Glossary


Aviation terminology

Average yields

Average revenue earned per unit of output; normally based on total passenger-kilometres or tonne-kilometres sold, but they can also be calculated per unit of traffic volume, e.g. per passenger carried or per kilometre flown.

Block hours

The time from the moment an aircraft leaves its parking position (“off-blocks time”) to taxi to the runway for take-off, until it comes to a complete standstill at its final parking position at the destination airport (“on blocks”).

Budget/no-frills carriers

“Budget/no-frills” carriers are airlines which offer largely low fares but no service whatsoever, either on board or on the ground. They fly mainly from small airports in rural locations, for example, Hahn airport.

Hub airlines

use an airport as a central connecting point – a hub. Passengers and goods are transported from the original starting point to the hub. From there, passengers and goods are carried to their final destination by a second flight.

Load factor

Measure of capacity utilisation in per cent. Ratio of capacity sold (revenue tonne-kilometres) to capacity offered (available tonne-kilometres). The passenger load factor is the proportion of seats sold, the cargo load factor is the proportion of freight capacity sold and the overall load factor is the degree of utilisation of total available capacity (i.e. in both passenger and cargo business).

Passenger Transportation segment

The Passenger Transportation business segment comprises the passenger airlines consolidated in the annual financial statements/interim financial statements: Lufthansa, Lufthansa CityLine, Air Dolomiti, as of 31 December 2005, the Eurowings Group (incl. Germanwings) and as of 1 July 2007 the SWISS Group. The published traffic figures comprise the performance data of Lufthansa Passenger Airlines – that is, Lufthansa German Airlines plus its regional partner airlines Air Dolomiti, Augsburg Airways, CityLine, Contact Air, Eurowings and SWISS.

Seat-/passenger-kilometre/tonne-kilometre

Standard output unit for air transportation. A revenue seat-/passenger-kilometre (RPK) denotes one fare-paying passenger transported one kilometre. A revenue tonne-kilometre (RTK) denotes one tonne of load (passengers and/or cargo) transported one kilometre.

Financial Terminology

Call option

The right to purchase a specified amount of the underlying security within a specified period of time at an agreed price.

Cash flow

Measure of a company’s financial and earnings potential. It is calculated as the difference between the inflow and outflow of cash and cash equivalents generated from ongoing business activities during the financial year. (See Cash flow statement).

Compliance

Institutionalised ar rangements for ensuring that a company’s management and staff duly comply with all statutory provisions and prohibitions.

CVA

(Cash Value Added) is the decisive parameter for measuring performance of value creation. If the cash flow generated (EBITDAplus) in a reporting period is higher than the minimum cash flow required to cover the cost of capital employed, the CVA is positive and value is generated (see also “Value-based management”).

Deferred taxes

Tax charges and accruals allocated for payment in a later financial year. Deferred taxes reflect the temporary differences between assets and liabilities recognised for financial reporting purposes and such amounts recognised for income tax purposes.

Directors’ dealings

Transactions by members of a company’s executive or supervisory board, or their family members, involving “their” company’s securities. Under German law, any such dealings must be disclosed if they exceed EUR 5,000 within a calendar year.

Dividend yield

Indicator for assessing the profitability of an investment in equities. It is determined by dividing the dividend by the share price at the close of the reporting year and then multiplying it by 100.

EBIT

Financial indicator denoting earnings before interest and taxes.

EBITDA

Financial indicator denoting earnings before interest, taxes, depreciation and amortisation. Depreciation and amortisation includes write-downs of tangible and intangible assets and of current and non-current financial assets, as well as impairments of investments accounted for using the equity method and of assets held for sale.

Equity ratio

Financial indicator expressing the ratio of shareholders’ equity to total assets.

Equity method

Accounting method for measuring income derived from a company’s investment in associated companies or joint ventures. Under the equity method, investment income equals a share of net income proportional to the size of the equity investment.

Free cash flow

Financial indicator expressing the cash flow from operating activities remaining in the reporting period after deducting the net cash funds used for investing activities.

Gearing

Financial indicator expressing the ratio of net debt plus retirement benefit obligations to shareholders’ equity.

Group of consolidated companies

Group of subsidiaries included in the consolidated financial statements.

Impairment

Unscheduled write-down of an asset if the recoverable amount falls below the carrying amount. The recoverable amount is the higher of an asset’s net selling price and its value in use. By contrast, a scheduled write-down of an asset (depreciation or amortisation) is the systematic allocation of the depreciable amount of an asset over its useful life.

Internal financing ratio

Financial indicator expressing the degree to which capital expenditure was financed from the cash flow generated.

Lufthansa Pension Trust

Company pension commitments which exist for employees in Germany and staff seconded to other countries which are financed largely via provisions for retirement benefit obligations. In 2004, Lufthansa set up a dedicated fund of plan assets with a view to financing future pension payments. The goal is to fully counter-finance the retirement pension obligations within ten to 15 years. The pension provisions previously reported in the balance sheet were reduced by the value of the Trust’s assets as of the cut-off date. Lufthansa intends to transfer an average of EUR 565m each year to the Trust.

Net indebtedness

Financial indicator expressing long-term financial debt less liquid funds and securities held as current assets.

Operating result

Measure of profitability denoting the result from operating activities less book profits (and losses), write-backs of provisions, currency gains and losses on valuation at the balance sheet date of long-term financial liabilities, and other periodic expenses and income. See also chapter Operating result.

Profit-revenue ratio

Financial indicator denoting the ratio of the net result to revenue.

Put option

Sales option or the associated contract giving the option buyer the right to sell a specified amount of the underlying security within a specified period of time at an agreed price (strike price).

Retained earnings

Transfer of profit to shareholders’ equity with a view to strengthening a company’s financial base.

Return on equity

Financial indicator expressing the ratio of net profit to shareholders’ equity.

Total shareholder return

Financial indicator expressing the overall return that the investor earns from the increase in stock market value or share price plus the dividend payment. The total shareholder return is calculated from the share price at the close of the reporting year plus the dividend paid in respect of the previous year, multiplied by 100 and divided by the share price at the close of the previous year.

Traffic revenue

Revenue generated from flight operations. It comprises revenue from transporting passengers and cargo as well as related ancillary services.

Working capital

Financial indicator for assessing a company’s liquidity, measured as the difference between a company’s current assets and its current liabilities.

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