Deutsche Lufthansa Ag Reg

Good day and thank you for standing by. Welcome to the Lufthansa Group Q2 2026 results analyst call. At this time all participants are in a listen-only mode. After the speaker's presentation there will be a question and answer session. To ask a question during the session you will need to press star 1 and 1 on your telephone and you will then hear an automated message advising your hand is raised. To withdraw your question please press star 1 and 1 again. We do ask callers to please limit yourself to two questions each. Please be advised, today's conference is being recorded. Right now, I'd like to hand the conference over to your first speaker today, Marc Medisam. Please go ahead.

Thank you very much and also from my side, welcome ladies and gentlemen to the presentation of our second quarter results 2026. With me on the call today are our CEO, Carsten Spohr, and our CFO, Till Streichert, and they will both present our results for the past quarter and discuss our commercial outlook for the remaining six months of the year. And as mentioned afterwards, you have the opportunity to ask two questions so that everybody can participate in the Q&A session. Thanks a lot in advance, and with that, Carsten, over to you.

Yeah, thank you, Marc, and a warm welcome to our half-year analyst conference, also on behalf of Till and myself. Obviously, 2026 is a landmark year for Lufthansa as we celebrate our centenary, but maybe more important, it's a time where the industry is facing a highly challenging environment, which is on the one hand shaped by the ongoing Middle East crisis, on the other hand, significantly higher fuel costs, and all that resulting also in bookings being made increasingly with even shorter lead times. The encouraging news is that demand remains extremely strong and continues to support yields across our airlines, especially in our three premium classes, where we'll come to details in just a few minutes. Also, it's important to understand that these challenging conditions, which are so clearly visible to all our stakeholders, also create opportunities for us as management to implement our agreed strategy faster and in some points more decisively. Let me turn first to our performance. The second quarter was again marked by strong demand around the world. We increased revenue by 8% year on year to 11.1 billion, which is a new record for the second quarter. But despite facing more armed conflicts than at any other time since World War II, it's obvious to see that the people's desire to travel remains undiminished. The impact of these conflicts has, however, made air travel noticeably more expensive. On the one hand, this has been driven by fuel cost, which in our case increased by 750 million in the second quarter alone. On the other hand, as there are ongoing capacity constraints in our industry. RAF increased significantly by 6.4% in our network airlines and by 9.4% at Eurowings. Many bookings for the second quarter had already been made before the crisis emerged, obviously, so this was limiting our ability to fully pass through the higher cost. We expect this effect to be largely absent in the second half of the year. Hopefully, there also will be no further strikes either. The financial impact of the repeated strikes by our two special interest unions representing cabin and cockpit in the main line amounts to at least 150 million euros. By now, these repeated strikes are met not only with a lack of understanding from our customers, but fortunately also increasingly from the majority of our employees. We are now finally back in constructive discussions with both unions and remain focused on securing the long-term competitiveness of also our core brand. This is the only way to halt the current downsizing of the group's largest and still most important airlines. More generally, across the group, growth was not consistent in the reporting quarter marked by, as mentioned, multiple crises. Due to flight constellations to the Middle East and the impact of strikes, our seat capacity declined by 3.3% year-on-year. Among other measures, we discontinued our least profitable short and medium haul routes, equivalent to around 1% of our total capacity, and this included the accelerated wind-down of Lufthansa City Line. This also enabled us to bring forward the planned retirement of the remaining fleet of 23 CRJ 900 aircraft. With the grounding of the airline, we were therefore able to cancel and take out of service the entire sub fleet. And this also contributed to the fact that the earnings impact resulting from the City Line grounding, which we actually announced three years ago and just now brought forward, amounts to approximately 180 million for a full year. As a result of this, also among other topics, we generated an adjusted EBIT of almost 400 million in the second quarter. This represents a decline of almost 500 million compared to previous year. Of course, none of us can be satisfied with these results. Even though the disruptions of the entire industry and the challenges we are facing This decline in earnings also comes as no surprise, particularly since we at Lufthansa have been affected much more than many of our competitors by again delayed aircraft deliveries. These delays are hitting us at Lufthansa at the worst possible time in the middle of the largest fleet transformation in our company's history. Also in the second quarter we were affected, we received only six aircraft