Overall assessment of business performance

It is the conviction of the Executive Board of Deutsche Lufthansa AG that the Lufthansa Group put in a solid performance in the 2011 financial year. As in the previous year, all the business segments delivered a positive earnings contribution. In the airborne segments Passenger Airline Group and Logistics these earnings were appreciably lower than in the previous year, however. The high level of oil prices and numerous external factors, such as the crises in the Arab region and North Africa, the environmental disasters in Japan and the debt crisis in Europe, all depressed the business results. The earnings of the service segments had a stabilising effect on the Group’s operating result.

Under these circumstances the flexible cost and capacity management of the Group helped to generate a substantial operating profit despite difficult conditions. This means that Lufthansa was again able to outperform the industry. The termination of Lufthansa Italia’s flight operations and the sale of bmi were important strategic milestones that rebalanced the portfolio and will bolster the result significantly in future.

The Group’s financial profile remains stable. The equity ratio rose slightly, at the same time net indebtedness went up. Gearing remained in the target corridor of 40 to 60 per cent. The rating agencies also confirmed the existing ratings in 2011.

Despite the difficult conditions of the 2011 financial year, the profitability of the Lufthansa Group was altogether sufficient to earn the cost of capital and to create value of EUR 99m. Sustainable value creation is still the explicit objective of the Executive Board. The Group and all the business segments therefore continue to concentrate on carrying on a cost-effective and profitable business while making use of growth opportunities.

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