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
	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
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
	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
	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.

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