Lufthansa lifts Group result and confirms outlook Wolfgang Mayrhuber:

Frankfurt (LUFTHANSA)  - Lufthansa put in a sturdy performance in the first three months of 2006 despite record-level oil prices. In the traditionally weak first quarter, the Group result improved by 15.5 per cent to -98 million euros. The operating result totalled -75 million euros (previous year: -26 million euros). Adjusted for changes in the group of consolidated companies, the operating result would have been -47 million euros. “The result is in line with our expectations. The first quarter is normally weak in the airline business,” said Lufthansa Chairman and CEO Wolfgang Mayrhuber, presenting the quarterly figures. “Lufthansa is staying on course despite a headwind. Even with an oil price of more than 70 dollars per barrel, our strategy is helping with innovative products to convince and gain new customers.” The Lufthansa Chairman is looking confidently to the full year and is still expecting an operating result at least on a level with the previous year’s (2005: 577 million euros).

Lufthansa will continue pursuing its strategy of offering attractive prices coupled with the highest quality. It has since April been offering round-trip fares starting at 99 euros on flights from Germany to all European destinations. The response is highly positive. Lufthansa has also made gains in premium business: Following its great success in Central Europe, the Lufthansa Private Jet service is now also available for flights to and from airports in the entire Russian Federation.

The integration of SWISS is making good headway, Mayrhuber observed. “Our customers are profiting from coordinated flight schedules, the integrated Miles & More frequent flyer programme and the joint presence of the two airlines at an increasing number of airport terminals.”

The Group has reached a major milestone in the restructuring of its LSG Sky Chefs catering arm in North America. Changes in the pay settlement and long-term lease agreements will save around 50 million dollars yearly.

Wolfgang Mayrhuber underlined that the Group will remain focused on rigorous cost management and increasing flexibility. “The fuel price has more than doubled in the past two years. That shows how important it is in our industry to act with foresight in improving the cost structure and productivity. We must act today so as to be among the winners again tomorrow.”

The action plan, launched in 2004 and designed to improve earnings by 1.2 billion euros by year-end, is working successfully to plan, the Chairman emphasised. Sustainable savings totalling 985 million euros had been realised by the end of March, he noted.

Lufthansa will continue beyond 2006 to seek possibilities of strengthening its clout. “We save in order to grow, not vice-versa. We are re-investing savings in new routes, new products and attractive prices. And that is creating perspectives for all: for our customers, for our shareholders and for the people employed by the entire Group,” said Mayrhuber.

First-quarter 2006 in figures

In the first three months, Lufthansa Group revenues rose year-on-year by 13.9 per cent to 4,4 billion euros. This and all other figures are only partly comparable with the previous year’s results owing to changes in the group of consolidated companies including the first-time inclusion of the Eurowings group. Traffic revenue was up by 12.9 per cent to 3.4 billion euros.

Operating expenses rose in parallel with the increased revenues to 4.8 billion euros. Aside from the enlarged group of consolidated companies, the increase in expenses is attributable principally to the high oil price. During the quarter, the Group spent 751 million euros on aircraft fuel, an increase on the year of 293 million euros or 64.0 per cent. Had it not been for successful hedging, the fuel bill for the airlines in the Group would have been 29 million euros higher.

The first-quarter operating result came to -75 million euros (previous year: -26 million euros). A distinct improvement in the financial result improved the Group result: The net loss for the quarter was down by 18 million euros to -98 million euros.

Capital expenditure during the term totalled 612 million euros, of which 145 million euros went on aircraft. The cash flow from operating activities amounted to 290 million euros. Net indebtedness, which stood at -74 million euros at the close of the quarter, was much on a par with the year-earlier figure.

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