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1. Company Snapshot

1.a. Company Description

Deutsche Lufthansa AG operates as an aviation company in Germany and internationally.The company's Network Airlines segment offers passenger services.Its Eurowings segment provides passenger services through a route network of more than 100 destinations in over 50 countries.


The company's Logistics Business segment offers transport services for various cargoes, including general cargo, dangerous goods, valuables, vulnerable, perishables, live animals, courier, emergency, airmail/e-commerce, and temperature sensitive goods services approximately 300 destinations in 100 countries.Its Maintenance, Repair and Overhaul Services (MRO) segment provides maintenance, repair, and overhaul services for civilian commercial aircraft serving original equipment manufacturers and aircraft leasing companies, operators of VIP jets, and airlines.The company's Catering Business segment engages in-flight services and convenience retail, as well as other areas, such as retail and food producers.


As of December 31, 2021, it had a fleet of 713 aircraft.Deutsche Lufthansa AG was founded in 1926 and is headquartered in Cologne, Germany.

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1.b. Last Insights on LHA

Deutsche Lufthansa's recent performance was driven by improved profitability, with a net profit margin of 4.6%, up from last year's 3.3%. The company's earnings surged 46.7% over the past year, driven by strong demand in the Latin American market. Additionally, Lufthansa's interest in acquiring a stake in TAP Air Portugal, a strategic asset in the European aviation industry, could potentially boost growth. The company's third-quarter operating earnings were slightly above expectations, with a strong outlook for the fourth quarter.

1.c. Company Highlights

2. Lufthansa's Q3 2025: A Strong Turnaround in Sight

Lufthansa Group reported a robust Q3 2025, with total revenue increasing by EUR 500 million to EUR 11.2 billion, driven by a 3.2% capacity growth and strong demand for air travel, cargo, and MRO services. The adjusted EBIT remained stable at EUR 1.3 billion, and the EPS came in at EUR 0.81, beating estimates of EUR 0.699. The company's revenue growth was accompanied by a significant reduction in irregularity costs, with regularity at 99% and departure punctuality improving by more than 10 percentage points compared to last year.

Publication Date: Nov -03

📋 Highlights
  • Revenue Growth:: Total revenue rose 4.6% to EUR 11.2 billion, driven by 3.2% capacity growth and improved demand.
  • EBIT Stability:: Adjusted EBIT held steady at EUR 1.3 billion despite yield softness, with irregularity costs reduced significantly.
  • Operational Efficiency:: 99% flight regularity and 10+ pts improvement in departure punctuality, boosting North Atlantic profitability.
  • Cargo Performance:: Lufthansa Cargo’s adjusted EBIT climbed to EUR 49 million, fueled by 11% chargeable weight growth.

Operational Highlights

The stabilization of flight operations was a key driver of financial success, particularly on the North Atlantic, where the company saw a significant profit pool, supported by its joint venture with United and Air Canada. Yield softness was partly currency-driven, but ex-currency effects, RASK remained stable versus the prior year. The company expects continued growth on the North Atlantic, with limited growth on the continental network.

Segment Performance

The Passenger Airline business revenues rose by 1% to EUR 8.9 billion, with an adjusted EBIT of EUR 1.2 billion. Lufthansa Cargo's adjusted EBIT reached EUR 49 million, an increase of EUR 11 million, driven by volume growth, with chargeable weight up 11% in Q3. The MRO segment revenue grew by 10%, but adjusted EBIT declined by EUR 31 million due to external headwinds, including tariffs.

Outlook and Valuation

The company expects the fourth quarter to deliver its strongest result, in line with seasonality, and remains well on track to deliver a full-year result significantly above last year's level. With a P/E Ratio of 5.2 and an EV/EBITDA of 5.41, the market seems to be pricing in a moderate growth trajectory. The company's ROIC of 5.28% and ROE of 16.68% indicate a decent return on capital, but the Net Debt/EBITDA ratio of 3.08 suggests that there is still room for deleveraging.

Guidance and Future Plans

Lufthansa confirms its 2025 adjusted EBIT guidance, expecting a result significantly above the previous year's level. The company expects mid- to high-single-digit capacity growth on long-haul flights in 2026, mainly driven by North Atlantic routes, which is not expected to pose significant risks to unit revenue. With a robust order book of 230 next-generation aircraft, the company is well-positioned for long-term growth.

3. NewsRoom

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Lufthansa Airlines aims to boost profitability in 2026, says CEO

Nov -28

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Investors Shouldn't Be Too Comfortable With Deutsche Lufthansa's (ETR:LHA) Earnings

Nov -28

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Britain's IAG joins major European carriers in bidding race for Portugal’s TAP

Nov -24

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British Airways’ Parent IAG Joins Race to Bid for Stake in Portugal’s TAP

Nov -21

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Deutsche Lufthansa (XTRA:LHA): Assessing Valuation as Shares Deliver Mixed Short-Term Returns

Nov -20

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Lufthansa Fires First Shot in Battle for TAP -- Europe's Next Big Airline Prize Is Suddenly in Play

Nov -20

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Lufthansa throws hat in ring in bidding for TAP stake

Nov -20

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Lufthansa enters race for TAP stake against Air France-KLM

Nov -20

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.34%)

6. Segments

Passenger Airlines

Expected Growth: 5%

Lufthansa's 5% growth in passenger airlines is driven by increasing demand for air travel, particularly in Europe and Asia. Strong economic growth, rising disposable incomes, and a growing middle class are contributing to this trend. Additionally, Lufthansa's focus on digitalization, modern fleet, and improved customer experience are enhancing its competitiveness and driving revenue growth.

Maintenance, Repair and Overhaul

Expected Growth: 3%

Lufthansa's 3% growth in Maintenance, Repair and Overhaul (MRO) is driven by increasing demand for air travel, fleet expansion, and rising aircraft complexity. Additionally, the company's focus on digitalization, predictive maintenance, and cost-efficient solutions also contribute to growth. Furthermore, Lufthansa's strong reputation, global presence, and long-term contracts with major airlines support the segment's expansion.

Logistics

Expected Growth: 4%

Lufthansa Logistics' 4% growth driven by increasing e-commerce demand, strategic partnerships, and expansion into new markets. Additionally, investments in digitalization and process optimization have improved operational efficiency, further boosting growth. The company's focus on specialized logistics services, such as temperature-controlled and express shipping, has also contributed to its growth momentum.

Catering

Expected Growth: 2%

Lufthansa's catering segment growth is driven by increasing demand for premium in-flight meals, strategic partnerships with airlines, and expansion into new markets. Additionally, investments in digitalization and sustainability initiatives have improved operational efficiency, allowing the company to capitalize on growing passenger traffic and airline outsourcing trends.

Reconciliation

Expected Growth: 1%

Deutsche Lufthansa AG's 1% growth is driven by increased demand for air travel, particularly in the premium segment, coupled with successful cost-cutting measures and improved operational efficiency. Additionally, the airline's focus on digitalization, modernized fleet, and expanded route network have contributed to the growth.

Additional Businesses and Group Functions

Expected Growth: 3%

Deutsche Lufthansa AG's Additional Businesses and Group Functions segment growth is driven by increasing demand for digital services, expansion of IT infrastructure, and strategic investments in innovation and technology. Additionally, the growth is fueled by the company's focus on sustainability, cost savings initiatives, and optimization of business processes.

7. Detailed Products

Passenger Air Travel

Lufthansa offers passenger air travel services to over 200 destinations worldwide, providing a range of fare options and classes of service, including Economy, Premium Economy, Business, and First Class.

Cargo Services

Lufthansa Cargo provides air freight services, transporting goods such as perishables, pharmaceuticals, and e-commerce shipments, with a focus on speed, reliability, and security.

Lufthansa Technik

Lufthansa Technik provides maintenance, repair, and overhaul (MRO) services for aircraft, engines, and components, as well as engineering and consulting services.

Lufthansa Systems

Lufthansa Systems provides IT services and solutions for the airline industry, including passenger services, cargo management, and airline operations systems.

Lufthansa Consulting

Lufthansa Consulting provides management consulting services to airlines, airports, and other aviation industry players, focusing on strategy, operations, and process improvement.

Lufthansa Flight Training

Lufthansa Flight Training provides pilot training and simulator services, offering a range of courses and training programs for commercial pilots.

8. Deutsche Lufthansa AG's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Deutsche Lufthansa AG is medium due to the presence of alternative modes of transportation such as trains and buses, as well as the increasing popularity of virtual meetings and remote work.

Bargaining Power Of Customers

The bargaining power of customers is high due to the availability of multiple airlines and travel options, allowing customers to easily switch to competitors if they are not satisfied with Lufthansa's services.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low due to the airline's large scale of operations and its ability to negotiate favorable contracts with suppliers.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the airline industry, including the need for significant capital investment and regulatory approvals.

Intensity Of Rivalry

The intensity of rivalry is high due to the competitive nature of the airline industry, with multiple players competing for market share and customers.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 54.98%
Debt Cost 5.44%
Equity Weight 45.02%
Equity Cost 11.55%
WACC 8.19%
Leverage 122.15%

11. Quality Control: Deutsche Lufthansa AG passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Fraport

A-Score: 5.8/10

Value: 7.2

Growth: 6.4

Quality: 4.7

Yield: 0.0

Momentum: 8.5

Volatility: 7.7

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IAG

A-Score: 5.4/10

Value: 7.3

Growth: 4.8

Quality: 5.0

Yield: 1.2

Momentum: 9.0

Volatility: 5.0

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easyJet

A-Score: 5.1/10

Value: 8.5

Growth: 6.7

Quality: 4.2

Yield: 2.5

Momentum: 3.5

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Lufthansa

A-Score: 5.1/10

Value: 7.4

Growth: 4.7

Quality: 3.1

Yield: 3.8

Momentum: 6.5

Volatility: 5.0

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Air France-KLM

A-Score: 4.4/10

Value: 10.0

Growth: 2.8

Quality: 3.8

Yield: 0.0

Momentum: 8.0

Volatility: 1.7

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Aeroports de Paris

A-Score: 4.4/10

Value: 3.2

Growth: 5.9

Quality: 2.6

Yield: 2.5

Momentum: 4.0

Volatility: 8.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

8.23$

Current Price

8.23$

Potential

-0.00%

Expected Cash-Flows