Assets

18. Goodwill and intangible assets with an indefinite useful life

All goodwill and intangible assets with an indefinite useful life were subjected to a regular impairment test in the 2023 financial year as required by IAS 36. Furthermore, there is the obligation to perform an impairment test if there is an indication of impairment. No indications of impairment were identified in 2023.

The tests were performed at the level of the smallest cash-generating unit (CGU) on the basis of fair value less costs to sell.

All impairment testing is based on approved four-year corporate planning. The assumptions on revenue growth used are based on this planning and external industry-specific sources (for example IATA). On the basis of the financial planning by the individual business units, discounts were made at Group level to reflect the uncertainties in the planning. In the course of Group planning, the discounts were set at approximately 10% (previous year: 6%) of the Adjusted EBIT on a long-term basis and were allocated to the units on a pro rata basis during the impairment tests.

Demand for flights has already increased significantly and the expectation is that available seat-kilometres will return to roughly the same level as before the crisis by the end of 2024. The assumption is that markets will continue to grow until the end of the detailed planning period, but some customer segments, particularly the business travel market, will initially remain below their historic capacities, whereas others, such as leisure travel, will perform better. Further pricing developments, both in sales and purchasing markets, and the ability to pass on rising costs (e.g. due to geopolitical effects, macroeconomic challenges or regulatory measures) are considered to be key success factors. The margins used are based on past experience or were developed on the basis of expected unit revenues and cost-cutting measures. As a rule, futures rates were used for the planning period in connection with fuel and CO₂ costs. However, a higher estimated fuel price of USD 120/barrel was used for the period from 2025. The statutory blending quotas up to 2027 and conservatively estimated prices based on current market premiums were used for SAF blends. At present, there is not considered to be a reliable basis for estimating prices further into the future, but the fundamental assumption is that any additional costs will not result in a lasting margin reduction. Long-term investment rates are based on past experience and take account of the procurement of production resources and their financing as envisaged in fleet planning. Costs of the central functions were charged to the individual units based on their use of these functions.

The weighted average cost of capital is calculated using market data to derive leverage ratios, beta factors and borrowing costs from a peer group that is reviewed annually. A market risk premium of 7.5% was used as a basis (previous year: 7.5%). Regional risks are taken into account by applying appropriate risk premiums.

Intangible assets with indefinite useful lives consist of slots purchased as part of company acquisitions (insofar as they are tradeable) and brand names acquired. Acquired slots have an indefinite useful life due to their lasting legal and economic significance. The carrying amounts of the slots and the brands were included in the impairment test for the smallest cash-generating unit (CGU) to which they are allocated. As described above for goodwill, the impairment tests were then performed on the basis of the corporate planning for all of the assets, including slots and/or brands, of the respective units.

Even if the assumptions for revenue growth are reduced by one percentage point compared with the figures in table ↗ T089 the recoverable amounts for the units are still higher than the carrying amounts. Worsening the scenarios by one percentage point in each case, in terms of planned Adjusted EBIDA margins or the discount rates used for the impairment tests, would also not reduce the recoverable amounts below the respective carrying amounts for these CGUs. The sensitivity analysis takes into account changes in one assumption at a time, with the other assumptions from the original calculation remaining unchanged.

Table T089 summarises the carrying amounts and the assumptions for the tests described above.

19. Other intangible assets

The intangible assets of the LSG group and the AirPlus group included in the sales process were reclassified to assets held for sale in the financial year ↗ Note 33.

Non-capitalised research and development costs for intangible assets of EUR 56m (previous year: EUR 25m) were incurred in the period. Firm orders have been placed for intangible assets worth EUR 1m (previous year: EUR 2m), but they are not yet at the Lufthansa Group’s economic disposal.

20. Aircraft and reserve engines including right-of-use assets

This item includes 97 aircraft with a carrying amount of EUR 2,716m (previous year: 101 aircraft with a carrying amount of EUR 2,977m), which have mostly been sold to and leased back from foreign leasing companies with the aim of obtaining favourable financing conditions. The leasing companies were fully consolidated as structured entities. The Lufthansa Group is entitled to buy the aircraft back at a fixed price and at a given point in time. Another four aircraft (previous year: four) with a carrying amount of EUR 332m (previous year: EUR 359m) were pledged as collateral under loan agreements.

In the reporting year, borrowing costs of EUR 95m (previous year: EUR 42m) were capitalised. The financing rate used was 3.0% (previous year: 1.7%).

The additions relate to the procurement of new aircraft and engines, to right-of-use assets for aircraft and reserve engines amounting to EUR 494m (previous year: EUR 349m) and to the capitalisation of engine maintenance and aircraft overhaul events.

Of the disposals, EUR 434m relates to twelve aircraft that were leased back from the buyer immediately after the sale ↗ Note 23. Eight of these twelve aircraft were received in the reporting year. The disposals of advance payments for aircraft and reserve engines relate to the sale of advance payments for a cargo aircraft that was chartered by Lufthansa on completion and is operated by Aerologic.

Order commitments for aircraft and reserve engines amount to EUR 20.0bn (previous year: EUR 15.8bn). The order commitment mainly increased due to orders for 26 long-haul aircraft and 80 short- and medium-haul aircraft placed in the reporting period. This was offset by down payments and final payments for current orders. For fleet orders, please also refer to the comments in the management report (↗ Fleet and route network).

21. Repairable spare parts for aircraft

The additions for the year (netted against disposals) amounted to EUR 211m (previous year: EUR -17m) for pool material and EUR 153m (previous year: EUR 95m) for non-pool material in the financial year; the net change in depreciation recognised in profit and loss was EUR -42m (previous year: EUR -80m) and EUR -8m (previous year: EUR -29m). Of the depreciation and amortisation expense for the financial year, EUR 0m (previous year: EUR 78m) was for impairment losses.

22. Property, plant and equipment including right-of-use assets

Land at Frankfurt Airport with a carrying amount at amortised cost of EUR 30m is no longer used primarily for the Group’s operations and is therefore classified as an investment property.

The assets of the LSG group and the AirPlus group included in the sales process were reclassified to assets held for sale in the financial year ↗ Note 33.

As in the previous year, there are no charges over land and property. A third-party pre-emption right is registered for land held at EUR 161m (previous year: EUR 167m).

Other property, plant and equipment owned by the Group that did not consist of right-of-use assets was not used as collateral for existing financing arrangements, as in the previous year.

The following items of property, plant and equipment have been ordered, but are not yet at the Lufthansa Group’s economic disposal:

23. Leases

Table T095 shows the carrying amounts of the recognised right-of-use assets and the changes during the reporting period:

The Lufthansa Group mainly leases property, particularly at airports, as well as aircraft and other operating and office equipment. Leases may include renewal and termination options. The terms of the leases are negotiated individually and cover a wide range of different areas. Longer-term leases relate particularly to property. There is a remaining lease term of up to 32 years for land and buildings (previous year: up to 33 years) as of the reporting date. The average remaining term of building leases as of 31 December 2023 was four years (previous year: four years).

The average remaining term of the aircraft leases as of 31 December 2023 was four years (previous year: three years). Right-of-use assets for 15 aircraft were recognised in 2023. This includes the aircraft added in the course of sale-and-lease-back transactions.

The right-of-use assets of the LSG group and the AirPlus group included in the sales process were reclassified to assets held for sale in the financial year ↗ Note 33.

The Lufthansa Group concluded the sale and lease-back of twelve short-haul aircraft from the Airbus A320 family in the fourth quarter of 2023. The aircraft will be leased back for a period of 72 months, with no extension option. The aircraft were between three and seventeen months old at the time of the transaction and are currently operated by Lufthansa Airlines, Lufthansa CityLine and Eurowings. The transactions reflect the Group’s strategy of financing capital expenditure in new aircraft with a mix of cash, Japanese operating leases (JOLCOs) and other leases. The transactions were with entities managed by Clover Aircraft Leasing Company Ltd., Dublin, Ireland and BBAM Aircraft Management LP, San Francisco, USA. Proceeds of EUR 608m were generated by the sale, which are shown in the cash flow statement as cash inflows from investing activities. The right-of-use assets amounted to EUR 166m as of the transaction date and the resulting lease obligation came to EUR 222m. The book gain of EUR 96m resulting from the sale is presented in EBIT. This book gain is not included in Adjusted EBIT.

In the reporting period, the amounts shown in the income statement were as follows:

Some of the Lufthansa Group’s leases for properties and aircraft include renewal options and variable lease payments. They are used to obtain the greatest possible flexibility in terms of capacities. They have not been taken into account in various cases when measuring the lease liabilities, because it is not sufficiently probable that they will be exercised. Potential future lease payments for periods after the exercise date of the renewal options are summarised in table T097:

Where termination options were in place for individual leases, their exercise was considered unlikely, with the result that additional lease payments were already taken into account in the corresponding lease liability.

Amounts included in the cash flow statement are shown in table T098:

Lease payments are shown as cash flows from financing activities unless they are lease payments not included in the measurement of lease liabilities, which are shown as operating cash flow.

The maturity analysis of lease liabilities is shown under financial liabilities, ↗ Note 38.

Information about operating leases in which the Lufthansa Group is the lessor can be found in ↗ Note 7.

24. Equity investments accounted for using the equity method

The investments in associates of the LSG group included in the sales process were reclassified to assets held for sale in the financial year ↗ Note 33.

Individual interests in companies accounted for using the equity method

Tables T100 to T103 contain summarised aggregated data from the income statement and statement of financial position data for the individual material joint ventures accounted for using the equity method.

The functional currency of SunExpress is the euro.

The item “Other” in the reconciliation with the carrying amount for SunExpress primarily includes the difference from the first-time consolidation of the company.

EUR 6m (previous year: EUR 5m) of the earnings of Terminal 2 Gesellschaft mbH & Co. was not recognised through profit or loss in the financial year because the carrying amount was not sufficient. The losses not previously recognised in the carrying amount came to EUR 4m as of 31 December 2023 (previous year: EUR 10m).

Table T104 contains summarised aggregated data from the income statement and the carrying amounts for the individual immaterial joint ventures accounted for using the equity method.

Cumulative losses of EUR 11m (previous year: EUR 24m) at the immaterial joint ventures were not recognised through profit or loss previously, as the carrying amounts of the equity interests were too low. No other losses were incurred in the financial year that could not be recognised through profit or loss.

Table T105 contains summarised aggregated data from the income statement and the carrying amounts for the individual immaterial associated companies accounted for using the equity method.

25. Other equity investments and non-current securities

Shares in related parties include shares in affiliated companies, joint ventures and associates that are not consolidated for reasons of materiality. These shares are carried at amortised cost. Disclosures on the equity investments and long-term securities can be found in ↗ Note 46.

26. Non-current loans and receivables

Non-current loans and receivables are carried at amortised cost.

EUR 142m of the other loans and receivables are owed by the AURELIUS Group. They relate to the disposal of the LSG group and represent deferred purchase price receivables. The term of the loans expires in October 2025 and can be extended by Aurelius until October 2028. The interest rate is 10% p.a. and 12% p.a. from November 2025.

CO₂ emissions certificates valued at EUR 201m (previous year: EUR 0m) were sold and simultaneously repurchased on the market on a forward basis in what are known as repo agreements so that economic ownership of the certificates is maintained. Equivalent other liabilities were recognised in the amount of the consideration received. For the impairment test for emissions certificates, please refer to the disclosures on the cash-generating units (CGU) in ↗ Note 18.

Other receivables include no expected reimbursements for obligations for which provisions have been made (previous year: EUR 2m). As in the previous year, no non-current receivables were used as collateral for liabilities.

27. Inventories

In inventories, EUR 751m (previous year: EUR 623m) comprise non-repairable spare parts for aircraft.

The gross value of written-down inventories as of 31 December 2023 was EUR 1,254m (previous year: EUR 1,077m). Inventories with a carrying amount of EUR 725m (previous year: EUR 614m) are held at their net realisable value. Write-downs to net realisable value of EUR 449m were made at the beginning of the financial year (previous year: EUR 471m). In the reporting year, new valuation allowances were carried out for EUR 95m (previous year: EUR 15m), mostly related to the MRO segment. Valuation allowances of EUR 15m from previous years were reversed (previous year: EUR 22m).

No inventories have been pledged as collateral for loans.

28. Contract assets

The Lufthansa Group recognised the following contract assets in 2023:

29. Trade receivables and other receivables

The decrease in trade receivables stems from the fact that, in line with IFRS 5, all assets and liabilities attributable to the AirPlus group have been presented separately in the statement of financial position as of 31 December 2023 as “Assets held for sale” and “Liabilities in connection with assets held for sale”. The disposal of the Catering segment was also responsible for the decline in this item. The AirPlus group accounted for EUR 795m of the trade receivables from companies outside the Group in the previous year and the discontinued Catering segment for EUR 183m.

No receivables have been used as collateral for loans. In the previous year, receivables of EUR 191m acted as collateral for a loan of EUR 120m structured as an asset-backed security.

There are factoring agreements for some of the trade receivables. Since the risk of late payment and default was almost completely transferred to the factor, the EUR 47m in assets transferred (previous year: EUR 61m) was fully derecognised, apart from a residual amount of EUR 1m (previous year: EUR 1m).

Impairment testing for the emissions certificates took place in the course of impairment testing for the cash-generating units (CGU) that hold them ↗ Note 18.

As in the previous year, there is no collateral for trade receivables and no reimbursements are expected for obligations for which provisions have been recognised.

For disclosures on impairment losses, credit risks and term structures, we refer to ↗ Note 46.

Other receivables of EUR 164m (previous year: EUR 70m) serve to secure negative market values of derivatives.

30. Deferred charges and prepaid expenses

Deferred charges and prepaid expenses consist of various services paid for in advance for subsequent periods.

31. Current securities

Current securities are fixed income securities, participation certificates, shares and investments in money market funds.

32. Cash and cash equivalents

This item includes cash and cash equivalents and fixed-term deposits with a term of up to three months. Bank balances in foreign currencies are translated at the exchange rate on the balance sheet date.

33. Assets held for sale

Assets and liabilities held for sale as of 31 December 2023 are made up as follows:

All the assets and liabilities held for sale stem from the contract signed on 20 June 2023 with SEB Kort Bank AB from Stockholm for the sale of the AirPlus Group. The AirPlus Group is part of Additional Businesses and Group Functions.

Assets with a carrying amount of EUR 1,109m were held for sale as of 31 December 2023.

This includes shares in VISA Inc. held as financial investments, which were recognised at fair value without recycling. Their market value went up by EUR 5m in the reporting period.

EUR 346m from reclassified trade receivables serve as collateral in connection with financing arrangements.

The liabilities related to the assets held for sale amount to EUR 670m.

In shareholders’ equity, the other neutral reserves item includes accumulated income of EUR 30m attributable to the assets and liabilities of the AirPlus group held for sale. They relate to mark-to-market reserves and differences from foreign currency translation.

Financial debt includes a loan with a carrying amount of EUR 273m and a market value of EUR 272m. The remaining financial debt consists of lease liabilities.

Assets held for sale in the previous year included six Airbus A380s which were sold to Airbus in financial year 2023.