We view the airline industry as a high-risk sector due to its cyclicality, capital intensity, and foreign-exchange and oil-price swings. In addition, fierce competition makes it frequently difficult to pass on cost inflation through higher ticket fares. Lufthansa's established positions in nonpassenger business segments, such as maintenance, repair, and overhaul (MRO) and catering, which account for 20%-25% of total EBIT, offer more stability than if Lufthansa were solely an airline. This also differentiates Lufthansa from its competitors, such as International Consolidated Airlines Group, S.A. (IAG), Air-France/KLM, or Delta Air Lines Inc., which derive the vast majority of their earnings from passenger airline operations. We forecast no major change in the combined EBITDA contribution from Lufthansa's nonpassenger business segments in 2019-2020.
