The ratings on Germany-based aviation group Deutsche Lufthansa AG (Lufthansa) reflect Standard and Poor's Ratings Services' opinion of its strong market positions, the diversity in its operations, and its good exposure to high-yield premium traffic. We consider that these strengths are partly offset by the high risk, cyclical airline industry, which is capital-intensive and subject to volatile fuel costs. We classify Lufthansa's business risk as "satisfactory," its financial risk profile as "significant," and its liquidity position as "strong." In our view, Lufthansa's recent profitability improvements will come under pressure in the near term mainly because of the poor macroeconomic outlook. We recently lowered our growth forecast for real GDP in the eurozone to 0.4% for 2012 (from 1.1%) and now
