Destination Time SHAPING THE FUTURE TOGETHER JAN. – SEPT. 3rd INTERIM Report 2013 Lufthansa Group overview Key figures Lufthansa Group Jan. – Sept. Jan. – Sept. 3) Change July – Sept. July – Sept. 3) Change 2013 2012 in % 2013 2012 in % Revenue and result Total revenue €m 22,768 22,821 – 0.2 8,304 8,312 – 0.1 of which traffic revenue €m 18,663 18,786 – 0.7 6,885 6,935 – 0.7 Operating result €m 661 907 – 27.1 589 672 – 12.4 EBIT €m 615 972 – 36.7 694 885 – 21.6 EBITDA €m 2,041 2,353 – 13.3 1,183 1,342 – 11.8 Net profit / loss for the period €m 247 697 – 64.6 451 647 – 30.3 Key balance sheet and cash flow statement figures Total assets €m 29,342 29,880 – 1.8 – – – Equity ratio % 19.1 17.1 2.0 pts – – – Net indebtedness €m 1,059 2,043 – 48.2 – – – Cash flow from operating activities €m 3,001 2,428 23.6 688 766 – 10.2 Capital expenditure (gross) €m 1,896 1,878 1.0 544 493 10.3 Key profitability and value creation figures Adjusted operating margin 1) % 3.2 4.3 – 1.1 pts 7.3 8.4 – 1.1 pts EBITDA margin % 9.0 10.3 – 1.3 pts 14.2 16.1 – 1.9 pts Lufthansa share Share price at the quarter-end € 14.42 10.55 36.7 – – – Earnings per share € 0.54 1.52 – 64.4 0.98 1.42 – 31.0 Traffic figures 2) Passengers thousands 79,774 79,283 0.6 30,305 29,634 2.3 Passenger load factor % 80.3 79.3 1.0 pts 84.1 83.4 0.7 pts thousand Freight and mail tonnes 1,453 1,482 – 2.0 489 488 0.1 Cargo load factor % 68.4 68.8 – 0.4 pts 66.6 68.3 – 1.7 pts Available tonne-kilometres millions 31,100 31,077 0.1 11,190 10,881 2.8 Revenue tonne-kilometres millions 23,376 23,124 1.1 8,630 8,421 2.5 Overall load factor % 75.2 74.4 0.8 pts 77.1 77.4 – 0.3 pts Flights number 779,742 812,245 – 4.0 277,342 283,297 – 2.1 Employees Employees as of 30.9. number 117,538 118,088 – 0.5 117,538 118,088 – 0.5 1) Performance indicator to enable comparison with other airlines: (operating result + write-backs of provisions) / revenue. 2) Previous year’s figures have been adjusted. 3) The comparable figures from last year were adjusted retrospectively due to the application of the revised IAS 19 as of 1 January 2013. Date of publication: 31 October 2013. Contents 1 To our shareholders 38 Further information 3 Interim management report 39 Credits/Contact/ 24 Interim financial statements Financial calendar 2014 To our shareholders | Interim management report | Interim financial statements | Further information Letter from the Executive Board Ladies and gentlemen, For the Lufthansa Group, the first nine months of 2013 have been For our customers, too, we have taken a number of important dominated by structural change and the continuation of the decisions. For them, the focus is on the quality of our product offer- SCORE earnings improvement programme. Good progress has ing. In the past quarter, we have begun to install the new Business already been made in the reporting period, largely thanks to the Class in the existing Lufthansa Passenger Airlines fleet. This will dedication of our employees and managers, and we would like to enable us to offer our passengers an end-to-end “five-star” product take this opportunity to thank them for their hard work. in the near future, not only in terms of service, but also as regards furnishing. Austrian Airlines has already successfully completed Our restructuring success is nonetheless diminished by a chal- the renewal of its long-haul Business Class. lenging macroeconomic environment, which continues to be dominated by the differences in global economic development In the third quarter of 2013, we also took the decision to place across the various regions as well as volatile exchange rate move- the largest fleet order in the history of the Lufthansa Group. A total ments. We were nonetheless able to improve our operating result of 59 modern Boeing 777-9X and Airbus A350-900 aircraft will for the first nine months of the year, after adjustment for non-recur- be brought in to the Lufthansa Passenger Airlines long-haul fleet ring effects and restructuring costs. This success encourages us between 2016 and 2025, primarily to replace older aircraft. The to resolutely pursue our chosen course. new aircraft are quieter and have much lower fuel consumption than their predecessors, which will also lead to a reduction in Current figures nonetheless make it clear that great efforts are greenhouse gas emissions and noise pollution. required to meet our targets. Although we are increasingly improv- ing our cost structures, the volatility of the markets is preventing Looking ahead to the end of the year, we expect that markets and a direct reflection of this success in our earnings performance. exchange rates will remain volatile, and that performance will vary We are nonetheless standing by our target of achieving an operat- from one region to another. We have narrowed our forecast for ing result of EUR 2.3bn in 2015. If the implementation of further 2013 to an operating result of between EUR 600 and 700m. reaching measures should be necessary to get there, we will do so. Adjusting for the non-recurring effects of restructuring costs and one-off expenses for product improvements, we therefore expect Historically low interest rates, a rising life expectancy and the an adjusted operating result of up to EUR 1bn. resulting increase in pension obligations make it necessary to adapt the system of retirement benefits. We have terminated We will press ahead on our chosen path and use our SCORE the corresponding tariff agreements with effect from the end of programme to lay the foundations for the future success of the 2013 and are now in talks with the collective bargaining partners Lufthansa Group. on coming to new agreements. We thank you for your trust. Stay with us as we forge ahead on this exciting journey. Christoph Franz Harry Hohmeister Simone Menne Chairman of the Member of the Member of the Executive Board Executive Board Executive Board Carsten Spohr Bettina Volkens Member of the Member of the Executive Board Executive Board Lufthansa 3rd Interim Report January – September 2013 1 Lufthansa share Shareholder structure by nationality in % (as of 30.9.2013) At the end of the third quarter, the Lufthansa share price of United Kingdom 3.0 Other 9.3 EUR 14.42 was virtually unchanged compared with the start of Canada 4.3 the year (+ 1.2 per cent). In the first two quarters, the share rose Luxembourg 5.7 by a total of 9.5 per cent. These gains were lost again in the third quarter (– 7.6 per cent). Analysts believe that the share price still USA 15.2 Germany 62.5 has potential, however. At the end of the quarter, the average target price was EUR 17.32. 19 out of 31 analysts recommended the Lufthansa share as a buy. The main reasons for the analysts’ Free float: 100% confidence are the increasing consolidation of the European airline industry, the Lufthansa Group’s positive performance and the earnings increase expected from the SCORE programme. The free float for Lufthansa shares was 100 per cent at the end of In addition to several roadshows and conferences for institutional September. 62.5 per cent of Lufthansa shares were held by Ger- and private investors, information about planned activities and man investors. As before, the largest individual shareholders were the progress achieved with SCORE was made available at two BlackRock Inc. with 5.43 per cent, Templeton Global Advisors specific investor events in June and October. The focus in June Limited with 5.00 per cent and The Capital Group Companies with was on the basic structure of the SCORE programme, while in 4.75 per cent. Up-to-date information on the shareholder structure October it was on the progress of specific activities at Lufthansa is provided regularly on the Lufthansa Investor Relations website. Passenger Airlines and Germanwings. The presentations and recordings of both events are available on the i investor-relations. lufthansagroup.com website. Performance of the Lufthansa share, indexed as of 31.12.2012, compared with the DAX and competitors, in % 200 200 180 180 160 160 140 140 120 120 100 100 80 80 31.12. 31.3. 30.6. 30.9. 2012 2013 2013 2013 DAX Lufthansa International Airlines Group (IAG) Air France-KLM easyJet Ryanair Air Berlin 2 Lufthansa 3rd Interim Report January – September 2013 To our shareholders Interim management report | Interim financial statements | Further information Lufthansa share Economic environment and sector performance Interim management report Development of crude oil, kerosene and currency Minimum Maximum Average 30.9. 2013 Economic environment and sector performance ICE Brent in USD / bbl 97.69 118.9 108.46 108.37 Kerosene in USD / t 881.75 1,103.75 985.40 979.00 Macroeconomic situation Economic performance continues USD 1 EUR / USD 1.2772 1.3671 1.3168 1.3531 to vary widely between the different regions of the world. Although JPY 1 EUR / JPY 113.9100 134.4500 127.0813 132.9000 the emerging markets saw strong growth, the industrialised CHF 1 EUR / CHF 1.2079 1.2616 1.2310 1.2239 CNY 1 EUR / CNY 7.8381 8.5193 8.1215 8.2829 economies reported much lower growth rates.