Key Financial Results
- Q1 Total Revenue: €8.7 billion (7.6% YoY) – Highest Q1 in company history
- Q1 Adjusted EBIT: -€612 million (€110M vs Q1 2025)
- Adjusted EBIT Margin: Improved nearly 2 percentage points YoY
- Reported EBIT: Included €154M book gain from Boeing 747-8 sale
- Q1 ASK Growth: +0.5% (essentially flat capacity)
- Strike Impact: ~€40M in Q1 (3 strike days); ~€150M in Q2 (6 strike days) = ~€200M total so far

Q1 Performance by Segment

Network Airlines:
- Adjusted EBIT: €135M YoY
- Lufthansa Airlines: +€110M improvement (€150M excluding strikes) – turnaround delivering results
- Swiss: €49M
- ITA Airways: +€70M operating improvement (but -€38M equity result due to FX)
- RASK: +3.3% (4.2% regional)
- Unit costs: +2.5% (broadly in line with inflation)
- Long-haul capacity: +1.4%; short-haul: -3%

Point-to-Point (Eurowings):
- Capacity: +5% YoY
- Traffic revenue: +14%
- Load factor: 84.4%
- Unit revenue: +7%
- Ancillary revenue: +13%
- Unit costs: +5% (€16M winter/Middle East impact, +29% MRO expenses)
- Adjusted EBIT: Broadly stable YoY (segment down €14M vs prior year due to SunExpress -€10M)

Lufthansa Cargo:
- Revenue: +5%
- Capacity: +7% (including ITA belly space = 3 Boeing 777 freighters equivalent)
- Operating expenses: +3%
- Unit costs: -7%
- Adjusted EBIT: +35% YoY
- Adjusted EBIT margin: 9.5%
- March airfreight yields: +5% YoY

Lufthansa Technik:
- External revenue: +19% YoY (~80% of Q1 revenue from third parties)
- Operating expenses: +12%
- Adjusted EBIT: Broadly flat YoY (margins impacted by ramp-up costs; expect “meaningful recovery” in coming quarters)
- Milestone: Completed 1,000th Pratt & Whitney GTF engine overhaul
- Expansion: Tulsa component repair facility, Calgary engine shop, largest maintenance contract in China (CFM56)

Fuel Impact & 2026 Guidance

Q1 Fuel Dynamics:
- Q1 fuel price: DOWN 3.3% YoY (due to 80%+ hedging + 20-30 day price lag)
- Estimated Q1 impact: Marginal (~€40M) – 60% of March consumption priced at pre-crisis levels
- Full impact delayed to Q2 onward

2026 Fuel Bill Estimate (based on forward curve as of late April):
- Total: €8.9 billion
- Fossil fuel: €8.7B; Mandatory SAF: €0.2B
- Increase vs original guidance: +€1.7 billion (entirely from Iran war price escalation)
- Single most relevant cost headwind for remainder of year

Hedging Position:
- 2026 passenger airlines: ~83% hedged for remainder of year
- 2027: ~36% hedged (all pre-crisis)
- Temporarily suspended regular hedging since early March due to volatility
- Selectively added short-term instruments (jet crack protection) when prices favorable
- Cargo: NOT hedged (pass-through pricing model)

Fuel Availability:
- Through June: Fully secured at own hubs
- Post-June: Making contingency plans (tank stops, etc.)
- No current physical supply shortages
- Jet crack spreads narrowing vs gas oil (market finding balance; US/Africa imports arriving)

2026 Full-Year Guidance (MAINTAINED):
- Adjusted EBIT: Significantly above 2025 (>10% growth)
- Adjusted Free Cash Flow: ~€0.9 billion
- Net CapEx: ~€2.9 billion
- ASK growth: 0-2% (revised down from “close to 4%”)
– InterCont: Positive growth
– Cont: Slight shrinkage

Critical Assumption: “Additional revenues in Network Airlines can offset additional fuel cost”
- Headroom largely gone due to fuel spike + strikes
- Q2 fuel recapture: ~60%
- Q3/Q4 fuel recapture: Well above 100% (if demand persists at current elevated levels)

Revenue Performance & Demand Environment

March Inflection Point:
- Network Airlines RASK: 12% YoY
- Normalized (excluding crisis effects, Easter timing, FX): **5% YoY**
- Premium yields: 5% in March alone (2% for Q1 overall)
- Airfreight yields: +5% YoY

Q2 Revenue Trends:
- RASK for Q2 overall: ~8 percentage points higher vs end-February (pre-crisis)
- April new bookings (departures in April): 12 points above pre-crisis
– Excluding Lufthansa Airlines (strike-affected): 14 points above pre-crisis
- Post-crisis freight rates: +31% worldwide; +90% to Southeast Asia

Longer-term Bookings:
- Remainder of 2026: Long-haul bookings locked in at yields ~34 percentage points above pre-crisis levels
- Booking windows shortened (normal in volatility) but load factor gaps closing near departure
- InterCont showing more resilience than short-haul
- July winter holidays (Southern Hemisphere peak): “Healthy” early bookings

Demand Assessment: “Robust and resilient” – different from historical crisis behavior
- Premium demand: Very positive development
- Corporate segment: Strong
- Point of sale US: 60-65% of bookings; remaining strong

Strategic Actions & Fleet Modernization

Immediate Crisis Response:
1. Lufthansa CityLine closure: Removed all 27 operational aircraft (mostly Canadair fleet) – ~1% ASK reduction, 20,000 flights summer capacity cut
– Only 4 destinations removed from 300-destination network (multi-hub flexibility)
– Migrating capacity to lower-cost AOCs
2. Early aircraft retirements:
– A340-600: Retiring by mid-October
– 747-400: Grounding part of fleet (at least for winter)
3. Middle East route cancellations: Freed 13 aircraft
– 3 widebodies redeployed: +13 weekly flights to India/Singapore
4. Yield-focused pricing: Tightened low-fare class availability

Multi-Hub/Multi-Airline Advantage:
- During strikes: Maintained 75-80% of group flight program despite mainline cancellations
- Network flexibility: Can consolidate unprofitable routes without compromising connectivity
- Lower strike impact per day vs historical (~€25M/day vs higher in past)

Fleet Modernization (Accelerated):
- Q1: Delivered 7 new aircraft (5 widebodies with Allegris/Swiss Senses premium cabins)
- 2026 target: ~45 new aircraft deliveries
- Sub-fleet consolidation complete: CityLine closure = third/final AOC consolidation in Germany (after SunExpress Germany, Germanwings)
- Strategic structure achieved: Mainline, feeder (Frankfurt/Munich), leisure specialist, point-to-point

Turnaround Program (Lufthansa Airlines):
- €1.5 billion gross cost benefits target: On track
- 3 pillars: (1) Fleet renewal, (2) Capacity shift to lower-cost AOCs, (3) 700 cost initiatives
- Additional EBIT safeguarding: Reduced project spending, external hiring stop (except operations)

Cash Flow & Balance Sheet (Strong)

Q1 Cash Performance:
- Adjusted Operating Cash Flow: Strong (driven by working capital)
- Advanced ticket sales: ~€2.4B (seasonal pattern; solid demand signal)
- Adjusted Free Cash Flow: €1.38 billion (clearly above prior year)

Q1 Balance Sheet:
- Liquidity: €10.3 billion (above €8-10B target corridor even after debt repayments/fleet investments)
- Debt actions: Repaid €1B Eurobond + €500M hybrid
- Net financial debt: Declined; leverage ratio improved to 1.6x
- Investment-grade ratings: Unchanged with stable outlook
- “Sufficient headroom to navigate volatility while continuing fleet renewal”

Regulatory Requests to EU Commission

Management emphasized need for 3 emergency measures:
1. Authorize US Jet A fuel imports (vs Jet A-1 requirement) – avoid redundant refining
2. Temporary suspension of slot regulations if fuel shortages force cancellations
3. Exception for EU anti-tankering rules for operational flexibility at fuel-short airports

Management tone on EU: “Higher up the ladder, more understanding; working level too slow” – positive direction but implementation takes time

M&A Commentary

ITA Airways: Window to acquire additional stake opens June 2026 (and June 2027) – no decision today

TAP Air Portugal: Process ongoing; Lufthansa + 1 competitor announced interest
- Strategic rationale: Not just TAP, but “Portugal aviation strategy”
- Opening new Lufthansa Technik facility in Portugal
- Evaluating Portugal for additional flight school location (with military)
- Would provide Latin America market share catch-up

Philosophy: “Strategic decisions and M&A not withheld by short-term operational challenges”

Management Outlook

Optimism factors:
- Industry may have been underpricing products historically
- Limited supply (engine/airframe/supply chain issues) + healthy demand = pricing power proven
- Could be “turning point where industry shows what products are really worth”
- Consolidation benefiting healthy carriers

Key quote (Carsten Spohr): “Never waste a good crisis” – using fuel shock to accelerate strategic initiatives already planned

Confidence drivers: Multi-hub structure, 80%+ hedging, diversified business model (cargo/MRO stabilizers), balance sheet strength, proven crisis management track record

Management maintained guidance despite challenges, emphasizing disciplined execution and structural competitive advantages while acknowledging high uncertainty ahead.