.de industry network since its foundation in 2000. highly sensitive methods of analysis, no contamination p www.econsense.de has been determined so far in plant or soil samples Intermodal transport Transport system that uses after fuel dumps. at least two modes of transport – such as train and Elder Care Term for giving care to older next of kin. plane – integrated in a transport chain to carry people Elder care is part of Diversity Management. When need- Girls’ Day The project Girls’ Day – focusing on the and goods from door to door. Thanks to a global ed, the Lufthansa Family Service advises employees future careers of young women – is jointly organized approach, existing transport capacities can be used on care options for family members in need. by Germany’s Federal Ministry for Education and more efficiently. Research, the Federal Ministry for Families, Seniors, EMAS Environmental Management and Audit Women and Youth, as well as numerous associations IPCC Intergovernmental Panel on Climate Change. Scheme, colloquially referred to as EU eco-audit regu- and organizations. Since 2001, the event has given An international UN panel of experts on climate lations. European regulations concerning environmen- girls the opportunity once a year to gather information change, founded in 1988 by the World Meteorological tal management and certification. about and establish contacts with technically-oriented Organization (WMO) and the United Nations Environ- companies, training courses, universities and research mental Program (UNEP). Employee shares Employee shares are usually centers. p www.ipcc.ch offered to staff at preferential prices and with favorable p www.girls-day.de terms of payment. Ordinarily, they are subject to a ISO 14001 International environmental management blocking period, during which they may not be sold. Global Compact Global network in whose context system. It allows companies to anchor environmental the United Nations cooperates with private-sector protection in their organization in a systematic manner. Ethibel Sustainability Index (ESI) Lufthansa is corporations and civil action organizations to advance listed in this index, which was set up by the epony- human rights, labor standards, environmental protec- Kerosene Fuel for jet and propeller engines that mous not-for profit consulting and research firm active tion and anti-corruption measures. is chemically similar to petroleum. Like diesel fuel or in the fields of Socially Responsible Investing (SRI) and p www.unglobalcompact.org gasoline, kerosene is produced by distilling crude oil; Corporate Social Responsibility (CSR). unlike these fuels, kerosene does not contain haloge- p www.ethibel.org Greenhouse gases Gaseous substances that nated additives. Due to its manufacturing process, it contribute to the greenhouse effect and have both does not contain benzene hexachloride either. World- Export guarantees Known in Germany as “Hermes natural and human (anthropogenic) causes. The most wide, aircraft currently consume almost 170 million guarantees.” They serve to open up difficult markets important natural greenhouse gases are water vapor, tons of kerosene per year. This represents about 5–6 and protect German companies from losses due to carbon dioxide and methane; the most important percent of the world’s total crude oil production. default by business partners abroad. The country anthropogenic greenhouse gas is carbon dioxide from where the exporting company has its headquarters the combustion of fossil fuels. It accounts for about 60 Kyoto Protocol Codifies binding goals for reducing assumes part of the export risk through its Export percent of the greenhouse effect attributable to human emissions of greenhouse gases. It was passed in 1997 Credit Agency. activities. Methane, primarily generated by agriculture as an amendment to the protocol concerning the for- and large-scale animal husbandry, contributes about mulation of the United Nations Framework Convention Freight performance (FTKO / FTKT) Airlines dis- 20 percent to the anthropogenic greenhouse effect. on Climate Change (UNFCCC) and was ratified in tinguish between freight performance offered (FTKO, Other artificial greenhouse gases are disulfur oxide, February 2005. freight ton kilometers offered) as part of its total perfor- fluorocarbons (FCs and HFCs), sulfur hexfluoride (SF6) mance offered and its sold freight performance (FTKT, and chlorofluorocarbons (CFCs). Lufthansa School of Business (LHSB) Germany’s freight ton kilometers transported) as part of its total first corporate university. It has received multiple performance sold. See also ton kilometers. IATA International Air Transport Association. The awards for the worldwide standards it establishes for general organization of international commercial the development and training of professionals and FTSE4Good Index introduced in 2001 by the Finan- aviation. managers. The LHSB supports processes of change cial Times and the London Stock Exchange. FTSE- p www.iataonline.com within the Group and promotes a shared management 4Good lists only those companies with an above-aver- culture. age performance in the areas of human rights, social ICAO International Civil Aviation Organization. A standards and environmental protection. Lufthansa has United Nations agency that develops internationally Managing volatility (“Fit for change”) Lufthansa featured here since 2001. binding norms for civil aviation. initiative that supports managers and employees in p www.icao.int reacting swiftly and flexibly to unexpected events, e.g. Fuel dumps Dumping of fuel in-flight due to emer- through workshops that teach and develop relevant gency situations. A procedure used on long-haul ICC Deutschland German chapter of the Internatio- methods. aircraft (Airbus A340, Airbus A330, Boeing 747, Boeing nal Chamber of Commerce. The ICC was founded in 76 Glossary

Mentor Experienced specialist or manager who Passenger kilometer (PKT) Measure for transport methane, nitrous oxide, etc.) but which are of great passes on his or her know-how to a junior employee performance in passenger carriage (number of significance for the Earth’s climate and the chemical and facilitates contacts. passengers multiplied by distance flown). Here one processes in the atmosphere. distinguishes between available transport performance Mentee Junior employee who is supported by an (PKO, passenger kilometers offered or synonymously Transparency International Anti-corruption organi- experienced mentor in his or her personal and profes- SKO, seat kilometers offered) and actual transport per- zation, of which Lufthansa has been a member since sional development. formance (PKT, passenger kilometers transported) 1999. p www.transparency.de Mentoring Instrument for targeted support of junior Senior professional Older, experienced employee. employees. Focuses on regular personal contacts between mentor and mentoree. Unburned hydrocarbons (UHCs) Organic mixture Seat kilometer (SKO) Measure for the transport of carbon and hydrogen that results from the incom- MRO Acronym standing for maintenance, repair and capacity available (SKO, seat kilometers offered). plete combustion of fuels containing hydrocarbons or overhaul of aircraft. from the evaporation of fuel. Seat load factor Passenger-related measure of

Nitric oxides (NOX) Chemical compounds consist- utilization of aircraft: The ratio of transport performance UN Global Compact see Global Compact.

ing of one nitrogen and several oxygen atoms. NOX (PKT, passenger kilometers transported) to capacity

is defined as the sum of NO and NO2 compounds. (PKO, passenger kilometers offered). UNEP The United Nations Environmental Program. Natural sources include lightning and microbes in the p www.unep.org soil. Nitric oxides are also generated in combustion Single European Sky (SES) Unified European processes under high pressures and temperatures. airspace. This initiative of the European Union aims at UN World Decade “Education for Sustainable Both of these parameters have been increased in optimizing traffic flows, standardizing licenses for air Development” Proclaimed by the UN plenary modern aircraft engines to significantly reduce fuel traffic controllers, harmonizing technology and thus session in 2002 for the period 2005 to 2014. Its goal consumption as well as emissions of carbon mon- maintaining safety, capacities and punctuality in grow- is to anchor the principles of sustainable development oxide and unburned hydrocarbon. However, future ing air transport. worldwide in the national educational systems. combustion chambers of an advanced design could p www.dekade.org

help reduce NOX emissions by 85 percent. Depending Slot Designated point in time at which an airline may on the type of aircraft and operational conditions, this use an airport’s runway for takeoff or landing. Volatile Organic Compounds (VOCs) Volatile value varies between 6 and 20 kilos per ton of fuel organic substances that are characterized by high burned. Air traffic has a share of 2–3 percent in man- Stakeholders Groups or individuals who formulate steam pressure and thus evaporate easily into the

made NOX emissions. Climate models show that nitric their demands on a company (e.g. attainment of atmosphere at room temperature. VOCs are present in oxides have increased the concentration of ozone at corporate goals) and pursue these either personally or solvents, cleaning agents, fuels and other substances. cruising altitudes by a few percentage points. through representatives. This includes shareholders, In the presence of nitrogen oxides and intense sun- employees, customers, suppliers and others. light, VOCs lead to the generation of ozone. OHSAS 18001 Occupational Health and Safety Assessment Series. Job safety management system, Sustainable development According to the guiding Water vapor Water vapor is the most important developed by the British Standards Institution in coop- principle of sustainable development formulated in greenhouse gas, even ahead of carbon dioxide. eration with international certification organizations. 1987 by the World Commission for Development and Without water vapor from natural sources, the Earth’s the Environment (Brundtland Commission), “sustain- surface would be around 22 degrees Celsius cooler.

Ozone (O3) Molecule consisting of three oxygen able development is a form of development that meets This makes water vapor responsible for two-thirds of atoms formed in the stratosphere. The ozone layer the needs of today’s generation without jeopardizing the natural greenhouse effect (33 degrees Celsius). For located in the stratosphere has an important protective the abilities of future generations to satisfy their own.” each kilo of kerosene burned, 1.24 kilos of water vapor function, as it absorbs harmful ultraviolet light. While For businesses, this means acting responsibly not are released. Concerns that air traffic might increase ozone at higher altitudes is broken down massively only in economic matters but also in environmental the concentration of water vapor in the stratosphere by chlorofluorocarbons (CFCs), it develops close to the and social issues in order to secure growth long-term. and thus change the climate have been refuted by sci- ground under the influence of sunlight from numerous All three aspects – economic, ecological and social entific research. The German Aerospace Center (DLR) precursor substances (“summer smog”) and irritates – must be kept in balance. concluded that even a one hundred-fold increase in the mucous membranes. At current levels, nitric oxide the quantity of water vapor emitted by air traffic would emissions from air traffic at cruising altitudes cause Telework Transfer of the workplace, e.g. to the home. not result in a detectable climatic signal. an increase in atmospheric ozone, analogous to the Access to corporate data is provided via the Internet. generation of summer smog, estimated by scientists at Work-Life balance Refers to a healthy equilibrium 3–4 percent on the heavily-flown North Atlantic routes. Ton kilometers (TKT) Measure of transport between work and private life. performance (payload multiplied by distance). One Partners for Innovation Lufthansa has been a distinguishes between available transport performance Partner for Innovation since 2005. More than 200 com- (TKO, ton kilometers offered) and the actual transport panies, associations and institutions participate in this performance (TKT, ton kilometers transported). In cal- initiative. Its goal is to bundle the scientific and strategic culating payloads, passengers are taken into account know-how of its members and to translate innovative by means of a statistical average weight. ideas into marketable products. p www.innovationen-fuer-deutschland.de Trace gases Gases of which there are only very small amounts present in the atmosphere (e.g. ozone,

Balance 2006 ii At a glance iii Contact partners

At a glance Contact partners

Environment Human Resources/Social issues Economic issues

1 2, 3 Key business performance data 2005 2004 Change Environmental data 2005 2004 Change Environmental Concepts Human Resources Policies Business and financial issues

At a glance Contact partners

Environment Human Resources/Social issues Economic issues

1 2, 3 Key business performance data 2005 2004 Change Environmental data 2005 2004 Change Environmental Concepts Human Resources Policies Business and financial issues

iv Fleet overview: Noise and fuel consumption al al Key data on sustainability at Lufthansa Issue 2006 Fleet overview: Noise and fuel consumption The Aviation Group