Notes to the consolidated income statement

3. Traffic revenue

In the consolidated income statement, the Lufthansa Group attributes revenue to the segments of Passenger Airlines, Logistics, MRO and Additional Businesses and Group Functions.

Table T095 provides a breakdown of traffic revenue according to the different business models.

The increase in traffic revenue was due to higher sales. Lower yields for certain routes have had a negative impact.

Traffic revenue of EUR 31,439m (previous year: EUR 29,926m) includes cargo and mail revenue of EUR 3,569m (previous year: EUR 3,225m). The Logistics business segment accounted for EUR 3,054m (previous year: EUR 2,775m) of this amount. Other cargo and mail revenue of EUR 515m (previous year: EUR 450m) stems mainly from marketing belly capacities on passenger flights by SWISS.

4. Other revenue

Table T096 provides a breakdown of other revenue by category (type of service) and geographical distribution.

MRO services make up the majority of external revenue in the MRO business segment. Other revenue in the MRO business segment – from the sale of material and hiring out material and engines, as well as logistics services – classified as other services.

Other revenue also includes revenue from customer contracts that are fulfilled over a given period. These are mainly MRO and IT services.

5. Changes in inventories and work performed by entity and capitalised

Other own work capitalised relates to aircraft and engine overhauls carried out within the Group. The year-on-year upward trend stems from an increase in the number of capitalisable maintenance events in conjunction with mainly inflation-related price rises.

6. Other operating income

Foreign exchange gains (excluding financial liabilities) mainly include gains from differences between the average rate for the month as of the transaction date and the payment date, along with foreign exchange gains from measurement at the closing rate. Income from exchange rate hedging is also recognised here. Correspondingly, foreign exchange losses from these transactions are reported under other operating expenses. ↗ Note 10. The foreign currency effects of financial liabilities are recognised in other financial items, in the context of the net results from exchange rate hedging relationships for financial liabilities.

Income from the reversal of provisions and accruals relates to a number of provisions and accruals recognised in previous years that have not been fully used. In the reporting year and in the previous year, the main reversals related to accruals for products and services, and to provisions for onerous contracts, bonus payments, legal disputes and warranties. Expenses from insufficient provisions recognised in prior years are presented together with the primary expense type to which they relate.

Income from compensation for damages stems mainly from compensation from suppliers for exceeding contractually agreed maintenance costs and insurance payments for damage to aircraft.

Income from the disposal of non-current assets includes EUR 102m in book gains on aircraft sold (previous year: EUR 108m). This income was primarily generated in connection with the sale and lease-back of 15 aircraft from the Airbus A320 family. ↗ Note 22. This item also includes the gain on the disposal of the AirPlus group in the amount of EUR 92m.

Income from the reversal of impairments on receivables mainly related to the MRO and Passenger Airlines business segments. In contrast to earlier expectations, receivables from customers for which defaults were considered to be highly probable as of the last reporting date did turn out to be recoverable.

The Lufthansa Group recognised rental and lease income of EUR 36m in 2024 (previous year: EUR 36m). Table T099 shows the contractual lease payments for future periods.

Miscellaneous other operating income includes items not attributable to any of the aforementioned categories.

7. Cost of materials and services

The increase in the cost of materials and services is largely due to the growth in business volume as well as price increases linked to inflation. This was offset by lower prices for fuel expenses.

Depreciation and impairment on repairable spare parts are also reported within expenses for other raw materials, consumables and supplies. In the 2024 financial year, as in the previous year, there were no impairment losses or valuation allowances.

Expenses for flight irregularities includes accommodation and meals in the case of delays, for instance, or payments for damaged luggage. Direct compensation payments to customers are recognised as a reduction in traffic revenue in accordance with IFRS 15.

Other purchased services include costs for lounge operations and costs in connection with the miles programme.

8. Staff costs

The increase in staff costs has mainly resulted from the almost 7% rise in the number of employees (adjusted for the sale of the catering business), salary increases under collective bargaining agreements and one-off payments. This was offset by the decrease in variable remuneration components.

The annual average is calculated pro rata temporis from the time companies are first consolidated or deconsolidated. The figures for the previous year include 16,475 employees as an average figure over the course of the year, and, on the reporting date, 50 employees in the Catering business segment.

9. Depreciation, amortisation and impairment

Total depreciation, amortisation and impairment came to EUR 2,378m (previous year: EUR 2,242m).

The slight increase in depreciation and amortisation reflects the aircraft and reserve engines received as well as right-of-use assets for aircraft and reserve engines.

In the 2024 financial year, impairment losses of EUR 41m related to Passenger Airlines (EUR 13m) and the MRO business segment (EUR 28m). Additional impairment losses with a volume of EUR 11m (previous year: EUR 0m) related to investments accounted for using the equity method. These are shown in the result from equity investments. ↗ Note 11

No impairment losses were recognised within the scope of other operating expenses (previous year: EUR 32m).

10. Other operating expenses

In particular, the increase in other operating expenses results from higher sales and marketing costs, as well as a rise in crew travel expenses as flight operations escalated. Higher foreign currency losses have also increased other operating expenses.

Foreign exchange losses (excluding financial liabilities) mainly consist of losses from exchange rate differences between monthly average rates on the transaction date and on the payment date, expenses from exchange rate hedges and foreign exchange losses from measurement at the exchange rate on the closing date. ↗ Note 6. The foreign currency effects of financial liabilities are recognised in other financial items in the context of the net results of exchange rate hedging relationships for financial liabilities.

Staff-related expenses also include travel and training costs for Group employees and the costs of outside staff.

Rental and maintenance expenses include, in particular, rent payments for non-capitalised IT equipment and the maintenance thereof in the amount of EUR 337m (previous year: EUR 328m) along with other maintenance expenses for properties of EUR 180m (previous year: EUR 158m).

The impairment on receivables of EUR 43m (previous year: EUR 32m) mainly related to customer receivables at direct risk of default. Impairments of EUR 8m (previous year: EUR 1m) were also recognised for general default risks applying the expected credit loss model defined in IFRS 9.

Of consulting and legal expenses, a total of EUR 15m (previous year: EUR 39m) relates to costs in connection with merger and aquisition transactions.

11. Result from equity investments

The result from equity investments accounted for using the equity method mainly stems from Günes Ekspres Havacilik Anonim Sirketi (Sunexpress) and Terminal 2 Gesellschaft mbH & Co oHG. The year-on-year decrease resulted, in particular, from a fall in Sunexpress’ earnings. In the previous year, its earnings figure had been significantly influenced by one-off tax income from the introduction of an inflation accounting in the tax balance sheet. The other entities accounted for using the equity method reported a net result of zero overall.

Of the net income from joint ventures accounted for using the equity method, EUR 11m (previous year: EUR 0m) related to impairment losses on shares in the MRO business segment.

Income and expenses from profit and loss transfer agreements include apportionments of taxes.

12. Net interest

Net interest comprises interest income and interest expenses – calculated using the effective interest method in accordance with IFRS 9 – from financial assets and liabilities not classified as at fair value through profit or loss.

Net interest improved year-on-year by EUR 199m. This was attributable, in particular, to decisions made by fiscal courts in favour of the Lufthansa Group in connection with tax audits, resulting from the reimbursement of interest-bearing past tax payments and the reversal of provisions for interest risks.

13. Other financial items

In 2024, as in the previous year, contrary changes in the time value of hedged items and hedge instruments in fair value hedges resulted in what was almost a break-even result.

For US dollars, the Lufthansa Group is in a net payer position as regards currency risks from planned aircraft purchases. This is because purchase price payments are dollar-denominated. Changes to the timing of planned aircraft purchases make the investment hedges partially ineffective. Changes in USD exchange rates in the 2024 financial year resulted in expenses of EUR 56m (previous year: EUR 105m) in the item “Ineffective portion of derivatives used as cash flow hedges”.

The increase in the item for securities measured “at fair value through profit or loss” is attributable, in particular, to higher income from the market measurement of the issued convertible bond (EUR 49m; previous year: EUR 20m).

14. Income taxes

Tax expenses of EUR 176m (previous year: EUR 380m) were incurred in the 2024 financial year. These are made up as follows:

Current income taxes include corporation tax, the solidarity surcharge, trade tax, the minimum tax and other income taxes paid outside Germany.

The tax rates used to calculate deferred taxes abroad in the 2024 financial year were unchanged from the previous year at 3.5% to 35.0%. For measuring deferred taxes, the relevant taxation rules in force or adopted as of the balance sheet date are used.

The Act to Ensure a Global Minimum Tax for Corporate Groups was passed in Germany with effect from 1 January 2024. Deutsche Lufthansa AG, as the ultimate parent company, is domiciled for tax purposes in Germany and exceeds the applicable limits. It therefore falls within the scope of the Act. Affected foreign business entities (subsidiaries, permanent establishments and joint ventures) are subject to local minimum tax laws insofar as national legislation has been implemented in the countries in question. Foreign business entities without national minimum tax legislation fall within the scope of the German Minimum Tax Act at the level of the ultimate parent company via the “income inclusion rule” (IIR). On the basis of the available tax information for specific countries, the Lufthansa Group has recognised a tax provision of EUR 30m for the 2024 financial year in profit or loss. Tax effects that could result from the application of global minimum taxation rules are not taken into account when measuring the amount of deferred tax assets and liabilities to be recognised.

Table T109 shows the reconciliation from the expected to the effective, recognised tax expense. The expected tax expense is calculated by multiplying profit before income taxes by a tax rate of 25% (previous year: 25%). This rate is calculated as the average estimated value for the tax group of the Group parent company, made up of a tax rate of 15.825% (previous year: 15.825%) for corporation tax/solidarity surcharge and 9.175% for trade tax (previous year: 9.175%). The portion of trade tax related to foreign air transport operations is deducted when calculating the trade tax rate, particularly in the case of the Group parent company with its head office in Germany.

The assessment base for the expected income tax expenses comprises profit before tax from continuing operations of EUR 1,576m (previous year: EUR 2,317m) and the loss before tax from discontinued operations of EUR 7m (previous year: loss of EUR 261m). Of the income tax expenses shown, EUR 176m (previous year: EUR 380m) is entirely attributable to taxes on continuing operations. In the previous year, tax income of EUR 13m was attributable to discontinued operations.

Including both continuing and discontinued operations, the effective tax rate in 2024 was 11% (previous year: 18%). The lower effective tax rate has mainly resulted from tax-free income from investments and foreign income, results of tax audits and the sale of shares and, on the other hand, the non-capitalisation of deferred tax assets on loss carry-forwards.

Deferred tax liabilities were not recognised on temporary differences in connection with shares in subsidiaries in the amount of EUR 328m (previous year: EUR 153m). This is because these temporary differences are not expected to reverse in the foreseeable future.

Deferred tax assets and liabilities in 2024 and 2023 were allocable to the following items:

For companies reporting a tax loss in the reporting year or the prior year, a net surplus of deferrred tax assets over deferred tax liabilities of EUR 2,349m (previous year: EUR 3,011m) was recognised as of 31 December 2024. This surplus is made up of EUR 699m (previous year: EUR 1,068m) in deferred tax assets on deductible temporary differences and of EUR 1,650m (previous year: EUR 1,943m) in deferred tax assets on tax loss carryforwards. Where there is a history of losses, an assessment of whether there would be sufficient taxable income in future was made on the basis of forecasts for taxable income. Deferred tax assets were only recognised to the extent that sufficient future taxable income was deemed probable.

EUR 2,348m (previous year: EUR 2,956m) of the deferred tax assets related to the tax group of Deutsche Lufthansa AG. The basis for this approach was long-term tax planning based on current corporate planning which also reflects external forecasts, e.g. from the industry association IATA. The planning assumes that the losses incurred in recent years were due to an accumulation of external factors (pandemic, supply and system partner bottlenecks, wars in Ukraine and the Middle East) whose simultaneous incidence is exceptional and will not be repeated over the next few years. This does not call into question the basic long-term profitability of the industry and in particular the Deutsche Lufthansa AG tax group. Deutsche Lufthansa AG has shown in the past that positive tax results could be achieved over long-term periods. A return to positive tax results is therefore expected from 2026 and in subsequent years. The potential use of this net surplus was assessed on the basis of these external and internal indicators and using various risk scenarios for future tax results. For the significant deferred tax assets on loss carry-forwards the analysis reflects the fact that tax loss carry-fowards do not expire under current tax law, but their use for tax purposes may still be ruled out for other reasons and that uncertainty in this respect increases with the length of the planning period. Deferred tax assets on loss carry-forwards are therefore only recognised to the extent that they are actually expected to be used within ten years of the reporting date.

A further EUR 217m (previous year: EUR 82m) related to Austrian Airlines companies. For the analysis of the Austrian tax group as well, an individual analysis of the risk situation was implemented, thereby taking into consideration historical tax results and further corporate plans. Since Austrian Airlines has reported stable positive tax results over the past few years and the reversal of all deferred tax assets would take an extraordinarily long time, the Lufthansa Group continues to assume only partial recoverability in this case also. Here too, a usage period of ten years was assumed for the capitalisation of deferred tax assets after offsetting against existing tax liabilities.

In addition to recognised deferred tax assets, Group companies have tax loss carry-forwards and temporary differences totalling EUR 5,014m (previous year: EUR 3,746m) for which it has not been possible to recognise any deferred tax assets. Among other things, these amounts include a notional interest deduction on equity for Maltese entities whose use is not considered to be sufficiently certain.

The majority of the loss carry-forwards and tax credits of EUR 5,008m (previous year: EUR 3,715m) for which no deferred tax assets have been recognised can be used for an indefinite period, while a small portion will expire after 2034.

15. Profit/loss from discontinued operations

As in the previous year, the profit / loss from discontinued operations resulted from the sale as of 31 October 2023 of the Lufthansa Group’s business activities in its Catering segment to an acquisition entity of the private equity company Aurelius Investments Limited. In the reporting period, this resulted from a subsequent purchase price adjustment for the transaction. As of the date of preparation for the financial statements, the parties had not yet completed their negotiations on possible further purchase price adjustments.

16. Earnings per share

Basic/diluted earnings per share are calculated by dividing consolidated net profit by the weighted average number of shares in circulation during the financial year. When determining the average number of shares, the shares bought back and reissued for employee share programmes are included in the calculation on a pro rata basis.

The convertible bond issued in 2020 has not yet had any effect on earnings per share, since the strike price for the options was higher than the average price of Deutsche Lufthansa AG's shares during the reporting period.

In view of their relatively small amount, the shares potentially created by the share-based remuneration introduced in 2023 do not have any effect on earnings per share either.

As the parent company of the Group, Deutsche Lufthansa AG reported a distributable profit of EUR 359m for the 2024 financial year (previous year: EUR 3,383m) according to German GAAP (HGB). At the Annual General Meeting to be held on 6 May 2025, the Executive Board and Supervisory Board will table a proposal to pay a dividend of EUR 0.30 per share. This represents a total dividend of EUR 359m (previous year: EUR 359m) or 26% (previous year: 21%) of the net profit for 2024 attributable to the Company shareholders.