Applicability and disclosures in accordance with the EU Taxonomy Regulation (EU) 2020/852

The EU Taxonomy Regulation is a standardised classification system for green economic activities within the scope of the EU action plan on “financing sustainable growth” and defines activities for the EU’s six environmental objectives:

1. Climate change mitigation
2. Climate change adaptation
3. Sustainable use and protection of water and marine resources
4. Transition to a circular economy
5. Pollution prevention and control
6. Protection and restoration of biodiversity and ecosystems

According to the definitions provided in the EU Taxonomy, economic activities are “environmentally sustainable” if they “contribute substantially” to the achievement of one or more of the six above-mentioned environmental objectives, “do no significant harm” to the achievement of the EU’s five other environmental objectives and comply with the “minimum safeguards” for occupational health and safety and human rights.

Technical screening criteria are applied in the analysis of whether an economic activity contributes substantially to one of the objectives and does no significant harm to the achievement of the other five objectives. Potential overlaps were identified and analysed to avoid any double counting of economic activities.

Reporting on the type of taxonomy-eligible and taxonomy-aligned economic activities is in line with the following delegated regulations:

• Delegated Regulation (EU) 2021/2139
• Delegated Regulation (EU) 2021/2178
• Delegated Regulation (EU) 2023/2485
• Delegated Regulation (EU) 2023/2486

Economic activities are “taxonomy-eligible” if they can be allocated to an economic activity described in the EU Taxonomy Regulation, while they are “taxonomy-aligned” if they meet the technical screening criteria and comply with minimum social safeguards.

In accordance with Delegated Regulation (EU) 2023/2485, detailed information on the taxonomy alignment of the economic activities in the aviation sector which are relevant to the Lufthansa Group has to be disclosed for the first time for the 2024 financial year. Including these economic activities the Lufthansa Group has carried out an assessment of its taxonomy-aligned revenues, capital expenditure (CapEx) and operating expenditure (OpEx) for the first time.

In accordance with the EU Taxonomy Regulation and relevant delegated acts, the Lufthansa Group reports below on the proportion of its revenue, capital expenditure (CapEx) and operating expenditure (OpEx) resulting from its taxonomy-eligible, taxonomy-aligned or taxonomy-non-eligible economic activities and provides additional qualitative and quantitative information.

The EU Taxonomy Regulation and the delegated acts enacted for the purpose of this regulation include phrases and terms whose interpretation remains subject to considerable uncertainty. Clarifications have not yet been published in every instance.

Implementation of the EU Taxonomy Regulation

Analysis of taxonomy eligibility

The Lufthansa Group’s economic activities were initially allocated to the activities as described in the EU Taxonomy Regulation. The taxonomy-eligible activities were identified according to the descriptions provided in the Regulation.

The taxonomy-eligible economic activities of the Lufthansa Group were then analysed, and the activities material to the Group were identified. As in the previous year, the reportable economic activities of the Lufthansa Group relate to Environmental Objective 1 (climate change mitigation). There are no significant economic activities for any of the other environmental objectives.

In line with German Accounting Standard (DRS) 20.32, the following relevant taxonomy-eligible economic activities of the Lufthansa Group have been identified:

• 3.21 Manufacturing of aircraft
• 6.19 Passenger and freight air transport
• 7.7 Acquisition and ownership of buildings

The share of revenue, CapEx and OpEx accounted for by the identified economic activities in relation to the overall activities of the Group was determined in accordance with the requirements of the EU Taxonomy Regulation. Revenue is defined as net sales in accordance with IFRS (International Financial Reporting Standards), as shown in the consolidated income statement, and therefore only relates to fully consolidated entities. Accordingly, companies accounted for using the equity method and other equity investments have not been included. Further information on revenue can be found in the ↗ Notes to the consolidated financial statements, Notes to the consolidated income statement.

CapEx is calculated on a gross basis, i.e. without including revaluations or depreciation, amortisation or impairment. CapEx comprises capital expenditure in non-current intangible or tangible assets, including goods purchased through asset or share deals, as presented in the consolidated statement of financial position. Taxonomy-eligible CapEx has been calculated while taking the underlying accounts into consideration and in combination with the asset classes.

OpEx includes non-capitalisable expenses recognised in the consolidated income statement, such as research and development, building renovation work, short-term leasing, maintenance and repairs and all other direct expenses resulting from the maintenance of property, plant and equipment to ensure the operational readiness of the taxonomy-eligible and taxonomy-aligned assets.

Analysis of taxonomy alignment

As a first step, the reportable economic activities were reviewed based on the respective technical screening criteria to determine whether they make a substantial contribution to climate change mitigation. This is true for economic activities 3.21 Manufacturing of aircraft and 6.19 Passenger and freight air transport.

The extent to which economic activity 6.19 Passenger and freight air transport makes a substantial contribution to climate change mitigation also depends on the use of sustainable aviation fuel (SAF). The Group fleet is used when determining the aircraft that meet the technical screening criteria for making a substantial contribution to climate change mitigation solely through the use of SAF. The amount of aviation fuel with a 9% SAF blend is determined based on the SAF acquired by the Lufthansa Group in the reporting year for its own use. The actual fuel consumption per aircraft in the financial year was used to identify the aircraft that could have been operated with the SAF blend and thereby meet the technical screening criteria for a substantial contribution to climate change mitigation.

For economic activity 7.7 Acquisition and ownership of buildings, there is no substantial contribution to climate change mitigation based on the technical screening criteria.

As an additional step, compliance with the “do no significant harm” (DNSH) criteria in respect of the other environmental objectives was analysed for economic activities 3.21 Manufacturing of aircraft and 6.19 Passenger and freight air transport. For economic activity 3.21, fulfilment of these criteria was primarily reviewed at the level of the consolidated Lufthansa Technik production locations at which maintenance, repair or overhaul activities are conducted on aircraft or parts thereof that make a substantial contribution. For economic activity 6.19, the DNSH criteria were mainly reviewed by the Lufthansa Group airlines and at Group level. Economic activities 3.21 and 6.19 were found not to cause significant harm with regard to environmental objectives 2 to 4 and environmental objective 6.

The generic DNSH Criterion 5 (Appendix C) stipulates that in order to qualify as taxonomy-aligned, an economic activity may not lead to the production, marketing or use of certain chemical substances. These also include chemical substances that are used in aviation for safety reasons. The Lufthansa Group has made all efforts to analyse whether the requirements have been met, and came to the conclusion that the substances are used within the framework of national or European exemptions and under strictly controlled conditions.

The Lufthansa Group points out that, in its opinion and that of other companies concerned, some interpretations of the requirements are disputed, which results in uncertainty when determining whether economic activities are taxonomy-aligned. The current opinion is that the requirements of the EU Taxonomy Regulation go beyond the requirements of the European regulations mentioned in Appendix C and therefore make it practically impossible to carry out the economic activities in a taxonomy-aligned way. Against this background, the official reporting template does not show any taxonomy-aligned activities for the aviation criteria.

However, alternative figures which point to the potential for taxonomy-alignment are shown, assuming that the requirements of the EU Taxonomy Regulation are equivalent to those of the European regulations referenced in Appendix C.

There was no review of the DNSH criteria in respect of economic activity 7.7, as the criteria for a substantial contribution were not met.

The Lufthansa Group uses established processes and documentation at Group level to verify compliance with minimum safeguards, which is also required as part of the implementation of the EU Taxonomy Regulation. Through policies and related processes and monitoring measures, the Lufthansa Group ensures that the EU Taxonomy Regulation’s requirements relating to respect for human rights (including labour rights), avoidance of bribery and corruption, taxation and fair competition are met in full. The companies are obliged to implement processes and monitoring measures. Responsibility for compliance lies with the respective companies.

Calculating the key performance indicators (KPIs)

3.21 Manufacturing of aircraft

Lufthansa Technik AG and the Lufthansa Technik group’s equity investments provide technical aviation services relating to the manufacture, maintenance, repair and overhaul of aviation components.
↗ MRO business segment.

Taxonomy-eligible revenue from this economic activity is generated in connection with maintenance, repair and overhaul services and the sale of spare parts. The resulting revenue of EUR 4,898m represents 13% of the Group’s overall revenue. ↗ T001 Key figures Lufthansa Group.

Taxonomy-eligible revenue increased year-on-year by EUR 648m due to higher demand for maintenance and repair services and other products and services from Lufthansa Technik. The proportion of potentially taxonomy-aligned revenue amounted to EUR 273m and thus 1% of the Group’s overall revenue in the reporting year.

Segment capital expenditure attributable to this economic activity in the MRO business segment has been recognised as CapEx. It consists primarily of intangible assets, technical equipment and other operating and office equipment. CapEx consists exclusively of CapEx (a) and at EUR 97m accounts for 2% of the Lufthansa Group’s capital expenditure in the reporting year. Taxonomy-eligible CapEx thus increased by EUR 20m, primarily because of increasing investing activity. Taxonomy-aligned capital expenditure accounts for EUR 13m or 0.3% of the Lufthansa Group’s capital expenditure.

OpEx as defined by the EU Taxonomy Regulation comprise the direct expenses incurred in order to ensure the operational readiness of the taxonomy-eligible assets. This economic activity accounts for EUR 53m (previous year: EUR 51m) and thus 1% of the Group’s total maintenance expenses. Potentially taxonomy-aligned OpEx for this economic activity came to EUR 4m, a share of under 1% of the Group’s total OpEx.

To determine the potentially taxonomy-aligned OpEx, total OpEx expenses are weighted according to the share of potentially taxonomy-aligned revenue before the global replacement ratio is applied.

This economic activity was not assessed for taxonomy alignment in the previous year.

6.19 Passenger and freight air transport

This economic activity comprises the key business activities of the Lufthansa Group which relate to the Passenger Airlines ↗ Passenger Airlines business segment and Logistics ↗ Logistics business segment business segments.

The revenue recognised as taxonomy-eligible for this economic activity corresponds to the traffic revenue shown in the financial reporting. At EUR 31,439m, this represents 84% of the total revenue of the Lufthansa Group. ↗ T001 Key figures Lufthansa Group

Compared with the previous year, taxonomy-eligible revenue increased by EUR 1,513m, primarily due to higher passenger numbers and freight volumes. The potentially taxonomy-aligned revenue amounted to EUR 3,154m and thus 8% of the Group’s overall revenue.

The CapEx for this economic activity consists solely of CapEx (a) and includes spending on aircraft and reserve engines, rights-of-use to aircraft and reserve engines, aircraft under construction and advance payments for aircraft and reserve engine orders. At EUR 3,912m, this accounts for 86% of the Lufthansa Group’s total capital expenditure. ↗ T115 Aircraft and reserve engines

The increase of EUR 123m stems from the larger number of new aircraft put into service by the Lufthansa Group airlines. Potentially taxonomy-aligned capital expenditure accounts for EUR 2,822m or 62% of total capital expenditure.

In connection with this economic activity, OpEx comprises the direct expenses incurred to ensure the operational readiness of aircraft and engines of the Lufthansa Group airlines as well as the charter costs paid in the context of wet lease agreements. Where these services were provided by Group companies rather than by the airlines themselves, consolidation effects are taken into account in the OpEx calculation. At EUR 3,366m, 93% of the Lufthansa Group’s total OpEx relates to this economic activity.

The increase in taxonomy-eligible OpEx of EUR 765m stems not only from higher staff and material costs but also the first-time recognition of wet lease costs for the use of third-party aircraft.

Potentially taxonomy-aligned OpEx for this economic activity came to EUR 670m, a share of 18% of the Group’s total OpEx.

This economic activity was not assessed for taxonomy alignment in the previous year.

7.7 Acquisition and ownership of buildings

No reportable revenue is realised through the acquisition and ownership of buildings. The scope of this economic activity exclusively relates to internal requirements.

All the buildings and rights of use to buildings and installations covered by this economic activity were included in the calculation of the taxonomy-eligible CapEx. This CapEx is classified exclusively as category (c) according to the definition in the EU Taxonomy Regulation. CapEx was assessed to determine whether it meets the technical screening criteria (alignment check). On balance it was found not to be taxonomy-aligned.

Taxonomy-eligible CapEx came to EUR 202m in the reporting year, a decline of EUR 34m on the previous year. It represents 4% of the Lufthansa Group’s total capital expenditure.

Taxonomy-eligible property maintenance work included in OpEx went up year-on-year by EUR 22m to EUR 180m. It therefore represents 5% of the Group’s total OpEx.

The Lufthansa Group does not conduct any business activities within the meaning of Delegated Regulation (EU) 2022/1214 in the gas and nuclear energy sectors and has therefore not disclosed the specific reporting template.