Deutsche Lufthansa AG

Yes. Thanks a lot also from my end.

Welcome, ladies and gentlemen, to the presentation of our second quarter results for 2025. With me sitting here today are our CEO, Carsten Spohr, and our CFO, Till Streichert.

They will present our results for the second quarter and discuss our commercial outlook for the remaining 6 months of the year. And at the end, you will have the opportunity to ask your questions.

Like always, I want to ask you to limit your questions so that everybody has a chance to participate. Thank you very much.

And Carsten, now with that, I hand over to you.

Yes, Marc, thank you very much, and a warm welcome also from my side to all of you for this year's half-year analyst conference. By nature, it's a quarter away from us 3 months ago that we were speaking about the summer, and Till and I announced that we are convinced that the Lufthansa Group is heading for a positive summer in various regards.

And I think it's fair to say in the summary that now, at the end of July, Till and I can confirm this despite, and you're all aware of this, a continuously challenging environment due to the geopolitical crisis, global trade conflicts. Nevertheless, we are operationally very stable, economically on track, and maybe most importantly, in terms of sustainability and long-term value creation for our shareholders, we are making solid progress on our key strategic initiatives.

This is particularly remarkable given that in addition to these global challenges, we as an industry and even more we as Lufthansa are still facing the specific issues of delayed aircraft deliveries, although I'm happy to say that there is now light at the end of the tunnel and signs of improvement in this area are visible. The industry as a whole, but also we as a company, have become much more resilient.

And if I think about the geopolitical situation as of today, a few years ago, I'm pretty sure not only us but also our competitors would give very different outlooks than what we are doing today. The resilience is also reflected, though, not only in financials, but also in our high operational stability.

Network reliability has significantly improved by 1 percentage point to more than 99%. Our punctuality increased by an impressive 8 percentage points.

This shows that our investments and measures, especially those under the Lufthansa turnaround program, are delivering results, operational results, but also financial results. Till and I will come to that in a minute.

Our customers once again now can rely on us to get them to their holiday destination or to their business destination on time, with talking about Europe, top Mediterranean destinations once again leading the pack, and basically being fully booked this year. On long haul, it's Japan and Argentina, which are standing out interesting enough, as much more popular than in the past.

But we're also on track with the integration of ITA Airways. Besides the turnaround of our core business, this is next to the fleet modernization, our most important strategic project.

And we have already expanded the joint culture offering to include our long-haul flights and, of course, our short-haul flights already a few months ago. We have now harmonized the 2 frequent flyer programs, Miles & More and Villata.

And therefore, also due to these measures, earlier than expected, we see positive financial effects from our investment in ITA already in the second quarter. The success of the overall engagement has exceeded expectations after only a few months already.

And while I remain optimistic about a strong summer '25, my outlook is somewhat clouded by the development of our location costs. Especially in Germany, but also in Europe in general, the competitive disadvantage tied to location cost in our European home markets is becoming increasingly evident.

And on top of this, we face constantly rising taxes and fees, and a very one-sided regulation from the European Union that puts an additional burden on us as a European operator. But let's return to the positive side of things.

In the second quarter, our airlines benefited from high demand for tickets and travel. In the first half of this year, we welcomed a total of 61 million passengers on board our aircraft.

And if you compare that to the previous year, we see an increased capacity of 3.8%, and we were able to successfully place this in the market. Thanks to the improved operational performance, we also reduced the financial impact of irregularities by 28%, which is significant compared to last year.

We're also making progress, even though slower than we were hoping for in our fleet modernization. In June, we put the 10th Airbus 350-900 with the Allegris premium product into service.

And it's not only the very positive customer feedback that is coming back from this, but it's also showing a significant yield uplift. Additionally, we're seeing a high willingness to pay for the various different seating options in the new business class that confirms and outperforms our expectations for additional ancillary revenues due to Allegris.

Nevertheless, this year remains a transition year, again, due to the delayed aircraft, for example. Nevertheless, we were able to achieve a 1/3 increase in our adjusted EBIT in the second quarter compared to the year before.

We went up from EUR 185 million to EUR 871 million. But apart from the improvement we see in our Passenger Airlines segment, we also benefit from the continued strong performance of Lufthansa Cargo, which doubled its result of EUR 73 million compared to last year.

And even more important in terms of impact and volume, financially, Lufthansa Technik is also on track, delivering once again a record level, not quite a rocket, but record level adjusted EBIT in the first half of this year. And it's these developments that highlight, on the one hand, the improvement in our group's operational profitability and, on the other hand, confirm the effectiveness of our especially Lufthansa Airline-focused turnaround measures, which we have implemented for our core brand.

So let's have a brief look at the traffic regions before I hand over to Till for more details on the numbers. As you all know, commercially, the North Atlantic remains our by far most important traffic area.

We're now at more than 400 flights every week to and from the U.S., and they were, as we also promised you in the Q1 call, well booked in the second quarter. We have significantly grown on the North Atlantic throughout the past half year, more than our competitors, and we were, at the same time, able to keep yields up versus the prior year.

The strong demand continues to be driven primarily by the premium classes, and in top or connected with that, we are seeing an increase in ticket sales at the point-of-sale U.S. But on the other side, and we already pointed that out in the Q1 call, we see that demand for flights to the U.S.

from our home market, Germany, is growing with some softness and is growing less than the demand for other parts of the world. In the second half, corresponding to that of the year, we are still expanding our capacity on the North Atlantic by about 5%, a little less than the first half, but this will still be above the market average.

And maybe more importantly, we remain flexible regarding our capacity growth. This is important, as I said, since our bookings for the coming months show somewhat of a mixed picture between premium and non- premium, and the yields are slightly below last year.

So we will not only take into consideration, but we will execute on reducing our growth for the fourth quarter, and details to be seen. We also remain flexible on our Asian routes.

As you know, last year, we saw significant revenue declines, mainly due to the competitive disadvantage of the closure of the Russian airspace. So, consequently, we have reduced our capacity towards Asia, and that has succeeded in terms of stabilizing our yields.

And nevertheless, we now see very promising developments, particularly to and from South Korea and Japan. And we will look at that it seems of additional opportunities.

But the bigger picture of things, it's the geopolitical circumstances, which need to enable a level playing field again, which will only happen when the Russian airspace reopens. And of course, once that happens, we are prepared to act swiftly and accelerate our promising recovery in Asia.

Overall, talking about the intercontinental business, I think we are quite satisfied with developments in the second quarter. When we now turn to the European traffic, it's a more mixed picture.

We surely see some spillover effects from the softer growth and the softer demand on the North Atlantic, which also results in a little bit softer growth and demand for connecting traffic on short-haul. We definitely, in some of our markets, see more intense competition and the already mentioned high location costs in our home market, especially Germany.

All that has not only put yields under pressure, but also our results in the second quarter. And we do see a similar market development in the coming months.

As one answer out of many to this challenge, we will focus the way in how we steer our continental network. We will introduce soon a more centralized management of our continental network steering across all hub airlines, also for Condor and short-haul, as we have done now for quite some years on long-haul.

This will further reduce complexity and increase the efficiency of our short-haul capacity in the way we deploy it among our 6 hubs. So let's shift our focus to a business segment that continuously withstands macroeconomic turbulences.

As a matter of fact, it actually benefits from macroeconomic and geopolitical tensions. It's Lufthansa Cargo.

In the Lufthansa Logistics segment, the positive trend in financial performance, which was already evident in the first quarter of the year, could successfully be carried forward to the second quarter. We achieved an adjusted EBIT in Lufthansa Cargo of EUR 73 million, which is an increase of EUR 37 million or more than doubling compared to its result in '24.

This growth was mainly driven by volume, while the base yield was stable versus the prior year. And despite increasing capacity by 3%, the load factor was able to be increased by 2 percentage points versus the previous year.

I think that demonstrates that Lufthansa Cargo was able to profitably utilize its increased capacity based on both the expansion of its freighter network but also of the expansion of its belly capacity of the passenger airline business aircraft. The high demand from Asian e-commerce players and semiconductor producers, as well as capacity constraints in sea freight, led to an underlying increase in demand for Lufthansa Cargo.

And it's obvious that some of the cargo, which was supposed to go from Asia to the U.S., is now due to the tariffs redirected towards Europe. As you all know, we are not active very much between China and the U.S., but we are very active between China and Europe, and therefore, this played to our advantage at Lufthansa Cargo.

On top, since June, Lufthansa Cargo has been able to market the ITA Airways Berlin capacities, starting with the South American routes through its hub in Rome. And on top of this, we plan to gradually now extend the use of ITA's Berlin capacities to all continental and intercontinental routes of our new partner airline, ITA, and basically copy and paste the success model of Lufthansa Cargo with the other Berlin airlines in the group, Berlin Cargo Airlines.

As I mentioned, the prevailing global uncertainties present both opportunities but also risks to the airfreight industry. And I think the Lufthansa Cargo also available freighter fleet that ensures the necessary flexibility needed to adapt swiftly and effectively to those potential shifts in demand patterns.

And that's also seen by the fact that the recent approach to reestablish more charter contracts, as well as our expertise in handling special goods, leaves cargo well prepared for what we believe is a positive outlook for cargo in the next years. That turns me to an even more strategic and more long-term optimization of another business segment, Technik, which demonstrated Lufthansa Technik once again its strength in the first 6 months of the year.

We achieved another record with an adjusted EBIT of EUR 310 million. And the total revenue in the second quarter alone increased by 8% compared to '24, which is I think reflecting the sustained high demand in this industry.

The adjusted EBIT for Q2 stands at EUR 149 million, which is below the prior year, but it's important to note that last year's second quarter was somewhat inflated by catch-up effects following the strike impact in Q1 and therefore, the release not therefore, and on top, the release of variable compensation provisions. So, despite challenges such as tariffs, cost inflation, and ramp-up costs for new international locations, Lufthansa Technik has strengthened its competitiveness through strategic measures, including renegotiations of maintenance contracts to include improved inflation adjustment clauses.

These initiatives not only enable the effective passing on of cost increases to customers but also secure long-term recurring revenue streams. The growth strategy of Lufthansa Technik Ambition 2030 is on track, and Lufthansa Technik is successfully focusing on further international expansion and digitalization, and expanding more and more into the defense sector.

So now let me hand over to Till for the financial details and further insights. And then with a few thoughts on the strategic outlook, we will go to questions and answers later on.

Thank you.

Thank you, Carsten, and a warm welcome also from my side. Thank you for joining us today to elaborate on our second quarter 2025 results and the financial outlook for the rest of the year.

So first of all, I'd like to walk you through our Q2 financial performance in a bit more detail. With an operating result of EUR 871 million, we've clearly exceeded the prior year's level, and we are on track to deliver an adjusted EBIT significantly above the prior year's level by the end of this year.

Let's start at the top. Our total revenues grew by 3% compared to the prior year, broadly in line with our capacity increase of 3.8% in available seat kilometers.

But most importantly, this top-line growth translated into the bottom line. In the second quarter, the adjusted EBIT reached EUR 871 million, a strong 27% increase, leading to an operating margin of 8.4%, which is a gain of 1.5 percentage points versus last year.

This year-over-year adjusted EBIT improvement of EUR 185 million was mostly supported by 4 factors. Of course, revenue growth at our passenger airlines, favorable fuel costs, which decreased by EUR 290 million versus 2024 despite the higher production level or including the higher production level and the growth of ancillary revenues, which contributed an additional EUR 71 million compared to last year.

And lastly, our cargo business, which increased its operating result by EUR 38 million versus last year. However, one thing is clear: cost pressures are not easing.

They are there, albeit as expected. And let me highlight a few areas of continued challenges.

Material cost ex fuel rose by more than 9% versus the prior year. Fees and charges increased by 11%, especially driven by 18% higher air traffic control costs and 13% higher airport charges.

As Carsten has highlighted, this is a serious concern for Germany as a location. And if location cost stays at this level, it will continue to slow down growth and the recovery of flight activities, which is still below 2019 and below our European peers.

And lastly, the cost for third-party MRO expenses, which went up by about 19% versus 2024. Going to personnel expenses, they were up by 10%, largely due to the timing of tariff increases from the collective bargaining agreements concluded a year ago, higher variable compensation, and a small increase in workforce, all resulting in a step-up effect, which we already highlighted in our Q1 call.

While all of the mentioned cost increases were factored into our plan, they remain out of proportion, and we need to continue tackling them by unlocking productivity gains. That is why the Lufthansa Airlines turnaround remains our #1 priority.

Apart from the Passenger Airlines segment, Lufthansa Cargo and Lufthansa Technik have also contributed significantly to our operating result. And as Carsten has already mentioned, combined, they delivered an EBIT contribution of more than EUR 220 million and have, therefore, contributed more than 1/4 of our operating result in the second quarter.

In doing so, they have successfully mastered the current macro challenges. While Lufthansa Technik has also dealt with a headwind of EUR 20 million due to tariffs, Lufthansa Cargo could keep its base yield stable despite the tariff-related burden on global trade.

In Q2, both segments, Lufthansa Cargo and Lufthansa Technik, have proven once again their strategic and commercial value as they stabilize our portfolio and profit streams even in times of volatility. Now let's look at the adjusted EBIT line below.

Compared to last year, we've seen significant improvement in our financial results. which has helped us to more than double our net income, which is ultimately the figure most relevant for our shareholders.

Key drivers include lower income tax expenses due to beneficial audit outcomes for prior periods, resulting in tax repayments and positive valuation effects, particularly from unhedged FX financial debt. On the cash flow side, adjusted free cash flow amounted to EUR 138 million, which is a solid second-quarter result.

Now let's have a look at the result of our Passenger Airline business. In total, the Passenger Airlines operating result amounted to EUR 690 million in the second quarter, which is EUR 109 million above the previous year's level.

And the overall operating performance reflects the impact of various factors. In the second quarter, we grew our capacity moderately by 3.8%, which translates into a 95% recovery of 2019 levels in terms of ASK.

While the seat load factor remained roughly stable versus the previous year, overall yields were slightly down, mostly driven by the short-haul business within Europe. Meanwhile, intercontinental yields remained on par with prior year and were driven by stable yields on an FX-adjusted basis in our most significant intercontinental traffic region, the North Atlantic, while in euro terms, it was slightly negative by 0.8% and positively strong yields in South America traffic with an almost 5% increase versus last year.

Because of the yield softness, RASK also declined versus the prior year, and the decline was mitigated to some extent by the positive development of ancillary revenues since flight-related ancillaries rose by 18% versus the prior year. Also, we achieved around EUR 30 million less revenue deductions as compensation payments, thanks to the improved regularity of our flights.

These 2 positive effects are proof points of the success of our turnaround program, which I'll come to in more detail in a second. As mentioned before, cost pressure remains a challenge.

As a result, unit cost increased by 4.1%. However, FX-adjusted unit cost increased only by 3.5%.

Lastly, we are pleased with ITA's contribution to our Q2 results. 41% of ITA's earnings after tax are included in our adjusted EBIT.

In Q2, this contribution amounted to EUR 91 million, largely driven by FX effects and improving operating results. Let me now turn to the Lufthansa Airlines turnaround program, our most critical lever for restoring long-term sustainability, sustainable profitability in the core of our group.

The first half of 2025 has delivered tangible proof points that our efforts are bearing fruit. As Carsten mentioned, operational stability has reached its highest level since 2017.

Punctuality improved by 11 percentage points year-on-year, averaging 77% across the first 6 months. And beyond these numbers, this performance also sends a very clear message.

Lufthansa is regaining the trust of its passengers, and this operational progress has translated into financial impact. Irregularity costs were reduced by 35% compared to the first half of 2024, and this is a direct result of fewer disruptions and a better operational delivery.

At the same time, we are taking difficult but necessary structural decisions, including streamlining our support functions while maintaining service quality through digitalization and automation. Additionally, we make progress on several measures, all targeting higher efficiency levels.

One key initiative, for example, is the implementation of new crew planning rules and systems, which we expect to lead to a 5% increase in crew productivity next year, which is a considerable leap forward. On the commercial side, we are beginning to see the first monetization effects from Allegris.

We have achieved yield uplifts of up to 15%. This is a strong validation of our strategy to personalize and differentiate our offer.

Ancillary revenues have also seen a significant boost, up more than 25% versus the first half of 2024, and this is driven by a more innovative and targeted approach to upselling, particularly in flight-related services. To sum up, the Lufthansa Airlines turnaround is progressing on all fronts, operationally, structurally, and commercially.

And the first half of 2025 has laid a solid foundation. And our focus now is to maintain this momentum and deliver further improvements in the second half of the year and the years to come.

Let's now turn to the cash flow development in the first 6 months of the year. The operating cash flow was EUR 2.8 billion, surpassing last year's EUR 2.7 billion, supported by seasonally strong ticket prepayments.

Compared to last year, changes in trade working capital were around EUR 180 million below the previous year's level. The main reason for the lower trade working capital in 2025 compared to 2024 is a smaller increase in unflown ticket liabilities combined with higher payouts for other payables.

In addition, there was an increase in prepaid expenses relating to more wet leases and IT maintenance services. Net CapEx in the first half of the year amounted to EUR 1.6 billion.

The number was mainly driven by 10 aircraft deliveries, including 1 A350, as well as investments in the cargo hub in Frankfurt and Lufthansa Technik's new facility in Portugal. In total, the adjusted free cash flow amounted to around EUR 1 billion, marking an approximately EUR 150 million improvement versus the first half-year result in 2024.

Our balance sheet was further strengthened in the first half of 2025. Net debt as of June 30, 2025, was EUR 5.5 billion, down EUR 289 million from the end of 2024.

And this decrease, of course, is also related to the weaker U.S. dollar.

Our strong liquidity position ensures that we are well-positioned for the upcoming aircraft deliveries and debt maturities. Net pension obligations reduced primarily due to the increase in the discount rate by roughly EUR 340 million, down to EUR 2.2 billion.

The leverage ratio for the last 12 months was 1.7x as of the end of June, which was below the level at the end of 2024 and stable versus the first quarter. This underscores the continued robustness of our balance sheet as evidenced by holding full investment-grade ratings by all our 4 rating agencies.

Since the beginning of the year, we've seen encouraging developments regarding our fuel cost, and I'm pleased to report that this trend still holds true. As of July 25, which you can see there on the slide, our projected fuel bill for the full year stands at EUR 7.2 billion, which is another EUR 100 million lower than our previous guidance based on April '24 calculations.

Remarkably, this figure is also EUR 600 million below last year's fuel costs despite increased capacity and the additional expenses associated with sustainable aviation fuel. This positive development reflects the effectiveness of our option-based hedging strategy.

It allows us to benefit from falling fuel prices while maintaining a high level of protection against price increases. As of now, 81% of our total fuel requirements for 2025 are hedged, with the Passenger Airline segment well covered at 86%, providing a solid safeguard against fuel price volatility and enhancing there with our financial stability.

For 2026, we have already hedged our passenger airline business at about 60%. Finally, the expected cost of SAF remains stable with an additional expense of EUR 200 million included in our total full year fuel bill.

Of course, the projected fuel cost savings will fully materialize only if fuel prices and exchange rates remain at the current level throughout the remainder of the year. Let me now comment on the financial outlook.

We are confirming our full year 2025 guidance, which we communicated earlier this year, and the underlying rationale does not differ much from what the one presented end of April, also due to the fact that the global uncertainties still persist. And those uncertainties still bring both risks and opportunities.

Let me share my thoughts on these while reflecting on the progress we've made and also, of course, on the challenges ahead of us. Starting with the broader environment, the demand situation continues to be affected by overall volatility resulting in current demand softness on the North Atlantic.

On the positive side, favorable fuel price developments and FX trends appear to persist for the time being and have already materialized in our half 1 numbers, as you can see. Taken together, risks and opportunities appear to be broadly balanced.

We are working on what we can control, and we've made good progress so far. The turnaround at Lufthansa Airlines is well on track and has already made meaningful contribution in the first half.

We are making progress on fleet modernization. The ITA Airways integration is advancing as planned, and the market for MRO is structurally a growth market.

We are ramping up operations in Portugal and Calgary, and Lufthansa Technik continues to be well on track to deliver the Ambition 2030 plan. And Lufthansa Cargo continues to demonstrate its agility in a dynamic market with a strong start into the year.

For me, these are proof points that we are capable of delivering against our financial targets even in a more complex macro environment. Finally, I want to remind you again that 2025 remains a transition year, but an important one for us to lay the foundation for the successful turnaround of our mainline Lufthansa Airlines.

To summarize, the environment is challenging and remains challenging overall. But in total, we have delivered on our half 1 plan, and our full year guidance remains in place, and we are actively managing the moving pieces with a clear view toward long-term value creation for our shareholders.

And with that, let me hand back to Carsten, who will provide you with some thoughts on the strategic outlook.

Till, thank you. In just a few minutes, indeed on how we jointly believe that we can further strengthen our group for the years to come.

An obvious pillar is the modernization of our fleet. And that's on top of that, of course, also commitment to innovation, to sustainability, but also to premium customer experience as we now saw in the recent months.

As you probably know, we have by now introduced 10 aircraft offering the Allegris product, being 10 350s operated out of Munich, and we expect to welcome the first Boeing 787 with the Allegris cabin late this summer, operating out of Frankfurt with up to 9 more to come by the end of the year. In between, we will also welcome the first Airbus 350 in Zurich with the new Swiss Sensors product on board, hopefully just in a couple of weeks.

And that means that next year alone, we anticipate new aircraft almost on a weekly basis. As a matter of fact, by the end of '26, we expect another 63 next-generation aircraft to join our fleet.

Looking now at '28, that means that on wide-bodies now only, that number, of course, before was including narrow-bodies, on widebodies only by end of '28, we will operate 41 Boeing 787s, 16 Boeing 777-9s, 44 Airbus 350-900s and another 12 350-1000 in our long-haul fleets. And these investments deliver benefits on multiple levels.

Of course, the financial impact of our fleet modernization will become clearly visible at our bottom line starting in '26, full swing '27 and '28. But also in terms of customer satisfaction, we have made significant progress compared to last year's levels with Allegris and soon then Swiss Senses on top, we believe these further premium investments, we are now back to redefining standards in every compartment of our airplanes.

On top of that, we're making progress in integrating ITA Airways into our services, including our digital services. One milestone in this harmonization process, for example, will be the availability of the Lufthansa Travel ID starting September 1, which will give ITA Airways passengers full access to Lufthansa Group's digital services.

And that also brings us another step forward strategically and maybe one of our most important targets, the ongoing internationalization of the Lufthansa Group. To this end, we are continuing to build international partnerships and collaborations such as the expansion of the Lufthansa Cargo United Cargo joint venture, which will now include Swiss Cargo as of tomorrow, actually.

And already today, we are seeing the benefits of the highly integrated business units across the group, the consistency in operations throughout the customer journey or when it comes also, of course, to our financial performance. We will, however, further intensify integration across the company, and thus, further improved customer experiences will generate value for our shareholders.

And of course, it also will create value for us in the management team in terms of leaner processes, allowing for quicker decision-making. So let me conclude with an outlook on the future development of the group.

At Lufthansa Group, we want to increase the level of integration across the group as a driver of value creation for our stakeholders. And at the same time, we are very deliberate about our brands, about our products, and the process variety.

And in general, when it comes to brands and products, we definitely believe in the diversity in the fee fight for the group, which in a way also reflects the USP of Europe. But when it comes to varieties in processes or in structures, then we will only allow that in the future when it either drives commercial value because customers are willing to pay for it.

Think about the different style in Swiss first class, whether it's a Lufthansa first class or it contributes to cost saving, think about different CRAs or, of course, when there are regulatory legal requirements, think about, again, different AOCs in different countries due to traffic rights reasons. So these will be exceptions to streamlining processes and organizations.

Everything else, we will try to act as one. And of course, at the same time, as mentioned, maintain the fee file where the customers enjoy it.

Going forward, I think that's a big step to further optimize the way we work, and we will share more of this with you soon in September when we all welcome you, hopefully, here in what we will have as our first Capital Markets Day in many years. September 29, Till and I would like to invite you to join us, most likely in Munich.

That's the idea to share with you where we are moving forward in our organization, where we are moving forward with our Lufthansa Technik, Lufthansa Cargo pillars. I'll also share with you how we use digital and artificial intelligence to further lean processes and reduce costs in the group.

So we look forward to that and the invitation will go out for market later time soon. And with that, of course, we will also talk about mid-term financial targets and how we believe that we will drive sustainable shareholder returns over the next years.

I think today's results mark a solid step towards that, but I think it's also obvious, thinking about the airplane deliveries, that what lies ahead is even more compelling. But with that, let me leave it for now and open the floor together with Till for your questions.

Just a little bit more on ITA. You included it in your adjusted EBIT number.

And I guess if you strip that out, the underlying operating performance is not as good. But at the same time, I imagine that you're moving things around across your hub network.

So maybe that's the right place to put it. But just to get some color in terms of how you're moving things around and why, with the current stake, you think it's right to put it there.

Secondly, it looks like the TAP sale process that kicked off, and obviously, relative to Air France and IAG, South America, LatAm is a lower part of your mix, and I guess it's something you want to tap into. Do you have any idea of how long the process will be and where things stand there?

And then a question I asked also on the Air France call is just about cargo. I know it's very short term, but just to get your color in terms of comps in Q3, Q4, and how you feel about air freight at the moment.

Yes, Jarrod, let me start with your second and third questions. I think on TAP, first of all, we have all seen back and forth on this process in the past.

And I think also in this, what is the last quarterly call where I said this will take longer than people think? So I would think the latest developments have confirmed that.

It's still no surprise that all major European players being based in London, Paris, or Frankfurt are looking at this. And for right now, we are quite happy to focus on ITA.

So, no rush on our side, but we will then talk about things on M&A when things happen, and not only when we forecast them. Cargo, as you rightly said, it's the shortest-term business of everything we operate.

But I think the logic which I mentioned that the more geopolitical tensions exist, the more unpredictable the world is, the less predictable our supply chains, which usually play to our favor. So I would think that, and on top of the fact that Q3 and Q4 are the strong cargo results, would make me optimistic for cargo for the rest of the year.

On ITA and how we put that into our numbers, I hand over to Till.

So, Jarrod, so the way we account for ITA is obviously at equity, and it's a 41% that we are putting into our adjusted EBIT. That's the way also in the segment, indeed, this is the way we handle the minority shareholdings, quite comparable also to Sun Express within the Eurowings accounts, and equally the joint ventures from Lufthansa Technik, for example, that sit in there.

And of course, when you think of ITA and rightfully, you alluded to the fact that further and deeper integration, which forms part of our synergy case, of course, it is the segment performance, which is where it belongs.

Yes, 2 for me. Just maybe, can I just ask about the weakening U.S.

dollar? How do you think about that?

Obviously, it's going to help fuel, maybe you look at it from an aircraft purchases perspective, or even the way the network is shaped into next summer, I mean, maybe the West to East could be weaker, particularly in the economy. I don't know how you think about that overall.

And then, since I'm talking about aircraft purchases, I think it's very important for your long-term strategic plan. Are the manufacturers telling you, whether it's Boeing or Airbus, that the delivery profile, it's looking more certain now when you'll get deliveries, and you can be pretty confident as you put those plans out to '28 beyond that they won't be delayed by the OEMs.

Let me make a start, just a little bit on the FX side. Maybe just a short comment only.

On the operational cost side, of course, you know that we are U.S. dollar short as a group, which is impacting the FX impact; we've got a slight benefit from that.

It helps the airline business generally. On Lufthansa Technik, on the upside, it's slightly negative because that's where we've got more contracts, more revenue in U.S.

dollar. To your point, taking a view on embedding a dollar rate in 2026 into the flight planning, look, I'm a bit cautious.

We need to see a bit. We'll first focus on where we've got visibility on.

On the aircraft purchases, as a matter of fact, that's where, obviously, the largest part of it is indeed U.S. dollar-based.

We've got a hedging strategy. So we hedge the result at the point of purchase with about half of it.

And then we'll build up a layered strategy. And that's basically on the aircraft side.

That's the way I would describe the situation.

Stephen, it's Carsten. On the aircraft manufacturing side, I would like to repeat what I said before on numerous occasions.

We believe that until the end of the decade, we will see bottlenecks in the supply chains of the OEMs and airframe manufacturers, obviously resulting in then delays towards the end customer like us. Nevertheless, of course, we have a plan for '28.

And if I might say that the bad luck of Lufthansa had that we were hit at the worst of all times with COVID and those delays, I think, is being reduced now every year starting in '26. So I think '25, we call it a transition year, we definitely, for the last time, on the complete darkness of these delays.

And now the number I gave you, 63 new aircraft by the end of next year. And of course, I don't know if all 63 will come on time, but just the sheer number shows you that we are now really seeing customer benefits and also financial benefits starting next year of the catch-up of our airplane deliveries, including the doubts if everything will do as promised until the end of the decade.

Can I maybe just add one more point, Jarrod, just on the yields? I just want to highlight one more time that in the U.S., on an ex-FX base or it's only negative right now due to the U.S.

dollar, actually, if you would do an ex-FX view, we would have a stable yield realized on the North Atlantic. So you can also see the effect there.

First question, Till, just on the costs. I mean, you talked about the consistent cost pressures.

So maybe you could talk about your ex- fuel CASK expectations over H2. And if you're able to walk us through the gross kind of inflationary pressure you still expect to see across those key cost lines?

And then maybe how much -- if you can give the color, how much absolute or percentage benefit you expect from your various initiatives, restructuring programs, et cetera, over the second half? And then just on the demand outlook, I wanted to ask, in terms of Q3 RASK or early bookings for Q4, has the pricing or the RASK backdrop gotten worse, do you think, since you last spoke to us a few months ago?

And in particular, Germany's point-of-sale demand has gotten worse or has decelerated versus earlier this year?

So let me start off on the CASK side. So look, technically, we are not giving kind of specific CASK guidance for the year or for the specific quarters.

Just as a reminder, Q2, obviously, 4.1% CASK increase. Here also, I'd like to add again, excluding FX, it was about 3.5%.

In the first quarter, we have achieved a 3% CASK. And if you now think of the second half, I would describe it in a way that you shouldn't expect any surprises on CASK evolution.

We are benefiting from the ramp-up of the Lufthansa Airlines turnaround plan as we progress throughout the year. And of course, then a question of ASK growth, of course, in terms of fixed cost, the digression plays a role in what ultimately the CASK figure we're going to look like.

But let me be a bit more extensive on the turnaround plan and the progress. We've started, obviously, some months ago.

We've got more than 700 measures. 3/4 of those measures are fully defined, and we've got more than 300 measures now indeed in flight.

It's a very big program. But obviously, it is quite impactful already for this year.

And you can see, and this is a point which I'd like to highlight one more time, is the focus on operational stability, which you can see in punctuality, regularity, has had already a substantial impact on the so-called Iraq effect, which we were basically able to substantially reduce. So this is big progress.

And equally, it's not only cost, and you can see many of the examples on the slide of what we are working on. Also on the revenue side, good progression on ancillaries, higher ancillaries, good progression on what we see on Allegris in terms of yield evolution.

So these are things that set us up for 2026 and beyond as we ramp up to improve and ramp up the growth of the Lufthansa Airlines turnaround program.

I noticed there wasn't time for management to answer Harry's question about RASK and bookings for Q4 and whether the backdrop has gotten worse or not, so I might let you revisit that. The 2 topics I'd like to explore.

First is for Carsten. In Europe, where you've talked about intensifying competition, you're just alluding to Condor adding low-cost services to feed the long haul?

Or is this also competition from other low-cost? And in terms of your lobbying of the government on the high German location costs, do you see any evidence at all of openness to potential change, perhaps through lower aviation taxes?

My second topic is for Till. I wanted to come back to the strong ITA results.

I think I've understood that the nonoperating one-off there meant the contribution was about 4x bigger than it would otherwise have been. So EUR 91 million might have been more like EUR 21 million.

Perhaps you could confirm that. And then looking at what you've said on Slide 10, it sounds like ITA doesn't have any balance sheet hedging for ForEx.

Hence, moves in dollar-euro can mean material unrealized FX gains and losses through the P&L from marking to market release liabilities. I presume that's what happened in Q2.

Perhaps it's a bit soon, Till, but is there anything you might do there, either putting hedging in place or stripping out the unrealized FX moves so that we get a less volatile contribution from ITA within the Lufthansa results?

Jamie, it's Carsten, yes. Well, when it comes to competition in Germany, the biggest competition we actually feel on domestic routes is Deutsche Bahn, the German cost-subsidized railway system, which is very aggressive.

And we do see, due to the short distances between some of the cities, that doesn't really hurt us on the connecting traffic because people still prefer to fly to Frankfurt and Munich. But on point-to-point, we definitely see that.

And with this cost structure in Germany to fly point-to-point, like other airlines have pulled out, and of course, probably doing the same thing in Eurowings, we do see more competition, especially from Deutsche Bahn. When it comes to other competitors, obviously, we take everybody seriously, it from Istanbul, Paris, Dubai, [indiscernible], Berlin, we look with respect to everybody and find our commercial answers.

When it comes to lobbying or location cost, of course, we had a setback just a few days ago when the aviation tax had not yet been reduced. But if I may say, whenever I go to Berlin, people do understand not so much the problem for Lufthansa because they see our numbers and they see that we are able to move towards Rome or Zurich, but they more and more see the problem for the German export-driven economy.

There are parts of Germany, Paderborn, [indiscernible], midsized economic centers, which are cut off from aviation. And I think that argument is working in the heads in Berlin and will eventually feed my optimism that we have seen the worst when it comes to regulatory cost.

Have we seen concrete improvements yet? No.

And Jamie, thanks for the question on the ITA topic. It's true that the about EUR 90 million contribution contains an FX effect, which is about EUR 70 million.

Nevertheless, you can see that also on the operating result, there's a positive contribution already, even if you strip that out this effect. And you're quite right.

When you have probably looked at the results of ITA from last year, you could see that the fleet is largely a lease fleet. And I would phrase it like that.

ITA is currently, for us, a minority shareholding, as you know. And therefore, I would say, at the latest, hedging, of course, would be aligned to the way we look at things and we manage things once we increase our stake to control.

It's true that we are currently also looking at that, but that's for me an open topic at the current stage.

Two for me, please. First one on Allegris, how are new ancillaries revenue from this project tracking versus the plan?

And second, how are the blocked seats going?

Okay. I understood.

The second question was about the blocked seats. We expect this is only a topic on the 787.

We expect the first aircraft to come in September with block seats in business class. A big part of the business class will be blocked.

We will only use the aircraft initially, for example, to destinations like Montreal, where we don't have much business class demand, and we have already put it into the booking system. By the end of the year, the partners, which are Boeing, Collins, and the FAA, expect that certification to be arriving.

So by the end of the year, we hope to release all seats to the market. When it comes to the yield lift, it's in the double-digit framework easily, and we only have 10 aircraft at the time.

So we believe that this will even further increase once we are able to put the aircraft on all the routes where yield upselling abilities exist. And overall, as I mentioned, I think in the numbers, we still have our extraordinary revenues have significantly outperformed our expectations, including Allegris, but not only in Allegris.

So I think the best is yet to come here as well. And this, as you know, was one of the big innovations of Allegro, having differently priced seats in business class.

I even know that some in the capital markets were critical. We are now 5 different seats, and it works not for all 5 the same way.

But for sure, the strategy and the innovation behind it are proving right, and we will further now optimize that with more aircraft to come.

Can you talk a little bit about Discovery or Discover? Where are the numbers?

Where do they sit in? How is it trading?

And, yes. How does it compete against its Strike competitor?

And then my second question might come back to ITA. I'm clearly precise that it made EUR 20 million in the June quarter, benefiting from Easter.

I think just recently, there was a business plan approved by the Board of ITA. So, are you able to offer us any color as to what's in the 5-year business plan?

And in the context of that EUR 20 million profit in the June quarter, can you offer any color on what the expectations for its profits are for this year?

Andrew, it's Carsten, Discover Airlines. We consolidate the numbers in the Lufthansa Airlines.

So we don't show them. But as I mentioned before, and I'm happy to repeat that here, they are profitable.

They are growing both now, not only in Frankfurt but also in Munich, and we expect them to operate up to 33 aircraft by '27. We are just about to also take a decision on the new generation widebodies, which Discover will need to receive to replace the 330-200s for the longest flights, and we are about to do that as well.

So that, I think, is as much as we are willing to, let's say, publish on this. And you know from our previous comments, we are quite happy with how we initially found a niche, but that niche is widening and widening and widening to have leisure-oriented travel out of the German market.

And with the latest stimulus from the German government, we especially expect in this segment, additional fuel for the success of Discover. On ITA, and you may have seen it in some of the disappointed reactions of some of the Italian unions, we were basically having the option of go on value creation first or to go for market share first.

And in the dialogue between ITA and us, we have decided to go for profitability and value creation first, and not stretch the growth of ITA too much. That's what was decided yesterday, and that's what caused some disappointment in unions who were hoping, of course, for even more jobs to be created, which was a little bit in the Italian media today, but we believe that's the right way of going.

And profit outlook for '25, I think it's fair to say this will be the first positive year of ITA, partly due to the first synergies with us, but also due to, of course, a very positive development of the Italian market. And on top of that, we have first synergy effects, which I mentioned in my speech, think about Villata and Miles & More.

We have put the first flights from Lufthansa to ITA due to its lower cost and other things. So I think there is more to come on that.

But already profit in '25, I think, is a black 0, the CEO of ITA calls it. So it's what we also expect a little bit more than 0, to be honest.

And just to flag, I've got the clientele inviting me to welcome you to answer Harry and Jamie's question on Q3 unit revenues, but I'll leave it to you.

Say that again, Andrew? Sorry, we didn't get that.

I think there's a curiosity about, and I think there was a question from Harry and also by Jamie. To what extent do you expect Q3 unit revenues, Q3, Q4 unit revenues, and how are advanced loads?

And what commentary can you offer on unit revenues? I appreciate that you don't guide, but what commentary can you offer?

If we get you right, this will be a CFO answer. We don't guide on RASK, Andrew, and you know that.

So that's why we're wondering if we didn't quite get your question. But let me repeat in qualitative terms what I said before.

We said it in Q1 with very soft data. Now we have better data for Q3, there will be a weakening of lower booking classes towards the U.S., especially in Germany, to a little less degree in Austria and Switzerland, and to almost no degree in the rest of Europe.

So living in Germany, I do believe there surely is an element of media effect on German consumers on the lower end of our price range, spending a vacation in the U.S., who are worried about, let's say, the hospitality of the United States. There have been some crazy stories about immigration, which we try to counterargue by saying that we have no proof of additional problems in U.S.

immigration whatsoever at all the 26 airports we serve. But still, that seems to be an issue, especially in the mind of Germans, interesting enough, not in the mind of our other European travelers going towards the U.S.

from the U.S., of course, we have a little bit of a U.S. dollar effect.

But putting that aside, as Till said before, we see strong demand from the U.S. in all booking classes.

And as a third comment, when it comes to premium, we see no weakening in both directions whatsoever. As a matter of fact, first class is even going better than business class, business class is going better than premium economy, and premium economy better than economy.

So nice staggering there. That's what we can say about the North Atlantic.

Sorry, Till.

And if I may add just one point, of course, at a low level of booking when we look into October, we see also a positive evolution as we see, but this is, of course, on a low seat load factor, respectively, sales.

One comment on that. My perception of living here was at its worst was the Easter days.

Remember when there were the crazy announcements made from the White House, Rose Garden, and people thought globalization would blow up. I think with recent developments, still not all to my liking, but still, I think we see now a rationalization of this question, what's happening on the North Atlantic, and that's maybe already reflected in the October numbers, as Till said, too early on the data point of proof.

But looking at the papers and the media, I think we have seen the worst. And I'm pretty sure that what we have been seeing in Easter is not, and it's proving not to be the trend for the whole future.

I've got a question linked to the previous question. Given the latter booking profile, can you talk about how close-in bookings have evolved at the end of Q2 and start of Q3?

And then secondly, just in MRO, how quickly should we expect cost increases and tariffs to be passed through to customers?

Let me start off maybe with the second question, and then I think the first one we answered already to a large extent in terms of booking evolutions. Look, MRO, as Carsten has explained already in his part, we've made good progress in terms of generally increasing the recovery or pass-through of inflation-related input costs.

You remember that it has been one of the topics we talked about in the past. So there's good progress in terms of new contracts being on a different model, which allows us to recover more of the inflationary cost, and also existing contracts are being renegotiated.

The way I would phrase it is good progress. That's clearly there.

Tariffs are a little bit of a different animal because, of course, this came also relatively short term and appears to be always an almost volatile topic where also parts lists are varying in terms of what tariffs are applied where. Generally, as I said, we suffered in the first half of the year about EUR 20 million headwind from the aluminum and steel tariffs for Lufthansa Technik.

We now need to see the exact definitions of how it' going to play out in the second half of the year. But again, of course, if you just think of the longer term, in the end, this is also an input cost.

If it goes up, there needs to be also a certain way of sharing that or passing it on in the end.

I think it's worth mentioning that both Brussels and Washington have confirmed that not only airplanes are out of the tariff scheme, but also aircraft parts. And they don't seem to be agreeing on much of what they agreed on in Scotland.

But this one, interesting enough, both sides of the Atlantic sent the same messages to the industry, not only airplanes are out also aircraft parts, and that, of course, applies to Lufthansa Technik in a positive way.

Two for me, if I may. One of them is related to ancillaries.

You clearly mentioned quite a good performance and growth year-on-year. I would like to know if all the projects that you intend to roll out are now being completed, or if you are still seeing this type of growth going forward into the full year and end of next year?

And my second question is about the Middle East impact, if it would be possible for you to quantify this impact? And if you are seeing any adjustments in terms of capacity and deals drag from this region?

Yes. Maybe worth mentioning on ancillaries, they are up 25% at Lufthansa Airlines only.

And if you now look at the fact that a big part of that comes from Allegris, and we only have 10 aircraft out of 200 wide-bodies now being Allegris, I think that gives you an idea of how much more there is to come on ancillaries. And also the commercialization due to our improved app and the Lufthansa digital hangar, which is continuously improving our app, I think it's the right tool to take advantage of this.

So in short, yes, we do believe there's much more room for growth. We are very convinced to be seen.

And the second question, sorry, none of us caught. So if you can repeat that, maybe closer to the microphone or a better microphone.

The second question is related to the Middle East. If it would be possible for you to please impact, specify the impact it had on your operations, namely going forward, and any adjustments you're planning to make in terms of capacity and its impact on yields?

Thank you. That is the very last question of our conference.

I was waiting for that question all morning because the Middle East being taken away from us has a huge impact on profitability for us, which is very unfortunate. And there was no question on this whatsoever, yet.

So yes, we're actually starting Tel Aviv tomorrow. And don't forget, for us, in Lufthansa at least, it's not only the traffic between the Middle East and Europe, there's a huge amount of people going on to the North Atlantic of the Middle East, be it Iran, where we are one of the few operators who have flown to Tel Aran at all, but also we are very strong as a group in Tel Aviv.

So yes, this had a huge impact. We're very happy for various reasons to restart tomorrow.

And this is easily a 3-digit number we have lost due to the developments there out of the Middle East, which we are now hopefully able to recover step-by-step, starting, yes, interesting enough, tomorrow.

Thanks to all of you for your interest in dialing in for the questions and for the constructive discussions. Thanks to you, Carsten, and Till for your answers.

We from Investor Relations are looking forward to continuing the dialogue. And to all of those who go on vacation, we wish you a great summer.

Thanks. Talk to you soon.