Deutsche Lufthansa AG

Overview Key strengths Key risks The largest airline in Europe, ahead of Air France-KLM and IAG, and fourth largest worldwide (by revenue), with leading positions at its main hubs in Frankfurt, Munich, Zurich, Vienna, and Brussels. Inherent susceptibility to European and global economic cycles, oil price fluctuations, high capital intensity, pandemics, and unforeseen geopolitical and security events. Operator of one of the world's largest route networks and balanced exposure to high-yield, premium, and long-haul air traffic across the route portfolio.Passenger revenue streams complemented by a leading position in aircraft MRO (maintenance, repair, and overhaul) and a significant share of the global air freight services market. First-quarter 2024 labor-strike effects, lingering cost inflation, flat-to-slightly-lower airfares, and decelerating growth in air traffic

...Lufthansa's capacity growth will slow this year, while air travel demand appears resilient (so far) despite macroeconomic headwinds. We forecast high single-digit revenue growth for the passenger airlines business segment. Our forecast reflects Lufthansa's reduced 2024 capacity guidance, to 92% of the pre-pandemic base (from 94%), amid adverse effects from first-quarter strikes and delays in new aircraft deliveries (noting that 2024 capacity is still up on the 84% of the 2019 base seen in 2023). We assume continued solid underlying demand for leisure travel across Lufthansa's European short-haul and international long-haul routes despite lingering macroeconomic headwinds. We anticipate the premium leisure segment (typically one of Lufthansa's most profitable) should continue to outperform others. Our forecast also reflects a moderate pick up in corporate travel, which reached 65% of the pre-pandemic base (in passenger numbers) in fourth-quarter 2023 and first-quarter 2024, still significantly...

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