Description
This document about lufthansa investor day 2010 group strategy and development.
Lufthansa Investor Day 2010
Group Strategy and Development
Wolfgang Mayrhuber, Chairman of the Executive Board & CEO
Deutsche Lufthansa AG
Frankfurt am Main / June 28, 2010
Lufthansa Group
2
Our Vision
Where are we going?
… want to grow profitably
…want to distinguish ourselves from competitors in terms of
superior quality, service, operational and technical competency
as well as innovation
…want to maintain a strong balance sheet
…are open for partnerships, whether in alliances or by consolidation
…want to offer products in all segments
…will stay an Aviation Company and an Airline Group
…want to stay flexible, responsive and stable
within a changing environment
…have a leadership strategy that builds on entrepreneurship
and a modular setup
We…
Lufthansa Group
3
Our formula for success is sustainability:
Based on respecting stakeholders’ interests…
Customers
Seamless
travel
149 nations
High quality
products
Employees
Entrepreneurship
Ca. 117,000 Employees
Ca. 80 m customers p.a.
Job security/perspectives
Shareholders
Cash value
added
Ca. 340,000 shareholders
Synergies
Competitive fares
Flexibility
(network)
Take over
responsibility
Fair HR
Profitable growth
Individual caring
Sustainable
development
Team spirit Mobility
à la carte
Lufthansa Group
4
Competency
Our formula for success is sustainability:
…and on creation of value and growth
Innovation
New technologies
Market
Emerging
economies
Stronghold
Europe
Integration
5 local European markets
Rating
Financial stability
Solid asset base
Strong capital structure
Learning organisation
Group development
Modular Setup
Management of networks
Connecting Europe
with the world
Profitable growth
Value creation
Investing in
strategic opportunities
Lufthansa Group
5
Lufthansa
A mobility company with focus on passenger airline business
Catering
IT Services
Logistics
Passenger
Airline Group
Technik
MRO
External revenue
[in m EUR]
73%
10%
10%
6%
1%
59
61
371
558
4,184
586
387
630
462
3,475
External revenue
split
Q1 2009
Q1 2010
Lufthansa Group
6
Growth of passenger air traffic 2008 to 2028 within regions
(in RPK)
660 bn
North America
( +2.5%p.a. to 1.580 bn)
Latin America
( +6.4%p.a. to 430 bn)
Europe
( +3.4%p.a. to 1.280 bn)
Africa
( +6.4%p.a. to 120 bn)
Middle East
( +6.2%p.a. to 140 bn)
Asia/Pacific
( +6.9%p.a. to 3.080 bn)
30 bn
120 bn
980 bn
810 bn
40 bn
RPK in bn 2028
RPK in bn 2008
Growth perspectives – Increasing relevance of Asia,
while Europe and North America relatively lose importance in 2028
Souce: Boeing Current Market Outlook 2009
Lufthansa Group
7
Europe
Africa
( +5.4%p.a. to 360 bn)
Middle East
( +5.5%p.a. to 330 bn)
North America
( +4.6%p.a. to 1.060 bn)
430 bn
180 bn
Latin America
( +4.3%p.a. to 410 bn)
Asia/Pacific
( +5.5%p.a. to 900 bn)
310 bn
130 bn
180 bn
Souce: Boeing Current Market Outlook 2009
Growth perspectives – The North Atlantic traffic remains the intercontinental
market with the highest volume, despite emerging markets
Growth of passenger air traffic 2008 to 2028 between Europe and the world
(in RPK)
RPK in bn 2028
RPK in bn 2008
Lufthansa Group
8
Source: IATA
International passenger and air freight volumes
seasonally adjusted
160
180
200
220
240
260
2005 2006 2007 2008 2009 2010
R
P
K
,
b
i
l
l
i
o
n
s
9
10
11
12
13
14
F
T
K
,
b
i
l
l
i
o
n
s
FTK
RPK
Ash
impact
Business environment
Strong market upturn temporarily interrupted by the ash plume in April…
Lufthansa Group
9
seasonally adjusted
May rebound
Source: IATA
160
180
200
220
240
260
2005 2006 2007 2008 2009 2010
R
P
K
,
b
i
l
l
i
o
n
s
9
10
11
12
13
14
F
T
K
,
b
i
l
l
i
o
n
s
FTK
RPK
Business environment - …but pre-recession levels almost regained
by May with a distinct positive trend…
International passenger and air freight volumes
Lufthansa Group
10
Monthly growth of international air traffic (IATA) and Lufthansa
(% to PY)
Source: IATA, Lufthansa (*) Lufthansa Cargo incl. chartered capacities of Jade Cargo and AeroLogic
Business environment - …and Lufthansa is taking part in recovery, the
cargo segment going ahead
2007
-35
-30
-25
-20
-15
-10
-5
0
5
10
15
20
25
30
Jan Jul Jan Jul Jan Oct
IATA
PKT
FTKT
Passenger volume (RPK)
Fright volume (FTKT)
May
2008 2009 2010
*
Lufthansa Group
11
Business environment
Also a very positive long-term perspective for the airline industry
World
Economy
(GDP)
Airplane
fleet
Number of
passengers
Airline traffic
(RPK)
Cargo traffic
(FTK)
+3.1%
+3.2%
+4.1%
+4.9%
+5.4%
Expected growth of the
world fleet up to 2028:
29,000 new aircraft
3.2 trillion USD
primary investment
Source: Boeing Market Outlook 2009
Annual growth rates 2008 to 2028
Lufthansa Group
12
6
34
167
305
428
345
841
1060
723
1042
28
718
36
383
577
845
1378
1280
130
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Gulf crisis
Leading business
Challenges: Managing volatility, crises and competition
Operating results Lufthansa Group
(in m EUR)
Remark: 1991 – 1996: Profit / loss from operating activities
SARS epidemic
9/11
Financial crisis
Strong winter
Pilots’ strike
Iraq crisis
Economic slump
Performance ATC
Kosovo war
Volcano
H1N1 epidemic
H5N1 epidemic
Pilots’ strike
No-Frills Carriers Middle East Carriers Asian Carriers
V
o
l
a
t
i
l
i
t
y
C
r
i
s
e
s
C
o
m
p
e
t
i
t
i
o
n
Lufthansa Group
13
Sound financials
– e.g. cost base, strong balance sheet, cash reserves, ownership of assets
Flexibility
– e.g. flexible contract volumes, postponement of deliveries
Responsiveness
– e.g. fast capacity adjustments
Opportunities
– e.g. secure the markets, prepare for economic revival
Differentiation
– e.g. product, offer
Group structure
– e.g. cycles, regions, customers
Culture
– e.g. mastering crisis is “state of mind”, avoidance of lay-offs
Entrepreneurship
– e.g. local crisis management ensures appropriate and fast execution
Leading business
Our strategic track proved suitable in the lasting uphill battle
Lufthansa Group
14
6
34
167
305
428
345
841
1060
723
1042
28
718
36
383
577
845
1378
1280
130
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Programm 93
Programm 15
Action plan
Leading business - Consistently carrying out dedicated efficiency and
cost-cutting programs
Operating results Lufthansa Group
(in mEUR)
CLIMB 2011
Lufthansa Group
15
Leading business – The Group‘s successful crisis management
shows in its profitability and its track record of value creation
-15
-10
-5
0
5
10
15
20
2001 2002 2003 2004 2005 2006 2007 2008 2009e
0
300
600
900
1200
1500
2001 2002 2003 2004 2005 2006 2007 2008 2009
Airline industry operating result (in bn USD)
Lufthansa operating result (in m EUR)
Source: IATA
Lufthansa value creation measured as CVA Operating profitability Lufthansa vs. industry
-628
151
654
-858
404
588
386
745
1,546
552
-1500
-1000
-500
0
500
1000
1500
2000
2500
3000
3500
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Total: 2.1 bn EUR
Cash value added (in m EUR)
Lufthansa Group
16
0
5.000
10.000
15.000
20.000
25.000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
0,0
10,0
20,0
30,0
40,0
50,0
60,0
70,0
80,0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Lu
A
B
A
KLM
B
Ib
Total Revenue
(bn EUR)
Passengers
per year
(in m)
Leading business
Lufthansa has become the largest European Aviation Group…
25.0
20.0
15.0
10.0
5.0
0
80
60
40
20
0
Lufthansa
British Airways+Iberia
Air France-KLM
KLM
Air France
British Airways
Iberia
2000 2002 2003 2004 2005 2006 2008 2007 2009 2001
Lufthansa Group
17
-20%
-15%
-10%
-5%
0%
5%
10%
15%
Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
Lufthansa
British Airways
Air France-KLM
Operating margin Lufthansa / British Airways / Air France-KLM
Q2 2007 – Q1 2010 (in %)
Leading business
…with an operating margin above competitors‘ level
Lufthansa Group
18
Leading business – We are well positioned as an innovative, leading
aviation group, committed to better understand customer needs
Lufthansa Group
19
From mid 90s:
Business segments
„Early Days“:
Monolithic Airline
Focussed
Aviation-Group
„Strategic
Management-Holding“
LCAG LSG LHTLSY TC
“flying“ “Services“
LHP
FRA MUC DIR
LX LCAG
LHT
LSY
LSG
FRA
LX
OS
BD
SN
4U
LH Passage
Logistics
Services
Airline-Groupe
B6 XQ
LCAG
LHT
LSY
LSG
Logistics
Services
DIR
MUC
Lufthansa‘s steps towards the future – reflected by its ongoing
organisational development and by its leadership strategy
GG
Lufthansa Group
20
Integration of partners follows the principle of „integrated autonomy“
This combines the strength of a large-scale enterprise and the
advantages of widely autonomous, self-dependent business units,
focussed on their local markets
The partners keep their relevant functions and brands as well as their
entrepreneurial responsibility
Airline Group - Leadership strategy
The principle of integrated autonomy
The competitiveness of passenger transport
requires attracting a sufficient passenger volume
in our homemarket Europe
Therefore, Lufthansa establishes a scalable,
modular Airline Group
Lufthansa Group
21
OS OS LX LX
FRA MUC DIR
e. g. Financial & business services
Strategy & Group development
Airlines / Business segments
Support functions
Definition of ”Principles“
Allocation of resources
Local market perspective
Entrepreneurship
Responsibility for P&L
Realization of synergies
Shared Services
e. g. Multi brand sales
e. g. Brand
e. g. Station management
e. g. Aircraft purchasing, Fuel management
SN SN BD BD
e. g. Network design
e. g. IT services
e. g. Fleet size
B
u
s
i
n
e
s
s
s
e
g
m
e
n
t
s
B
u
s
i
n
e
s
s
s
e
g
m
e
n
t
s
.
.
.
.
.
.
Flexibility
Airline Development Board
(ADB)
Airline Group - Leadership strategy - The Airline Development Board
balances the Group‘s and the segments‘ perspectives
Lufthansa Group
22
Entrepreneurship and further development of the
Airline Group and respective working principles
Learn from and with each other – in an atmosphere
of trust and transparency
Share market intelligence
Airline Group - Leadership strategy
Common principles of the learning organisation
Flatten peaks regarding capacity, investments etc.
Allocate resources appropriately – with a focus on market potentials,
customer‘s preferences, cost etc.
Decide on spearheading activities
Streamline activity plans
Lufthansa Group
23
Airline Group – Leadership strategy
Benefits of a modular Airline Group
Harvesting
Cost Synergies
Synergies through group-wide
intellectual properties
Customer
Benefit
Generation of
Revenue Synergies
Lufthansa Group
24
Fundamental principles of fleet development
defined
- Safeguarding flexibility, increased homogeneity and
staggering of fleet development
- Bundled purchasing and marketing of aircraft
- Standardized financing and accounting within the group
Group Airlines develop competitive strategies and
common management of networks
- Alignment and optimization of local network strategies
- Positioning in the competitive landscape
- Development of overall strategies to safeguard
today‘s as well as future hometurf catchments
Airline Group – Strong cooperation
Jointly developing the group
Lufthansa Group
25
Airline Group – Strong cooperation
Jointly developing the group
Essential principles for group sales approved
- Development of sales channel management
- Joint corporate contracts
- Move under one roof
Lufthansa and Austrian Airlines intensify their
cooperation in cargo business
- Synergies result from an extended range of products &
coordination of business processes
- Founding of a joint subsidiary in Vienna
- Lufthansa Cargo takes over responsibilty for additional
markets
Lufthansa Group
26
Airline Group – Group Airlines enhance their position by structural cost
management while generating synergies
Integration of group airlines
generates substantial synergies
Structural cost management leads to a
permanent reduction of unit costs
„Climb 2011“
1 bn EUR earnings improvement
by end of 2011
Further optimisation
of unit costs
„Austrian Next Generation“:
Further 150 m EUR cost reductions,
focus on volume markets,
maintain position in Eastern Europe
3 year turnaround plan,
25% capacity cut, -800 jobs,
cost cut of 80 m GBP p.a.
Synergies
for the
Group
100 m
EUR
230 m
EUR
20
m EUR
60 m
EUR
Optimization of neighborhood traffic
Integrated sales organization
Joint ground processes (i.e. check-in, handling)
Joint contracts (i.e. fuel, handling, general purchasing)
Alignment of back office processes
Lufthansa Group
27
Market share (RPK) Jan. - Apr. 2010 (in %) and change vs. PY (in PP)
27.8
+0.2
14.4
-0.7
14.3
-1.8
43.5
+2.2
Europe
27.2
+0.8
23.4
-0.4
25.9
-1.3
23,5
+0.9
North Atlantic
29.5
+0.4
31.5
+0.4
15.0
-2.4
24.0
+1.7
Asia/Pacific
6,2
-0,6
38.4
+0.7
12.7
-0.7
Mid
Atlantic
12.1
-0.2
32.5
-3.1
28.3
-2.7
27.2
+6.0
South
Atlantic
32.5
-0.4
23.0
-1.8
18.3
-1.5
26.3
+3.8
Middle East
18.9
+0.7
20.5
-1.6
18.0
+1.6
42.5
-0.8
Africa
Traffic regions in sum
24.4
+0.2
27.3
-0.4
21.1
-1.6
27.3
+1.8
PKT Region: 50,637 Mio.
PKT Region: 16.830 Mio.
PKT Region: 17,013 Mio
PKT Region: 9,627 Mio.
PKT Region: 21,178 Mio.
PKT Region: 46,144 Mio.
PKT overall (AEA):
211.199 Mio
PKT Region: 49,674 Mio.
Lufthansa Airline Group
incl. Brussels Airlines*
Air France / KLM
British Airways + Iberia
Other AEA carriers
(*) Lufthansa Passenger Airlines, SWISS, Austrian Airlines, bmi, Brussels Airlines
Competition – The group strategy strengthens the positioning in important
worldwide sales regions, especially compared to European competitors
42.7
+0.6
International passenger traffic of AEA network carriers, Source: AEA
Lufthansa Group
28
Global growth opportunities - The exposure to emerging markets has
significantly increased in the new Passenger Airline Group setup
Lufthansas exposure to Africa has grown
substantially through consolidation.
265 weekly flights to 38 destinations
More than half of LH long-haul exposure
is to fast recovering emerging markets in
Asia-Pacific, Africa and Middle East
LH exposure by traffic region Jan-Dec 09
Asia/Pacific
18%
Middle East & Africa
9%
Europe 48%
Source: LH, Global Insight
% GDP growth CAGR 2010e – 2013e
+3.3
+4.4%
+5.7%
+1.7%
+5.0%
Americas
24%
Lufthansa Group
29
1.
2.
3.
6.
4.
5.
Outlook
Clear course as leading European network carrier
with global offer and ongoing development of the
Lufthansa Airline Group
Considerable upward trend for Lufthansa Cargo
Sound contributions of MRO, IT Services and Catering
Continuous development of all products and segments
Strong engagement in cooperation with partners (e.g. STAR)
Various growth opportunities
7.
Lufthansa will maintain its successful course based on a
strong brand with qualified personnel, a stable management,
value creation and a clear strategic course
Thank you
Wolfgang Mayrhuber, Chairman of the Executive Board & CEO
Deutsche Lufthansa AG
Frankfurt am Main / June 28, 2010
doc_332967275.pdf
This document about lufthansa investor day 2010 group strategy and development.
Lufthansa Investor Day 2010
Group Strategy and Development
Wolfgang Mayrhuber, Chairman of the Executive Board & CEO
Deutsche Lufthansa AG
Frankfurt am Main / June 28, 2010
Lufthansa Group
2
Our Vision
Where are we going?
… want to grow profitably
…want to distinguish ourselves from competitors in terms of
superior quality, service, operational and technical competency
as well as innovation
…want to maintain a strong balance sheet
…are open for partnerships, whether in alliances or by consolidation
…want to offer products in all segments
…will stay an Aviation Company and an Airline Group
…want to stay flexible, responsive and stable
within a changing environment
…have a leadership strategy that builds on entrepreneurship
and a modular setup
We…
Lufthansa Group
3
Our formula for success is sustainability:
Based on respecting stakeholders’ interests…
Customers
Seamless
travel
149 nations
High quality
products
Employees
Entrepreneurship
Ca. 117,000 Employees
Ca. 80 m customers p.a.
Job security/perspectives
Shareholders
Cash value
added
Ca. 340,000 shareholders
Synergies
Competitive fares
Flexibility
(network)
Take over
responsibility
Fair HR
Profitable growth
Individual caring
Sustainable
development
Team spirit Mobility
à la carte
Lufthansa Group
4
Competency
Our formula for success is sustainability:
…and on creation of value and growth
Innovation
New technologies
Market
Emerging
economies
Stronghold
Europe
Integration
5 local European markets
Rating
Financial stability
Solid asset base
Strong capital structure
Learning organisation
Group development
Modular Setup
Management of networks
Connecting Europe
with the world
Profitable growth
Value creation
Investing in
strategic opportunities
Lufthansa Group
5
Lufthansa
A mobility company with focus on passenger airline business
Catering
IT Services
Logistics
Passenger
Airline Group
Technik
MRO
External revenue
[in m EUR]
73%
10%
10%
6%
1%
59
61
371
558
4,184
586
387
630
462
3,475
External revenue
split
Q1 2009
Q1 2010
Lufthansa Group
6
Growth of passenger air traffic 2008 to 2028 within regions
(in RPK)
660 bn
North America
( +2.5%p.a. to 1.580 bn)
Latin America
( +6.4%p.a. to 430 bn)
Europe
( +3.4%p.a. to 1.280 bn)
Africa
( +6.4%p.a. to 120 bn)
Middle East
( +6.2%p.a. to 140 bn)
Asia/Pacific
( +6.9%p.a. to 3.080 bn)
30 bn
120 bn
980 bn
810 bn
40 bn
RPK in bn 2028
RPK in bn 2008
Growth perspectives – Increasing relevance of Asia,
while Europe and North America relatively lose importance in 2028
Souce: Boeing Current Market Outlook 2009
Lufthansa Group
7
Europe
Africa
( +5.4%p.a. to 360 bn)
Middle East
( +5.5%p.a. to 330 bn)
North America
( +4.6%p.a. to 1.060 bn)
430 bn
180 bn
Latin America
( +4.3%p.a. to 410 bn)
Asia/Pacific
( +5.5%p.a. to 900 bn)
310 bn
130 bn
180 bn
Souce: Boeing Current Market Outlook 2009
Growth perspectives – The North Atlantic traffic remains the intercontinental
market with the highest volume, despite emerging markets
Growth of passenger air traffic 2008 to 2028 between Europe and the world
(in RPK)
RPK in bn 2028
RPK in bn 2008
Lufthansa Group
8
Source: IATA
International passenger and air freight volumes
seasonally adjusted
160
180
200
220
240
260
2005 2006 2007 2008 2009 2010
R
P
K
,
b
i
l
l
i
o
n
s
9
10
11
12
13
14
F
T
K
,
b
i
l
l
i
o
n
s
FTK
RPK
Ash
impact
Business environment
Strong market upturn temporarily interrupted by the ash plume in April…
Lufthansa Group
9
seasonally adjusted
May rebound
Source: IATA
160
180
200
220
240
260
2005 2006 2007 2008 2009 2010
R
P
K
,
b
i
l
l
i
o
n
s
9
10
11
12
13
14
F
T
K
,
b
i
l
l
i
o
n
s
FTK
RPK
Business environment - …but pre-recession levels almost regained
by May with a distinct positive trend…
International passenger and air freight volumes
Lufthansa Group
10
Monthly growth of international air traffic (IATA) and Lufthansa
(% to PY)
Source: IATA, Lufthansa (*) Lufthansa Cargo incl. chartered capacities of Jade Cargo and AeroLogic
Business environment - …and Lufthansa is taking part in recovery, the
cargo segment going ahead
2007
-35
-30
-25
-20
-15
-10
-5
0
5
10
15
20
25
30
Jan Jul Jan Jul Jan Oct
IATA
PKT
FTKT
Passenger volume (RPK)
Fright volume (FTKT)
May
2008 2009 2010
*
Lufthansa Group
11
Business environment
Also a very positive long-term perspective for the airline industry
World
Economy
(GDP)
Airplane
fleet
Number of
passengers
Airline traffic
(RPK)
Cargo traffic
(FTK)
+3.1%
+3.2%
+4.1%
+4.9%
+5.4%
Expected growth of the
world fleet up to 2028:
29,000 new aircraft
3.2 trillion USD
primary investment
Source: Boeing Market Outlook 2009
Annual growth rates 2008 to 2028
Lufthansa Group
12
6
34
167
305
428
345
841
1060
723
1042
28
718
36
383
577
845
1378
1280
130
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Gulf crisis
Leading business
Challenges: Managing volatility, crises and competition
Operating results Lufthansa Group
(in m EUR)
Remark: 1991 – 1996: Profit / loss from operating activities
SARS epidemic
9/11
Financial crisis
Strong winter
Pilots’ strike
Iraq crisis
Economic slump
Performance ATC
Kosovo war
Volcano
H1N1 epidemic
H5N1 epidemic
Pilots’ strike
No-Frills Carriers Middle East Carriers Asian Carriers
V
o
l
a
t
i
l
i
t
y
C
r
i
s
e
s
C
o
m
p
e
t
i
t
i
o
n
Lufthansa Group
13
Sound financials
– e.g. cost base, strong balance sheet, cash reserves, ownership of assets
Flexibility
– e.g. flexible contract volumes, postponement of deliveries
Responsiveness
– e.g. fast capacity adjustments
Opportunities
– e.g. secure the markets, prepare for economic revival
Differentiation
– e.g. product, offer
Group structure
– e.g. cycles, regions, customers
Culture
– e.g. mastering crisis is “state of mind”, avoidance of lay-offs
Entrepreneurship
– e.g. local crisis management ensures appropriate and fast execution
Leading business
Our strategic track proved suitable in the lasting uphill battle
Lufthansa Group
14
6
34
167
305
428
345
841
1060
723
1042
28
718
36
383
577
845
1378
1280
130
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Programm 93
Programm 15
Action plan
Leading business - Consistently carrying out dedicated efficiency and
cost-cutting programs
Operating results Lufthansa Group
(in mEUR)
CLIMB 2011
Lufthansa Group
15
Leading business – The Group‘s successful crisis management
shows in its profitability and its track record of value creation
-15
-10
-5
0
5
10
15
20
2001 2002 2003 2004 2005 2006 2007 2008 2009e
0
300
600
900
1200
1500
2001 2002 2003 2004 2005 2006 2007 2008 2009
Airline industry operating result (in bn USD)
Lufthansa operating result (in m EUR)
Source: IATA
Lufthansa value creation measured as CVA Operating profitability Lufthansa vs. industry
-628
151
654
-858
404
588
386
745
1,546
552
-1500
-1000
-500
0
500
1000
1500
2000
2500
3000
3500
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Total: 2.1 bn EUR
Cash value added (in m EUR)
Lufthansa Group
16
0
5.000
10.000
15.000
20.000
25.000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
0,0
10,0
20,0
30,0
40,0
50,0
60,0
70,0
80,0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Lu
A
B
A
KLM
B
Ib
Total Revenue
(bn EUR)
Passengers
per year
(in m)
Leading business
Lufthansa has become the largest European Aviation Group…
25.0
20.0
15.0
10.0
5.0
0
80
60
40
20
0
Lufthansa
British Airways+Iberia
Air France-KLM
KLM
Air France
British Airways
Iberia
2000 2002 2003 2004 2005 2006 2008 2007 2009 2001
Lufthansa Group
17
-20%
-15%
-10%
-5%
0%
5%
10%
15%
Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
Lufthansa
British Airways
Air France-KLM
Operating margin Lufthansa / British Airways / Air France-KLM
Q2 2007 – Q1 2010 (in %)
Leading business
…with an operating margin above competitors‘ level
Lufthansa Group
18
Leading business – We are well positioned as an innovative, leading
aviation group, committed to better understand customer needs
Lufthansa Group
19
From mid 90s:
Business segments
„Early Days“:
Monolithic Airline
Focussed
Aviation-Group
„Strategic
Management-Holding“
LCAG LSG LHTLSY TC
“flying“ “Services“
LHP
FRA MUC DIR
LX LCAG
LHT
LSY
LSG
FRA
LX
OS
BD
SN
4U
LH Passage
Logistics
Services
Airline-Groupe
B6 XQ
LCAG
LHT
LSY
LSG
Logistics
Services
DIR
MUC
Lufthansa‘s steps towards the future – reflected by its ongoing
organisational development and by its leadership strategy
GG
Lufthansa Group
20
Integration of partners follows the principle of „integrated autonomy“
This combines the strength of a large-scale enterprise and the
advantages of widely autonomous, self-dependent business units,
focussed on their local markets
The partners keep their relevant functions and brands as well as their
entrepreneurial responsibility
Airline Group - Leadership strategy
The principle of integrated autonomy
The competitiveness of passenger transport
requires attracting a sufficient passenger volume
in our homemarket Europe
Therefore, Lufthansa establishes a scalable,
modular Airline Group
Lufthansa Group
21
OS OS LX LX
FRA MUC DIR
e. g. Financial & business services
Strategy & Group development
Airlines / Business segments
Support functions
Definition of ”Principles“
Allocation of resources
Local market perspective
Entrepreneurship
Responsibility for P&L
Realization of synergies
Shared Services
e. g. Multi brand sales
e. g. Brand
e. g. Station management
e. g. Aircraft purchasing, Fuel management
SN SN BD BD
e. g. Network design
e. g. IT services
e. g. Fleet size
B
u
s
i
n
e
s
s
s
e
g
m
e
n
t
s
B
u
s
i
n
e
s
s
s
e
g
m
e
n
t
s
.
.
.
.
.
.
Flexibility
Airline Development Board
(ADB)
Airline Group - Leadership strategy - The Airline Development Board
balances the Group‘s and the segments‘ perspectives
Lufthansa Group
22
Entrepreneurship and further development of the
Airline Group and respective working principles
Learn from and with each other – in an atmosphere
of trust and transparency
Share market intelligence
Airline Group - Leadership strategy
Common principles of the learning organisation
Flatten peaks regarding capacity, investments etc.
Allocate resources appropriately – with a focus on market potentials,
customer‘s preferences, cost etc.
Decide on spearheading activities
Streamline activity plans
Lufthansa Group
23
Airline Group – Leadership strategy
Benefits of a modular Airline Group
Harvesting
Cost Synergies
Synergies through group-wide
intellectual properties
Customer
Benefit
Generation of
Revenue Synergies
Lufthansa Group
24
Fundamental principles of fleet development
defined
- Safeguarding flexibility, increased homogeneity and
staggering of fleet development
- Bundled purchasing and marketing of aircraft
- Standardized financing and accounting within the group
Group Airlines develop competitive strategies and
common management of networks
- Alignment and optimization of local network strategies
- Positioning in the competitive landscape
- Development of overall strategies to safeguard
today‘s as well as future hometurf catchments
Airline Group – Strong cooperation
Jointly developing the group
Lufthansa Group
25
Airline Group – Strong cooperation
Jointly developing the group
Essential principles for group sales approved
- Development of sales channel management
- Joint corporate contracts
- Move under one roof
Lufthansa and Austrian Airlines intensify their
cooperation in cargo business
- Synergies result from an extended range of products &
coordination of business processes
- Founding of a joint subsidiary in Vienna
- Lufthansa Cargo takes over responsibilty for additional
markets
Lufthansa Group
26
Airline Group – Group Airlines enhance their position by structural cost
management while generating synergies
Integration of group airlines
generates substantial synergies
Structural cost management leads to a
permanent reduction of unit costs
„Climb 2011“
1 bn EUR earnings improvement
by end of 2011
Further optimisation
of unit costs
„Austrian Next Generation“:
Further 150 m EUR cost reductions,
focus on volume markets,
maintain position in Eastern Europe
3 year turnaround plan,
25% capacity cut, -800 jobs,
cost cut of 80 m GBP p.a.
Synergies
for the
Group
100 m
EUR
230 m
EUR
20
m EUR
60 m
EUR
Optimization of neighborhood traffic
Integrated sales organization
Joint ground processes (i.e. check-in, handling)
Joint contracts (i.e. fuel, handling, general purchasing)
Alignment of back office processes
Lufthansa Group
27
Market share (RPK) Jan. - Apr. 2010 (in %) and change vs. PY (in PP)
27.8
+0.2
14.4
-0.7
14.3
-1.8
43.5
+2.2
Europe
27.2
+0.8
23.4
-0.4
25.9
-1.3
23,5
+0.9
North Atlantic
29.5
+0.4
31.5
+0.4
15.0
-2.4
24.0
+1.7
Asia/Pacific
6,2
-0,6
38.4
+0.7
12.7
-0.7
Mid
Atlantic
12.1
-0.2
32.5
-3.1
28.3
-2.7
27.2
+6.0
South
Atlantic
32.5
-0.4
23.0
-1.8
18.3
-1.5
26.3
+3.8
Middle East
18.9
+0.7
20.5
-1.6
18.0
+1.6
42.5
-0.8
Africa
Traffic regions in sum
24.4
+0.2
27.3
-0.4
21.1
-1.6
27.3
+1.8
PKT Region: 50,637 Mio.
PKT Region: 16.830 Mio.
PKT Region: 17,013 Mio
PKT Region: 9,627 Mio.
PKT Region: 21,178 Mio.
PKT Region: 46,144 Mio.
PKT overall (AEA):
211.199 Mio
PKT Region: 49,674 Mio.
Lufthansa Airline Group
incl. Brussels Airlines*
Air France / KLM
British Airways + Iberia
Other AEA carriers
(*) Lufthansa Passenger Airlines, SWISS, Austrian Airlines, bmi, Brussels Airlines
Competition – The group strategy strengthens the positioning in important
worldwide sales regions, especially compared to European competitors
42.7
+0.6
International passenger traffic of AEA network carriers, Source: AEA
Lufthansa Group
28
Global growth opportunities - The exposure to emerging markets has
significantly increased in the new Passenger Airline Group setup
Lufthansas exposure to Africa has grown
substantially through consolidation.
265 weekly flights to 38 destinations
More than half of LH long-haul exposure
is to fast recovering emerging markets in
Asia-Pacific, Africa and Middle East
LH exposure by traffic region Jan-Dec 09
Asia/Pacific
18%
Middle East & Africa
9%
Europe 48%
Source: LH, Global Insight
% GDP growth CAGR 2010e – 2013e
+3.3
+4.4%
+5.7%
+1.7%
+5.0%
Americas
24%
Lufthansa Group
29
1.
2.
3.
6.
4.
5.
Outlook
Clear course as leading European network carrier
with global offer and ongoing development of the
Lufthansa Airline Group
Considerable upward trend for Lufthansa Cargo
Sound contributions of MRO, IT Services and Catering
Continuous development of all products and segments
Strong engagement in cooperation with partners (e.g. STAR)
Various growth opportunities
7.
Lufthansa will maintain its successful course based on a
strong brand with qualified personnel, a stable management,
value creation and a clear strategic course
Thank you
Wolfgang Mayrhuber, Chairman of the Executive Board & CEO
Deutsche Lufthansa AG
Frankfurt am Main / June 28, 2010
doc_332967275.pdf