Deutsche Lufthansa AG

Thank you and good afternoon, ladies and gentlemen, and welcome to the presentation of our Results for the Full Year and Fourth Quarter of 2021. With me on the call today are our CEO, Carsten Spohr; and our CFO, Remco Steenbergen.

After a brief introduction to 2021 by Carsten Spohr, Remco Steenbergen will discuss the financial development over the past 12 months. Carsten Spohr will conclude by discussing our strategic priorities and focus topics for 2022.

Afterwards, you'll have the opportunity to ask your questions. Carsten over to you.

Yes. Thank you, Dennis, and a warm welcome to all of you from me here from Frankfurt.

Thanks for joining our call today in very special times, obviously. And I think we all agree that speaking today basically means speaking when previously at least unimaginable events are shaking Europe and the rest of the world.

And to give you an example, the way I look at this is we were not in the year 2022, and this was just an ordinary Thursday in any March, there would be 4,000 people in our flights to and from Ukraine and Russia. We would either connect to our home markets, bring home friends, family, doing business and that's what we are there for.

We connect both nations, their people and their economies with Europe and the rest of the world. And that, as you know, is our purpose at the Lufthansa Group.

We believe a purpose that has never been more relevant than today. We connect people, cultures and economies.

We actually bring people together and that hope you agree is contributing to the national understanding and peace. But obviously this is not an ordinary Thursday today.

On this very Thursday, our short-haul aircrafts were scheduled to fly to Russia and Ukraine sitting here empty on the – in the hangar next to us. And the long range aircraft, at least some of them are in the air for up to 15, 15.5 hours, circum navigating Russian and Ukrainian airspace to at least continue to connect Japan, China and Korea with our home markets and the rest of the world.

So, I think, I speak on behalf of all of our more than 100,000 employees today, when I say that our thoughts at this moment are with the woman, the man and the children in Ukraine, and of course we, Lufthansa, to do the very best to support our 130 colleagues on the ground. But as you're also aware that for globally operating airline group, the current situation is another challenge and the political and economic effects of the conflicts are risks for the development of the whole global economy, for the recovery of our industry and as a consequence, of course, also for the outlook of the Lufthansa Group.

The closure of Russian and Ukrainian airspace affect therefore our business, but to be honest only a small part of our business. For example, the passenger capacity for Russia and Ukraine this summer is less than 2% and only a very small portion of our passenger flights to China, Korea, and Japan will actually have to take a detour, also there they account in this case even for less than 1% of our entire capacity.

But not only the loss of revenue from canceled flights affects our business, also the rising oil price, obviously, and the additional cost for detours and not forgetting Lufthansa Technik had to stop all services for our customers in Russia, but regardless how uncertain the future might be, I think one thing is for sure, we, Lufthansa, are ready to master this additional challenge and we want to do it as least as well as we master the previous one. Throughout the past two years, we have not only managed the most severe crisis in our corporate history, we have kept our promise and use the crisis as an opportunity.

We worked hard to secure jobs, to transform the companies and accelerate their transformation and we made as you all know very significant financial progress not only short-term, but also for the mid and long-term outlook and financial structure of this company. The Lufthansa Group is emerging from the crisis with more efficient structures, lower cost and more sustainable.

And today, we are better equipped than ever before for the future and can tackle the next challenge as I said with renewed strength. All in all we had to downsize the Lufthansa Group from around 140,000 to 105,000 employees worldwide and have successfully completed this enormous personnel restructuring.

In Germany alone, we cut more than 10,000 jobs just last year. On one hand that number devastating because our unique team is our greatest asset, but on the other hand I'm quite proud that we have always acted in a socially responsible manner and kept our promise to our staff that at least we want to maintain 105,000 sustainable jobs.

And I also glad that by the way, we now have found solutions to avoid layoffs for our pilots, which as you can imagine all were trained by us for many, many years. So glad to have a chance to keep them on board and use them.

Our strict cost management established – enabled us to return to profitability in the summer 2021 and it also helped us to stop the cash outflow. And we already achieved more than 75% of our annual cost saving targets of a total of €3.5 billion.

And today, the implemented measures have structurally reduced our annual cost by almost €3 billion. And perhaps the most important success of all in November 2021, we were able to announce the full repayment of the German government stabilization measures far ahead of schedule and following a successful capital increase.

Although we still have the reported loss for 2021, we are convinced to be in the right path. In the full year, our airlines welcome 47 million passengers on board, which is more than – 30% more than the previous year.

We reduced our operating loss by more than half. The adjusted EBIT excluding restructuring cost was minus €1.8 billion.

Group revenue increased by a quarter year-on-year to €16.8 billion in 2021 and Lufthansa Cargo and Lufthansa Technik were important contributors for these good results. In fact, the result of Lufthansa Cargo was once again historic the record adjusted EBIT of €1.5 billion in cargo alone, I remember years when that was a result for the whole group.

So you may imagine that potential we have really been able to get out of cargo in this unfortunate overall difficult times. The winter has indeed been long and cold and the emergence of Omicron has surely resulted in a tough start for the year 2022, but however bookings have improved significantly week after week, so we have all reasons to be confident.

After two years of a global pandemic and obviously comprehensive travel restrictions, the pent-up demand for leisure and business travel is strong. People just wanted to travel again and we expect strong growth for our group airlines in the spring and even stronger growth in the summer months.

Already the demand for flights at Easter and in the summer is high, the intake of new bookings has reached almost 85% of pre-crisis levels already. And I would like to take this opportunity to express my appreciation and thanks to the employees of The Lufthansa Group, surely for the past two years have not been for the faint of heart, but now we reached the point where we can focus firmly on what lies ahead.

And we surely owe the success to the joint effort of the whole team. And we will now continue to push the transformation of our company at full speed to shape the company for the future And I go into that in detail in a bit, but first Remco will bring you up to speed on our key financial figures.

Remco over to you.

Thank you, Carsten. Before starting, let me also say that with much sadness, I'm watching and reading the news during the last week.

My thoughts are with the people of Ukraine, they deserve all the supports that we can give them. Having said that let me give you more detail on the Group's financial performance in the final quarter of the year and the full year 2021.

In line with our guidance in November adjusted EBITDA was solidly positive in the fourth quarter amounting to €304 million. This was achieved despised Omicron, which impacted short term amount, especially in German domestic and European short-haul in late November and early December.

Restructuring expenses amounted €226 million, higher than initially expected. Excluding this, the Q4 adjusted EBIT loss amounted to minus €145 million in the quarter.

The adjusted free cash came in at minus €261 million, including around €520 million euros of tax deferrals, which we paid in the final three months of the year. The full year adjusted EBIT loss amounted to minus €1.8 billion, excluding restructuring expenses of €581 million, a reduction by two thirds compared to the previous year.

In addition to the recovery in the amount, the result improvement was driven by the success of our restructuring and continued cost discipline throughout the organization. I am equally encouraged by the clear focus on cash preservation and generation, which the organization embraced during the crisis.

Full year adjusted EBITDA reached almost €500 million excluding restructure charges. Adjusted free cash was far less negative than adjusted EBIT amounting to minus €855 million in 2021.

And without the one-off repayments of deferred taxes of €810 million, the adjusted free cash flow was almost no longer negative. I consider this a great achievement.

Analyzing our performance in 2021 in more detail, the network airlines flew an average of 40% of pre-crisis capacity and achieved the seat load factor of 60%. European short-haul, latter recovery over the summer months of the year, driven by strong leisure, existing friends and relatives demand.

The transatlantic was boosted by the reopening of the U.S. for European travelers in November.

The increasing share of premium leisure amount, as well as the short-term nature of booking supported yields, while the slower recovery of corporate amount held back yields in the short haul, yields in long haul even exceeded 2019 levels. Adjusted EBIT loss of the Network Airlines amounted to minus €3.5 billion in 2021.

This compares to a negative adjusted EBIT of minus €4.7 billion in the prior year. Excluding restructuring expenses adjusted EBIT loss in 2021 amounted to minus €3.1 billion.

At Eurowings capacity reached 43% of pre-crisis levels, strong leisure amount over summer drove a seat load factor of 74% that impacted yields, especially as corporate demand on German domestic routes remained under pressure. Nonetheless, the 15% lower yield compared to 2019 still represents a very good performance relative to low-cost peers.

Unit cost at Eurowings were almost in line with 2019 levels, despite the still significant reduced capacity, demonstrating the progress made in realigning the strategic direction of the business and rightsizing the cost base since 2019. The adjusted EBIT loss shrunk to €230 million compared to negative €703 million in 2020.

Our aviation service companies recorded a broad-based recovery in 2021 with all of them generating profits. Lufthansa Cargo had the best year ever.

Yields double compared to pre-crisis levels, driven by continuing capacity limitations due to missing belly space and strong amount as a consequence of global supply chain disruptions and distortions in ocean shipping. In addition to streamlining to a 777 only fleet and increasing digitalization of sales and handling processes, generated strong efficiency gains.

Taking all of this into account Lufthansa Cargo reported a record registered EBIT of nearly €1.5 billion, thereby almost doubling the record results from the prior year. Lufthansa Technik benefited from the growing maintenance demands in connection with the industry-wide recovery.

In addition, the non-recurrence of negative one-time effects in the prior year, such as the partial reversal of bad debt provision supported results. Adjusted EBIT to €210 million.

The Catering segment around LSG also returned to a profit of €27 million, mainly driven by the strong industry recovery in North America. In addition, wage subsidies under the U.S.

CARES Act set made a positive contribution. Finally, the more negative results in the Other Businesses and Group Functions segment was mainly related to high restructuring expenses and other one-off effects of setting the 20% cost savings in overhead functions.

Now turning to cash flows, the full year adjusted free cash flow amounted to minus €855 million, excluding the now full repayment of Texas deferred in the early stages of the crisis amounting to €810 million, the adjusted free cash was closed to breakeven levels. Strict working capital management and the net inflow of new bookings of €1.2 billion supported operating cash flows.

Investing cash outflows amounted to €1.1 billion, reflecting lower than forecasted CapEx because of delays in delivery of new aircraft. At the beginning of the year, we mapped out a path to restoring the strength of our balance sheet, including return to investment-grade rating and to provision of significantly high liquidity to protect against future crisis.

Today, I'm proud to report that we've made great progress in all fields of action. Related ground for our return to profitability by securing sustainable cost savings of around €2.7 billion.

This was key to stopping the Group cash burn in the second half year. We repaid all repayable stabilization message in Germany earlier than expected.

Following a successful €2.2 billion capital increase. And we initiated a comprehensive portfolio review.

Our portfolio decisions will be entirely driven by strategic considerations and to maximize value for our shareholders. Following on from what I've just said, liquidity at the end of the year amounted to €9.4 billion.

This is comfortably above our target corridor of €6 billion to €8 billion, a great achievement, especially when taking into account repayment and termination of more than €5.5 billion of Silent Participation provided by the German government. This would not have been possible without trust placed in us by the capital markets.

And I would like to thank you for that. In addition to the successful capital increase in October, the group issued six bonds and concluded 20 aircraft financings at very attractive conditions over the course of the year.

We thereby managed, not only to refinance the WSF stabilization measures, but also more than €3 billion of maturing liabilities, including the KfW loan in Germany. Our measures to optimize our liquidity profile do not stop here.

We are working on establishing a larger syndicate credit facility that we replaced existing bilateral credit lines, adding financial flexibility and proving the efficiency of our balance sheet. The capital increase, I just mentioned helped us to reduce net debt by almost €1 billion compared to the end of 2020.

Pension provisions declined by almost €2.9 billion over the course of the year. The decrease was mainly driven by the increase of long-term bolt yields, resulting an increase of the discount rate from 0.8% to 1.3%.

In the current environment of rising inflation and interest rates, there is a clear possibility that an increase in discount rates will further reduce the deficit and increase shareholder equity in the years ahead. Despite the 2021 net loss, the contribution from the capital increase as well as the lower pension deficit meant that shareholder equity increased by €3.1 billion to €4.5 billion, representing equity ratio back to over 10%.

Ladies and gentlemen, we are encouraged by the strong amount recovery you were witnessed in the past weeks. At least as far as the pandemic is concerned, the tide finally seems to be turning.

However, this does not alter our focus on structurally improving the group's cost base, the target to eliminate cost on a structural base of at least €3.5 billion. By now, we have already secured reductions accounting for more than 75% of the plans volume, equaling around €2.7 billion.

In the area of personnel cost, our focus is threefold. We are adjusting the size of our organization to the new normal.

We are increasing productivity by focusing growth on lower cost high productivity platforms and by optimizing our network, our fleets and our operations to drive gains across all group airlines. And we are maintaining maximum flexibility, should a recovery of demand turn out stronger than currently expected.

Since the beginning of the crisis, we reduced our workforce by over 30,000 people, a reduction of 20%, even when excluding the effect from the divestiture of our European catering operations. In Germany, we secured the reduction of 10,000 people in the past 12 months alone, mainly by offering voluntary leave programs at Deutsche Lufthansa AG and Lufthansa Technik.

By now around 7,000 of these 10,000 colleagues have already left, another 3,000 signed termination agreements to depart in 2022 and a few years staffing. Employee numbers declined to close all work groups on the ground, the reduction amounted to more than 30%, including fewer people in administrative functions.

The number of cabin staff declined by 12%. The number of cockpit staff by four.

The letter equals a reduction of 400, which is net of some selected new hiring’s at Eurowings and Eurowings Discover. Another four of the pilots will leave in 2022, primarily based on the voluntary program offered over last summer, which received a lot of interest.

In addition, in 2022, we also consider offering additional voluntary programs for first offices at Lufthansa German Airlines and a group of pilots at Lufthansa Cargo, following the retirement of the remaining MD11s, subject to negotiations with employee representatives. Based on the effect of voluntary programs and the ongoing negotiations regarding collective reductions of working hours, we ruled out forced dismissal for Lufthansa German Airline pilots two weeks ago, negotiations with our social partners also continue in order to find a solution regarding the remaining pilots who are currently without work after the closure of the Germanwings passenger flight operations.

We aim at either employing them at another group airline or a newly established AOC so that we can avoid forced dismissal. Considering all these measures, we remain confident that we will achieve our €1.8 billion reduction target in the area of personnel.

By the end of 2021, group personnel cost are down 10% when excluding one, the one-time effects such a short time work and restructuring expenses, as well as temporary cost reductions, the structural decline will grow to between 50% and 20%. Once the remaining measures are implemented and recognized in the P&L.

This reduction only a few would have believed possible at the beginning of the crisis and when we announced our cost saving target in June 2021. Agreements with our social partners, creative framework for the achievement of our productivity and cost targets.

From our point of view, there's no question that future collective agreements must reflect structural changes by industry, competitive costs and productivity levels at least equal to those of other leading network airlines are prerequisites for future profitable growth. They are key driver of our targets to reduce unit cost by low to mid single-digit percentage rate in 2024, compared to 2019.

The more we can achieve in this regard with our social partners, the better progress in our negotiations in the coming weeks will determine the extent to which the shifting capacity and future growth to lower cost and more productive AOCs will be necessary. Looking at the scheduled short, hopefully to summer, the shift is obvious.

We're bringing back more planes more quickly in our most productive AOCs. That means our regional and lesser focused airlines, which will remain in the next stages of the recovery.

Turning to the rest of our cost base. Airport charges are set to increase throughout nearly all European hubs, as airports try to recoup their losses.

The same is true for our group hubs. However, the rate of increases at our key airports is much lower than elsewhere in Europe and in some cases just related to expiry of crisis related to temporary reductions.

We also do expect other fees and charges to increase most notably those related to air traffic control. We estimate the overall increase in this area to amount to between 5% and 8%, a rate which other airlines will face too.

Personnel cost inflation however is expected to be below general inflation in 2022, owing to the ongoing challenges our industry is facing. The same applies to material costs, excluding fuel, the latter I will discuss in a second.

And when it comes to CO2 certificates under the European emission trading scheme, we have almost completely covered our needs through 2024 at an average rate of €24, as you know, far below the current market prices. Talking about fuel, our fuel hedging protectors for 2022.

For the current quarter, our hedge ratio amounts to 74% for the full year 2022, we have currently hedge 63% of our exposure at a breakeven price of US$74 per barrel, significantly below current price levels. At least from a medium and long-term perspective, however, it’s clear that fares will have to rise across the industry, not just because of our higher fuel prices, but also considering the inflationary trends in other cost areas, which affect the whole economy.

We made first successful steps in this regard in the past weeks and quarters especially on touristic routes, which are high demand for spring and summer. Let me finish my part of the presentation with our financial outlook.

Carsten will discuss the strong recovery in amount to experience in recent weeks in a minute. This gives us calls for optimism.

So we plan to increase capacity to more than 70% of pre-crisis capacity in the full year 2022. Our ambition is clear.

We want to return to positive results as quickly as possible. We have later foundations for this above all by implementing our cost cutting program.

We expect operating results to improve significantly after a very challenging start of the year due to the Omicron ground variant resulted in expected EBIT loss in Q1. Some uncertainties regarding the future course of the pandemic remain.

More important now, however, we cannot yet proceed to what extent the current Ukraine conflict will affect the amount and the current economic environment in 2022. That is why we cannot guide on a full year 2022 EBIT targets.

Obviously, we clearly expect full year adjusted EBITDA improved compared to 2021 levels. The same is true for full year adjusted free cash flow, despite normalization of capital expenditure, which expected to reach around €2.5 billion in 2022.

Based on the further recovery, we’re expecting this year, we reconfirm our medium targets communicated last summer. From 2024 onwards, we target an adjusted EBIT margin of at least 8%.

In addition, we remain committed to strong capital returns by targeting Adjusted ROCE of at least 10%. Adjusted free cash flows should reach €2 billion a year in 2023 and 2024.

And with that, back to you Carsten for somewhere insights into our key priorities and drivers of performance in the current year.

Remco, thank you very much. And ladies and gentlemen, as I indicated before, we will continue to do everything possible to make the roof of the group a structural winner.

And this, we are guided by our purpose connecting people, cultures and economies in a sustainable way. And we obviously live up to our ambition to be among the best in our industry.

And just like the year 2021, also this year, we’ll continue to be characterized by our ongoing transformation. And this, we are focusing on five priorities.

The recovery of strong demand for passenger flights our core business; second, the further operational ramping up of our flight operations while maintaining maximum flexibility; the premium customer experience; sustainability; and number five, portfolio enhancement. On demand recovery, let me highlight the following.

We and the entire travel industry expects a strong summer season and the sustained demand recovery thereafter. I mentioned it at the beginning of my speech; pent-up demand is bursting at the seams after two years of the pandemic, which is already shown by our booking figures.

On specific leisure routes to the Mediterranean, demand is only triple that of 2019. This apply to European short-haul demand is especially strong on the transatlantic and the trend very important for us toward higher value bookings in our premium classes continues unabated.

And as you well know, that for us, in many ways, is a very good message. We’re well prepared for the next month, where people will enjoy their holidays and visit their friends where it is abroad.

And even before the pandemic, we began positioning Lufthansa more broadly in this segment, something we have accelerated in the past two years. Now we are benefiting from our strong network and brought offer of our dedicated leisure airlines, with more than 120 vacation destinations, we offer our customers more choice than ever before.

And many of them are offered by our group airlines, specifically tailored for leisure travel, which, as you know, is Eurowings and even more Eurowings is cover and device. As demand grows, we are also flexibly expanding our flight schedules.

We expect group airlines to reach about 85% of capacity during the summer compared to 2019. On short and medium haul, capacity utilization will even be higher.

In this segment, we expect return to around 95% of pre-crisis level in the summer. But depending on the demand, we’re able to respond flexibly on short notice and operate the full 2019 capacity.

Eurowings will offer more capacity even then compared to summer 2019. In the full year 2022, we expect an average capacity above 70% compared to 2019.

Regarding our longer-term outlook, we outlined our expectation of at least 90% capacity utilization in 2024 and the return to pre-crisis levels by the middle of this decade. From today’s perspective, strong demand dynamics at least in the weeks before the tragic events in the Ukraine and I definitely see the possibility that this estimate will prove to be to the service.

We want to return to pre-crisis levels also regarding customer satisfaction. We are painfully aware that over the past few years, like all airlines around the world, we were not always able to deliver the level of service quality we want and we stand for.

It is why now, shortly before the start of the first COVID wave, consumer satisfaction will be among the top priorities. To make this happen, we are doing our very best to offer our customers the premium service they rightfully expect from us and that we ourselves expect from us and that we ourselves expect from us.

And despite the financial effects of the crisis, we are investing billions to significantly enhance our offers and products once again. This includes a new state-of-the-art premium economy seats that will be introduced before the end of the first quarter, initially at Swiss and any investments in many other products and services on board and on the ground, catering, lounges, digital offerings.

The best terminal experience possible that is our goal and this includes more and more sustainability. Another area in which Lufthansa Group is leading the industry.

The crisis has, once again, accelerated. Our transformation towards small sustainability and the reduction of our CO2 emissions.

We continue to develop new carbon offset tools for leisure and business travelers. We will offer our customers around 50% more sustainable offers the next three years.

This includes tickets that already include CO2 compensation via our industry-leading platform compensate – or carbon-neutral all-inclusive travels, which we are currently testing in cooperation with our partner [indiscernible] in Germany. We want to ensure that every guest has the opportunity to offset the carbon emissions of their flight in the most convenient and in the most effective way possible.

In addition, we have also used the past 24 months to carry out the most extensive fleet transformation in the history of our company and our continuing this renewal at a high pace. By 2025, we receive 120 new highly efficient – fuel efficient aircraft and even more than 180 aircraft by 2030.

And that basically means every two week; we get a new aircraft without exceeding our capacity – our CapEx targets. Now to the last point of my agenda, the enhancement of our portfolio.

We are committed to concentrating on what we do best, flying people and goods safely to their destination as an airline group. That is what we will be focusing on even more going forward.

Since the beginning of the crisis, we have analyzed the synergy is generated between our airlines and our service companies. Where synergies are too small, we will find better owners for the businesses.

That’s why we have already sold the European part of LSG in 2020 and we plan to divest the remaining rest of the world part of that business this year, assuming we can realize its full value. The same is true for AirPlus.

And with regard to Lufthansa Technik, we initiated a comprehensive strategic review to define how we can best support the business to unfold its full strength and to create maximum value for our shares. We continue to be convinced that Lufthansa Technik should remain an integral part of Lufthansa Group, benefiting the group and its shareholders, however, we are equally convinced the minority sale or a partial IPO will enable technique to realize its full potential.

And Remco and I have led the way in commencing the calf-half preparations and Remco and I will make sure that work is continued at full speed. And subject to market conditions, we actually can aim for transaction in the course of 2023.

Furthermore, we are closely monitoring the renewed consolidation trend in our industry as the European navigation recovers, this has become a key topic again, but for us as a strict rule, every acquisition must add value for our shareholders. And we only talk about M&A when it happens, we will not participate in speculation about what could happen, it could not happen, blah, blah, blah.

The strength of our group is of particular benefit to us now and because competition in the aviation will get fiercer not only due to the crisis, but also due to the parameters, affecting our efforts regarding sustainability. That is why Lufthansa Group has become a member of the newly founded Aviation Alliance Fit for 55, the Alliance of European hub airports and network carrier supports the EU ambitious climate targets for aviation.

At the same time though, it advocates European climate policy that effectively actually reduces carbon emissions, avoids common leakage, and ensures the international global level playing field. Europe and our home markets need a strong aviation industry in order to be globally successful and the more we see in these days, the dependency on global energy sources outside of Europe, I think the more that belief is gaining strength in Brussels and capitals throughout Europe.

We should not weaken those who are doing a lot for sustainable aviation like us and then those who do not. Also in our democracy here in Europe, it cannot be political desirable that auto critically led states of all things are the beneficiaries of European regulations.

And we all see that I think more clearly ever these days than before. Ladies and gentlemen, after two years of the pandemic, we are more determined than ever to put the crisis behind us and look to the future with strength and confidence.

If achieved the goals we set ourselves, then we are ready for further progress. We are merging from the crisis with more efficient structures, lower cost, better unit cost, more sustainable and more focused.

We have maintained and satisfied our position among the top airline groups in the world and we have secured jobs for more than 100,000 people. More than 100,000 people that without a doubt, we’ll continue to set industry standards with unmatched passion and professionalism.

We are so committed to creating value for our shareholders. And we do reconfirm our medium term targets.

By 2024, we strive to achieve an adjusted EBIT margin of at least 8% and an adjusted ROCE of at least 10%. And we hopefully, including you will celebrate 100th anniversary of the founding of Lufthansa together in just four years.

And we believe for that, we got to be young and fresh as never before. Lufthansa Group that strongly believes in leading aviation industry also in the future and that is our aspiration here, and we will not sell for anything less.

And with that, thanks for your attention, and Remco and I, and of course, Dennis, as well, all three of us now look forward to your questions in these unique times.

Good afternoon, Carsten, Remco and Dennis. Thanks for taking my questions.

I’ve got three. First one, you’ve said that short-haul and transatlantic bookings are leading the recovery and that you expect a strong yield performance from the end of 2021 to continue.

Ryanair recently said they’re seeing pricing going into summer above pre-crisis levels. IAG said something similar to the transatlantic.

Can you quantify at all what Lufthansa’s network airlines and Eurowings are seeing currently on price, please? Second one, Lufthansa and the shipping group, MSC have been linked with acquiring a stake in ITA.

Carsten, apologies, because I hear you are not wanting to speculate. But I did wonder if you could provide some color on how the link up with MSC came about, who approached, who the rationale for a potential joint investment in ITA and any update on where things stand today.

And then thirdly, and finally, as per slides 42 and 43, I can see Lufthansa is adopting some changes to its reporting structures, both in the P&L and the cash flow, presumably in an attempt to be more transparent. Remco, I wondered perhaps you could quickly give us some of the high level thinking behind these changes.

Thanks very much.

Yes. I’ll start with the center question on Italy and then Remco will give you our agreement with Ryanair and IAG on the forecast of prices.

On ITA, as you know, we have been looking at Italy many years. It’s almost important market outside our home market in Europe, globally, number two.

So we have been nothing involved with all the stakeholders, including Italian government. On the other hand, the Italian government has obviously linked up with MSC and then they ask us for a blind date and we just fell in love.

Thanks.

Now, if you talk about yield square what we see clearly, and I think with the reality last year was clearly on the long haul, we did slightly better than 2019, I said it also in my speech. And we clearly see that the trend on the yield to continue also this year.

So this year, we also expect the yields to be slightly above 2019. The short haul that we were about 14% below 2019, we see that gap halving.

So we see clearly an improvement versus 2021 in our yields, although they will be slightly below 2019. But of course, that last gap and hopefully we will be over it when business travel will be fully coming back because that remaining 7% it would be fully related to business travel.

But actually when it’s fully back, we should actually coming back with higher yield. So we’re in a similar ballpark figure, I think as our competitors.

And I would also argue with regard to the long haul we’re actually better doing than our competitors if you look at the yields of last year. With regards to the KPIs, the adjusted EBIT of the industry in general, but also for our competitors, excludes restructuring and large incidental legal items, right?

And Lufthansa has traditionally not done that. During last year, we have every time to explain adjusted EBIT, excluding restructuring.

And it’s actually a bit weird because restructuring should have already been excluded when you give the adjusted EBIT number. That’s why we have just wanted to align those KPIs with what everyone else in the world is doing.

It’s similar for the ROCE, correct with the ROCE you exclude net debt, you don’t keep cash in. That’s what the industry does in general, so that we will also change.

And for the segment reporting, we just bring it back in line to have all the airlines into one group because we manage it that way. So I think a very logical consequence of the way we operate and to be in line with market.

I hope Jaime that answers your questions.

Thanks, Remco. Anything quickly on the cash there, the cash metrics and pensions.

I’m not sure what you mean exactly on the cash. But let me start with the pensions.

I think clearly you have seen the pension liability coming down during the year because of the interest rate and also the good performance of the plan assets. If you would look in the beginning of January, and so many are pretty curious where it roughly stands now.

In the beginning of the year, the interest rate went further up with the inflation coming in, and it came to a range of in between €170 million and €190 million versus the €130 million. If you look at the current level, it is currently around €170 million, not necessarily because the interest rate high because the spread and the length spread is much higher with the uncertainty.

Secondly, of course the plan assets are coming down slightly, but it’s limited. So if you will take the €170 million versus the €130 million, which is 40 basis points, and you multiply it with €450 million for every 10 basis points, you can see that we still be easily above €1 billion, even after deducting the negative impact of the plan asset.

But again, it as it stands now, it can change. If you look at the mid-long term and I’ve also said that last year, I believe the inflation or environment will in the end result in high interest rate.

And I just remind everyone that the 300 basis points, the pension liability will be zero and that amount would come straight into our equity. I would only argue, it’s more question of timing than if, but that’s my personal view.

You have to make up your own mind. With regard to cash, I think you have seen the liquidity at €9.4 billion, slightly above, slightly higher than also the consensus originally had.

I think it’s in a comfortable position. We’re currently and it shows the good cash flow generation, which we have had, and we will continue that path.

Depending on the course of this year, our economic situation goes, we might pay more debt, we might do something with our government funding we have in the countries outside, outside Germany. But we have not made decisions in this regard.

We’ll just follow common sense in the course of this year.

Jamie, I think the other change you were referring to was the adjustment of our adjusted fee cash flow definition. So here we simply exclude FX out of the acquisition or the divestiture of assets, again, to align with peers and to provide fully transparent view on the recurring financial performance of the business.

Makes complete sense. Thanks a lot, guys.

Hi, good afternoon. Three from me, please.

First of all, on the new AOC in Germany, I understand the logic to having a lower cost production platform, but how large are the risks to relations with your workforce that might see this as potentially resulting in worse sums for employees? Does this put at risk any changes that you might want to implement, which would rely on their agreements?

Secondly, I appreciate you don’t speculate on specific M&A transactions, but can I please ask about your underlying philosophy that hopefully a straightforward question in order to make any investments, which you have to believe that the target will sustainably earn its costs of capital. And then finally, if you could please comment on what you’re seeing around the demand of business travel, both on short haul or long haul around bookings, and maybe what you’re hearing from key corporate customers’ suite?

Thank you.

Afternoon. On the new AOC, basically there’s lots of rumors spreading around, but as an easy answer, what we are creating is a second city line.

We already have the former regional airline city line, which you probably know about, and that is limited to a certain amount of aircraft. And now the cost pressure, we need to extend the lower cost production feeding our hubs.

At the same time, we didn’t agree with our union on safeguarding those 250 people who lose their jobs in German, who are all mainline pilots, and I will need them next summer. So let them go and German labor law is a very expensive exercise if you need to rehire them next summer.

There’s some internal friction in the union, but we decided that we create a solution for them and have them working for us in that new AOC, which will also allow us to have critical mass from the beginning. And then we rehire into that AOC from then on and these people newly hired will have the same CLA as the ones working in city line today.

So it’s basically extension of city line with the two additional elements of safeguarding those 250 people for critical mass beginning and is also avoiding the fact that we need the union to extend the size of CityLine. We don’t have approval for that.

So we have to create a new AOC. And of course, to be honest, the best news for the staff out of this is that we don’t need to fire people.

So, I’m not surprised that, that reaction is not coming through from the union, I’m sure it will come. And then the second question is very easy.

Yes, we only do M&A when we can at least recover the cost of capital and even do that more with that investment than we could have done with that capital otherwise, because otherwise, you would use the capital somewhere else. So that’s how we do things.

If you look at what we have done with Swiss and our market position in Switzerland and our market position between Austria and Germany, our market position between Belgium and Germany, I think you can see a certain logic. And obviously, Italy is, as I said before, the most important market, even ahead of Switzerland, Austria and Belgium.

And the third one, Remco will think come back to.

Yes. I can take that one, Carsten.

So as you know, during the crisis time, the business travel was low at between 15% and 20%. We’ve seen the bookings clearly coming up very fast on the business travel.

The booking turnaround 40%. And when you think about the second half of the year, we expect at least 60%.

We have to see what will come about. But really, we expect quite an increase in the course of this year on the business side.

So, we’re very confident here.

Very clear. Thank you.

Good afternoon. Just wondering if you could let me know where you’re planning your capacity on transatlantic.

Clearly, you’ve talked about 85% group capacity for the summer short-haul at 95%. I mean where you could single out transatlantic, that would be great.

And the second one, I know you don’t really like to talk about it, but if Russia airspace would remain closed longer term, can you just run me through as an educated idiot, really how the network planning would have to change? I think you said you wouldn’t have to do much rerouting, but I’m not sure that’s the case.

And if you can talk about passenger and cargo clearly. And then thirdly, I don’t want to be too competitive here, but I got dozens of times cost and in the past about Alitalia or ITA or whatever we call it.

And you have consistently said you’ve never invest financially unless it was effectively transformed business. Do we ignore what you said before [Technical Difficulty] customers?

Thank you.

Yes. Let me start with the second one.

That’s the one. We always said rightly.

So, we would never invest into Alitalia, because we don’t believe it’s a restructured business. It’s like we did not invest into Swiss Air before it was turned into Swiss.

We did not invest into Sabina before it was turned into Brussels Airlines. We did not invest into Austrian Airlines before it was restructured under the ownership in the old days.

So the same applies to Alitalia. We would never have invested.

With new ITA, we believe its worth to have a look in the data room. If there is the optimum choice to just be commercial partners, which probably is an easy win-win for everybody.

Or can we do more, then we might have to take a minority investment, maybe not. So, we’ll look at that.

But surely, you’re right. I will never have invested into Alitalia, if I got your question right.

And again, we wouldn’t have invested into Swiss Air or Sabina either. On the network scheduling, we indeed see about two-hour detours depending on wins.

I cannot give you the exact number because it’s different every day, winter and summer. And we will continue to do so as long as the Russian airspace is closed, that additional cost for detours, by the way, is to a high degree compensated by saving royalties over flying Siberia.

You might know that while we don’t give our own number. You probably know the number from the EU Commission that €400 million – or more than €400 million are spent on Russian overflights.

We, obviously, saved those for every frequency, but we have additional costs for fuel aircraft and crew going via the Southern route. And we’ll continue to do so as we have to.

And if there is more demand in and out of Asia, we all hope Asia will open up more, the north. South is opening up while we speak.

We add more aircraft on that route. Cargo, it’s more convenient to have intermediate stock because you would otherwise in danger the maximum pay load.

So for them, it’s better to have a fuel stop more economically than flying nonstop with reduced loads. I hope that answers both of your questions.

If not, please come back to me, and Remco will give you an answer on North Atlantic numbers.

Yes. So most of the capacity is clearly on the North Atlantic.

We’re looking to 90%, 95% in the summer. And of course, managing the capacity and the pricing, of course, all according to the law with United and Air Canada has done in a very good way.

We have done also in the past, we have the same plans for the summer. So that we look very, very positive towards the summer on the Atlantic.

But you have to look about 90%, 95%.

Thanks very much. And thanks for your thoughts Carsten.

I appreciate it.

Yes, of course, I hear that factors about Italy, but you should look – sure you have those data available to you. Look who’s the number on long-range carryout, look what dolomite is doing to our hub in Munich.

So, we know what we are doing in Italy. Don’t worry.

We won’t do anything.

Thanks a lot.

You still on sound convinced. So if I end up buying a few shares in ITA, you don’t want me to keep a few shares aside for you.

Is that right?

I’ll come back to you on that. Thanks very much.

No, no. I hear you, and I don’t only hear all of you.

I hear my shareholders. But don’t worry.

We know that, of course, there is a legacy that there are topics we look at very closely. But don’t forget, we have to do that in Swiss as well Swiss Air was not the same thing as Swiss and so on.

So we have some experience in those issues, and we’ll be very careful.

Let me also correct. I think you have seen on ITA, correct?

There are now 50 planes, correct? The number of employees is a few thousand versus the 10,000 they had before, correct?

The conditions for the employees of ITA are very different than the way we before in Itavia. So we believe, at least on the outside, we haven't seen the data room yet.

It still has to be formally approved, that's opened, but I think it justifies a very, very good look how we can create a value – and can create value out of this and basis on that we'll make – they can make a very logical commercial decision. And I think that's the right thing to do.

Yeah exactly, I think this is long enough to remember Swiss, so best of luck on that. Thank you.

Yeah. Good afternoon, Carsten, Remco and Dennis.

Yeah, three quick ones, just go back on the transatlantic. Are you seeing any, just industry capacity moving from Asia, which is kind of partly closed to the transatlantic, does that worry you at all or is it because it's of the partnership structure, JVs, not something to worry about?

On the demand side of the transatlantic, the inbound from the U.S., James who, I remember long times back when you with the Gulf War, they were the U.S. side Americans had to do more hesitant booking.

I don't know where you'd seen any change there? And then second question would be just on cargo Carsten, I know you used to run the cargo business.

Do you think that the record profits, I mean, is it – how much of it do you think is structural and how much of it is because of the bellies, the capacity hasn't been added back yet and so you get those price increases because there's certainly some structural supply chain benefits e-commerce, et cetera? And then just finally, it just sounds to me like you're further down the road in Lufthansa technique, so I think Remco you must have – the process you've gone through has certainly convinced yourselves that it would be right to perhaps partially IPO or say it to get value, might just talk about the process a bit?

That would be useful. Thanks a lot.

Well, on Asia Pacific, first of all, as you well know, it's basically closed since two years. So there's only, I think 20% of the capacity out of Europe going to Asia Pacific compared to normal time.

And now with the Russian situation, don't forget this is taking additional capacity into Asia Pacific because suddenly you need 1.2 aircraft for the same flight you have done with 1.0 aircraft before. So that eats up aircraft capacity.

It eats up cruise sometimes, will rather take more capacity to offer the same amount of service. And they're – now the Asians have announced to take their flights out partly, so for sure, between Europe and Asia, I don't see capacity being shifted to the North Atlantic.

I'd rather see additional capacity needed to maintain certain – maintain element of flying at least for those who continue to fly. Between Asia and the U.S., I think it's unaffected, but obviously that doesn't really affect us anyway.

On the U.S., you are right historically when there were times of war, some countries including the U.S., but also very much Korea, Japan tend to be very sensitive. The largest element of that has always come from Northern Asia, the two countries I just mentioned Japan and Korea, which are now basically close.

So in math, I would think we see less of that, whatever you want to call it sentiment in this crisis than we have seen in past crisis, just because the most sensitive part of the market is not traveling anyway. Cargo, first of all, again, this will eat up capacity on freighters.

So I think we'll see another hike on yields. I think on cargo the next weeks, because supply chains are interrupted on the ground, Russian and Ukrainian sailors, I was told are leaving their ships in the harbors.

There's a big mess. So I think we see more coming from there in terms of demand and we less capacity because twos are flown.

So I think the next weeks are strong, but your question goes more towards structural there. I'm very convinced that we see a big part maintained while of course some of the belly capacity coming back will take care of a certain element.

But supply chains are such a mess around the world. I think it will take a long, long time to have them rebalanced.

We see e-commerce being even stronger after COVID than before due to consumer behavior. I'm sure you have other sources of that as well.

So people have even used e-commerce more than they do before and e-commerce, that's why we also have both A321 freighters now in Europe, not always global it's sometimes inter Europe. You need to be faster nowadays to deliver your product.

So these things I think are structurally in the right way. Can I promise you one from 5 billion now every year, probably not, but I don't think cargo will go back down to where it was before, then I could spend hours on this.

As you can tell many, many old freighters have been revived for this COVID crisis. You cannot do that forever.

Some of these 747, even 742 will not be flown too long. At the same time, we all know Boeing only builds one or two freighters per month.

So there is no additional capacity coming to the market. It'll take a few years before Airbus starts with A350 and Boeing can increase their production capacity.

So this is a very nice market to be in. If you hear any 777 freighters available, call me.

Okay, let me take the last question on the technique. As I said already last year, Craig, we wanted first to do a very good review on the MRO market to positioning technique.

The value chain technique is currently in where do we see the opportunities in the coming years, where, and what we need – and want to invest, et cetera. We have done that early.

We've also done a review. Hey, what would it mean with a partial sale or partial IPO, would it create value, we believe wouldn't that create value we’ve done that also partly with external help.

And we can clearly to the conclusion that we think it's beneficial to proceed. So we're currently at that stage with of course, a thorough review internally as well to make sure we're all aligned.

We are now going into a process to prepare ourselves for this. There, as you can imagine quite some things to do, to be ready for such a process.

Also go at a certain times into, into discussions around the partial sale. Once we are there, we can say more, of course, from commercial terms, we say we will not comment until there's something.

In terms of timing, we’re clearly looking for something in 2023. I think we need the time to well prepare.

And the most logical would be to be something in 2023, but we have to go through the process. We have to see that indeed our assumptions in terms of value creation, in terms of preparations are indeed sound correct.

And yeah, the only thing we can prove that is going through the process and figure that out. But we’re clearly convinced that there is a value creating element for both technique as for the Lufthansa Group.

Okay. Thank you guys.

Good afternoon, Carsten, Remco and Dennis. Just following up on the earlier question around fares and that you’re seeing good fares.

Do you think that risk can increase enough to offset the spike in fuel prices and just generally cost inflation? Or will there be pressure on margins?

A second question is around CapEx of 2.5 billion, which I think previous guidance was 2.2 billion. So why is it higher?

Can you talk about how much of it is fleet related and how much of this is cash CapEx versus kind of ROUs flowing into your – and so hence, implications from a free cash flow perspective? And then on ATC fees, my understanding is that the increase is around mid-teens.

And I think one of your slides said cost increases of 5% to 8%. So I just wanted to understand what the difference there would be?

Thank you.

Let me take those questions. I think the second one to start with.

I’m not sure we guided on 2.2 billion on the CapEx. We said, we always had 2.5 billion in the CapEx, and it’s a combination of cash CapEx, financial leases, but also the operating leases, of course, from an IFRS 16 perspective, that’s dealt differently.

It runs also differently in the cash flow statement. But in principle, that is the number.

Perhaps there is a little bit of timing issue, but in general, over the coming years, we want to do 2.5 billion. And that may relate also that we want to generate a free cash flow above the 2 billion.

With regard to pricing, we already see in general in the industry that there is inflation, correct. We have seen fuel prices already going up versus last year, even before the crisis.

With that regard, we have increased pricing. We have now to see where there’s extreme fuel prices we’re currently confronted with what will now happen in the coming weeks, whether it will further come down or stay on this level.

But in the end, if the industry is faced with higher costs and the end, it has to come in pricing. Clearly, there could be a time lag in between those fuel price increases and the time the fares are growing up.

And of course, it’s also a market dynamic is considering the amounts involved. I think it’s very clear fares will go up.

With regard to the ATC, I’m not sure we – I think before – and last year, we expected ATC to be more in the range of 10% to 15%, but clearly when all the negotiations and discussions happened and the final ATC rates came out, they ended up on a lower level than originally foreseen. That’s why we are currently looking at more than 5% to 8%.

And Muneeba, keep in mind that this also includes other fees and charges like handling fees, for example, which moderates the overall increase. You’re probably right, it all depends on how exactly the network looks like.

But that there’s a chance that ATC will increase – will indeed reach double digit levels in terms of the year-on-year increase, yes.

Great. Thank you.

And on CapEx what portion is cash of the 2.5 billion?

That we will, depending on the lease rates, correct and what we can realize with [indiscernible] and the cash, and also the timing and the phasing of when we get the planes, we will determine at the time. There’s no exact number, of course, that also determines what makes economically sense.

Thank you.

Thank you. Thanks Carsten, Remco and Dennis for your time.

I have got three questions. So firstly on the MRO business.

Could you actually share the outlook for the business going into 2022 especially as you see capacity ramp up from the airlines. So how is it going to play out for MRO versus 2021?

And secondly, on the premium economy as you roll out premium economy in Swiss, [ph] how should one think about, first of all, CapEx spend for this refurbishment? And the second one is, what percentage of your capacity within your overall network would end up being a premium economy segment?

And when do you plan to reach that target? And then the third one, exceptional charges, how should one think about in 2022 with regards to exceptional charges?

Thank you.

Maybe I’ll start with the second one, Remco will have time to prepare for number one and three. Premium economy is a standard product for Lufthansa on our wide bodies.

So we’ll reintroduce that – or we introduced that in all cabins, including Eurowings Discover, including of course, Swiss, which is not headed before. We do it in Austrian and Lufthansa.

It’s by the way, the most profitable class of travel we have. It beats business class, it beats first class, which is not difficult and it beats economy.

So we not only introduce that to all white bodies, but probably see larger percentage of our airplanes – of our floor space in the airplanes seeing in premium economy. The CapEx for that is included in our CapEx guidance and like all other hardware we are buying.

So there is no additional numbers to be expected from that right. And of course, the line-fit airplanes all have it coming on Seattle or to Lufthansa.

With regard to your question on MRO, let’s say, what I can say – in general, as you look at the MRO industry, there is clearly an outlook of low to mid-single-digit growth of the MRO industry in general. And technique is well positioned in that industry and to capture as well in this growth.

Let me not comment for the moment exactly what the numbers are in 2022. I don’t think that is wise to do.

We also don’t guide on this. But you can clearly see that this is a market which is still growing over the coming years, there might be further consolidation as well happening technology changes over the coming five to 10 years, et cetera.

So all in that, we are, I think, very well positioned, but I cannot comment on the exact number for 2022. I'm sorry for that.

With regards to the special charges in 2022, there's not much currently foresee as I commented on perhaps through the voluntarily program for some – for some restructuring, but that depends what the outcome of that is going to be. For the rest other one-off charges would come if they are one-off and exceptional, at this time I wouldn't know any but we have to see in the future.

Okay. Clear.

Thank you. Just a quick follow for Carsten.

So premium economy Carsten. So what is your expectation in terms of percentage of seeds that or capacity that you wanted to achieve?

To be honest, that of course is different in every aircraft depending on the configuration. If I can give you a quick summary number in the next minutes, I don't know, let's look at the team here.

We have that available. We can – you get it of course, because it's pure math behind it.

And of course it's changing while we speak hear, because some of the aircraft don't have it yet, so we refigure them one after the other, but that number we would need to give you in writing because again on the 744, there's a different percentage on the 748 and 350 and so on. So we don't need to give you that number separate way.

There's also dynamic because we are increasing the share of premium economy with every configuration.

Okay. That's helpful.

Yes. Thank you.

Great. Good afternoon, gentlemen.

Three as well. A very useful slide on Page 22, just in terms of how bookings are progressing.

Am I right? That takes us up until the end of February in terms of things that have been progressing, and then just, I know it's very early days, but is there – is there any change in the booking trend and amongst the different brand?

Then also just relating to the different kind of operating companies just in terms of network, how should we be thinking about capacity kind of allocation amongst them all? And then just lastly kind of linked CapEx, I mean, there's a number of airlines which are having issues with the manufacturers.

I was just wondering how the relationships are for you with the manufacturers and in terms of getting the deliveries as and when they do and any negotiations? Thanks.

[Indiscernible] so I shall start? I'll take the last one.

No, I think, to be honest, the last two years has been good years for us regard to the OEMs because remember we had quite a few aircraft, we could retire to be flexible in size to adapt to COVID. At the same time, we knew that one-day we will need additional more than widebodies especially.

So we were the ones who took advantage of very interesting purchasing prices. We were the only customer buying 350s in 2021.

Obviously we didn't pay record prices on that in terms of high record prices. So I think we had that opportunity.

Other competitive didn't have that we hardly had to cancel any aircraft, but rather took advantage of those canceled by others. So in terms of the OEMs and I hope they would say the same and you ask them, we were there when they needed us most.

And our point of view is we got discounts, we even Lufthansa wouldn't have gotten otherwise. So that helped probably that's probably emotional relationship that helped the business relationship and I know there are some others out there, but leave that to them.

If I take the other question. At the beginning on the bookings, correct, the booking score was clearly indeed shown until the end of February.

We of course since the beginning of the crisis of the last days we saw the bookings coming down, that's normal in this situation. I don't think you can yet conclude on any trends change.

Correct, we have to see how this now develops, but also all net-net, yes, we are very positive with the booking inflow we have seen so far. In the capacity allocation, correct.

We have to, I think distinguish between long-haul and short-haul. When you think about long-haul, of course, where the demand is, we will allocate the age of the planes and of course all the sort of productivity elements will play a role.

But of course the main beneficiary, of course, the main airline and our Swiss, and to a lesser extent the rest. When you think about the short-haul, it's really about also the productivity we will allocate where we can get most productivity, that's where we want net-net to grow.

And that will really determine the allocation of the planes. So we're flexible in that.

We don't determine upfront where the planes go. We are very flexible depending on where the demand is.

I think you very clearly heard what Carsten was saying in terms of the AOCs in Germany, where the capacity goes. And that is really driven to the productivity, but that's mainly for the short-haul.

Okay. Thanks very much.

Good afternoon. And hi Carsten and Remco and Dennis.

Carsten, thanks so much for your very dignified remarks on the conflict at the start of the presentation. Question, with regard to the overly tissue and the diversions to serve North Asia.

Is there any upside for you guys with your partnerships with Air China or with All Nippon though I'm not sure. So I thought they were pulling capacity off.

But is there any upside for you on that? Second question, coming back to ITA.

Are you able to say that you would, I mean, clearly you would ideally like a commercial partnership and you're willing to consider a minority. Can we rule out a majority on your part?

And then a third question would come around to the talk of the new AOC CityLine 2. When you spoke to us about the restructuring of Eurowings it was always absolutely critical to reduce the number of AOCs to get the efficiency.

So how much of a challenge would you foresee by having this newly created AOC sat alongside Eurowings Discover as well. And, and I guess, if you don't get to do this new AOC, where can the pilots go?

How much disruption can they create or do you think they can't stop it anyway? Thanks.

Yes. Andrew, good afternoon, and thanks for that feedback because obviously, that's always a difficult topic to talk about this terrible like that happen.

So I appreciate your Yes, the question is, yes, to your first question. We, as you both – or as you all know, we have a joint venture, both with Air China and with ANA, which simplifying a little bit it means we are net to neutral.

So it doesn't matter if the passenger is on the Air China aircraft or Lufthansa aircraft. In the end, one way or another.

It's a little bit more complicated, as you can imagine. We share that profit at least coming out of it, even though it's a revenue joint venture.

So Air China can continue to fly over Siberia so far at least, and we have to go the detour, but let's not forget the difference is not that much if the royalties, of course, at least in our case, were applied before don't apply anymore. And we take basically the business continuously as a joint venture sharing that profit, that upside, that's going to cause the upside.

On ITA, I think, Andrew, you were watching as many years commercial partnership only, obviously, is the lowest risk on our side, but it's also low synergies, right? Joint venture is the next step.

We do that long range and then ownership is again, next steps. So there's always a trade-off between risk and synergies we probably Lufthansa can live easily without investment in ITA because there will be some synergies for sure for us and surely some for them.

If the snags are enough for them to be a viable business has to be decided by them. So there could be some pressure on their side, its have additional synergies, and then we weave to decide are these additional synergies worth the risk to own a certain part of it.

And in the days of Swiss and Brussels, we even one day came to the point, there are so many additional synergies. We want to own the majority.

We are far away to answer your question from that in ITA. So the answer clearly is at this point, no majority ownership.

And again, we never do it overnight in Lufthansa. It's a long way to get there.

I don't even see that way in ITA yet. And last but not least, on CityLine – you're right.

On Eurowings, we had too many sees in our view. We brought them down.

And that forget this CityLine or second CityLine will have a Lufthansa-branded aircraft. It will allow us to be fully commercially integrated into the hub system, whereas Eurowings is focusing on point-to-point, different IT, Navitas and all these things.

So this is really a second CityLine fully commercially integrated into our hubs in Franks and Munich. And indeed, the union cannot stop it because we can open AOCs as much as we want.

These pilots could have also joined other AOCs, both the mainline or CityLine, but the union didn't want that because they didn't want these pilots to bypass the sonority of the existing pilots in the existing AOCs. So it's probably a unique situation where we are saving pilots, otherwise the union probably would have maybe given up, but that's up to them for the side for us.

It's a great way to have these highly qualified people to start a new AOC because CityLine has worked very well. We would love to scale up CityLine.

We can't do that with two scope clauses. So this new AOC will allow us to grow CityLine second we'll see more or less.

And again, Eurowings, as you know, Banco showed that various times out of our business units in the group, the biggest advancement on overheads and restructuring shutdown was Eurowings. So I think we went the right way there.

And these AOCs we now talk about for the mainline are just purely operational AOCs, no commercial overhead, nothing. And I think it's a way to go because in the mix of our hub system, over the years, already the mainline has been reduced and lower-cost airlines, including CityLine, [indiscernible], have increased their share.

And to be honest, I see that trend continuing.

Thanks. Can I just follow up the CityLine 2?

I mean CityLine and [indiscernible], we've often lived through scope clause problems. But now you say you can create an AOC free of scope clauses and no one can – they can't do anything.

No scope quotes on CityLine 2, even though you start to completely tied up on CityLine 1?

Yes, Andrew, that is correct. And I hope I don't bore now the others who are not as deeply involved in this.

In 2005, there was a legal ruling in Germany that scope clauses from older CLAs can only always be applied to existing airlines during the time the scope clause was signed, which includes CityLine 1. So there is a scope clause on CityLine 1.

But anything we found after CityLine 1 – after that legal ruling cannot be subject to scope clause. So as I said before, I think once we are probably the only legacy area in the world not having a scope clause anymore.

I'm not saying the union likes it. So we try to stay in dialogue how we optimize this, but we also saved all pilots in the mainline.

So I think we're not in such a clash as some people would like to see that in the German media, which you're probably referring to. I think we have done our job to safeguard our jobs.

And now we find alternative AOCs to make sure that also the last ones have a job, and that is indeed why there is no scope clause applied to this. So one day, maybe if you're interested, we can have a separate setup with Dennis and of course, we can also have people in Lufthansa more in the detail even than me, but there is a very specific situation here.

Okay, cool. Thank you.

Thank you, Andrew.

Thank you all for joining us this afternoon for all the Q&A. As you know, over the coming weeks, we will have discussions with many of you on a one-to-one basis.

I'm looking forward to that. I think still to perhaps to remember for the session we had today.

at least that I hope you remember that during last year, we promised quite a bit with regards to the transformation of the company, the cost savings, the cash, the balance sheet, and I believe our balance sheet is stronger than we can say for our peers, puts us, I think, in a very good position for the coming year. Yes, we are in the fortunate situation with Ukraine and Russia, which we have to deal with.

But I think we're in a good position to do with that, and we will continue on that part. Any further detailed questions very happy to discuss over the coming weeks.

If there's no appointment yet and will reach out, feel free to reach out to Dennis and happy to talk to you, and I wish you all a good afternoon.