The ratings on Germany-based aviation group Deutsche Lufthansa AG (Lufthansa) reflect Standard&Poor's Ratings Services' opinion of its "satisfactory" business risk profile and "significant" financial risk profile. The "satisfactory" business risk profile reflects Lufthansa's strong market positions, its operational diversity, 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. The "significant" financial risk profile reflects our view that funds from operations (FFO) to debt will remain above 25% in 2012 and that debt maturities are manageable. We continue to view macroeconomic conditions as difficult across Europe. Our baseline forecast is for a mild recession through the
