Notes to the segment reporting

44. Notes to the reporting segments and segment data
Notes to the reporting segments

As of 31 December 2023, the Lufthansa Group operated in three reporting segments, which constitute its Group activities. The segments are defined in line with the internal reporting and management structure. The airline activities were combined in their respective reporting segments based on the similarity between the economic characteristics of the individual airlines, such as network and sales structures, as well as customers and services. The Passenger Airlines segment comprises Lufthansa German Airlines, SWISS, Austrian Airlines, Brussels Airlines and Eurowings, including the equity interest in SunExpress. Further information about the individual airlines can be found in the Group management report ↗ Passenger Airlines segment.

The Logistics segment comprises the scheduled airfreight activities of the Lufthansa Cargo group. Lufthansa Cargo is Europe’s leading cargo airline.

The MRO segment is a leading global provider of maintenance, repair and overhaul services for civil and commercial aircraft and is represented by the Lufthansa Technik group. Aircraft Maintenance and Engineering Corporation (AMECO), which was previously presented in the MRO segment, has formed part of the Additional Businesses and Group Functions in the Company’s internal reporting since the start of the current financial year. The figures for the previous year have been adjusted accordingly.

The Catering segment sold in the reporting year, represented by the LSG Lufthansa Service/Sky Chefs group, is a leading airline caterer and also offers catering services in the retail segment as well as related services and logistics. Due to the disposal, the figures for the Catering segment are eliminated in the consolidation column of the reconciliation and are not part of the figures in the Group column, which only shows the continuing operations. The disposal of the segment also meant that the previous year’s figures were adjusted in the reconciliation column to consolidated figures in the segment reporting.

Business activities not allocated to a reporting segment are presented in table ↗ T138, in the “Additional Businesses and Group Functions” column, along with the income and expenses of central Group functions. They include the income and expenses of Lufthansa Commercial Holding GmbH, the Lufthansa AirPlus group, the Lufthansa Systems group, the Lufthansa Aviation Training group and other Group companies.

Notes to segment data and internal management

The accounting policies of the reporting segments are the same as those described in ↗ Note 3.

The Lufthansa Group measures the performance of its segments using both segment result indicators: EBIT and Adjusted EBIT. EBIT is made up of the IFRS operating result and the result from equity investments. Adjusted EBIT is obtained by correcting EBIT for gains and losses on the disposal of assets, write-downs and write-backs and earnings attributable to other periods in connection with pension obligations (plan adjustments and plan settlements), expenses for staff-related restructuring measures, material extraordinary legal costs not resulting from normal business operations, material costs in connection with company transactions and material other expenses based on extraordinary external events.

Sales and revenue between reporting segments are based on arm’s length prices. Administrative services are charged as cost allocations.

For information on external traffic revenue, see ↗ Note 4.

The result of the equity valuation for the segment’s equity investments is part of its segment result. However, from a Group perspective, it is attributed to the financial result rather than the operating result.

Capital employed largely comprises segment assets, adjusted for derivative financial instruments, cash and cash equivalents and deferred tax items less non-interest-bearing debt.

The reconciliation column includes both the effects of consolidation activities and the amounts resulting from different definitions of segment item contents compared with the corresponding Group items. Eliminated segment revenue generated with other consolidated segments is shown in the reconciliation column for revenue.

The amounts in the reconciliation column for Group EBIT include the effects of consolidation activities on profit or loss in which income and expense do not figure for two companies at the same amount, or in the same period.

T138 SEGMENT INFORMATION FOR THE 2023 REPORTING SEGMENTS
  Passenger Airlines Logistics MRO Catering Total reportable operating segments Additional Businesses and Group Functions Reconciliation Group6)
in €m             Not allocated Consolidation5)  
                   
External revenue 27,632 2,927 4,389 1,888 36,836 485 -1,879 35,442
of which traffic revenue 26,701 2,775 29,476 450 29,926
Inter-segment revenue 705 50 2,158 66 2,979 435 -3,414
Total revenue 28,337 2,977 6,547 1,954 39,815 920 -5,293 35,442
Other operating income 1,306 113 481 37 1,937 2,325 -1,275 2,987
Total operating income 29,643 3,090 7,028 1,991 41,752 3,245 -6,568 38,429
Operating expenses 27,730 2,933 6,383 1,945 38,991 3,499 -6,530 35,960
of which cost of materials and services 16,687 2,063 3,844 770 23,364 428 -3,429 20,363
of which staff costs 5,426 419 1,559 811 8,215 906 -811 8,310
of which depreciation and amortisation 1,725 182 157 62 2,126 113 -11 2,228
of which other operating expenses 3,892 269 823 302 5,286 2,052 -2,279 5,059
Results of equity investments 1) 120 62 -17 9 174 48 -9 213
of which result of investments accounted for using the equity method 125 11 -24 9 121 9 -9 121
Adjusted EBIT 2) 2,033 219 628 55 2,935 -206 -47 2,682
Reconciliation items 31 -5 -2 24 -46 9 -13
Impairment losses/gains -38 1 -40 -77 -4 42 -39
Effects from pension provisions and restructuring -13 -4 3 -1 -15 -7 -22
Earnings from asset disposal 81 -2 12 39 130 4 -33 101
Other reconciliation items 1 1 -16 -14 -39 -53
EBIT 2,064 214 628 53 2,959 -252 -38 2,669
Other financial result                 -352
Profit/loss before income taxes                 2,317
Capital employed 3) 8,496 2,335 4,056 267 15,154 1,445 -399 16,200
of which from investments accounted for using the equity method 256 43 150 449 29 -13 465
Segment capital expenditure 4) 3,095 191 137 35 3,458 30 121 3,609
of which from investments accounted for using the equity method 19 19 19
Employees at end of period 60,924 4,152 22,870 50 87,996 8,681 96,677
Average number of employees 59,331 4,122 21,925 16,475 101,853 8,411 110,264
                     
1) The result from equity investments does not include any impairment losses on investments accounted for using the equity method.
2) For reconciliation from Adjusted EBIT to EBIT ↗ T023, in the Group management report.
3) The capital employed results from total assets adjusted for non-operating items (deferred taxes, positive market values, derivatives), less non-interest bearing liabilities (including trade payables and liabilities from unused flight documents) and, as of the reporting year, less cash and cash equivalents.
4) Investment in intangible assets and property, plant and equipment, as well as in loans to and shares in companies. Investment is shown without capitalised borrowing costs.
5) Consolidation includes elimination of discontinued Catering segment.
6) Figures show continuing operations (except average number of employees).
T138 SEGMENT INFORMATION FOR THE 2022 REPORTING SEGMENTS
in €m Passenger Airlines Logistics MRO Catering Total reportable operating segments Additional Businesses and Group Functions Reconciliation Group7)
                Not allocated Consolidation5)  
                   
External revenue 21,8925) 4,582 4,004 1,903 32,381 409 -1,895 30,895
of which traffic revenue 20,7055) 4,430 25,135 729 25,864
Inter-segment revenue 8685) 45 1,546 57 2,516 242 -2,758
Total revenue 22,760 4,627 5,550 1,960 34,897 651 -4,653 30,895
Other operating income 1,025 106 401 51 1,583 2,117 -1,327 2,373
Total operating income 23,785 4,733 5,951 2,011 36,480 2,768 -5,980 33,268
Operating expenses 24,100 3,171 5,383 2,015 34,669 3,050 -5,948 31,771
of which cost of materials and services 14,492 2,295 3,066 784 20,637 298 -3,005 17,930
of which staff costs 4,584 425 1,379 833 7,221 835 -833 7,223
of which depreciation and amortisation 1,766 170 178 77 2,191 117 -109 2,199
of which other operating expenses 3,258 281 760 321 4,620 1,800 -2,001 4,419
Results of equity investments 1) 15 386) -14 -7 326) -16 7 23
of which result of investments accounted for using the equity method 33 86) -14 -9 186) -42 9 -15
Adjusted EBIT 2) -300 1,6006) 554 -11 1,8436) -298 -25 1,520
Reconciliation items 21 -25 -56 -171 -231 -46 176 -101
Impairment losses/gains -29 -15 -174 -218 -15 177 -56
Effects from pension provisions and restructuring5) 51 -20 19 -1 49 -7 2 44
Earnings from asset disposal 2 -1 11 6 18 20 -5 33
Other reconciliation items -3 -4 -71 -2 -80 -44 2 -122
EBIT -279 1,5756) 498 -182 1,6126) -344 151 1,419
Other financial result                 -170
Profit/loss before income taxes                 1,249
Capital employed 3) 7,230 2,1726) 3,825 435 13,6626) 1,381 -138 14,905
of which from investments accounted for using the equity method 125 446) 161 41 3716) 21 392
Segment capital expenditure 4) 2,032 254 99 40 2,425 45 -45 2,425
of which from investments accounted for using the equity method 37 37 37
Employees at end of period 56,762 4,085 20,411 20,218 101,476 8,033 109,509
Average number of employees 56,054 4,088 20,116 18,709 98,967 7,922 106,889
                     
1) The result from equity investments does not include any impairment losses on investments accounted for using the equity method.
2) For reconciliation from Adjusted EBIT to EBIT ↗ T023, in the Group management report.
3) The capital employed results from total assets adjusted for non-operating items (deferred taxes, positive market values, derivatives), less non-interest bearing liabilities (including trade payables and liabilities from unused flight documents) and, as of the reporting year, less cash and cash equivalents.
4) Investment in intangible assets and property, plant and equipment, as well as in loans to and shares in companies. Investment is shown without capitalised borrowing costs.
5) Figures adjusted due to the reclassification of the Catering segment to discontinued operations. Consolidation column includes elimination of discontinued operations.
6) Figures adjusted due to segment reassignment of Aircraft Maintenance and Engineering Corporation.
7) Group column only includes continuing operations (except average number of employees at end of period). Figures adjusted due to the reclassification of the Catering segment to discontinued operations.
Notes on geographical regions in 2023

The allocation of traffic revenue to geographical regions is based on the original location of sale. Non-current assets are allocated according to the location of the relevant asset. The allocation of other revenue to the individual regions is based on the geographical location of the customer.

The regions are defined on a geographical basis. As an exception to this rule, traffic revenue generated in Turkey is attributed to Europe.

The Lufthansa Group controls its air traffic operations on the basis of network results and not on the basis of regional earnings contributions. Consequently, the presentation of regional segment results is of no informational value for the Lufthansa Group.

A presentation of traffic revenue generated in the Passenger Airlines and Logistics segments by traffic region, rather than by original location of sale, is included in the information on the respective segments in the management report.

External revenue, non-current assets and capital expenditure are as follows:

T139 EXTERNAL REVENUE AND NON-CURRENT ASSETS BY REGION
  2023 2022
in €m Europe North America Central and South America Asia / Pacific Middle East Africa Group Europe North America Central and South America Asia / Pacific Middle East Africa Group
                             
Traffic revenue  1) 20,173 5,482 612 2,694 450 515 29,926 17,131 4,588 640 2,514 498 493 25,864
Other revenue 2,403 1,511 223 984 270 125 5,516 2,211 1,561 146 791 239 83 5,031
Non-current assets 2) 3) 4) 21,455 151 19 102 2 2 21,731 19,919 460 51 208 2 8 20,648
Capital expenditure on non-current assets 3) 3,593 25 3 17 3,638 2,367 31 3 7 1 2,409
                               
1) Traffic revenue is allocated according to the original location of sale.
2) Non-current assets include property, plant and equipment and intangible assets with the exception of repairable spare parts for aircraft.
3) Aircraft are allocated according to their location of registration.
4) Including right-of-use assets in accordance with first-time application of IFRS 16.

The figures for the main countries are as follows:

T140 EXTERNAL REVENUE AND NON-CURRENT ASSETS BY COUNTRIES
    2023 2022
in €m Germany USA Germany USA
Traffic revenue  1) 8,915 4,842 7,674 4,092
Other revenue 894 1,190 916 1,326
Non-current assets 2) 3) 14,956 92 14,271 382
Capital expenditure on non-current assets 3) 2,505 15 1,877 25
           
1) Traffic revenue is allocated according to the original location of sale.
2) Non-current assets include property, plant and equipment and intangible assets with the exception of repairable spare parts for aircraft.
3) Aircraft are allocated according to their location of registration.

In the 2023 financial year and in the previous year, no more than 10% of Lufthansa Group revenue was generated with any one customer.

Lufthansa Group Annual Report 2023