Other disclosures

45. Additional disclosures on financial instruments

Financial assets by measurement category

As of the current reporting date, financial assets can be broken down into measurement categories with the following carrying amounts:

The category “At fair value through profit or loss” includes derivatives that do not meet the requirements for applying hedge accounting and are therefore accounted for as stand-alone derivatives. This category also includes equity instruments, consisting of money market funds and equity investments, for which the instrument-specific option of fair value through other comprehensive income without recycling has not been exercised. The debt instruments designated as at fair value through other comprehensive income with recycling relate to the establishment of bond positions as part of the investment of liquidity.

Financial liabilities by measurement category

Financial liabilities can be broken down into measurement categories with the following carrying amounts, with the “at fair value through profit or loss” category including derivatives that do not meet the requirements for hedge accounting and therefore being recognised as stand-alone derivatives. In addition, the instrument-specific option to designate the convertible bond issued in 2025 as at fair value through profit or loss was exercised; its fair value as of the reporting date was EUR 614m. The total change of EUR 14m in the market value of the convertible bond was therefore split into a credit risk-induced share of EUR 4m, which is recognised as an expense in other comprehensive income, and a price-induced share of EUR 10m, which is recognised as an expense in the trading result.

The net result of the various categories of financial assets and liabilities is made up as shown in Table T169.

Table T170 shows the carrying amounts and fair values of the individual classes of financial liabilities. The stated fair values of bonds reflect their market listings (Level 1 of the fair value hierarchy). The fair values for other types of financial liabilities have been calculated using the applicable interest rates for the remaining term to maturity and repayment structures at the reporting date based on the available market information (Bloomberg) (Level 2 of the fair value hierarchy). For other assets and liabilities, non-current receivables, trade receivables and cash in hand carried at amortised cost, the carrying amount is deemed to be a reasonable approximation of the fair value.

Financial assets held at fair value by level of fair value hierarchy

Tables T171 and T172 show financial assets and liabilities held at fair value by level of fair value hierarchy. The levels are defined as follows:

• Level 1: Financial instruments traded on active markets, the quoted prices of which are used for measurement unchanged.
• Level 2: Measurement is made by means of valuation methods with parameters derived directly or indirectly from observable market data.
• Level 3: Measurement is made by means of valuation methods with parameters not based exclusively on observable market data.

In the 2025 and 2024 financial years, the fair value hierarchy for financial assets and liabilities held at fair value was as follows:

Level 3 investments held at fair value through profit or loss included a total of 38 individual investments as of the reporting date (previous year: 37), the acquisition costs of which are the best estimate of fair value for reasons of materiality.

Netting of financial assets and liabilities

The following financial assets and liabilities are subject to global netting agreements and other agreements.

Principles of the hedging policy

As an aviation group with worldwide operations, the Lufthansa Group is exposed to exchange rate, interest rate and fuel price movement risks, as well as to credit and liquidity risks. Limiting these risks by means of systematic financial management is part of Company policy.

Market risk

The major market and price risks to which the Lufthansa Group is exposed are exchange rate fluctuations between the euro and other currencies, interest rate fluctuations in international money and capital markets, and price fluctuations in the crude oil and oil products markets. The hedging policy for limiting these risks is laid down by the Executive Board and documented by internal Group guidelines. It also provides for the use of financial derivatives. The corresponding financial transactions are concluded only with first-rate counterparties.

Foreign exchange risk

For US dollars, the Lufthansa Group is in a net payer position as regards currency risks from its operating business, since fuel payments are dollar-denominated. There is always a net surplus for other currencies. This is especially true of the Chinese renminbi, the British pound sterling, the Japanese yen and the Indian rupee. Depending on market liquidity, currency risks from projected operational exposure are hedged gradually over a period of 24 months by means of futures contracts, which are accounted for as cash flow hedges. At the end of the 2025 financial year, the hedging of operations for the next 24 months was as shown in Table T175.

A fixed proportion of currency risks from capital expenditure on aircraft is generally hedged immediately after the contract is signed. The hedging level is reviewed and increased where necessary, if, over the lifetime of the contract, the exchange rate moves significantly above or below that used to calculate the investment. In the last 24 months before payment, the hedging level is increased in half-yearly steps, reaching 90% by the end. These investment hedges are therefore also accounted for as cash flow hedges. Capital expenditure on aircraft takes place in US dollars and is hedged in euros or in Swiss francs, depending on the functional currency of the Group company making the purchase. There was no exposure in Swiss francs as of the reporting date.

US dollar exposure for capital expenditure as of year-end 2025 was as shown in Table T176.

The sensitivity analysis in Table T177 shows how earnings and shareholders’ equity would have changed had the currencies identified as price risk variables been different from those at the reporting date.

Interest rate risk

The Lufthansa Group seeks to manage interest rate risks by means of a balanced mix of fixed-rate and floating-rate financial instruments in order to limit interest rate fluctuations and optimise net interest. Interest-rate derivatives, including cross-currency interest rate swaps, are used to manage interest rate risk, in order to supplement the portfolio of financial assets and liabilities. The aim is for financial liabilities mainly to bear interest in the functional currency of the Lufthansa Group. A finance committee is responsible for determining the ratio of fixed and floating interest on net debt.

The tables T178 and T179 describe the floating/fixed ratio for non-current borrowing as of financial year-end 2025 after taking into consideration interest rate hedging, as well as the distribution of the nominal volume of interest rate hedges.

The sensitivity analysis in table T180 shows how net profit and equity would have changed had the interest rate identified as a price risk variable been different from the perspective of the reporting date. A symmetric sensitivity of 100 basis points is used given the current interest rate volatility. Stand-alone interest rate derivatives and interest rate derivatives in cash flow hedge accounting have been included. The reason for this is that, in fair value hedge accounting, interest rate derivatives offset the movements in the underlying hedged items.

Fuel price risk

In the 2025 financial year, fuel costs accounted for 17.8% of the Lufthansa Group’s operating expenses (previous year: 19.9%). Significant changes in fuel prices can therefore have a considerable effect on the Lufthansa Group’s result.

Fuel price risk is limited by the use of crude oil and gas oil hedges. As a rule, the exposure is hedged monthly for up to 24 months on a continuous basis by means of spread options. At the same time, forward hedges can be concluded for the price difference between kerosene and crude oil, and between gas oil and crude oil. Executive Board approval may be obtained to extend the hedging period and to increase the monthly hedging volume in order to exploit market opportunities. The target hedging level as of 31 December 2025 is 85%.

Table T181 shows the fuel hedges at financial year-end.

The sensitivity analysis in table T182 shows how equity would have been affected by changes in the market value of hedging instruments held as of the reporting date had the identified risk variable, namely the fuel price, been different. Since hedge accounting rules mean that changes in the market value of the instruments are recognised only directly in shareholders’ equity without effect on profit and loss, the change in the fuel price of the hedges alone has no effect on earnings.

Market values of the derivative financial instruments used for hedging

Hedging instruments designated in hedging relationships are used to hedge exchange rate, interest rate and fuel price risks as of the reporting date. In the financial year, they changed as shown in Table T183.

The market values stated for financial derivatives correspond to the price at which an independent third party would assume the rights and/or obligations from the financial instrument. The fair values of interest rate derivatives correspond to their respective market values, which are measured using appropriate financial and mathematical methods, such as discounting expected future cash flows. Discounting takes market standard interest rates and the residual term of the respective instruments into account. Forward currency transactions and interest rate swaps are individually discounted to the balance sheet date based on their respective forward rates and the appropriate interest rate curve. The market prices of options used to hedge fuel prices are determined using acknowledged option pricing models.

Depending on the hedged exposure, the Lufthansa Group designates interest rate hedges as both fair value hedges and cash flow hedges and accounts for them accordingly. Interest rate swaps are designated as part of a hedging relationship and are not broken down into individual components. Ineffectiveness in these hedging relationships result largely from different parameters in the hedged item and the hedging instrument and the basis spread in cross currency swaps. Ineffectiveness in fair value hedges and cash flow hedges are recognised and presented as part of the financial result, in other financial items.

Derivatives used in the context of fuel hedging to hedge future kerosene purchases are designated as cash flow hedges. The Lufthansa Group applies the IFRS 9 component approach, using crude oil / gas oil, based on Brent ICE / gas oil ICE, as the designated risk component of the hedging instrument. The hedged item is composed of a global crude oil mix / gas oil mix. The base risk between individual crude oil components / gas oil components in the hedging instrument and the crude oil mix / gas oil mix in the hedged item is reduced by rebalancing the volumes that make up the hedged item on a quarterly basis. In 2025, the quarterly rebalancing factors for adjusting the hedged item for crude oil / gas oil were as follows: 1.008/0.993 (Q1), 1.008/0.993 (Q2), 1.007/0.991 (Q3) and 1.006/0.990 (Q4). The Lufthansa Group generally uses options and combinations of options to hedge fuel prices. The intrinsic value of the option is designated as the hedging instrument, so that effective changes in the intrinsic values are recognised in other comprehensive income in the cash flow hedge reserve. The fair value of an option is not designated as a hedging instrument and effective changes in the fair value are therefore recognised as a cost of hedging. Ineffectiveness in fuel price hedges results from the base risk between the crude oil component / gas oil component and the crude oil mix / gas oil mix in the component approach. Ineffectiveness in hedges is recognised and presented as part of the financial result in other financial items.

The Lufthansa Group applies the spot-to-spot method for exchange rate forward transactions designated in cash flow hedges. The spot component of a forward contract is designated as a hedging instrument and effective value changes are recognised in the cash flow hedge reserve. The other effective components of a forward contract, the forward component and the basis spread are presented in a separate OCI component in line with the legal requirements for the cost of hedging. Ineffectiveness in hedging relationships results from changes in the timing of the planned aircraft purchases. Ineffectiveness is presented as part of the financial result in other financial items (↗ Note 13).

The Lufthansa Group uses the hypothetical derivative method to calculate changes in the value of hedged items designated as being part of a hedging relationship.

Derivative financial instruments that do not meet the requirements for applying hedge accounting are measured at fair value through profit or loss. As a rule, these derivatives were originally in an economic hedging relationship with a particular exposure, but the exposure can either not be measured for hedge accounting purposes or no longer exists.

Fair values are exclusively calculated on the basis of recognised financial and mathematical methods, using publicly available market information.

Changes in the market values of derivatives that do not qualify as effective hedging transactions under IFRS 9 can be seen in the income statement and in the overview of other financial items (↗ Note 13).

Liquidity risk

Complex financial planning systems enable Lufthansa to identify its future liquidity position at an early stage. Based on the results of the Group strategy and planning processes, a monthly rolling liquidity plan differentiated by currency is drawn up with a planning horizon of 24 months. This planning method offers an up-to-date picture of anticipated liquidity developments within the Company and corresponding currency effects.

The Lufthansa Group held unused lines of credit as of 31 December 2025 totalling EUR 2,567m (previous year: EUR 2,549m).

The Group takes specific and general measures to safeguard and manage its liquidity to avoid any potential liquidity restrictions that could result from exogenous developments. These include the implementation of monitoring on the basis of detailed, rolling short-term cash plans in order to manage liquidity effectively, and the holding of sufficient funds to cover the current financing requirement. Specific liquidity risks resulting from reimbursements for cancelled flights are also analysed and managed. In addition, liquidity is managed in connection with current orders for goods and services. Transparency is ensured across the Group, including through an early warning system and an escalation process for outstanding receivables, and strict approval requirements apply within the order process.

A maturity analysis for financial liabilities and derivative financial instruments based on undiscounted gross cash flows, including the related interest payments, shows the following projected cash inflows and outflows considered from the reporting date of 31 December 2025. As a result of the hedges used there are generally direct connections between the cash inflows and outflows for the derivative financial instruments shown.

Credit risk

The sale of passenger travel and freight documents mostly takes place via agencies. These agencies are predominantly connected to national clearing systems for billing passenger and cargo sales. The credit rating of the agencies is reviewed by the responsible clearing systems. Due to the broad diversification, credit risk for the agencies is relatively low worldwide. To further reduce credit risk exposure to the agencies, the Lufthansa Group tracks their payment histories and tries to agree on shorter payment deadlines whenever possible, and with the support of the International Air Transport Association (IATA).

Receivables and liabilities between airlines are offset through bilateral arrangements or via an IATA clearing house, insofar as the contracts underlying the services do not explicitly specify otherwise. Systematic settlement of weekly receivables and liability balances significantly reduces the default risk. Fidelity guarantee insurance also covers partial risks within a certain range. Service contracts occasionally require collateral for miscellaneous transactions. All other contractual relationships are subject to credit rules, which, depending on the type and volume of the contract involved, require collateral, credit ratings/references or historical data from prior dealings, particularly payment history, in order to avoid defaults. Credit risks from the MRO business are monitored and managed via a separate credit risk management system. It comprises the calculation, authorisation and monitoring of customer-specific credit limits and the daily monitoring of payments received and receivables past due.

Counterparty risks in connection with credit card companies are monitored closely and incoming payments are reviewed daily. To reduce risks even further, a permanent analysis process examines whether to further tighten credit terms for some settlement partners. In addition to the monitoring of receivables at the Company or business segment level, there is also counterparty monitoring at Group level, with individually assigned limits, in order to identify the accumulation of portfolio risks across the entire Group and take appropriate action where necessary. The maximum credit risk for financial assets from the potential insolvency of customers is their carrying amount.

Besides individual write-downs on receivables if a default event occurs, IFRS 9 requires risk provisions to be recognised for expected losses. The Lufthansa Group’s trade receivables are exposed to external credit risks for which expected losses have already been taken into consideration in accordance with IFRS 9, in addition to individual write-downs. A simplified impairment model based on an impairment matrix is used for the portion of the receivables portfolio that is subject to external credit risks. The portfolio is divided into clusters based on customer groups, regions and days past due. A default matrix is calculated on the basis of historical default events in the Lufthansa Group’s receivables portfolio, which is supplemented to include forward-looking, publicly available insolvency forecasts. This impairment matrix is applied to trade receivables that are exposed to external credit risk. Receivables from credit card providers are excluded due to their very low probability of default. An impairment matrix is also used for trade receivables in the MRO segment. It entails dividing the customer portfolio into four risk classes, with a low, medium, high and very high risk of default. Customers are assigned to each category using the MRO segment’s credit risk management system, which is based on fundamental data, market information and payment history. Probabilities of default are derived from historic default events and current market information. Available collateral is taken into account. The Lufthansa Group uses a definition of default of 90 days past due for receivables, which are written off in full if the default event occurs. Exceptions are permitted in justified cases, however.

Table T188 shows the individual impairment losses and impairment due to expected losses for trade receivables and their changes. The gross carrying amounts of the receivables subject to expected losses and the gross carrying amounts of the receivables subject to individual impairment losses are shown for the purpose of comparison.

In the reporting year, the Lufthansa Group used the default rates shown in table T189 for each past due category in the impairment matrix for the simplified approach of the impairment model.

Securities representing debt are rated as shown in table T190 (Standard & Poor’s).

The credit risk for derivative financial instruments and securities held at fair value through profit or loss or through other comprehensive income is the risk that a counterparty defaults. The maximum credit risk from these instruments is their carrying amount. The counterparty default risk for financial market transactions is limited by defining a maximum risk, taking the credit score given by recognised rating agencies into account.

46. Contingencies and events after the reporting date

A total of EUR 2,141m (previous year: EUR 2,134m) relates to joint and several guarantees and warranties. This amount is offset by compensatory claims against the other co-debtors for EUR 2,080m (previous year: EUR 2,059m). Insofar as annual financial statements have yet to be published, these figures are preliminary.

Otherwise, several provisions for other risks could not be made because an outflow of resources was not sufficiently probable. The potential financial effect of these provisions on the result would have been EUR 17m (previous year: EUR 25m).

Receivables of EUR 135m (previous year: EUR 97m) in connection with legal disputes were not recognised as of 31 December 2025 because the inflow of economic benefits depends on the outcome of the court proceedings.

Legal risks

The Lufthansa Group is exposed to a number of legal risks in the course of its normal business. Based on current knowledge, the assumption is that these will not have any material, lasting effects on the net assets, financial and earnings position, beyond those for which provisions for litigation risks have been created (↗ Note 36).

Legal disputes and other claims made against the Group are always subject to uncertainty, however. Management estimates of these risks may also change over time. The actual outcome of these legal disputes may differ from earlier management estimates, which could have significant effects on the net assets, financial and earnings position and the reputation of our Company.

Due to the existing uncertainties described below, we cannot make an assessment of the amount of the respective contingent liabilities or of the group of contingent liabilities. The legal disputes that these statements refer to include:

Risk of successful civil claims for damages in ongoing antitrust proceedings

Various cargo airlines, including Lufthansa Cargo AG and Swiss International Air Lines AG, were involved in a cargo cartel in the period between December 1999 and February 2006. Numerous lawsuits for damages were brought worldwide as a result by both direct and indirect customers and addressed to the airlines as co-debtors. After other proceedings were settled out of court in 2025, Deutsche Lufthansa AG, Lufthansa Cargo AG and Swiss International Air Lines AG are now only exposed to a significant risk of civil claims for damages arising from one case in the Netherlands. As many substantive and legal questions are still unclear at present, it is not possible to give a concrete assessment of the outcome of this pending lawsuit or of the number and amount of any other claims.

Nonetheless, significant effects on the net assets, financial and earnings position of the Group cannot be fully ruled out if it should lose these legal proceedings or end them by way of an out-of-court settlement. The affected shareholders of the Lufthansa Group have made provisions to cover potential outcomes of such settlement negotiations.

Legal action by Ryanair against the European Commission’s decision on state aid

Ryanair has appealed to the General Court (of the European Court of Justice) against the decision by the European Commission approving stabilisation measures for companies in the Lufthansa Group. Stabilisation measures of around EUR 7.6bn in total are affected for Deutsche Lufthansa AG, Austrian Airlines AG and Brussels Airlines SA/NV. The lawsuits relating to the state aid for Austrian Airlines AG and Brussels Airlines SA/NV were definitively dismissed. In May 2023, the European General Court upheld the action for annulment with regard to the stabilisation measure in the amount of EUR 6bn granted to Deutsche Lufthansa AG by the Economic Stabilisation Fund (ESF) of the Federal Republic of Germany and annulled the corresponding state aid decision of the European Commission on the grounds of substantive errors of law. Until a final judgement is made or a new state aid decision is issued, uncertainty remains as to the legal consequences of the annulment of the decision to grant state aid. There is no immediate repayment risk as the stabilisation measures have already been completed and Deutsche Lufthansa AG has already repaid the silent participations from the ESF in full. Potential indirect consequences include the demand for clawback interest for the period between the allocation and the repayment of the stabilisation funds, as well as the imposition of conditions attached to a new state aid decision. Deutsche Lufthansa AG appealed to the European Court of Justice against the ruling of the court of first instance. The European Commission and the Federal Republic of Germany are intervening in the appeal. The Advocate General gave an opinion on 16 October 2025 in which he recommended dismissing Lufthansa’s appeal in full. No ruling had been made at the time the report was prepared. Ryanair also instituted proceedings against the European Commission in December 2024 for failure to act. It wants the European Commission to issue an injunction against Germany to recover the state aid from Deutsche Lufthansa AG. In July 2024, the European Commission initiated a formal examination procedure, as it has done in similar cases. At the time this report was prepared, it was not yet clear what the European Commission’s response to the judgement of the European Union General Court would be.

Covenants in connection with the funds granted by the Economic Stabilisation Fund

As well as information and auditing rights for the Economic Stabilisation Fund, the framework agreement with the Economic Stabilisation Fund, which has since been terminated, provided for extensive obligations for the Lufthansa Group including the ban on dividend payments and the ban on cross-subsidising Lufthansa Group companies which were already in difficulty within the meaning of EU Regulation No. 651/2014 on 31 December 2019. The ECJ ruling of 10 May 2023 revoked the approval decision and so the legal basis for the ban on dividend payments, but the differences of opinion between the Lufthansa Group and the European Commission about the applicability of these obligations could represent a potential risk if the European Commission issues a new decision approving the stabilisation, asserting its position and possibly adapting it in line with the ECJ ruling.

This disagreement particularly relates to the ban on dividend payments. The Lufthansa Group has received preliminary statements from departments of the European Commission that are not consistent with the Group’s line of argument regarding the inapplicability of the ban to certain companies. In this context, provisions of EUR 55m including interest have been recognised in the 2025 consolidated financial statements, in particular for distributions by investees to external shareholders. Deutsche Lufthansa AG assumes, based on its preliminary statements, that if the European Commission issues a new approval decision it will continue to see the payment of dividends as a breach of the aforementioned obligation, meaning that it could demand payment of the above amount by the Company in a formal decision. The outstanding decision by the European Court of Justice declaring the state aid notice to be null and void will delay the proceedings.

Based on the Group’s line of argument and the assessment of statements to the contrary made by the departments of the European Commission, the Lufthansa Group believes there is an overwhelming probability, in respect of almost all dividend payments, that the accusation made by the European Commission, namely that the aforementioned obligation has been breached, would not stand up to a judicial review. A possible decision reversing the payment obligation would only be made at a later date. Since, however, it is impossible to assume the almost complete certainty of a court ruling in favour of the Company, as would be required in order to recognise a reimbursement claim in accordance with IAS 37, the aforementioned provision has been recognised for the probable payment obligation in prior years and will be maintained in view of the continuing uncertainty.

Tax risks

Tax risks exist largely because of differences in legal opinions between the German tax authorities and the Company. Points disputed to date from the tax audits for the years 2003 to 2012 have been resolved with a mutually acceptable solution. The inspections for this period have been finalised.

The tax audits for the years from 2013 to 2021 have not yet been completed. Appropriate provisions have been made for disputed aspects to the extent that a claim is likely to be made. No provisions have been created for matters that the Company believes are more likely than not to result in a decision in its favour.

Comments from the tax authorities in the course of the current tax audits have queried the taxation of certain foreign income under the German Foreign Tax Act (AStG), raising additional tax risks. However, the Company continues to assume that the current tax treatment is correct. This could give rise to negative tax effects of around EUR 700m (previous year: EUR 700m).

The assessment of the amount is subject to uncertainty. The risk is apportioned both to years with taxable profits and to years in which tax losses were incurred in a ratio of 60% to 40%. Accordingly, this would thus entail potential back payments or reduced deferred taxes from loss carry-forwards. The cash outflows in each case depend on the outcome of the appeals which have been brought.

Events after the reporting period

Since 31 December 2025, no events of particular importance have occurred that would be expected to have a significant influence on the net assets, financial and earnings position.

47. Other financial obligations

As of 31 December 2025, there were order commitments of EUR 17.9bn (previous year: EUR 21.6bn) for capital expenditure on property, plant and equipment, including repairable spare parts, and for intangible assets. There were also capital and shareholder loan commitments of EUR 163m towards investees (previous year: EUR 516m), of which EUR 155m (previous year: EUR 508m) relate to joint ventures.

In addition, as of 31 December 2025, payment obligations under lease agreements for which the leased items had not yet been received are as follows:

48. Auditors’ fees

The fees paid to the auditors in the financial year and charged to expenses in accordance with Section 314 Paragraph 1 No. 9 HGB are made up as follows:

The audit services mainly consist of fees for auditing the annual and consolidated financial statements of Deutsche Lufthansa AG and those of its consolidated subsidiaries, as well as fees for the review of the half-yearly financial statements. The non-audit services include the fee for auditing the sustainability reporting and services in connection with company and capital market transactions.

The following fees paid to the global EY group, especially abroad, were additionally recognised as expenses:

The auditor at EY GmbH & Co. KG Wirtschaftsprüfungsgesellschaft responsible for the Lufthansa Group is Jörg Bösser. He held this position for the fourth time in the 2025 financial year.