The ratings on Germany-based aviation group Deutsche Lufthansa AG reflect its predominant market positions, improving operating performance, and healthy balance-sheet structure. The ratings are constrained by the high-risk and cyclical airline industry and aggressive competition from low-cost carriers in a decentralized home market. Lufthansa reported total debt of about €3.1 billion and provisions for post retirement liabilities of €3.7 billion at June 30, 2007. Lufthansa is Europe's second-largest airline in terms of passenger traffic, and, through Lufthansa Technik, is the largest provider of maintenance, repair, and overhaul (MRO) services in the region. The Lufthansa group derives about 80% of revenues from its passenger airline and cargo transport activities and 11% from MRO activities. The core airline business benefits from the
