Lufthansa Group Strategy Investor Day Christoph Franz Chairman of the Executive Board and CEO Zurich, September 21 st, 2011

Transcription

1 Lufthansa Group Strategy Investor Day 2011 Christoph Franz Chairman of the Executive Board and CEO Zurich, September 21 st,

2 Triangle of targets Three key factors for sustainable profitable growth Grow with the market Enhance quality of production Strengthen financial performance 1

3 Airline market growth Lufthansa Group will profit from sound growth rates in airline business Total traffic growth Europe per region (in RPK) North America 1,367 (+3.2 % p.a.) 424 (+3.6 % p.a.) Europe 1,224 (+4.4 % p.a.) 155 (+5.8 % p.a.) Asia 1,380 (+6.6 % p.a.) South America 195 (+6.7 % p.a.) 82 (+5.1 % p.a.) 138 (+4.6 % p.a.) Africa 145 (+5.1 % p.a.) 144 (+5.4 % p.a.) Middle East 255 (+6.0 % p.a.) RPK in bn 2010 Source: Lufthansa, Boeing Current Market Outlook 2011 RPK in bn

4 Aviation vision 2020 Airline landscape in 2020 increasingly globalized, emerging markets growing fastest The Gulf carriers: Pressure on passenger airline and cargo yields on key markets Zombie European flag carriers will disappear or shrink from the twin-attack of low cost carriers and Gulf carriers Further convergence between network and low cost carrier airline business models New generation aircraft (changing aircraft economics and opening of new markets) Cost pressures will continue (rising oil prices and taxes), OEMs will impact the MRO business Further industry consolidation, emergence of mega-carriers National regulatory obstacles will reduce the required pace of international consolidation 3

5 Lufthansa Group Already market leader in most business segments Results Jul 2010 Jun 2011 Revenue 1 (bn EUR) External rev. share Adj. op. margin People Market position Portfolio contribution PAG* Lufthansa SWISS Austrian bmi Germanwings % 3.3 % 58,700 38,800 7,800 6,900 3,900 1,300 #1 Global passenger revenue #4 Global ASKs 24% EU-IK share Central part of our business Cargo % 10.3 % 4,500 #1 Global FTKT (ex. integrators) 20% share ex DE Synergies with belly and sourcing MRO % 6.5 % 19,600 #1 Global independent MRO provider 14% global share Synergies with airline business Joint pressure on OEMs Stabilizing op. result Catering % 3.6 % 29,200 #1 Global Caterer 26% global share Competitive global catering cost IT Services % 1.5 % 2,900 #4 Systems provider 12% global share Aviation IT & Technology supplier Group % 3.7 % 114,900 #1 Global aviation group revenue * Passenger Airline Group Source: Lufthansa Half Year Report Jan.-Jun. 2011, Air Transport World July 2011, annual reports 2010 Note 1 : 12 months figures July 2010-June

6 Governance strengthened Intensifying cooperation in core functions and improving process efficiency Executive Board Group Development Board (GDB) Airline Development Board (ADB) Strategic development of the Group Group Network Team Group Revenue Management Team Group Sales Team Central Aircraft Procurement Group Commercial Airport Relations Team Group Ground Processes Development Team Group Operations Team Group Product Management Team 5

7 Superior earnings structure Solid outperformance of other European airlines over the last decade EBIT margin Lufthansa Group vs. AEA in % 10% 8% EBIT Lufthansa EBIT AEA 6% 4% 2% 0% -2% % -6% Source: AEA 6

8 Earning cost of capital and value creation Our established value based management concept is key Lufthansa Cash Value Added (CVA) * PAG* in m EUR 3500 MRO Cargo Catering IT Services annual CVA 2.1 bn EUR cumulative CVA 1, (*) Passenger Airline Group (*) WACC 2010: 7.9% Source: Lufthansa annual reports ; only major business segments detailed out 7

9 Successful portfolio management We will continue the track record of the last decade Investment & divestment overview (major deals) divest invest Eurowings (24%) Sky Chefs BMI (20%) Equant (72%) Amadeus (10%) Fraport (5%) Eurowings Air (51%) BMI Dolomiti (10%) Swiss Eurowings (25%) Globe- Globe- ground ground (51%) (49%) Amadeus Dtl (66%) DHL (25%) Amadeus Amadeus (13%) (3,6%) Loyalty (53%) Tank & Rast (30%) Fraport (5%) Amadeus (2%) Thomas Cook (50%) Austrian Brussels (45%) JetBlue (16%) BMI (70%) Condor (25%) BMI Source: Lufthansa; dates for divest according date cash injections 8

10 Profitable growth Lufthansa is reflecting its growth options by considering financial implications in order to assure strategic flexibility Lufthansa Group's growth strategy Organic growth Cost Flexibility (Reduce share of fixed expenses) Add new long haul flights, leveraging new aircraft technology Rollover and upgauge fleet on short- and midhaul network Restructure underperforming businesses Partnerships Expand network offer through Star Alliance partners and codeshares Further develop commercial Joint Ventures and strategic partnerships Acquisitions Provide access to growth markets and catchments Strengthen competitive position in strategic regions Acquire strong brands in their markets/segments Participate in industry consolidation Supported by strong financial performance, focus on stability, flexibility and healthy capital structure 9

11 Our Airline Group Strategy Strengthening the Passenger Airline Group through competitive strategies Strengthening our presence in our home markets and key European catchments will enhance our share on long haul connecting traffic through our hubs We will seek to maintain our market leading position in Europe through organic growth and potential partnerships Our short haul and long haul businesses will be further impacted by low cost carriers and the state-run Gulf carriers In each business, we will either refocus, attack or partner to develop a sustainable long term position 10

12 Our Airline Group Strategy Further development of our strong global long haul network, partnering and improvement of short haul profitability Europe Europe North America Focus on extracting benefits from our North Atlantic Joint Venture A++ Improve profitability of short haul flying Divest LH Italia Turnaround Austrian and review BMI Monitor partnership opportunities South America Increase footprint and presence in South America: - Add new destinations to the network - Strengthen relationship with existing partners Africa Strengthen relationship with African Star Alliance partners (Egypt Air, South African Airways & Ethiopian) Add new destinations to the network Asia / Middle East Develop commercial Joint Venture activities in Asia (e.g. with ANA) Strengthen cooperation with existing partners Implement further measures to compete against Gulf carriers 11

13 Partners Star Alliance remains the leading global alliance, with opportunities to bring in more partners Regional traffic per alliance (in passengers, 2010) others Asia North America Europe Africa Middle East Australia South America Source: IATA Airport IS analysis based on directional O&D passengers transported 12

14 Our strategy to shape our position as the European Airline Powerhouse 1. Adjust our portfolio reviewing unprofitable businesses 2. Improve quality of delivery to our customers through product investment and enhanced execution 3. Sustain market leadership positions by pursuing market aligned growth and developing commercial joint ventures 4. Increase focus on profitability strengthening transformation measures and group synergies 5. Make careful investments in our business, safeguarding our investment grade rating 13 To achieve successful profitable growth

15 Disclaimer in respect of forward-looking statements Information published in this presentation with regard to the future development of the Lufthansa Group and its subsidiaries consists purely of forecasts and assessments and not of definitive historical facts. These forward-looking statements are based on all discernible information, facts and expectations available at the time. They can, therefore, only claim validity up to the date of their publication. Since forward-looking statements are by their very nature subject to uncertainties and imponderable risk factors such as changes in underlying economic conditions and rest on assumptions that may not or divergently occur, it is possible that the Group's actual results and development may differ materially from those implied by the forecasts. Lufthansa makes a point of checking and updating the information it publishes. It cannot, however, assume any obligation to adapt forward-looking statements to accommodate events or developments that may occur at some later date. It neither expressly nor conclusively accepts liability, nor gives any guarantee, for the actuality, accuracy and completeness of this data and information. 14

16 Lufthansa Group Strategy Investor Day 2011 Christoph Franz Chairman of the Executive Board and CEO Zurich, September 21 st,