Annual review

Q1 / 2011

New Executive Board team

The new Executive Board of Deutsche Lufthansa AG commenced work at the beginning of the year. Christoph Franz took over the post of Chairman of the Executive Board and CEO of Deutsche Lufthansa AG as of 1 January 2011. He is the successor to Wolfgang Mayrhuber. Effective as of the same date, Carsten Spohr was appointed to the Executive Board of Deutsche Lufthansa AG as CEO of Lufthansa German Airlines.

Air traffic tax introduced in Germany and Austria

The air traffic tax on flights departing from Germany introduced on 1 January 2011 leads to higher ticket prices for air travel. A similar tax on departures from Austria was introduced on 1 April 2011. These one-way measures distort competition and have since had an adverse effect on airlines’ traffic performance, as price-sensitive customers in border areas partly switch to airports abroad.

Political unrest in North Africa and Middle East and disasters in Japan

The unrest in some Arab countries in the first quarter had a distinctly negative effect on business. Flights were temporarily suspended to some cities in the countries affected. The earthquake and devastating tsunami in Japan on 11 March 2011 as well as the subsequent catastrophe at the Fukushima nuclear power plant resulted in temporary restrictions on flights to Japan.

Supervisory Board approves order for 35 new aircraft

In March the Supervisory Board approved the order of 35 aircraft. They include 30 aircraft from the Airbus A320neo family and five Boeing 777 freighters. The passenger planes are to be delivered from 2016 and the freighters from as early as 2013. The fleet modernisation was continued in September with the ordering of a further twelve aircraft (two Airbus A380s, one A330-300, four A320s, five Embraer 195s).

Q2 / 2011

Oil price hits high for the year

In the second quarter of 2011 the oil price reached its high for the year at USD 126.25 for a barrel of Brent Crude. The kerosene price also hit its annual high, putting pressure on business. Over the course of the year prices for crude oil and kerosene remained high and were therefore an important factor in the Lufthansa Group’s earnings development.

Joint venture Japan+ founded by Lufthansa and ANA

Following approval by the Japanese competition authorities, in June a strategic joint venture named Japan+ was founded by Lufthansa and ANA, Japan’s largest airline. The partnership, which is due to commence in April 2012, includes coordinated sales activities and flight plans.

Wage settlement with Vereinigung Cockpit pilots’ union

Lufthansa and the Vereinigung Cockpit pilots’ union agreed on a new wage settlement on 29 June 2011. This comprises a pay rise of around 3.5 per cent, backdated to 1 April 2011, for the approximately 4,500 pilots at Lufthansa Passenger Airlines, Lufthansa Cargo and Germanwings. The wage agreement runs until the end of April 2012.

Awards for companies in the Lufthansa Group

At the World Airline Awards 2011 Lufthansa Passenger Airlines was voted “Best Transatlantic Airline”. At the same ceremony, Austrian Airlines emerged victorious in the categories “Best Business Class Catering” and “Staff Service Excellence Europe”. SWISS won in the category “Best Airline in Western Europe” at the Skytrax World Airline Awards. Over the course of the year Lufthansa Cargo and Lufthansa Technik were voted “Best Cargo Airline” and “Best MRO Provider in Europe”.

Q3 / 2011

Lufthansa starts biofuel test

In mid July 2011 Lufthansa began a biofuel test supported by the German government’s aviation research programme. This involved operating one engine of an Airbus A321 on the Frankfurt–Hamburg route with a fuel blend made up of 50 per cent biosynthetic fuel. The test ended in December 2011 and according to initial calculations was able to save 1,471 tonnes of CO2 on the flights made.

Lufthansa adjusts its growth plans to the changed market environment

In September Lufthansa adjusted its earnings expectations and growth plans in line with the sharp deterioration in market conditions. As part of a package of measures, capacities were cut in the winter flight plan 2011/2012 and planned capacity growth reduced for the full year 2012.

PartnerPlusBenefit is ten years old

The Lufthansa corporate bonus programme PartnerPlusBenefit celebrated its tenth anniversary in September. The programme was launched in 2001 for small and medium-sized companies in Germany and enables them to benefit from corporate incentives.

Jaan Albrecht nominated as new CEO of Austrian Airlines

In August 2011 Jaan Albrecht was nominated by the Executive Board of Deutsche Lufthansa AG as Chairman of the Executive Board of Austrian Airlines, and in September was appointed to the post by the Supervisory Board. The long-serving CEO of Star Alliance, who made a key contribution to developing the alliance’s leading role in global airline competition, took up his new position on 1 November 2011.

Q4 / 2011

Greater cooperation between Lufthansa Passenger Airlines and Germanwings

A decision was taken in December 2011 to coordinate the routes available from Lufthansa Passenger Airlines and Germanwings even more closely in future. As a result, Germanwings will serve all European destinations from Stuttgart for Lufthansa Passenger Airlines from summer 2012. The two airlines have been cooperating since the beginning of the year. It has been possible for customers to combine flights from Lufthansa and Germanwings since January 2011. In early February Germanwings was also integrated as an airline partner in the Lufthansa corporate programmes.

Lufthansa is growing in Berlin with a new strategy

On 9 November 2011 Lufthansa presented its plans for the inauguration of the Berlin-Brandenburg “Willy Brandt” airport in summer 2012 for the first time. In addition to local fleet growth from nine to 15 aircraft, the route network is also to be extended from eight to 38 destinations. Cockpit and cabin crews stationed locally on competitive terms make it possible to offer customers one-way tickets from EUR 49.

Night-flight ban at Frankfurt Airport

On 10 October 2011 the Hesse administrative court unexpectedly imposed a strict ban on night-flights for Frankfurt Airport as of 30 October 2011. It prohibits flights in the period from 11 p.m. to 5 a.m. and will remain in force until a final ruling by the Federal Administrative Court in spring 2012. The ban has grave consequences for the winter flight plans at Lufthansa Passenger Airlines and Lufthansa Cargo.

Lufthansa and IAG sign contract for the sale of bmi.

Lufthansa and International Airlines Group (IAG) signed an agreement for the sale of British Midland Ltd. (bmi) on 22 December 2011. With the transaction Lufthansa is disassociating from a sustainably loss-making subsidiary. The deal is aimed to be closed in the first quarter of 2012 and is subject above all to approval by the competition authorities.