Outlook for the Lufthansa Group

Lufthansa Group assumes that growth will continue in the 2024 financial year

On the basis of the forecasts shown for the performance of the overall economy and the sectors in which the Group operates, the Lufthansa Group assumes that the positive course of business in the reporting year will continue in the 2024 financial year. This expectation is based in particular on the ongoing strong demand in the Passenger Airlines segment, which is reflected at the start of 2024 in the form of continued positive developments in new bookings. Orders in the MRO segment also indicate that demand remains strong.

Outlook subject to material uncertainties

In view of the short booking cycles in the passenger business, the fact that freight business is driven mainly by the spot market, and uncertainties in the macroeconomic and geopolitical environment, the financial outlook for the Lufthansa Group is subject to a high degree of
uncertainty. The operating and financial performance is also subject to the further developments in Russia’s war of aggression against Ukraine and the Middle East conflict, particularly their impact on fuel costs. Uncertainty in the macroeconomic outlook, particularly the effects on the economy of the steps taken by the major central banks worldwide to combat inflation, may potentially have a material influence on customer demand.

Further capacity expansion planned

Notwithstanding these uncertainties, the Lufthansa Group assumes that demand will rise year-on-year in 2024. In addition to the private travel segment, where demand is forecast to exceed its pre-crisis level, a contribution will come from the further recovery in demand in the business travel segment.

Flight capacity will therefore be expanded. Overall, the Lufthansa Group anticipates that available capacity for Passenger Airlines in 2024 will be around 94% of its pre-crisis level in 2019. The Group assumes that its airlines will receive over 30 new aircraft in 2024 and that the European air traffic system will be stable enough to support the planned increase in traffic.

Lufthansa Group revenue expected to rise significantly

A significant year-on-year increase in revenue is forecast for the Lufthansa Group in 2024.
The main drivers are expected to be further capacity growth in the Passenger Airlines segment and expected growth in the Logistics and MRO segments.

Lufthansa Group forecasts Adjusted EBIT at the same level as the previous year.

The Lufthansa Group expects that revenue growth will be offset by ongoing cost inflation. Overall, the Lufthansa Group therefore anticipates Adjusted EBIT at the same level as the previous year.

The Lufthansa Group stands by its goal of generating a sustainable Adjusted EBIT margin of at least 8%. The Adjusted EBIT margin in 2023 was 7.6%. The Group is striving to achieve this target margin as soon as possible. However, it is not likely to be the case in financial year 2024, as was originally targeted.

The performance of Adjusted ROCE will depend above all on the performance of Adjusted EBIT. The Lufthansa Group expects Adjusted ROCE in 2024 to be roughly on par with the previous year and that the Lufthansa Group will thus create value again for shareholders.

Stable earnings performance expected in all business segments

For the Passenger Airlines segment, the Lufthansa Group is expecting a significant increase in revenue, based on strong demand and planned capacity expansion in 2024. Unit revenues in the Passenger Airlines segment are expected to be stable or slightly down on the previous year.
Economies of scale in the fixed cost base due to capacity expansion, efficiency gains and productivity improvements are expected to make up for the forecast cost increases, particularly in staff costs and fees and charges, so that the unit costs at Passenger Airlines (without expenses for fuel and emissions certificates) are stable year on year. Adjusted EBIT in the Passenger Airlines segment is therefore expected to be at roughly the same level in the 2024 financial year as the previous year.

After the global market returned to normal following the coronavirus pandemic, the Lufthansa Group is expecting a significant increase in revenue again in the Logistics segment. Cost increases due to inflation are forecast to be partially offset by structural savings and efficiency gains.
Adjusted EBIT in the Logistics segment will therefore be roughly at the same level as the previous year.

A significant increase in revenue and Adjusted EBIT at the same level as the previous year is expected for the MRO segment. This reflects the ongoing growth of the MRO market and simultaneous cost increases due to inflation.

Adjusted free cash flow of at least EUR 1.5bn is expected

Net capital expenditure by the Lufthansa Group in 2024 is expected to be roughly the same as in the previous year.
This will mainly be for capital expenditure in aircraft. Cash inflows from sale-and-lease-back transactions will partly offset higher gross capital expenditure. Including the forecast earnings development, Adjusted free cash flow for the Group is projected to be at least EUR 1.5bn in the 2024 financial year, depending largely on the earnings performance and advance ticket payments. Cash flow from advance ticket payments in 2024 depends above all on demand in the second half of the year, which is subject to high forecasting uncertainty at the time of reporting.

Slight decline in net indebtedness forecast for year-end 2024

Net indebtedness at the end of the 2024 financial year is expected to be slightly below the figure at the end of the 2023 financial year. The decline will be less than the free cash flow generated, however, due to the effect of capitalising leases.

No material financing activities planned

Liabilities that mature in 2024 are largely to be repaid from available liquidity. Financing activities are therefore only planned for a minor amount and will be carried out opportunistically. The basic aim is to ensure that liquidity
of EUR 8bn to EUR 10bn is available, including contractually agreed credit lines.

Continuation of dividend payments planned

The Group plans to pay another dividend in the 2024 financial year in line with its dividend policy. This provides for the distribution to shareholders of 20% to 40% of net profit, adjusted for non-recurring gains and losses.

Slight reduction in carbon emissions per passenger-kilometre expected

The Lufthansa Group aims to continue its progress in reducing its environmental impact in 2024. The ongoing modernisation of the fleet is expected to have a positive impact on specific carbon emissions per passenger-kilometre. The Lufthansa Group therefore expects specific carbon emissions to decline slightly year-on-year.

      Result 2023 Forecast for 2024
Revenue €m 35,442 significant increase
Adjusted EBIT €m 2,682 on par with the previous year
Net capital expenditure €m 2,811 on par with the previous year
Adjusted free cash flow €m 1,846 at least
EUR 1.5bn
Net indebtedness €m 5,682 slight decline
Adjusted ROCE % 13.1 on par with the previous year
Specific CO₂ emissions grammes 88.4 slight decline

Lufthansa Group Annual Report 2023