Deutsche Lufthansa Ag Reg

Ladies and gentlemen, welcome to the Lufthansa Group Q4 2025 Results Conference Call and Live Webcast. I'm Moritz, the call operator. I would like to remind you that all participants will be in a listen-only mode and the conference is being recorded. The presentation will be followed by a question and answer session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Marc-Dominique Nettersheim, Head of Investor Relations. Please go ahead, sir.

Thank you very much, and also on my end, a very warm welcome, ladies and gentlemen, to the presentation of our full year results 2025. With me on the call today are our CEO, Carsten Spohr, and our CFO, Till Streichert. Both of them will present the results for the past year and discuss our commercial outlook for 2026. And afterwards, as always, you will have the opportunity to ask questions. And I want to remind you, please limit your questions to two so that everybody has a chance to participate in the Q&A session. Thank you very much. And with that, Carsten, over to you.

Yeah, thank you, Mark, and a warm welcome for me as well to this full year 25 conference, which I think will start in a little bit of a different tone. Not because it's our famous 100-year celebration this year, which makes it a special year for us anyway, but while we were focusing on this to a certain degree, it's obviously last weekend when everything was changed again. So maybe I'll share with you a few thoughts on where we are when it comes to the situation at the Gulf first, which is, as you know, very dynamic, and then, of course, with a few thoughts on the whole year before I hand over to Till for more details and expected by you, and of course also would like to give you a view ahead as much as that's possible in such a dynamic environment. On the Gulf situation, like many of us, I would assume we're a little bit surprised by the various dynamic turns this takes. In the end, our crisis management always ask us for safety first, which in our case meant we stopped flying a day early to the region, which also allowed us to have hardly any aircraft on location, because we brought them home before. We then brought our crews home, and then went into the next phase of our management of the situation by deciding to close 10 destinations initially, which included Lanarka. We are opening this next, this Saturday again, but keep the others closed for probably a few more days at least to remain. I think there's more and more now doubts. This is a question of days of reopening versus weeks. We prepare for both and we'll take you through this in the Q&A session if required. Second, of course, big impact spike on fuel prices. Till we'll come back to that. We actually believe due to the fact that we are hedged hires towards our main competitors, the actually only other airline Hedged the way we are is Ryanair, with which we who, as you know, hardly overlap, should give us a relative advantage when now prices in the markets need to go up to cover for higher fuel prices, especially, of course, for our American competitors and partners who more or less are not hedged at all. Third, extensional or extra sections to be flown to markets beyond the Gulf. We have seen huge demand since day one for bookings coming in from Asia to Asia, also South Africa, also very much in China towards Beijing and Shanghai. So we now decided to put extra sections into the air with spare aircraft we have due to the cancellations, spare crews we have, and also by the fact that we're still in the winter schedule, which doesn't put our fleet to the max. So we already announced quite a few extra flights to Bangkok. There will be more coming to Singapore, to Shanghai, to Cape Town, and to India, which will probably confirm the course of the last day from our revenue management teams that we have record inbound bookings, especially to those regions I mentioned, and that will allow us to probably give also later on to a more positive outlook on the commercial output at least of this initial phase of this crisis than we otherwise would have been able to do. Last but not least, the mother of all questions probably for European Airlines, how much is this situation changing the view and the behavior of travelers, customers on this obvious Achilles heel of geopolitical topics beyond aviation, but surely in aviation. So we all, I think, agree that Gulf carriers will reopen eventually, but how our traffic flows, how our cargo flows being directed in the future based on this terrible experience locally, I think is the mother of all questions for our industries, and I'm sure we'll be discussing that later on. With that, let me nevertheless take you, of course, now back to 25, which, as you might recall, we have called a transition year from the very beginning. Various topics in the pipeline we have addressed to you before and, of course, happy to also discuss today. Overall, the turnaround of the Lufthansa airline remains our utmost priority, as also mentioned in the former quarterly results sessions Starting from operations, we've seen significant improvements, which also allowed us to reduce our flight irregularity costs by 43%, equivalent of 362 million, significant input into our improved numbers of 25. And overall, also we were quite cautious with our capacity increase, which only resulted in a 4% or a little less, even 3.8% growth by lifting our revenues to a new record of 39.6 billion euros. We nevertheless, of course, were able to improve our profits, as you know, to at least by 19% compared to 24. This is a delta of 350 million, far away from where Till and I want to take the company, talking about the 8% to 10% margins, but at least a step in the right direction, and especially when it comes to the core airline. The operational stabilization was the basis for everything to come. We once again saw strong earnings contributions from MRO and logistics, but for us important that also in the core of the core, we are moving forward. We also have seen the first, but only the first positive impacts of our fleet modernization and the associated product improvements. As you know, we finally were able to certify our Allegra seats also the 787, which is a big part of the 23 new aircraft deliveries we received. As a matter of fact, seven of these 23 were 787s with now more or less all certified seats across all classes. That fleet alone, Boeing 787, will grow to 32 aircraft by the end of the year. Twenty-seven will have a significant impact on our Allegris, our new product in Lufthansa and Swiss Census are now underway out of three hubs, Munich, Zurich and Frankfurt. Not only we are receiving very positive feedbacks, but maybe more important for you in numbers we have been able to achieve 12% higher yields for Allegra than for the former business class. To give you an example on business class, that's a big element of bringing up our ancillary revenues, which already went up 15% last year. And I'm pretty sure we'll show you some good numbers for 26 a year from today. Overall, that, of course, forced us to discuss how much are we wanting to Make sure that shareholders already participate from this improvement. We decided to increase the dividend by 10% to 33 cents per share, which is a 10% increase, resulting in a dividend yield of 4% and a payout ratio of 30%. With that, let me turn to the traffic regions. I think we all remember Liberation Day last spring. When there were doubts about the development of the North Atlantic, it turned out, as expected, that the North Atlantic remained strong and, by the way, continues to do so. We'll come back to that later. And we managed to expand and sell capacity on this most profitable market segment of ours by 5%. In the fourth quarter, with an overall capacity growth of roughly 4%, we even managed to slightly increase unit revenues on a currency adjusted basis, which was clearly a trend reversal to the demand situation we saw in Q3. Going forward, I think the backbone of not landing will remain, but I think it's already fair to say we will see an increased shift of point of sales to the US. In this stage where American customers tend to book earlier than European customers, In Q3 and Q2, we are almost at a 60% above share of point of sales US and obviously below 40% in Europe. Again, due to the later booking patterns of Europeans, this will shift a little bit. But again, I'm convinced the trend of last year where we grew our American passengers by 10% and our European passengers only by 1% will probably result in even stronger dynamics this summer. Second largest trend. Intercontinental area for Lufthansa is not anymore China, but now India, which is also obviously one of the fastest growing aviation markets in the world. We signed a partnership agreement with our long-term partner, Air India, following just a few weeks after the EU and India had concluded a new trade agreement. We, in this case, includes not only Lufthansa, but the German economy, the German business environment are quite positive and bullish on India. And, of course, Lufthansa Group wants to be part of it. But also in South Korea and Japan, where we slightly increased capacity along with demand, we were able to bring up profitability. And that is also true for South America, which, as you know, becomes more important for us also due to the fact that with ITER, we were able to double our capacities to Argentina and Brazil. The idea for 26 is to grow 6% on intercont and more or less stay flat on cont. And as I said, this, of course, does not include our recent extra sections we are now in the process of offering, so these numbers, of course, are based on the regular flight pattern, which probably will change due to the short-term demand we're trying to take advantage of. Nevertheless, focused growth will remain our fundamental principle. We've seen the upside of this in 25, and we'll probably see more of this in 26. Coming to the next slide, let me talk a little bit about our obvious the unique business model based on the fact of not having the same whole market as our main competitors in Paris and London. We'll be even more focused on the four business segments and we'll also show them now also in our financial reporting with the four strategic pillars we know. Network Airlines will continue to be our core of the core by 70% turnover share, of course, with Lufthansa Airlines being the biggest part of it. We will also now We were more transparent on our success in the point-to-point business where Eurowings is continuous, not only going strong to defend our non-hub home markets. You all know this is the utmost priority for Eurowings historically. We also see, due to the fact that other airlines have been leaving Germany due to the high cost structure, additional market opportunities on the leisure side we are continuously exploring. Third pillar. Logistics, not surprisingly, the more unplannable the global economy is, the better for cargo. We've seen a good year in 25. We'll give you more numbers on in a minute. And already the way things are starting now after the Chinese lunar year with a complete mix-up of traffic lanes and supply chains due to the situation of the Gulf, we're probably looking at a good year here as well. On top of that, new consumer behavior when it comes to e-commerce, I think combined will make this a strong part of our company to come. That's even more true for Technic. We all have discussed with you before that 25 due to tariffs, there has been a little bit of a slowdown of our increase of margin and profits, which we don't expect to see again in 26. And obviously the more or less new part of the technique business being defense will probably also get more headwinds, sorry, tailwinds, tailwinds from the unfortunate military developments in Iran over the last days and more to come. So I'm sure we'll be talking about this rather more than less in the future. So with that little call it 360 and almost hourly dynamic situation where we are, hand over to you and talk to you in a few more minutes with some outlooks on my side of the strategic path before we are ready for your questions.