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 high risk and cyclical nature of the airline industry, aggressive competition from low-cost carriers within a decentralized home market, weak performance of the group's catering operations, and rising fuel prices are likely to place increasing pressure on profitability levels in the air passenger business. Lufthansa reported total debt of about €3.6 billion and provisions for postretirement liabilities of €4.0 billion at Dec. 31, 2005. Lufthansa is Europe's second-largest airline in terms of passenger traffic, and benefits from a strong connecting network through its membership of the Star Alliance international airline group. The Lufthansa group
