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                                                                                LUFTHANSA REPORT 2017

Dear everyone,

The Lufthansa group that has always symbolised our brand in aviation is celebrating its 100th anniversary in this year. Such event presents a good opportunity to think on the past and to look forward into the future. Behind us lies a long, often varied and always highly eventful past, which has been defined by continuous growth and our aspiration to combine tradition and innovation. We have driven change at all times and simultaneously held on to tried and tested practices. We took the 100-year anniversary of the crane as the opportunity to freshen up our image. This is perhaps the most visible sign of modernisation at the Lufthansa Group. In accordance with this, in 2017 we concluded the most successful year in the history of the Lufthansa Group. Never before as many passengers have flown with our Group’s airlines and never before have we generated as much revenue from special and express freight. Never before has Lufthansa Technik serviced as many aircraft and never before has our catering company LSG prepared as many meals. All this makes us confident that we have set the Lufthansa Group on the right course. That is particularly important because our industry is currently undergoing a process of comprehensive structural change. Weaker competitors are leaving the market and the long overdue consolidation that is so important for the industry is making progress. Competition is changing significantly, particularly in the Lufthansa Group’s home markets. That will be to the long-term benefit of our passenger airlines. The main drivers of the very good earnings performance last year were, on the one hand, the increased demand for flights. The year before, terrorist attacks in Europe and strikes at Lufthansa German Airlines lead to fewer bookings and lower earnings. On the other hand, we have continued to reduce our unit costs, despite rising unit revenues at the airlines. The result is something we can be proud of: revenue went up by 12 per cent to more than EUR 35bn. Adjusted EBIT, our main performance indicator, climbed by around 70 per cent to approximately EUR 3bn. Adjusted ROCE, the return on capital employed, improved by 5 percentage points to 12 per cent. This means the Lufthansa Group created value of EUR 1.8bn after covering its cost of capital. These are all new records, too. At the same time free cash flow doubled to EUR 2.3bn. The equity ratio improved by around 6 percentage points to 26.5 per cent. This was despite the fact that we invested EUR 3bn, around a third more than the previous year.