The ratings on Germany-based aviation group Deutsche Lufthansa AG reflect its predominant market positions, strong liquidity, and healthy balance sheet structure. The ratings are constrained by the poor performance of the group's catering and leisure operations, and likelihood that profitability levels in the air passenger business will take longer to recover to historical levels than envisaged, due primarily to increasing fuel prices and strong competition, particularly on short-haul routes. Lufthansa reported total debt of about €3.6 billion and provisions for postretirement liabilities of €4.6 billion at Sept. 30, 2004. Lufthansa is Europe's second-largest airline in terms of passenger traffic, and benefits from its membership of the Star Alliance, which holds a market-leading share of about 27% of global revenue passenger
