The opportunities and risks for the Lufthansa Group will be defined very largely by macroeconomic factors and their subsequent effects on global air traffic markets and competition. Past experience shows that developments in external parameters are subject to great uncertainty. We currently anticipate that the global economy will continue to perform well, albeit at lower growth rates. As a result of the financial and economic crisis a tangible forecast risk can be observed for assessments of future economic developments. In the future greater volatility is expected than has been previously observed. The assumed growth in global passenger and cargo demand is therefore subject to considerable opportunities and risks for Lufthansa. Fuel prices remained high throughout 2011 and were not much affected by the lower growth prospects. Kerosene costs were reduced in 2011 by strong hedging results. On the basis of current futures prices we are expecting the results of fuel hedging to be much lower in 2012. Additional expenses will come from the inclusion of European air traffic in emissions trading, which takes effect as of 2012. No decision has yet been taken on the possibility of offsetting the costs of purchasing the necessary certificates against the air traffic tax introduced in 2011. These risks are mirrored by the corresponding opportunities if the parameters of demand, average yields and fuel price develop better than expected.
In this environment Lufthansa is relying on its ability to adjust its capacities and resources flexibly to changing market conditions and to cut costs. In early 2012 the Executive Board presented SCORE, the new Group programme to safeguard earnings, which is intended to make lasting, structural improvements to profitability. More information can be found in the section.
Despite the tense situation on financial markets and the deteriorating economic outlook, the Group expects to be able to maintain its investment grade rating. Counterparty risks are rising again, however.
Altogether, and considering the macroeconomic situation and all other known issues and circumstances, there are currently no identifiable developments which could endanger the Company’s continued existence.