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 T95 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 32,325m (previous year: EUR 31,439m) includes cargo and mail revenue of EUR 3,701m (previous year: EUR 3,569m). The Logistics business segment accounted for EUR 3,189m (previous year: EUR 3,054m) of this amount. Other cargo and mail revenue of EUR 513m (previous year: EUR 515m) stems from marketing belly capacities on passenger flights by SWISS.

4. Other revenue

Table T96 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 decline is chiefly due to a smaller number of capitalisable maintenance events.

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 as 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. Significant reversals related to accruals for products and services, and to provisions for legal disputes and maintenance obligations. 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 quality defects, compensation awarded following litigation and insurance payments for insured losses.

Income from the disposal of non-current assets includes EUR 50m in book gains on aircraft sold (previous year: EUR 102m). This income was primarily generated in connection with the sale and lease-back of 15 aircraft from the Airbus A320 family and four Airbus A350s. ↗ Note 22. This item also includes income from the retrospective adjustment to the disposal proceeds for the AirPlus group in the amount of EUR 28m.

The increase in revenue from Group services relates mainly to the cost charges in connection with the integration of ITA Airways.

The Lufthansa Group recognised rental and lease income of EUR 44m in 2025 (previous year: EUR 36m). Table T99 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, price increases for government-levied aviation security and airport fees, higher purchasing prices in the MRO business segment and higher expenses for emissions certificates. The order volume awarded to joint venture partners and external third parties also increased, driven by Lufthansa Technik’s revenue growth. For this reason, expenses for external MRO services increased. They were offset by lower prices for fuel and reduced expenses in connection with irregularities in flight operations.

Depreciation and impairment on repairable spare parts are also reported within expenses for other raw materials, consumables and supplies. In the 2025 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 of EUR 244m (previous year: EUR 479m) are recognised as a reduction in traffic revenue in accordance with IFRS 15.

Other purchased services include expenses from the new tour operator business at Eurowings, costs for lounge operations, licence fees in the maintenance business and costs in connection with the miles programme.

8. Staff costs

The increase in staff costs has mainly resulted from the almost 3% rise in the number of employees, salary increases under collective bargaining agreements and accruals for bonus payments.

The annual average is calculated pro rata temporis from the time companies are first consolidated or deconsolidated. The previous year’s annual average includes 616 employees at AirPlus.

9. Depreciation, amortisation and impairment

Total depreciation, amortisation and impairment came to EUR 2,407m (previous year: EUR 2,378m).

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 2025 financial year, impairment losses of EUR 38m related to Passenger Airlines (EUR 34m), the MRO business segment and Additional Businesses and Group Functions (EUR 2m respectively).

No impairment losses were recognised in other operating expenses or in the result of investments accounted for using the equity method (previous year: EUR 11m).

10. Other operating expenses

The decline in other operating expenses stems mainly from lower foreign currency losses.

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

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 as the net result of exchange rate hedging relationships for financial liabilities.

Rental and maintenance expenses include, in particular, rent payments for non-capitalised IT equipment and the maintenance thereof in the amount of EUR 360m (previous year: EUR 337m) along with other maintenance expenses for properties of EUR 197m (previous year: EUR 180m).

The impairment on receivables of EUR 30m (previous year: EUR 43m) mainly related to customer receivables at direct risk of default. Impairments of EUR 5m (previous year: EUR 8m) 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 4m (previous year: EUR 15m) relates to costs in connection with company transactions.

11. Result from equity investments

The increase in the result of joint ventures accounted for using the equity method stems mainly from the pro rata result at Italia Trasporto Aereo, S.p.A. (ITA Airways), which was consolidated for the first time in the reporting year. It was offset by the lower pro rata result from Günes Ekspres Havacilik Anonim Sirketi (SunExpress). The other entities accounted for using the equity method improved their results year-on-year by a total of EUR 36m.

The result of joint ventures accounted for using the equity method does not include any impairment losses (previous year: EUR 11m).

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

12. Net interest

Net interest includes 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 declined by EUR 67m year-on-year. Interest income was down by EUR 110m, above all due to lower interest income for tax refunds in connection with tax audits. Interest expenses fell by EUR 43m, in particular due to lower interest expenses for aircraft financing.

13. Other financial items

In 2025, as in the previous year, contrary changes in the fair value of hedged items and hedge instruments in fair value hedges resulted in what was almost a break-even result.

The decline in the item for securities measured “at fair value through profit or loss” is attributable to negative effects from the market valuation through profit or loss of the issued convertible bond (EUR ⁠-⁠13m, previous year: EUR 49m) and to lower income from securities investments (EUR 29m, previous year: EUR 75m).

There were positive exchange rate effects of EUR 98m from unhedged financial liabilities in the 2025 financial year, particularly from the changes in the US dollar exchange rate.

14. Income taxes

Tax expenses of EUR 564m (previous year: EUR 176m) were incurred in the 2025 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 2025 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.

Deutsche Lufthansa AG, as the ultimate parent company that is domiciled for tax purposes in Germany, falls within the scope of the Act to Ensure a Global Minimum Taxation for Corporate Groups since it exceeds the applicable limits. 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 an income tax provision of EUR 45m (previous year: EUR 30m) for the 2025 financial year in profit or loss. Tax effects that could result from the application of the rules on global minimum taxation 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 1,920m (previous year: EUR 1,576m) and the profit before tax from discontinued operations of EUR 7m (previous year: loss of EUR 7m). As in the previous year, of the income tax expenses shown, EUR 564m (previous year: EUR 176m) is entirely attributable to taxes on continuing operations.

The Act for an Immediate Tax Investment Programme to Strengthen Germany as a Business Location was adopted in July 2025 and cuts the corporation tax rate in increments from 15% to 10% in the years 2028 to 2032. Measurement of medium and long-term temporary differences and tax loss carry-forwards was analysed and adjusted based on the timing of the expected reversal in the respective differences or the use of the tax loss carry-forwards, and the tax rate specific to that year. This resulted in a total reduction of EUR 447m in the deferred tax assets recognised in the consolidated statement of financial position. EUR 224m of the total stemmed from the remeasurement of deferred taxes on loss carry-forwards and EUR 223m from temporary differences. EUR 308m was expensed and EUR 139m was recognised in equity without effect on profit or loss.

Including both continuing and discontinued operations, the effective tax rate in 2025 was 29% (previous year: 11%). Measurement effects from the future reduction in the corporation tax rate were the main reason for the higher effective tax rate.

Deferred tax liabilities were not recognised on temporary differences in connection with shares in subsidiaries in the amount of EUR 219m (previous year: EUR 199m). This is because these temporary differences are not expected to reverse in the foreseeable future.

Deferred tax assets and liabilities in 2025 and 2024 were allocable to the following items:

For companies reporting a tax loss in the reporting year or the prior year, a net surplus of deferred tax assets over deferred tax liabilities of EUR 1,902m (previous year: EUR 2,349m) was recognised as of 31 December 2025. EUR 532m of this surplus (previous year: EUR 699m) related to deferred tax assets on deductible temporary differences and EUR 1,370m (previous year: EUR 1,650m) to deferred tax assets for tax loss carry-forwards. 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 1,902m (previous year: EUR 2,348m) 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. It therefore envisages a return to taxable profits from 2027 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-forwards 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 for tax purposes within ten years of the reporting date.

Deferred tax assets on loss carry-forwards of EUR 223m (previous year: EUR 217m) 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, taking into account the increasing risks over time.

In addition to recognised deferred tax assets, Group companies have tax loss carry-forwards and temporary differences totalling EUR 4,473m (previous year: EUR 5,014m) for which it has not been possible to recognise any deferred tax assets.

The usage restrictions for non-capitalised tax loss carry-forwards and the resulting deferred taxes are distributed as follows:

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 2025 has not yet had any effect on earnings per share, since the strike price for the options was higher than the average price of shares in Deutsche Lufthansa AG in the reporting period.

In view of their relatively small amount, the shares potentially created by the share-based remuneration introduced in 2023 have an effect of less than one euro cent on earnings per share.

As the parent company of the Group, Deutsche Lufthansa AG distributed a dividend of EUR 0.30 per share in the 2025 financial year. It reported a distributable profit of EUR 396m for the 2025 financial year (previous year: EUR 359m) under the HGB. At the Annual General Meeting to be held on 6 May 2026, the Executive Board and Supervisory Board will table a proposal to pay a dividend of EUR 0.33 per share. This represents a total dividend of EUR 396m (previous year: EUR 359m) or 30% (previous year: 26%) of the net profit for 2025 attributable to the Company shareholders.