Deutsche Lufthansa AG

Thank you very much and also from my end a very warm welcome to all of you. Happy to have you here to our third quarter results presentation.

With me today are Carsten Spohr, our CEO; and our new CFO to Till Streichert and they will both guide you through what happened in Q3 main result in the outlook for the rest of the year. As mentioned before there will be a Q&A session at the end.

We ask you to limit yourselves to two questions, so that everybody has a chance to participate. And with that, I hand over to you Carsten.

Yes, Marc, thank you very much. And a warm welcome on my behalf as well, and that's also on behalf of my new colleague Till, who have had the pleasure of working with for a few weeks and the two of us as mentioned by Marc, we'll do our very best after a short introduction to answer your questions whatever topic you are raising them regard to.

You all have been in this industry probably for some time. So you're all well aware like us to the aviation we have always mastered ups and downs.

Is it market changes the increased operational demands political conditions, which are changing or especially in the last month of course global uncertainties these all require us to be flexible and decisive. And I think this year 2024 is no exception.

Just think about the E situation alone. But it also shows once again that we have set the right strategic course for profitable growth in the future being said in the past.

So that's why I would like to start with focusing on three points today. First the fact that the global demand is quite intact and continues to grow and not only were we able to fully sell our significant growth this year, but we also increased the seat load factor to new record levels.

And however, it once again also became clear that the global air traffic system is currently at the limits of its operational capacity and that is not always to the pleasure of our customers. And also the long-term effect for new aircraft demand probably will be that this demand cannot be met for many, many years to come.

In the end all this will lead to a healthy balance between supply and demand in the years to come. And in addition, I think also especially for us in the Lufthansa Group, this will also result in healthy demand for MRO -- sorry, for some technical problems here.

This is also -- sorry that's the second. Okay, we continue.

So this will in my view also have a positive impact on Lufthansa Technik's outlook because basically missing aircraft will partly, but only partly be replaced by older aircraft flying, which will require additional MNO activities around the world. And you add to this quite positive outlook on air freight, and you know why we are presenting here in a quite optimistic tone today.

Second pillar of my introduction is the fact that on the one hand the Lufthansa Group is remaining on course for our economic success. We are able to fulfill our financial targets, which we have shown to you before.

But at the Lufthansa brand core brand, especially we do see external and also internal factors challenging also our financial success, which we will come back to in a few minutes. And last but not least on the third pillar, it is our conviction that by further strengthening our strategy and our implementation of our strategy who will enhance our role as the Europeans number one.

On the other hand, the fact that we are European also means that we continue to face regulatory challenges and disadvantages others around the world don't have. Now let's look first at our third quarter results.

We has achieved as a group revenue of €10.7 billion which is an increase of 5% compared to the previous year. As a matter of fact, it's the strongest revenue we ever have seen in the history of our company for one quarter.

By this, we achieved an adjusted EBIT of €1.3 billion in the third quarter, and we have done that partly by increasing the number of available seat kilometers by 6% compared to the previous year, quite some less growth than we expected to be able to produce, which probably helped for a certain amount, stabilizing the -- sorry, the RASK development, especially over the last weeks, we'll come back to that. But for the first time in history, we have in August achieved a load factor of more or less 88%, and we welcomed more than 40 million people on board in just the third quarter alone.

We see that customers, and that's, I think, important also for the long-term outlook in almost all our global markets tend to spend a higher proportion of their income on travel. And that's, in our view, another indication of the stable market outlook for the entire industry for the years to come.

The pressure of yields, as just mentioned, has somewhat stabilized in the recent weeks and months. Also, on the other hand, when it comes to the cost side, irregularities, for example, due to weather conditions or bottlenecks in European air traffic control cost us approximately €240 million in just the third quarter.

Overall, as mentioned, we believe we are on track to meet our overall financial targets. All our passenger airlines achieved positive results in the third quarter, but three of them, Austrian, Brussels and Eurowings were even able to post record results.

Also, Lufthansa Cargo and Lufthansa Technik developed quite positively as expected, while the cargo business is very much driven by China. The keyword is e-commerce here.

That's why we have shifted cargo freighter capacity from the transatlantic to Asia to take full advantage of that healthy market development out of China. However, the situation at the core brand, Lufthansa Airline remained tense also in the third quarter.

It again earned less than the previous year. And it's not only because of its size and strategic importance that this trend must and will be reversed.

Lufthansa Airline is obviously our core business. It's our core brand and has a revenue share of more than 40%, therefore, the most important airline by far in our group also in economic terms.

And the negative adjusted EBIT of the Lufthansa Airlines in the last nine months shows the importance of the turnaround program, which is mainly focusing on efficiency and it has been launched and will be required for the future viability of this brand in our portfolio. And Till Streichert will get back to that with more details in a few minutes.

But there's also some external factors such as delayed aircraft deliveries or operational challenges, especially at our hubs, Frankfurt and Munich, which are hitting Lufthansa Airlines and Lufthansa City Line particularly hard. In addition to these external difficulties, nevertheless, there are also internal structural problems and especially efficiency challenges and improving these is crucial and is where the turnaround program has its focus on.

Let's speak a little bit about premium. I think customer satisfaction to be raised with the new Allegris product on the Intercontinental cabin side was clearly in our view, but we are very happy to see those expectations being exceeded with the flights we have already been operating.

In mid-October, we were now finally able to take delivery of the first Airbus 350, including the new first class. We are now in the fine-tuning process and wait for the official approval by the German authorities, and we'll be able to take the aircraft into the skies with passengers in just a few days.

By the end of the year, we expect to have two more of these 350s with Allegis in all four travel classes in our possession, even more to come in early 2025 with three. And also in 2025, we'll be starting to put the first class into those airplanes, which were already delivered without them over the last weeks, and that will be a significant, I think, improvement of our premium offer.

Keyword operations. I think it's obvious in our industry, it's our employees, be it at the airport or in the cabin, in the cockpit or in the ground or in the hangars who make the Lufthansa Group unique and in the end, guarantee our premium positioning.

And at the airline alone, Lufthansa Airline alone, we have recruited more than 5,600 new colleagues in the last 18 months. And another number, which is, I think, remarkable is that over the last four years, after COVID, we have recruited 40,000 people out of 100,000 total staff newly into the Lufthansa Group, including the challenges that creates in training, in licensing and so on.

But in the end, this is an investment into our future into stabilizing our operations with additional people, and it's obviously, something we are focusing on doing as well as we can. When it comes to growth beyond hiring new people, it's important to mention Lufthansa City Airlines.

Our newest airline has commenced site operations and will now increasingly contribute to ensuring that our important feeder outbound flights for our hubs again cover their costs and become profitable. There's on top growth – significant growth in Brussels Airlines in Edelweiss and Discovery Airlines, both Brussels and Discover will receive additional aircraft and modernize their long-haul cabins as early as over the next years.

In Edelweiss, we even already take delivery of newly configured Airbus 350s, this spring of 2025. While Till will explain the turnaround measures in detail in a few minutes, I would like to highlight the important level of automation and digitalization just for a few minutes.

We took a strategic decision some time ago to create a dedicated area for digital innovations in the Lufthansa Group, so-called Digital Hangar. That decision is paying off.

Our app, which is compatible with all hub airlines and develop with identical functionality from a single source for all the hub airlines has just been named the best Airline app in the world at the World Aviation Festival. Another thing makes us proud considering that we will probably saving a little bit too much on investments in this term when it came to the years of COVID.

We're now nicely catching up and are leading the pack from the front. The number of daily users has doubled since 2023 alone, one in two customers book their flights through the app, one in four requests are now managed digitally and the app booking – sorry the bookings to the app are growing at eight times as fast the rate as our website bookings.

More than 40% of digital check-ins are now made through the app. More than 80 features make travel more convenient.

And also importantly, we now integrated our Miles & More frequent flyer program. So users can now book award flights directly in the app.

Usually IT services, especially internal IT services are sometimes considered uneconomical or difficult at least to judge. In our case, that's not so, the Digital Hangar activates generates cost savings over a year, which easily cover the cost of we invest there.

And I think it's one of the most profitable things and ideas we have probably implemented over the last years. But in the end, it's not only about investing into digital, geologies and tools.

It's also of course about investing into aircraft and new cabin interiors to first of all improve customer satisfaction. But let's be honest, also needed for long-term profitability.

That brings me to a recuring topic that the entire industry is suffering from the ongoing delivery problems at the aircraft manufacturers Airbus and Boeing. In the Lufthansa Group alone, we are currently waiting for 41 aircraft just from Boeing aircraft that should be flying by now.

And by that we actually in the core brand miss more Boeing aircraft than we currently operate. And that gives you, as I mention of our problem, which on top comes at a very critical time in our largest fleet modernization ever.

So over the next few years, we faced the most fundamental free transformation in our history. We have 250 new aircraft on our order list, each as you know uses about 30% less fuel and mid 30% less CO2.

So this is also so important because in the end new more full efficient aircraft and engines are the most effective lever for reducing CO2 emissions at least in our industry. This will require record investments and our investment-grade rating will help us to do so but it will also require a major operational effort, which we know is well worth it.

Because in the end this will allow us to reduce fuel emissions and maintenance costs significantly, it will lower the complexity by strictly harmonizing our fleet and at the same time, it will allow us to modernize our cabin interiors to take our premium offering to a new level. Ladies and gentleman, we know that the success of all of our efforts to improve premium quality and customer experience in the end depend on the operational stability of our flight operations.

And that's why we're again stepping up here with additional reserves by extending connecting times and by relieving transfer hubs during daily peak periods. We are doing everything we can to further increase our stability in the coming months and especially the coming summer that's not only required for passenger convenience but also will require insignificant reductions of our irreg cost.

And in the end we are convinced that our strategy is strengthening our resilience to the various challenges in the industry by first consistently focusing on our core business Airlines including cargo and of course strategically developing Lufthansa Technik by the way including additional defense business. And as mentioned by successfully implementing this turnaround program and in parallel the largest fleet organization ever we will be creating a stable base for sustainable and profitable growth.

Second we're positioning ourselves more internationally to become less dependent on our home markets not only on demand, but we already are below 25%, but also on the production side. And third we are obviously making every effort as mentioned to consistently live up to our premium standards and deliver on our quality promise to our guests everyday be summer or winter.

So I will now hand over to Till, who will present our figures in more detail, give you an update on the Lufthansa Airlines efficiency program which we call turnaround and also introduce his own topics for the coming weeks and months which we are looking forward to work together. Thank you, for right now.

Thank you, Carsten for the kind introduction, and a warm welcome to all of you. Having joined Lufthansa Group six weeks ago, today's announcement of the third quarter results will be the beginning of what I hope a very close dialogue with you our shareholders analysts and other stakeholders of the Lufthansa Group.

I look forward to being personally in touch with you in the next few weeks and months, but would like to use this opportunity today to already share with you some of my impressions and thoughts. But first things first, so let's begin by taking a look at the results of the past quarter.

Our revenues in the third quarter reached €s10.7 billion, a 4.5% increase compared to the prior year and making it the strongest quarter in terms of revenues in the history of Lufthansa Group. The increase was driven by 6% capacity growth in our airline business as well as revenue growth at Lufthansa Technik.

Operating expenses in the quarter grew by 6.3%, mainly due to higher personnel costs higher fees and charges as well as higher expenses for aircraft maintenance. In summary, our adjusted EBIT decreased by around 9% and amounted to €1.34 billion.

Adjusted free cash flow was clearly positive at €128 million, but significantly lower than last year which I'll explain shortly. In our Passenger Airlines segment, the capacity offered in the quarter amounted to around 94% of pre-crisis levels, which is a six percentage point increase compared to the prior year and slightly below our original expectation of 96% for the quarter.

Thereby capacity growth slowed meaningfully, compared to the double-digit year-on-year growth of the prior quarters as the post-COVID capacity ramp-up levels off. When it comes to yields which overall has declined by 3.5%.

We observed a mixed performance across different traffic regions, whereas Continental yields remained more or less stable compared to prior year yields on the transatlantic turned out to be about 5% weaker than last year, mainly driven by a decrease in non-premium fares which was partially compensated through stronger load factors. Asia Pacific was especially challenging with yields down almost 14% versus 2023 due to strong competition especially from Chinese carriers.

The yield decline was partially offset by an improvement in seat load factor which increased by one percentage point versus last year reaching 87.2%. In summary RASK declined by 2.7%.

As mentioned, especially on the transatlantic we achieved a higher seat load factor of plus 2.5 percentage points versus prior year. Due to the lower year-on-year capacity expansion as well as cost increases in personnel fees charges and MRO expenses CASK increased by 4.5% in the quarter.

The adjusted EBIT of the Passenger Airlines segment overall amounted to €1.2 billion in the quarter, a 14% decrease versus 2023. Looking at the individual businesses within the segment, it becomes clear that Lufthansa Airlines is facing challenges, while the other passenger airlines are performing strongly.

For Austrian Airlines, Brussels Airlines and Eurowings, the third quarter was even the best quarter in their respective histories. Lufthansa Airlines on the other hand delivered an adjusted EBIT of approximately €400 million, which is a decrease of over 36% compared to last year.

The underperformance to the other airline businesses is driven by lower capacity recovery and especially high cost pressure, resulting from missing deliveries of new aircraft high maintenance and cost and significantly lower crew productivity measured in crew block hours per crew FTE, which remains still 13% under the pre-crisis level. At the same time, Lufthansa Airlines has been especially affected by changes on the demand side.

This is largely due to its high exposure to the German market, which is heavily affected by higher regulatory costs and thereby lagging in recovery and its relatively high capacity share to Asia, which holds long-term potential but is only recovering slowly with rising capacity and price pressure. Additionally, the airlines higher share of corporate traveler's clear strengths pre-crisis has recovered much slower with resulting impact on demand structures and yields.

To address, these structural challenges, Lufthansa Airlines has initiated a comprehensive turnaround program targeting at boosting efficiency, reducing complexity and improving quality to make the airline fit for the future. Key elements of the plan include, optimizing the network, shifting more short-haul traffic and growth to more cost-efficient AOCs, closing productivity gaps in operations versus 2019, and increasing flexibility through digitalization and automation.

In addition, once our wide-body fleet harmonization is concluded with a much higher new technology share many inefficiencies in the system will automatically disappear respectively be reduced. While not all the details have been completely worked out yet, we anticipate that this program to deliver already benefits from inception with a total positive gross effect on adjusted EBIT of up to €1.5 billion by 2026.

Over the full course of its project tenure or time line, the program is expected to contribute an adjusted EBIT effect of up to €2.5 billion by 2028. About one-third of the targeted improvements will come from revenue measures and two-thirds from cost reductions.

The revenue uplift foresees upselling potential thanks to a more elevated premium offer and an increased focus on ancillary sales for example a more personalized and context-related offering of advanced seat reservations back charges or upgrades. The cost reductions imply a rigorous streamlining of the organization towards less complexity and higher productivity both for ground admin as well as flight operations.

Measures include actions such as consistent continuous automation of check-in and ground processes, Gen AI usage in crew planning and maintenance planning topics also data-driven analysis for fuel-efficient flight operations, flight planning departure, and arrival procedures, as well as simplification of collective labor agreements to enable higher productivity for flight cruise. The turnaround program is a critical step towards ensuring Lufthansa Airlines remains competitive and well positioned for future growth.

And that is why I'm devoting my attention to this issue. And we as the Executive Board have made it one of our top priorities.

Now, let's look at the performance of the other segments. First Lufthansa Cargo profits picked up significantly compared to prior year.

And this was driven by strong demand from Asia Pacific and the gradual recovery in global air freight demand caused by the reduction in inventories, as a result of the diminishing global supply chain difficulties. Generally, freight yields have remained -- freight yields have remained strong throughout the past quarters for us and are still more than 40% above pre-crisis level.

Given these developments, we look confidently ahead to the Q4 peak season for our cargo business. Looking at Lufthansa Technik, results were on par with the prior record year level with an adjusted EBIT of €167 million, revenues increased by 9%, reflecting the strong demand for MRO services.

And at the same time, we observed significant cost inflation in material cost, cost for external services and staff costs. And finally, the other segment which includes smaller companies within our group as well as our central administrative functions reported an adjusted EBIT of €10 million.

The improvement to prior year was mainly driven by lower project expenses and some favorable foreign exchange rate effects. Let's look at our cash flow.

Adjusted free cash flow in the first nine months of this year amounted to €1 billion driven by a robust booking intake for the summer season as well as improved working capital and net CapEx. Net capital expenditures amounted to around €2.2 billion, a reduction of around 10% compared to the prior year due to a different phasing of investments.

The majority of investments related to fleet modernization including prepayments as well as delivery payments for 11 aircraft in the first nine months. Adjusted free cash flow for the quarter, amounted to €128 million, which was significantly lower than previous year due to the lower operating result as well as higher tax payments and a year-on-year decline from working capital as well as with all M&A transactions, the purchase price of €450 million received during the quarter from the successfully concluded sale of AirPlus is not included in the adjusted free cash flow.

Our financial position improved in the third quarter. Available liquidity is still above our target range with €11.4 billion, supported by the positive adjusted free cash flow.

Maturing liabilities were successfully refinanced through bond placements in the second and the third quarter with a total volume of €1.75 billion. Available liquidity and net debt were additionally positively impacted by the €450 million disposal proceeds from the AirPlus transaction.

Compared to the beginning of the year, net debt declined supported by the positive free cash flow contribution and a slight decrease in net pension liability. These reductions have favorably impacted our leverage ratio now standing at 1.9 times including pensions.

Let me now update you on our fuel cost expectations. The decrease in the price for kerosene in the past months demonstrated that our option-based hedging strategy is beneficial in case of price declines.

These decreases lead to an expected tailwind of about €300 million regarding our fuel bill in 2024, of which slightly above €100 million have been realized. Overall, we now expect our fuel bill to amount to €7.8 billion in 2024 with a hedge ratio of 83% for 2024 and approximately 70% for 2025 we are effectively protected against the risk of rising prices including potential impacts from an escalation of the conflict in the Middle East.

Ladies and gentlemen, the booking outlook for the winter months gives us confidence as we continue to observe a solid demand environment. During the next two months, capacity growth in terms of offered seats is expected to be limited to around 2% year-on-year.

At the same time, we see an increase in bookings of over 6%. This shows that we are able to sell additional capacity in the market.

This trend is also continuing in the first quarter of 2025. At the same time, our capacity is growing less strongly than in the second quarter, this should have a stabilizing effect on the yields.

For the full year 2024, we now expect to reach an average of 91% of our 2019 capacity, a slight decline to our prior guidance of 92%. The adjustment results from the slightly lower than expected capacity level in Q3 as well as a further focus on yield stabilization in Q4.

For unit revenues, we now expect a mid-single-digit percentage point decline versus prior year. CASK ex-fuel and emissions cost is expected to increase within a low single-digit range versus prior year.

Overall, we thereby confirm our adjusted EBIT guidance range of €1.4 billion to €1.8 billion for the full year 2024. The results of the fourth quarter will be still dependent on the further development of demand, especially in the core season of Lufthansa Cargo as well as external factors such as geopolitical developments.

Adjusted free cash flow is still expected to be significantly below €one billion and is expected to develop in line with the operating results. Now, as promised at the beginning of my presentation, I would like to share with you some early observations and give you my thoughts on strategic directions.

Let me begin by saying Lufthansa Group is an iconic company which has been a strong leader in the industry in its nearly 100-year history with its strong home markets, distinct local brands, and multi-hub expertise on the airline side and the strong cargo and MRO business, I believe the company is well-positioned to shape the future of aviation also going forward. It has a strong balance sheet is also confirmed by our unanimous investment-grade rating.

It has a high-quality asset base. One example for that is of course Lufthansa Technik.

And as a world market leader in our growing industry with a highly skilled workforce and a clear growth trajectory, Lufthansa Technik is in my view uniquely positioned. And here we're looking forward to providing you with more insights at our Capital Market Day in December.

Furthermore as you are all aware we are optimistic to complete the acquisition of ITA in the next few months and thereby at another attractive home market and the more southern hub to our portfolio as an access point to further growth regions such as South America. With its successful track record of integrating strong brands into our ranks, Lufthansa Group has shown that its multi-hub strategy allows strong brands to thrive while achieving significant synergies behind the curtain.

At the same time and that brings me to my third point, of course. Of course my focus is very clear.

We will be very focused on profitability and cash flow generation. And after a very successful year 2023, the results for 2024 is not where we want and needed to be.

While many of our business units will deliver profitable growth also this year as mentioned before the Lufthansa Airlines business is fighting significant headwinds. I have no doubt that the turnaround program is key in returning the group to the profitability targets we continue to set ourselves.

I and the entire executive team are very much involved here already. And I expect that we will see first benefits in 2024 gradually ramping up into 2026.

But it will of course take time for all measures to unfold their full potential. The improved profitability will of course also support the cash flow development which will be a prerequisite to keep investing into growth and in particular into the necessary fleet renewal.

For these future investments, we need to be prudent on capital allocation. and make sure we spend our money on the fields that will benefit us the most for the future.

And as Carsten has highlighted before, we are excited to continue with the renewal of our fleet which will require significant investment. The renewal is a crucial part of our strategy as it will enable us to improve the product, increase fuel efficiency, and reduce unit cost.

In addition we intend to invest into further digitalization in customer touch points, ensuring further revenue growth and satisfied customers, but also through applying state-of-the-art technology to further optimizing our operations. Let me also be clear it is my clear goal to deliver attractive shareholder returns over time.

And given what we expect in relation to our 2024 results we intend to distribute a dividend in 2025 in line with our current dividend policy. And with that, I've come to a close of my part and Carsten and I are now looking forward to your questions.

Morning, gentlemen and welcome Till. So two from me.

On Slide 18, you talk about the strong demand environment for the remaining winter months. How would you characterize that demand please?

Where is it strongest? Where is it weakest?

Perhaps, you could differentiate a bit by airlines or maybe Eurowings versus Swiss versus Lufthansa, for example? And secondly, could I ask you to talk a little bit about the 2025 outlook please, I'm interested in your capacity plans the rate of your 70% fuel hedge?

And how much of the Lufthansa turnaround measures you think, can be realized next year? Thanks.

Thanks for the question. Let me start off with the second one.

It's a bit too early, to comment on 2025 outlook at that stage. Also because I'm obviously, just around for a couple or a few weeks.

And therefore, I'm working through the outlook and the plans that we've got for next year. What I can tell you in relation to the turnaround program, as I said, I do expect already positive contribution in 2025, but quantifying that is something that I would only reach clarity and visibility when we talk kind of more towards February, in our full year results presentation where we also give customarily, a more comprehensive outlook for what we expect for the full year.

And to your first question, again, we've got solid demand which we see. Here obviously, a slight kind of I would say fine-tuning in terms of the dynamics seats on the one hand side growing well.

Yield decline. You've seen that as well in the third quarter was starting to stabilize.

This is something which we would like to continue seeing also in the fourth quarter. The demand as such is driven by leisure and premium classes.

For November, we've sold about 70% for December 55%. The comp business remains strong.

Eurowings indeed, on a strong trend. But generally, all airlines are actually doing well, except for obviously, the known issue on the Lufthansa Airline side.

Okay. Thanks very much.

Thanks very much. Hi, Till.

Hi, Carsten. Just got a follow-on from Jaime's questions actually, it's probably quite annoying, but I'm going to do it anyway.

Some turnaround program. Obviously, you talked about €1.5 billion higher in 2026.

Is that one where we just mapped €1.5 billion as a total quantum for the year? Or is this one of those ones where you're talking about a run rate of €1.5 billion some point in 2026, I'd just like to get a clarification on that.

And then secondly, I think look I know, you're going to talk a bit more about Lufthansa capacity and it's clearly slightly in the hands of Boeing and that's not very helpful. But I think Lufthansa itself, I'm talking about Lufthansa Airlines capacity is running about 87% of 2019 levels.

Can you maybe just give a range or feel or some sort of sense of how that might look for 2025, as a whole? Thank you.

So let me take the first question, just on the turnaround respectively, efficiency programs that we are targeting. The €1.5 billion is basically a measure volume.

So this is basically a contribution, which we aim to achieve for 2026, already. So as I said, I expect it's kind of a ramp up, which starts already in 2025 positive contribution, €1.5 billion in 2026.

And once we have completed and we are now looking at the time line of about 2028, I would estimate the contribution to be about €2.5 billion as such. Let me also say, which is always important this is basically a gross measure volume of this program.

So you would, obviously, have as well the underlying trends in terms of cost increases. Therefore, that is always something that you need to consider when you then build up your model or your expectations going forward?

The second question on Lufthansa Airlines what was the second question? Was about the capacity…

Yeah, James it's Carsten. So overall, obviously, sorry.

So if I get your question right, the overall capacity as you know is will be 95% for the Lufthansa Group. For the Lufthansa Airline, classic as we call it the core without City Airlines and without Discover, it will only be 84%, which shows a significant impact we will see with Discover and City Airlines adding to that.

So it shows, obviously, a strategy, which we follow the less profitable we are, the slower we grow. And therefore Lufthansa Airlines will be at the lower end of our growth.

But the hub system frankly Munich, of course, you have to add Discover and see the airlines to it and you come to more or less the same level of capacity as we have in the group. Maybe also to the question -- maybe one comment also to the question before, because you asked for different outlooks for capacity and demand for Swiss and Lufthansa.

We don't look at it that way anymore when it comes to demand, because we are now incorporating our hubs in a way and that's maybe an interesting number that 80% of our connecting interconnecting passengers can already pursue the destination by more than one hub. And that goes up to 10% of our passengers who can even use all five hubs to get to their connecting destination.

So we are really now able to steer our traffic in the demand, which of course is the base for that through more than one of our hubs in most cases two or three. That's why there is no such thing as an individual demand situation for Swiss or Austria anymore because basically the way we look at markets is a group perspective and then we make sure that we steer through the hubs in the most profitable way.

Maybe that's part of the answer to the first two questions, sorry.

Sure. Thank you.

Good morning, everyone and welcome Till. Just, again, just focusing a little bit on costs going into 2025.

Any color you can give in terms of conversations with suppliers what they're pushing for especially some of your hub airport, and how those are going and potentially how things could move around to put some pressure on them if it's not going your way? And then just in terms of airfreight, it's obviously going quite well but I wanted to just kind of hear your comments on potentially tariff increase in the US, potentially de minimis disappearing in Europe by 2028, and obviously becoming lower in the US, probably less of an impact for you but the de minimis changing in 2028 in Europe, how are you thinking about that and where you're going to replace the volumes if the consumer side of your business takes a hit?

Thanks.

Yes, Jarrod on suppliers, obviously, airport are always maybe the most challenging one in this regard. It's no secret that Frankfurt Airport is our most expensive hub and it's also the one who has increased charges the most in 2024 and looking at doing something in 2025 in future years, which is the reason why we grow the least in Frankfurt and grow strongest in those airports, for example, Zurich, which are looking at less cost rate.

So this is definitely an input into our multi-hub system if that was the back front of your question goes nicely hand-in-hand with my answer before with being able to steer traffic via more than one hub up to all five hubs because we can now leverage our negotiating power with this our airports. The very specific case of Frankfurt, we also talked to the Government of [indiscernible] who has to prove the charge increases of Frankfurt Airport and we are hopefully looking for a compromise here.

With Munich, historically, the cooperation is the closest and the best. We have some operational issues there which will jointly tackle now.

But when it comes to cost increases, I think, Munich Airport and us jointly understanding that the cost of hubbing is what puts us also in competition with other hubs outside of our system and I'm optimistic to find the right solutions there. And especially after now the Governor of the [indiscernible] has announced that there will be a COO position installed.

I think also the quality will improve and we were appreciating to hear that signal. On air traffic going well and you asked especially on the US situation it's very important for you to know that we hardly have freighters anymore to and from the US with increased daily capacities.

We mainly now focus on daily from the US. We still have some freighter operation.

But as mentioned in my opening remarks we are shifting our freighters more and more towards Asia specific especially to China the yields are highest out of China, but also Vietnam is an interesting place. More and more charter business now we are able to sign in China because the demand for e-commerce is so strong out of China and there's gap for capacity that this becomes the most important part of our cargo business where we can allocate capacity with the freighters on daily.

Obviously we take whatever is there.

Okay. Thanks.

Hi. Good morning, gentlemen.

Hopeful as well. First question is on your €1.5 billion turnaround.

Think about this a different way how much depends on underlying change versus other factors. Specifically how much of that €1.5 billion is non-recurrence of strikes from this year?

How much is the direct impact of new aircraft lower fuel burn and so on? And how much is the underlying like-for-like process change?

Second question on that same slide you talked about retail and ancillary revenue as a source of improvement. Do you already have the right technology infrastructure to achieve this?

Or do you need further meaningful technological change here please? Thank you.

So in terms of turnaround contribution for 2026 as you said we are targeting the €1.5 billion within the year. There is no kind of offset to the Strike contribution.

So the Strike is obviously a different event that happened this year. I think that's the answer to the first point.

The second one is in fact the idea and the target of the program is to improve on a structural basis. As you know when you look at the KPIs and we've spoken about that in terms of productivity gaps that we still face versus 2019 in our crude productivity.

When you think about the inefficiencies that we are incurring and additional costs from MRO et cetera, et cetera. These things are all addressed through the levers of the turnaround program to improve in a structural way the output the productivity that we have.

If within that program fuel renewal baked in. Here I need to give you a slightly differentiated answer on the cost side no.

So when you think of fuel or fuel savings or MRO savings this lever would actually come as a new aircraft arrive. On the revenue side it's true.

The improved product will obviously have a dependency on the fleet renewal and we're going to support what we are targeting here as revenue uplift ancillary revenues et cetera.

Yes. On the ancillary revenues maybe we all know that Lufthansa here is below our competitors, but that's not for system gaps but rather for our understanding of the premium product has probably kept us in a more conservative position.

What are we charging extra for what are we including our rates which tend to be a little bit higher than other airlines. But I think that we see a slow shift in this the lower you go in our base structure the more ancillaries we are now able to achieve because we are becoming more aggressive let's put it that way commercially to charge extra.

But a huge impact we'll see on the new Allegris. You probably know that we have seven different business last year, which we are starting only one of them will be basically base priced.

The others will be requiring additional surcharges by our customers be it sitting in a double seat with somebody else, be it having an office suite around you, be it in a completely closed cabin. So we'll be I think starting in the spring of 2025 see new [indiscernible] revenue streams on business class where historically, of course, we had none.

We also just recently increased our seat reservation fees also in economy class. So I think we are becoming, let's say, more aggressive on this.

When it comes to the system side, we are continuously investing. But again, our gap you see to others is more driven by our, let's call it, philosophy towards the market than our system capabilities and we'll see that changing as part of turnaround as well.

All right. Thank you.

Hey, good morning Carsten and Till. First one was just on your Slide 18 on the demand environment into winter.

I appreciate the color on November and December, but maybe you could give us a little bit of color on how October developed in terms of yield and load factor and RASK for the month of October? And then on the second question just on the Lufthansa turnaround figures the €1.5 billion number by 2026.

I appreciate this is obviously a gross number. Any color at all on what the net number might end up being?

And would the net number just be post any inflationary pressure on cost? Or is there anything else in there we need to take into account, which means that that number might be lower?

Thanks a lot.

So, look it's a bit early to say. As I said, we are still at an early stage of the program.

That includes also myself being around just for a couple of weeks and diving into it. When you think about gross versus net two point, I wanted to make is you need to consider kind of inflationary aspects that obviously go against this gross contribution of €1.5 billion.

I think that's the main item to keep in mind. There might be -- but this is again something that we are just working through also some investment required.

But again, this is something that we are still determining of how much that is. And if it would be of any meaningful number, we would also talk about it.

Otherwise with the visibility that I've got right now I can see that we've got already a lot in our CapEx plan embedded.

On October, I think, we are doing quite well on the seat load factor surprisingly well. And at the same time we were able to reduce our yields decrease, which also indicated in my opening remarks that we are seeing a stabilization over the last weeks in the two months.

I think we're getting close to zero here, which of course is a much nicer number than the single-digit decreases we have seen in the year before. So expect October to be strong especially once again at Eurowings and Discover at least in Germany, which is quite relevant for us in this regard there is this I called it before the never-ending summer kind of travel that people towards the summer destinations in the Mediterranean continue to expand their vacations and even now between the German fall holidays and the late summer holidays people obviously without school children continuously fill our airplanes to these destinations.

So I think we see a new behavior here which is very much helping us on the leisure side and we see that also this October of 2024 in a very positive way.

Understood. Thank you both.

Yes. Thanks Carsten.

Thanks Till. I've got two questions here.

So firstly around the disruption of year regulated cost of €240 million. Can you like this split it by say the airline passenger?

So how much of it is actually from Lufthansa? And also how much of it is actually driven by say the bottlenecks in Munich as well?

And the second one is around the productivity gap that you mentioned as part of the improving cost turnaround 13% below 2019 levels. And if I had to say understand this productivity cap is this mainly driven by the issues relative to disruption and how much of it is actually related to the grounding of aircraft because of GTS.

So as and when those areas comes back how do you expect this productivity gap to normalize? Thank you.

Yes. Sorry we had a little bit difficult time to have the acoustics going well enough to understand you completely.

But if I get your questions right, let me try to answer and please get back if we have not correctly answer you. The €240 million cost Frankfurt versus Munich we had a little bit more problems this summer in Munich than we had in Frankfurt.

That is correct. But all German airports were affected also the non-German airports like Zurich and to a certain degree even Brussels and Vienna be it strikes, but let's not forget whether, this was a very difficult month of July for aviation this year and also after the control especially over France was once again a significant problem this summer affecting of course all our competitors' hubs as well.

And that's what caused this number to go up. So it's way beyond our internal problems which we also have indeed I didn't try to hide.

On the productivity, still being 13% below. Remember, we were at 20% even in the first half of the year when the strikes came on top.

This is driven by of course delayed aircraft where people are trained on the wrong aircraft type and not be able to schedule as efficiently as we usually would do. It's also driven by the fact that our aircraft physically on the ground more than 20 aircraft getting back to Europe and the questions are currently being grounded because of certain issues.

So yes, a big part of this will melt away and the rest of the productivity gap we will try to close by renegotiating our labor agreements which are currently limiting our productivity. This is one of the big internal topics the management of the airline is addressing with codetermination in our partners in the unions.

Some of these rules are as old as Lufthansa. It seems like more than 30, 40 years old.

So I think there will be a significant increase of productivity also driven by those negotiations where there is a joint interest because also our unions understand that the growth of the poor airline is currently inhibited by its efficiency challenges.

Maybe just a comment a couple of figures. Sorry Sathish just to complement a couple -- with a couple of figures in terms of the [indiscernible], so this year we had last year we had €500 million for the full year.

This year alone in the first nine months we had already €550 million of [indiscernible] cost which obviously you can see as on a full year basis is exceeding last year quite a bit. And yes, this element forms part of the turnaround scope or the efficiency scope because [indiscernible] costs are something which obviously when we improve stability and we will also benefit -- we're also going to see the requisite benefit and this belongs to the program.

That's true.

So this -- again the cost is it mainly like at Lufthansa mainline and that's where the bottleneck is and the rest of the airlines are mostly negligible disruption costs. Is that fair?

I don't have the exact figures at my fingertips but there is a very sizable and also disproportionately high share at Lufthansa Airlines, but of course also an element of that was strike driven and that was not only Lufthansa Airlines, so you had it elsewhere also. So yes, very sizable Lufthansa Airlines disproportionately high probably, but you've got it in -- across the board.

Okay. Got it.

And then just maybe one quick follow-up on the productivity. So Carsten you did mention that majority of it actually will be addressed as soon as you get the grounded aircraft back and then the aircraft deliveries back on track.

I'm just assuming that the grounded aircraft are coming back by end of next year. So, would that imply by end of next year you should have at least got into around 70% productivity gap being addressed?

Well, first of all, the ground aircraft if you talk about the 320, this will go away into '26. So we will not call -- we're not going to have all of our aircraft back.

And even think about the 787, there will be 15, I think over the next day sitting on the ground in South Carolina. Assuming certification occurs, we cannot take delivery of 15 aircraft overnight.

We can probably take one aircraft for three weeks. So definitely, '25 will still be a year where we will have to work on decreasing the productivity gap is it closed by 70% at the end of the year.

It's probably not the wrong guess, but it's difficult for us to quantify at this point without the exact dates of aircraft to the rates known to us. But for sure, it will come down, leaving ATC and weather of course as a fixed factor side.

And you did mention about going back to the unions and negotiating on the other productivity. What does it mean in terms of the current pay deal that you have done because it is – it's a multiyear pay deal.

What does it imply that needs to be renegotiated as well?

Satish, I'm happy to continue on the Investor Relations team later. I think we have to go to the colleagues, so that they also can ask questions.

Okay. Sure.

Okay. Thank you.

Yes. Good morning, gentlemen.

And welcome Till, and morning Carsten and Marc. I see in your interim report, you do talk about – obviously, you've mentioned the sustainable adjusted EBIT target of at least 8%.

That is a goal and you strive to achieve that as soon as possible. So I'm assuming, it's very much determined or dependent on the turnaround program and very clear want the growth effect of 1.5 BO6 and 2.8 B BO8 [ph].

I'm assuming to some extent there's some assumptions there about the modernization of the aircraft fleet because obviously, that's the major issue here, which is affecting the numbers this year. And at some stage you're assuming that the negative jaws effect of negative unit revenue and ex-fuel cost rises is going to arrest itself or invert basically.

So just might talk about the 8% margin in general terms. And then the second thing is maybe more for Carsten.

But basically do you think that when we look back say 2028 to 2029 that the Lufthansa Group the kind of where it's – the geographical dispersion of the business, do you think it's more kind of west-facing than East, given that the unlevel playing field there is East I mean maybe you look at obviously the investment in Alitalia gets approved and it gets closed and maybe you look at TAP as well. So just a general comment on the margin and where the geographical positioning of the company would be in the future?

Thank you.

Stephen, good talking to you. On your first question, if you do the math, this year I think it's worth to say, we'll be getting to 8% already, if you leave the Lufthansa core airline out.

We all know that investors don't do that, analysts don't do that and promise you the top management doesn't do it that way. But for seeing what we have achieved over the last years, we were more or less hitting the 8%.

I'm sure we will be above the 8%, the Lufthansa Group outside the Lufthansa Airline. So in the Lufthansa Airline, as Till pointed out, the turnaround program is essential to get to the 8% but also not forget that there are some elements to give aircraft, which will obviously take care of themselves.

And if the aircraft issue alone is €0.5 billion, you see that what Till has said is a very realistic target also for the Lufthansa Airline. We're pretty sure we'll get to the 8%, of course depending on market developments in terms of – how many years it will get but we will get there and the rest of the group is already there while we speak.

In 2028 and 2029, I'll be in the middle of my career at Lufthansa, so I will then probably have a Lufthansa Group, which is for sure facing more south. I think we should not underestimate the Southern Hemisphere in two ways of thinking.

First of all, we see a lot of economic development in that part of the world. And last but not least, it will be a significant leverage to our seasonality issues because obviously, the southern hemisphere when it comes to leisure for sure is exactly countercyclical to our more northern hemisphere markets, which of course, Lufthansa mainly depends on.

So I think there will be two elements; additional growth in this market and a little bit better leverage to reduce our seasonality. And I think let's be honest, the Asia development will very much also depend on geopolitical issues.

With the Russian air space be open by 2028 and 2029 I think we all hope so. If that's the case, I think we'll see the China business recovering faster because it's not the demand out of China, which is stopping us.

It's the under playing field. And if that's not the case, I think China will still be a challenge.

But let's see how that goes. The North Atlantic, regardless who wins next weekend will be also the commercial backbone I for all of our network carriers also in 2028 to 2029.

That's great, Carsten. Thank you for that.

I'm sure you'd be only halfway for your career by then.

I'll speak to my wife about that tonight. Thanks Steve.

Thanks to replace.

Yes. Hello.

Thank you for taking my question. I understand that based on the recent big hard ruling, you still have to provide contact with preferential conditions until other court decisions will be reached.

You mentioned earlier this year that you already changed the conditions for Condor over summer. As we take a hard ruling means that you are allowed to continue with the conditions this summer?

Or do you have to go back to the old historical contracts? And is there a lease that you have to pay back Condor some money this year from the higher prices that you charge this summer?

Thanks.

Ruxandra, thanks for that question, because this allows me to qualify indeed some misunderstanding. No, very important.

First of all there is no core decision on the topic itself the German Supreme Court only forced us to continue until a final court ruling is occurring which will be in Q1 2025, my lawyers tell me. Until then, we are obliged to continue the, from our point of view, improved SPA conditions which were higher priced and lower availability is what we changed after the German court in this sort of rule in May.

So there's no need to go back to the old crazy conditions we had before. And therefore, of course, your second question there is no need to refund, because we are allowed to continue with the current SPA.

Long-term, I don't know of any hub in the world where the hub airline is forced to feed its competitor. So I think this will end up like every other ruling in the world on these topics will end up but it will take some time and we take it through there.

Yes. Good morning.

Just one question on the notable €75 million swing of adjusted EBIT within other. If you sort of push by on the moving parts say 75 [indiscernible] improvement in Southern Express could continue into further quarters.

So if you could expand that that would be appreciated. Thanks.

Do you remind just repeating your question again? I was just struggling to completely catch what you said?

Sure. Please could you expand on the €75 million swing at adjusted EBIT in other?

And to what extent we could expect that to continue into future quarters?

Yes, I see. Thanks for that.

So look the other segment or kind of category, in essence, here we've got a positive contribution from the basically project expenses which we are carrying at headquarter functions. So that is positive.

There's also some FX in which contributes in that line. And again by nature, obviously, the first one that I mentioned is something that we control to your question in the future.

How would that behave? FX obviously is coming as it comes.

Thanks for taking my question. I just wanted to follow-up on your earlier comments on the corporate demand side.

At this point where are you in terms of corporate travel recovery compared to pre-pandemic levels? Have you seen a pickup in that demand recently?

And how are you thinking about that into next year, because we heard some kind of positive trends from the US airline. Thank you.

Yes. Hello, Muneeba.

I can confirm that trend when it comes to the North Atlantic where we indeed we see a pickup. Overall, we have recovered just to 60% total, a little bit less in Germany, a little bit more on Intercont and 60% right on in cont in general, if you go beyond Germany.

And we see the pickup still existing, but let's be honest, it at a slow pace. But I think we have seen the worst.

And therefore, I think also you have to understand when you look at the numbers, we always do this in passenger numbers. The US carriers do it in revenue.

If you want to compare that, you more or less have to add 10% to 15% to it because that's what yields went up in corporate traffic over the last years. I hope that helps you a little bit.

Yes. Thank you.

Yes. Good morning.

Thanks for taking my question. I actually just have one technical question left.

I'm trying to get my head around why the full year RASK guidance was slightly downgraded to a mid single-digit decline. I think before it was low to mid-single.

It just seems counterintuitive to me given the current trend is rather for an improvement in RASK and yields as you slow down capacity growth.

Yeah. Let me remind you.

So we've given you that picture on a full year basis because that's in the end kind of what matters. Of course, we've got the fourth quarter ahead of us.

And when you think of -- it's basically between kind of yield and seat load factor and a bit of a RASK-specific comment that I'd like to make. When you think about RASK and yield in the fourth quarter, just let me remind you, in prior year fourth quarter, we had some effects, which inflated the other income, which were about still COVID-related release of provisions for unflown tickets, some OEM compensation payments and insurance payouts within the prior year Q4.

So this inflated income last year means actually that this year in Q4 the RASK decline will be higher than the low yield decline and seat load factor increase would actually suggest, okay? So it's a pure prior year comparison, not impacting this year's numbers.

So in other words, the yield development will be significantly better than the RASK development in Q4.

That's correct.

All right. Okay.

Thank you.

Good morning, gentlemen. Thank you for taking my question.

I just wanted to -- my question relates to ITA and its post integration in Lufthansa Group. So in this, how might this materialize in terms of initially the impact on costs later on, if it can provide -- can you give us some color on the headwinds it can provide in terms of profits for the group?

Thank you.

No, I think ITA integration will be a double-digit number of investments in IT systems and some resources to align certain things. So that I think considering the size of the business is probably in neglectable.

And if I don't get your question wrong, ITA, we don't know the ITA numbers currently because due to the lack of rights from the EU Commission, we're not allowed to look into the books. But I've seen the press, and we all know that ITA is doing better than what we had put into our budget and business plan.

So I think we will see probably an overall positive development compared to when we took the decision. When it comes to overall profitability and margin, probably ITA will be somewhere between our best and our worst airlines when we start.

Thank you very much. Perfect.

Thanks to everybody for your interest, for your questions, and we are also looking forward to continue the dialogue on the Investor Relations side and also to meeting you together with our Board members on the upcoming conference season and roadshows. So today, thank you very much and we're now closing this call.

Bye.