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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

Breaking News: Deutsche Lufthansa AG recently had its rating upgraded to Strong Buy, driven by growing optimism about its earnings prospects. The upgrade to a Zacks Rank #1 reflects positive expectations for the company's future performance. Meanwhile, the ongoing conflict in the Middle East has had a mixed impact on the global economy, with oil prices recently falling. G7 finance ministers are monitoring the situation, but no decision has been made on releasing strategic oil reserves. Analysts at Zacks recommend a Strong Buy for Deutsche Lufthansa.

1.c. Company Highlights

2. Lufthansa's 2025 Earnings: A Strong Recovery in Sight

Lufthansa Group's full-year 2025 results showcased a significant improvement in financial performance, with revenue increasing by 5.4% to EUR 39.6 billion. The adjusted EBIT margin stood at 4.9%, with an adjusted EBIT of EUR 1.96 billion, up EUR 350 million from the previous year. Earnings per share (EPS) came in at EUR 0.2303, below analyst estimates of EUR 0.3206. The company's liquidity position strengthened, with EUR 10.7 billion in liquidity, above the target corridor. Operating cash flow increased to EUR 4 billion, and adjusted free cash flow reached nearly EUR 1.2 billion.

Publication Date: Mar -07

📋 Highlights
  • Revenue Growth: Full-year revenue rose 5.4% to €39.6 billion, driven by 3.8% capacity growth in Passenger Airlines and strong cargo demand.
  • Adjusted EBIT Margin: Improved to 4.9% (€1.96 billion), up €350 million YoY, reflecting cost discipline and ancillary revenue gains (+15%).
  • Flight Irregularity Cost Reduction: Lufthansa Airlines cut irregularity costs by 43% (€362 million) through operational improvements.
  • Dividend Increase: Raised by 10% to €0.33/share (4% yield, 30% payout ratio), signaling confidence in cash flow resilience (€1.2 billion adjusted free cash flow).
  • Allegris Product Success: New business-class offering generated 12% higher yields than standard business class, contributing to ancillary revenue growth.

Operational Highlights

The company's turnaround efforts, particularly at Lufthansa Airlines, showed significant improvements, with a reduction in flight irregularity costs by 43%, equivalent to EUR 362 million. The introduction of the Allegris product led to a 12% higher yield compared to the former business class. Ancillary revenues rose by 15% in 2025, driven by the rollout of Allegris.

Valuation and Dividend

With a P/E Ratio of 5.92 and an EV/EBITDA of 4.9, the company's valuation appears reasonable. The dividend yield stands at 3.69%, with a payout ratio of 30%. The company's decision to increase the dividend by 10% to EUR 0.33 per share reflects its confidence in its financial performance.

Outlook and Guidance

Lufthansa expects adjusted EBIT to be significantly above the 2025 level in 2026, with a 4% capacity increase and cost inflation partly offset by transformation programs and fleet modernization. The company targets a high single-digit adjusted EBIT margin by 2028-2030 for Lufthansa Airlines, driven by fleet renewal, productivity improvements, and other turnaround initiatives.

Segment Performance

Lufthansa Cargo delivered a strong performance with 4% revenue growth, driven by a 5% capacity increase, and an adjusted EBIT of EUR 324 million, up 29% year-over-year. Lufthansa Technik achieved 12% revenue growth, with total revenue exceeding EUR 8 billion, and adjusted EBIT of EUR 603 million.

Fuel Hedging and Costs

The company has hedged around 82% of its fuel needs for the remainder of 2026, providing protection against potential fuel price increases. Lufthansa estimates its fossil fuel bill for 2026 to be around EUR 7.2 billion. The company's hedging strategy is expected to provide a relative advantage, with 50% of gas oil hedged, which is strongly correlated to jet crack.

3. NewsRoom

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Eco Innovation Group, Inc. (ECOX) Provides Update on Kepler GTL Sustainable Aviation Fuel Initiative and Airline Supply Opportunities

Mar -13

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Airline stocks slide as oil surges past $100 on Iran tanker attacks

Mar -12

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Surging Air Fares Upend Global Travel as Peak Season Nears

Mar -12

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Lufthansa Cargo minimizes delays during pilot strike

Mar -11

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Major airline canceling Middle East flights 'until later this year'

Mar -11

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DLAKY vs. ULCC: Which Stock Is the Better Value Option?

Mar -11

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Lufthansa Says More Than Half of Flights Will Run Thursday, Friday, Despite Planned Strike

Mar -11

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United Airlines Just Had Its Best Ever Day of Bookings. There's Hope Amid Fuel Fears.

Mar -11

Source: barrons.com

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

Stock-Card
Lufthansa

A-Score: 5.3/10

Value: 8.3

Growth: 4.7

Quality: 3.3

Yield: 3.1

Momentum: 7.5

Volatility: 4.7

1-Year Total Return ->

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Stock-Card
Fraport

A-Score: 5.2/10

Value: 6.3

Growth: 6.3

Quality: 3.3

Yield: 0.0

Momentum: 8.5

Volatility: 7.0

1-Year Total Return ->

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Stock-Card
IAG

A-Score: 5.2/10

Value: 7.1

Growth: 4.8

Quality: 5.0

Yield: 1.9

Momentum: 8.0

Volatility: 4.7

1-Year Total Return ->

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Stock-Card
easyJet

A-Score: 4.9/10

Value: 8.5

Growth: 6.7

Quality: 4.2

Yield: 1.9

Momentum: 2.5

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
Aeroports de Paris

A-Score: 4.5/10

Value: 3.2

Growth: 5.9

Quality: 2.9

Yield: 2.5

Momentum: 6.0

Volatility: 6.7

1-Year Total Return ->

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Stock-Card
Air France-KLM

A-Score: 4.1/10

Value: 9.8

Growth: 2.8

Quality: 3.6

Yield: 0.0

Momentum: 7.0

Volatility: 1.3

1-Year Total Return ->

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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

7.61$

Current Price

7.61$

Potential

-0.00%

Expected Cash-Flows