Deutsche Lufthansa AG — Interim / Quarterly Report 2012

Aug 20, 2012

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Für eine sichere Reise

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Please read the 2nd Interim Report 2012 carefully. / Bitte den 2. Zwischenbericht 2012 sorgfältig lesen.

Lufthansa Group overview

Key fi gures Lufthansa Group

		Jan. – June 2012	Jan. – June 2011	Change in %	April – June 2012	April – June 2011	Change in %
Revenue and result
Total revenue	€m	14,509	13,685	6.0	7,890	7,417	6.4
of which traffi c revenue	€m	11,851	11,243	5.4	6,502	6,179	5.2
Operating result	€m	– 20	114		361	283	27.6
EBIT	€m	– 166	– 19		252	499	– 49.5
EBITDA	€m	758	834	– 9.1	703	922	– 23.8
Net profi t / loss for the period	€m	– 168	– 206	18.4	229	301	– 23.9
Key balance sheet and cash fl ow statement fi gures
Total assets	€m	29,361	29,517	– 0.5	–	–	–
Equity ratio	%	26.8	26.5	0.3 pts	–	–	–
Net indebtedness	€m	2,295	1,427	60.8	–	–	–
Cash fl ow from operating activities	€m	1,662	1,692	– 1.8	829	937	– 11.5
Capital expenditure (gross)	€m	1,385	1,437	– 3.6	793	693	14.4
Key profi tability and value creation fi gures
Adjusted operating margin *	%	0.2	1.2	– 1.0 pts	5.0	4.3	0.7 pts
EBITDA margin	%	5.2	6.1	– 0.9 pts	8.9	12.4	– 3.5 pts
Lufthansa share
Share price at the quarter-end	€	9.11	15.03	– 39.3	–	–	–
Earnings per share	€	– 0.37	– 0.45	17.8	0.50	0.66	– 24.2
Traffi c fi gures
Passengers	thousands	49,365	47,513	3.9	27,483	26,656	3.1
Passenger load factor	%	76.9	75.9	1.0 pts	79.4	78.5	0.9 pts
Freight and mail	thousand tonnes	987	1,070	– 7.8	500	542	– 7.6
Cargo load factor	%	65.8	66.7	– 0.9 pts	65.0	66.0	– 1.0 pts
Available tonne-kilometres	millions	19,823	19,974	– 0.8	10,367	10,443	– 0.7
Revenue tonne-kilometres	millions	14,390	14,423	– 0.2	7,651	7,673	– 0.3
Overall load factor	%	72.6	72.2	0.4 pts	73.8	73.5	0.3 pts
Flights	number	512,140	517,808	– 1.1	269,922	270,263	– 0.1
Employees
Employees as of 30.6.	number	117,416	118,766	– 1.1	117,416	118,766	– 1.1

* Performance indicator to enable comparison with other airlines: (operating result + write-backs of provisions) / revenue. Date of publication: 2 August 2012.

Contents

• 1 To our shareholders
• 31 Further information
• 2 Interim management report
• 21 Interim fi nancial statements
• Credits/Contact
• Financial calendar 2012/2013

Ladies and gentlemen,

The fi rst half-year of 2012 was challenging, as expected. The Lufthansa Group's business performance was infl uenced by un usually high fuel prices and the economic-political uncertainties in the euro zone. These were challenges that the Group had to overcome, while also offsetting the extra burdens caused by the night-fl ight ban and by air traffi c tax. But the half-year fi nancial statements we are presenting today also recognise some important restructuring successes. The vast majority of the Austrian Airlines cabin crew members went along with the transfer of operations to Tyrolean Airways. This transfer has made a major contribution to making the company competitive once again and has already had a positive impact on the latest fi nancial statements.

On the operational side, our airborne companies stuck to their stringent capacity and yield management programmes, which strengthened their aircraft's load factors. The Passenger Airline Group's result was nonetheless still lower year on year, due to the high price of oil, which did not tail off until June. The Logistics business segment was likewise subjected to these diffi cult market conditions. It is, however, very fl exible in terms of capacity planning and therefore matched its capacity plans very closely to the developments in demand. As a result, Lufthansa Cargo was able to post an operating profi t in the fi rst half-year. The service segments MRO, IT Services and Catering were able to increase their profi ts and therefore had a stabilising effect on the consolidated operating result as usual. This result was marginally in the red, but much of the shortfall from the beginning of the year was then recouped in the second quarter.

Our aim, however, is to boost the Group's profi tability sustainably. To achieve this, all of the business segments are committed to our SCORE programme. Over the next three years, the Lufthansa Group's operating result shall be structurally improved by EUR 1.5bn. A lot of projects have already been initiated to this end, and we expect to see signifi cant contributions from all the segments as a result, as well as Group-wide synergies.

Sustainable improvements also entail assuming responsibility for protection of the climate and the environment. We have succeeded in further reducing our fuel consumption and our emissions by means of effi cient capacity management and through the systematic renewal of the Group's fl eet. Environmental protection remains one of the Lufthansa Group's key corporate objectives in spite of the diffi cult parameters, and is something that we are pursuing in perfect harmony with our quality ethos. For example, we added the Boeing 747-8i to our fl eet in July of this year – an aircraft which not only produces approximately 30 per cent less noise pollution than its predecessor, but which also offers our passengers the luxury of our new Business Class generation on longhaul fl ights.

We are holding to our forecast of an operating profi t in the mid three-digit million euro range (before restructuring costs) in the 2012 fi nancial year. We are relying on the experience and fl exibility of our business segments in handling economically challenging conditions – something which is very much founded on the expertise and commitment of our management and our employees.

We thank you for your trust.

Christoph Franz Chairman of the Executive Board

Simone Menne Member of the Executive Board Chief Financial Offi cer

Stefan Lauer Member of the Executive Board Chief Offi cer Group Airlines and Corporate Human Resources

Carsten Spohr Member of the Executive Board Chief Offi cer Lufthansa German Airlines

Lufthansa share

The sovereign debt crises in Europe remained the overriding issue on the stock markets in the second quarter. Many securities saw the price gains achieved in the fi rst quarter negated. Airline shares were hit particularly hard by this development, with price losses only being reversed in June, when the price of oil fell considerably. Overall, Germany's DAX index gained 8.8 per cent in the fi rst half-year, taking it to 6,416 points. The Lufthansa share stood at EUR 9.11 as of 30 June 2012. Its price was therefore virtually the same as at year-end 2011 (– 0.8 per cent). Taking into account the dividend of EUR 0.25 paid in May, shareholders received a positive return of 1.9 per cent.

Shareholder structure by nationality in % (as of 30.6.2012)

At the end of the second quarter, German investors held 63.5 per cent of the Lufthansa shares. The largest individual shareholders were BlackRock Inc. with 5.43 per cent and Franklin Templeton with 5.00 per cent. The free fl oat remained unchanged at 100 per cent.

Information on the shareholder structure and analysts' recommendations is regularly updated and published on our website i www.lufthansa.com/investor-relations.

Performance of the Lufthansa share, indexed as of 31.12.2011, compared with the DAX and competitors

Interim management report

Economic environment and sector performance

GDP growth 2012 compared with previous year

in %	Q1 1)	Q2 2)	Q3 2)	Q4 2)	Full year 2)
World	2.7	2.6	2.6	2.8	2.7
Europe	0.4	– 0.1	– 0.2	0.2	0.1
Germany	1.2	1.1	0.6	1.1	1.0
North America	2.0	2.1	2.1	1.8	2.0
South America	2.8	2.8	3.4	3.8	3.2
Asia / Pacifi c	5.0	5.2	4.9	5.2	5.1
China	8.1	7.6	7.7	7.9	7.8
Middle East	3.8	3.3	3.0	2.9	3.3
Africa	3.6	4.4	5.1	5.5	4.6

Source: Global Insight World Overview as of 15.7.2012.

1) Partially forecast.

2) Forecast.

Macroeconomic situation The development of the global economy fl uctuated noticeably in the fi rst six months of 2012. Developments in the various regions also remained highly disparate. The emerging economies made a major contribution towards the global economic recovery, although their rate of growth has slowed down. The pace of growth in the developed economies remained tempered. Altogether, the global economy grew by 2.6 per cent in the second quarter (see table).

Due to general uncertainty regarding further economic developments, the price of crude oil fell sharply towards the end of the fi rst half-year. After peaking at USD 126/barrel in the meantime, the price of ICE Brent dropped to USD 98/barrel by the end of June. However, the average price of USD 114/barrel for the fi rst six months was still slightly higher than it was last year (+ 2 per cent). The kerosene price was also 2 per cent higher than the average price in the fi rst half of 2011 (see table on p. 3 ).

The euro continued on its downwards spiral. Meanwhile, the US dollar appreciated by an average of 7.5 per cent over the fi rst six months, which mainly affected costs. As regards revenue, a number of currencies performed more robustly including the British pound sterling and the Japanese yen. Overall, exchange rate movements had a negative impact of EUR 107m on the operating result in the period from January to June.

Course of business

Development of crude oil, kerosene and currency

		Minimum	Maximum	Average	30.6. 2012
ICE Brent	in USD / bbl	89.23	126.22	113.67	97.80
Kerosene	in USD / t	866.50	1,111.75	1,024.94	905.25
USD	1 EUR / USD	1.2364	1.3463	1.2967	1.2651
JPY	1 EUR / JPY	96.9	110.89	103.27	100.96
GBP	1 EUR / GBP	0.7971	0.8483	0.8224	0.8068
CHF	1 EUR / CHF	1.2007	1.2186	1.2046	1.2012

Sector developments The aviation industry recorded moderate growth in the passenger sector for the fi rst half-year of 2012. However, last year's fi gures were affected by events including the earthquake and nuclear disaster in Japan. In the fi rst fi ve months of the year, revenue passenger-kilometres went up by a total of 6.5 per cent. Sales growth for the European carriers was comparable at 6.1 per cent. The premium segment also performed similarly, growing 4.9 per cent in the fi rst fi ve months.

By way of contrast to the growth in passenger traffi c, freight business developed modestly in 2012. Throughout the industry, revenue tonne-kilometres for the fi rst fi ve months were 1.6 per cent down on the previous year. The decline was particularly severe for the European cargo airlines at 4.6 per cent.

The aviation industry remained eventful in the fi rst six months of 2012. For instance, the long-planned merger of Brazil's airline TAM and the Chilean carrier LAN, to LATAM Airlines Group, was completed at the end of June. In addition, the large Spanish bank Bankia – IAG's largest single shareholder – is being forced to dispose of its 12 per cent stake in the airline group in the course of its bailout. The shares are yet to be sold.

Course of business

Overview In the fi rst half-year of 2012, business developments at the Lufthansa Group felt the pressure of high, volatile fuel prices and the ongoing eurozone crisis. However, the Lufthansa Group succeeded in increasing revenue again compared with the same period last year thanks to robust overall demand and the ongoing strict management of capacity and yields. Due to high fuel costs, the operating result remained lower than last year's. However, the Company managed to make up much of the shortfall in the second quarter, partly due to the non-recurring factors resulting from the restructuring of Austrian Airlines.

As in the fi rst quarter of 2012, the market environment had a particularly noticeable effect on the Passenger Airline Group business segment. Increases in prices and revenue could not compensate fully for higher costs. Rigorous capacity management was able to limit the decline in profi ts in the Logistics business segment. The service segments – MRO, IT Services and Catering – once again made a positive contribution to the Group's result for the period. Their contribution was higher than a year ago.

SCORE – Change for success The Group-wide future programme SCORE, which was launched at the beginning of 2012, aims to bring about a sustainable, structural improvement in earnings of EUR 1.5bn. The full effect of the SCORE measures on earnings will be felt in 2015. One of the programme's focal points is to step up use of Group-wide synergies. A number of projects have already been implemented to this end with the aim of establishing joint purchasing, improving collaboration in the fi eld of local traffi c and expanding shared business services, for example. In the area of administrative functions, the objective is to reduce expenses by 25 per cent sustainably, largely by cutting staff costs. Additional projects – also for the business segments – are constantly being developed and rolled out.

Signifi cant events The sale of British Midland (bmi) to IAG (International Airlines Group) was completed on 19 April 2012, as agreed in December 2011. The transaction was proceeded by the approval of the EU competition authorities on 30 March. For details of the impact on the half-year fi nancial statements, please refer to the "Earnings position" section on p. 4 and the notes to the consolidated fi nancial statements on p. 27 .

The state of Hesse's transport ministry enacted the night-fl ight ban at Frankfurt Airport on 29 May 2012 after the Federal Administrative Court passed a verdict stating that it was legal. Prohibiting scheduled fl ights between 11.00 p.m. and 5.00 a.m. has a massive impact on some of Lufthansa Passenger Airlines' operations, and especially those of Lufthansa Cargo.

Berlin's new airport was due to open on 3 May 2012, but this has been postponed until next year due to fi re protection work which has yet to be completed. Until it opens, Lufthansa's planned services will depart from Berlin Tegel Airport.

Staff and management On 7 May 2012, the Supervisory Board appointed Simone Menne to the Executive Board of Deutsche Lufthansa AG. She assumed responsibility for Finance and Aviation Services effective 1 July 2012. Simone Menne takes over from Stephan Gemkow, who resigned from his post in mutual agreement as of 30 June 2012 to join the Haniel Group as CEO. Ms Menne's contract runs up to 30 June 2015.

The trade union UFO called a strike ballot on 17 July during ongoing collective negotiations for cabin crew at Lufthansa Passenger Airlines. Voting is due to be completed by the end of 7 August 2012.

Changes in reporting standards and in the group of consolidated companies The standards mandatory as of 1 January 2012 did not have a signifi cant effect on the Group's net assets, fi nancial and earnings position. For further details, see the notes to the consolidated fi nancial statements from p. 26 .

There have been signifi cant changes to the group of consolidated companies since this time last year. Bmi was deconsolidated when its sale to IAG was completed on 19 April 2012. The assets of EUR 576m and liabilities of EUR 690m attributable to the company and shown on the balance sheet for the period ending 31 December 2011 as per IFRS 5 were closed out. The particular accounting treatment of bmi since the signing of the contract for its sale to IAG is discussed in detail in the following section "Earnings position". The individual changes to the group of consolidated companies compared with year-end 2011 and 30 June 2011 are shown in the table on p. 26 . Apart from the effects outlined above resulting from the separate presentation and deconsolidation of bmi, the changes to the group of consolidated companies did not have a signifi cant effect on the balance sheet or the income statement in comparison with the fi rst half-year of 2011.

Earnings position

Traffi c fi gures of the Lufthansa Group's airlines

		Jan. – June 2012	Jan. – June 2011	Change in %
Passengers carried	thousands	49,365	47,513	3.9
Available seat-kilometres	millions	126,876	124,051	2.3
Revenue seat-kilometres	millions	97,626	94,095	3.8
Passenger load factor	%	76.9	75.9	1.0
Freight / mail	thousand tonnes	987	1,070	– 7.8
Available cargo tonne-kilometres	millions	7,723	8,188	– 5.7
Revenue cargo tonne-kilometres	millions	5,082	5,460	– 6.9
Cargo load factor	%	65.8	66.7	– 0.9 pts
Total available tonne-kilometres	millions	19,823	19,974	– 0.8
Total revenue tonne-kilometres	millions	14,390	14,423	– 0.2
Overall load factor	%	72.6	72.2	0.4 pts
Flights	number	512,140	517,808	– 1.1

As a result of the contract for the sale of bmi to IAG signed by Lufthansa and IAG on 22 December 2011, bmi is to be presented in the Group's income statement as a discontinued operation in line with IFRS 5. bmi was deconsolidated when the sale transaction was completed on 19 April 2012. The proceeds from the discontinued operation include the after-tax result recorded for bmi until its disposal and changes in the valuation or proceeds of disposal for the discontinued operation compared with the 2011 fi nancial statements, resulting from the aforementioned contractual agreement. The fi gures for the previous year have been adjusted accordingly. The result from discontinued operations in the fi rst half-year of 2012 was mainly due to price adjustments made as a result of bmi's better than expected liquidity position. For details, please see the notes to the consolidated fi nancial statements on p. 27 .

Revenue and income

	Jan. – June 2012 in €m	Jan. – June 2011 in €m	Change in %
Traffi c revenue	11,851	11,243	5.4
Other revenue	2,658	2,442	8.8
Total revenue	14,509	13,685	6.0
Changes in inventories and work performed by the entity and capitalised	71	24	195.8
Other operating income	969	1,320	– 26.6
Total operating income	15,549	15,029	3.5

Revenue and income Traffi c at the Lufthansa Group increased in the fi rst half-year of 2012 compared with the same period last year. However, passenger and freight business experienced very different trends. The airlines in the Group carried 49.4 million passengers which is 3.9 per cent more than in the same period 2011, whereas the amount of freight and mail fell by 7.8 per cent to 987 thousand tonnes, see table left. The individual performance data for the separate segments is presented in the respective chapters.

The overall increase in traffi c in the fi rst half-year lifted traffi c revenue by 5.4 per cent to EUR 11.9bn. This increase in revenue was attributable to developments in volumes (2.2 per cent), higher prices (0.7 per cent, including surcharges for fuel and air traffi c tax) as well as exchange rate effects (2.5 per cent). The Passenger Airline Group accounted for EUR 10.3bn (+ 7.6 per cent) of traffi c revenue and the Logistics segment for EUR 1.3bn (– 9.6 per cent).

Course of business Earnings position

External revenue share of the business segments in % (as of 30.6.2012) Catering 6.4 IT Services 0.9 Logistics 9.2 MRO 8.6 Passenger Airline Group 74.9

Revenue development in €m (Jan. – June)

Other revenue was up 8.8 per cent on the fi rst half of 2011 at EUR 2.7bn. Of this, the MRO segment generated EUR 1.2bn (+ 6.6 per cent), IT Services EUR 126m (+ 14.5 per cent) and Catering EUR 927m (+ 13.2 per cent). The airborne companies in the Passenger Airline Group and Logistics segments contributed EUR 362m (+ 4.3 per cent) to other revenue.

As a result, the Group's revenue came in 6.0 per cent up on the fi rst half of last year at EUR 14.5bn. The development of revenue over the last fi ve years is shown in the chart above. The Passenger Airline Group's share of total revenue rose to 74.9 per cent (+ 1.1 percentage points) in 2012. The distribution of revenue by segment and region is shown in the segment reporting from p. 29 .

Other operating income was considerably reduced by 26.6 per cent to EUR 969m. In addition to non-recurring income last year (reimbursement of security charges and received compensation payments), this decline is due to lower exchange rate gains (EUR – 203m) and a fall in book gains from the disposal of assets (EUR – 22m). The lower exchange rate gains were partly offset by a corresponding fall in exchange rate losses recognised in other operating expenses. Other items did not vary signifi cantly compared with the previous year.

Total operating income therefore went up by EUR 520m or 3.5 per cent to EUR 15.5bn.

Expenses Operating expenses climbed by a total of EUR 841m (+ 5.7 per cent) to EUR 15.6bn. The main reason for the increase was the cost of materials and services, which rose by 9.0 per cent to EUR 8.8bn. This increase was primarily driven by the EUR 642m (+ 22.0 per cent) climb in fuel costs to EUR 3.6bn. In addition to the 15.4 per cent increase in fuel prices (after hedging), the movement of the US dollar also added 7.4 per cent to expenses.

On the other hand, the volume effect caused by the smaller number of fl ights led to a slight reduction in expenses (– 0.8 per cent). Fuel costs included a positive result of price hedging of EUR 154m. Other raw materials, consumables and supplies edged up by 1.0 per cent to EUR 1.3bn.

Expenses

	Jan. – June 2012 in €m	Jan. – June 2011 in €m	Change in %
Cost of materials and services	8,754	8,028	9.0
of which fuel	3,565	2,923	22.0
of which fees and charges	2,532	2,422	4.5
of which operating lease	61	66	– 7.6
Staff costs	3,399	3,309	2.7
Depreciation	895	822	8.9
Other operating expenses	2,550	2,598	– 1.8
Total operating expenses	15,598	14,757	5.7

Fees and charges rose by 4.5 per cent to EUR 2.5bn, principally due to elevated traffi c. The main drivers were increases in passenger fees (+ 11.0 per cent), take-off and landing fees (+ 5.1 per cent) and air traffi c control charges (+ 2.7 per cent). Expenses for the air traffi c tax went up by 8.6 per cent to EUR 176m, partly due to the tax that has been levied in Austria since 1 April 2011. Other purchased services totalled EUR 1.4bn, 2.8 per cent less than last year, due primarily to lower charter expenses.

Staff costs rose by 2.7 per cent in conjunction with a 2.6 per cent increase in the average number of employees to 117,359, not counting the staff at bmi. Additional expenses from currency movements and wage agreements were offset by a reduction in

costs resulting from pension provisions. The latter resulted mainly from adjustments to retirement saving schemes for cabin crew from Austrian Airlines which were agreed when the carrier's fl ight operations were transferred to Tyrolean Airways.

Depreciation and amortisation rose to EUR 895m (+ 8.9 per cent). Depreciation of aircraft accounted for EUR 23m of the increase (+ 3.4 per cent). Of the total impairment losses of EUR 47m (previous year: EUR 7m), EUR 45m (previous year: EUR 6m) related to aircraft: in particular three Boeing 747-400s and seven B737- 300s, which have been decommissioned or are held for disposal. Impairment losses of EUR 12m were also incurred on the three B747-400s mentioned above, one Airbus A330-200 and fi ve Avro RJs shown in the balance sheet as "assets held for sale". These impairment charges are recognised in other operating expenses.

Other operating expenses totalled EUR 2.6bn, a decrease of 1.8 per cent on the previous year. This fall is mainly attributable to a reduction in exchange rate losses (EUR – 28m), which was offset by lower exchange rate gains in other operating income. Reduced expenses for advertising and sales promotion (EUR – 11m) also helped to drive the fi gure down. Last year's fi gure also included expenses from provisions for long-term contracts in the MRO business segment. By contrast, expenses were infl ated by higher write-downs on current assets (EUR + 32m) and higher staffrelated expenses (EUR + 29m). The other items did not change signifi cantly compared with last year.

Earnings development The loss from operating activities came to EUR – 49m for the fi rst half-year of 2012 (previous year: profi t of EUR 272m). The operating result, which is regularly adjusted for

Reconciliation of results
---------------------------	--

		Jan. – June 2012	Jan. – June 2011
in €m	Income statement	Reconciliation with operating result	Income statement	Reconciliation with operating result
Total revenue	14,509	–	13,685	–
Changes in inventories	71	–	24	–
Other operating income	969	–	1,320	–
of which book gains and current fi nancial investments	–	– 27	–	– 62
of which income from reversal of provisions	–	– 45	–	– 53
of which write-ups on capital assets	–	– 8	–	– 3
of which period-end valuation of non-current fi nancial liabilities	–	– 8	–	– 128
Total operating income	15,549	– 88	15,029	– 246
Cost of materials and services	– 8,754	–	– 8,028	–
Staff costs	– 3,399	–	– 3,309	–
of which past service cost	–	– 2	–	20
Depreciation, amortisation and impairment	– 895	–	– 822	–
of which impairment losses	–	47	–	7
Other operating expenses	– 2,550	–	– 2,598	–
of which impairment losses on assets held for sale – non-operating	–	12	–	10
of which expenses incurred from book losses and current fi nancial investments	–	19	–	26
of which period-end valuation of non-current fi nancial liabilities	–	41	–	25
Total operating expenses	– 15,598	117	– 14,757	88
Profi t / loss from operating activities	– 49	–	272	–
Total from reconciliation with operating result	–	29	–	– 158
Operating result	–	– 20	–	114
Result from equity investments	31	–	17	–
Other fi nancial items	– 148	–	– 308	–
EBIT	– 166	–	– 19	–
Write-downs (included in profi t from operating activities)	895	–	822	–
Write-downs on fi nancial investments, securities and assets held for sale	29	–	31	–
EBITDA	758	–	834	–

Earnings position Cash fl ow and capital expenditure

To our shareholders Interim management report | Interim fi nancial statements | Further information

the items shown in the table on p. 6 , was down EUR 134m on last year's fi gure at EUR – 20m. However, an operating profi t of EUR 361m was generated in the second quarter (previous year: EUR 283m). The adjusted operating margin declined by 1.0 percentage points to 0.2 per cent in the fi rst half of the year. This is calculated as operating result plus write-backs of provisions divided by revenue.

Operating result and net profi t / loss for the period in €m (Jan. – June)

The result from equity investments increased overall by EUR 14m to EUR 31m in the reporting period. While the result of the equity valuation fell by EUR 10m, other income from equity investments improved by EUR 24m to EUR 59m. Net interest declined by EUR 17m to EUR – 161m.

The result from other fi nancial items was up EUR 160m at EUR – 148m. This was primarily due to a sharp fall in expenses from negative changes in the value of hedging instruments classifi ed as trading under the defi nition of IAS 39, which stood at EUR 17m (previous year: EUR 131m). In addition to this, changes in the time value of options used for fuel hedging and recognised in profi t or loss led to expenses of EUR 122m (previous year: EUR 156m).

Earnings before interest and taxes (EBIT) refl ect the changes in the operating result, the result from equity investments and from other fi nancial items and dropped by EUR 147m to EUR – 166m at the end of the fi rst half-year.

Earnings before taxes (EBT) fell by EUR 164m to EUR – 327m. As the pre-tax result was negative and contained non-taxable income, income taxes diminished the loss by EUR 130m. The result from continuing operations therefore came to EUR – 197m (previous year: EUR – 86m).

Including the result of discontinued operations (EUR 36m, see notes on p. 27 ) and after minority interests (EUR 7m), the net loss for the fi rst six months of 2012 came to EUR – 168m (previous year: EUR – 206m). Earnings per share improved to EUR – 0.37 (previous year: EUR – 0.45).

Cash fl ow and capital expenditure

The Lufthansa Group's cash fl ow from operating activities totalled EUR 1.7bn in the fi rst six months. This was EUR 30m lower than in the previous year. Earnings before income taxes fell by EUR 164m. Non-cash expenses of EUR 139m from changes in the market value of fi nancial derivatives (previous year: EUR 287m) were added when calculating cash fl ow. Adjusting for non-cash depreciation and amortisation added a further EUR 101m to cash fl ow. Changes in working capital and income tax payments also resulted in improvements to cash fl ow from operating activities of EUR 107m and EUR 105m respectively compared with last year. Starting with the fi nancial statements for 2011 the calculation of cash fl ow from operating activities also includes retirement benefi ts paid to former staff from external pension funds, which are included in changes in working capital. The fi gures for the previous year have been adjusted accordingly.

Gross capital expenditure came to EUR 1.4bn. Of this, EUR 1.2bn was for a total of 25 aircraft (two Boeing 747-8is, two Airbus A380s, fi ve A330s, fi ve A321s, four A320s, two A319s and fi ve Embraer 195s) as well as aircraft overhauls and down payments. An additional EUR 103m was invested in other property, plant and equipment. Intangible assets accounted for EUR 25m of the remaining capital expenditure. Financial investments of EUR 13m related solely to loans. The disposal of bmi resulted in cash outfl ows totalling EUR 168m.

EUR 69m were invested in repairable spare parts for aircraft. The funding requirement was partly covered by interest and dividend income (EUR 264m in total) and proceeds of EUR 280m from the disposal of assets and shares – in particular aircraft and noncurrent securities. The purchase and sale of current securities and funds resulted in a net cash outfl ow of EUR 534m. A total of EUR 1.6bn in net cash was therefore used for capital expenditure and cash management activities (previous year: EUR 173m).

Lufthansa recorded a free cash fl ow of EUR 584m in the six months to June (previous year: EUR 809m).

The balance of fi nancing activities was a net cash infl ow of EUR 7m. New borrowing (EUR 752m) was offset by scheduled capital repayments (EUR 380m), dividend payments (EUR 126m) and interest payments of EUR 235m. The new borrowing consisted of six borrower's note loans, aircraft fi nancing and an exchangeable bond issue, which can be exchanged for Lufthansa's JetBlue shares.

Cash and cash equivalents rose by EUR 71m to EUR 958m. This fi gure includes an increase of EUR 14m in cash balances due to exchange rate movements.

The internal fi nancing ratio was 120.0 per cent (previous year: 117.7 per cent). Cash and cash equivalents – including securities – totalled EUR 4.6bn at the end of the fi rst six months and therefore remained virtually unchanged. The detailed cash fl ow statement can be found on p. 25 .

Assets and fi nancial position

At EUR 29.4bn, the Group's total assets increased by EUR 1.3bn between year-end 2011 and the end of June 2012. Non-current assets rose by EUR 368m, while current assets increased by EUR 912m.

Within non-current assets, the item aircraft and reserve engines rose slightly by EUR 438m to EUR 12.0bn.

The fall in equity investments accounted for under the equity method (EUR – 28m) is largely due to negative earnings contributions from SN Airholding and SunExpress. The increase of EUR 139m

in other equity investments is primarily attributable to changes in the market value of the shares in Amadeus IT Holding S.A. (EUR + 125m) and in JetBlue (EUR + 11m), which are not recognised in profi t or loss. By contrast, non-current derivative fi nancial instruments (mainly relating to fuel hedging) shrank by a total of EUR 46m.

Non-current securities were down EUR 114m following the sale of a borrower's note loan. Loans and receivables also fell by EUR 56m.

In current assets, receivables increased by EUR 1.1bn, mainly for seasonal and billing reasons. The reduction in current fi nancial derivatives (EUR – 197m) stems primarily from fuel hedging, offset by higher market values for foreign exchange hedges. Cash and cash equivalents, consisting of current securities, bank balances and cash-in-hand, rose by EUR 575m to EUR 4.6bn. The sale of bmi to IAG on 19 April 2012 resulted in a reduction of EUR 576m in assets held for sale. The proportion of non-current assets in the balance sheet total declined from 66.3 per cent at year-end 2011 to 64.7 per cent currently.

Shareholders' equity (including minority interests) fell by EUR 163m (– 2.0 per cent). It therefore totalled EUR 7.9bn on the reporting date. This reduction is largely due to the negative after-tax result and dividend payments. The equity ratio fell accordingly to 26.8 per cent (year-end 2011: 28.6 per cent).

Non-current liabilities and provisions shrank by EUR 142m to EUR 10.1bn, while current borrowing was increased by EUR 1.6bn to EUR 11.4bn.

Within non-current borrowing, pension provisions decreased by EUR 132m. This was partly due to the settlement of bmi's pension obligations. Pension provisions also declined in conjunction with the adjustments to retirement saving schemes for cabin crew from Austrian Airlines which were agreed when the carrier's fl ight operations were transferred to Tyrolean Airways. Financial liabilities were up EUR 114m. Derivative fi nancial instruments increased by EUR 57m. Of this, EUR 49m was attributable to the market value of conversion options associated with the exchangeable bond issued in April 2012, which entitles the holder to acquire Lufthansa's shares in JetBlue. The sharp fall of EUR 226m in deferred tax liabilities is mainly due to the loss before income taxes and the non-taxable income included in this fi gure.

Cash fl ow and capital expenditure Assets and fi nancial position

Calculation of net indebtedness and gearing

	30 June 2012 in €m	31 Dec. 2011 in €m	Change as of 31 Dec. 2011 in %
Liabilities to banks	1,613	1,456	10.8
Bonds	2,309	2,119	9.0
Other non-current borrowing	2,934	2,849	3.0
	6,856	6,424	6.7
Other bank borrowing	12	16	– 25.0
Group indebtedness	6,868	6,440	6.6
Cash and cash equivalents	958	887	8.0
Securities	3,615	3,111	16.2
Non-current securities (liquidity reserve)*	0	114	– 100.0
Net indebtedness	2,295	2,328	– 1.4
Pension provisions	2,033	2,165	– 6.1
Net indebtedness and pensions	4,328	4,493	– 3.7
Gearing in %	54.9	55.9	– 1.0 pts

Within the current liabilities, fi nancial liabilities increased by a total of EUR 318m. In addition, trade payables and other fi nancial liabilities climbed considerably (EUR + 606m) – largely for seasonal and billing reasons – as did liabilities from unused fl ight documents (EUR + 1.2bn). Debt in connection with assets held for sale shrank by EUR 690m. This was due to the sale of bmi in April 2012.

Net indebtedness stood at EUR 2.3bn as of 30 June 2012 and was therefore slightly lower than at year-end 2011. Gearing including pension provisions decreased slightly to 54.9 per cent (year-end 2011: 55.9 per cent) and therefore remains within the target range of 40 to 60 per cent.

* Realisable at any time.

Group fl eet – Number of commercial aircraft as of 30.6.2012

Manufacturer / type	LH Passenger Airlines1)	SWISS	Austrian	LH Cargo	Group fl eet	of which fi nance lease	of which operating lease	Change as of 31.12.11	Change as of 30.6.11
Airbus A310	23)				2			–	–
Airbus A319	64	7	7		78	2	16	– 9	– 7
Airbus A320	48	27	9		84	11	2	– 3	– 3
Airbus A321	61	7	6		74	4		– 2	+ 3
Airbus A330	18	19			37		4	+ 3	+ 3
Airbus A340	50	13	22)		65	2	2	–	–
Airbus A380	10				10			+ 2	+ 3
Boeing 737	50		7		57			– 23	– 31
Boeing 747	30				30			–	–
Boeing 767			6		6	2		–	–
Boeing 777			4		4			–	–
Boeing MD-11F				18	18			–	–
Bombardier CRJ	56		1		57		1	– 8	– 20
Bombardier Q-Series			14		14			–	–
ATR	11				11		6	–	– 2
Avro RJ	5	20			25		6	– 4	– 9
Embraer	35	43)	33)		42	2	4	– 14	– 10
Fokker F70			9		9	1		–	–
Fokker F100			15		15			–	–
Total aircraft	440	97	83	18	638	24	41	– 58	– 73

3) Leased to company outside the Group.

1) Including regional airlines and Germanwings.

2) Let to SWISS.

Lufthansa 2nd Interim Report January – June 2012 9

Passenger Airline Group business segment

Key fi gures Passenger Airline Group 1) of which Lufthansa

Jan. – June Jan. – June	Change
	in %
7,687	6.6
–146	– 105.5
416	– 51.5
40,118	2.1
34,640	3.4
91,891	1.8
69,563	2.8
75.7	0.8 pts
	2012 2011 8,192 – 300 202 40,960 35,830 93,518 71,518 76.5

1) Before profi t/loss transfer from other companies. 2) Lufthansa Passenger Airlines, SWISS and Austrian Airlines.

3) Including Germanwings. Previous year's fi gures have been adjusted.

Segment structure and course of business The Passenger Airline Group segment comprises Lufthansa Passenger Airlines (including Germanwings), SWISS and Austrian Airlines. They are joined by equity investments such as Brussels Airlines and Sun-Express. With the sale of bmi to IAG on 19 April Lufthansa has disassociated itself of a persistently loss-making subsidiary.

The Passenger Airline Group's multi-hub strategy gives customers a highest degree of fl exibility in planning their travel thanks to the different hubs in the group and allows the companies to realise revenue and cost synergies.

The course of business in the fi rst half-year of 2012 refl ects fl uctuating and temperamental demand caused by the current economic concerns. Oil prices were also high on average in the fi rst half, which further impaired earnings. Thanks to strict capacity management, the business segment was able to boost its passenger load factor and average yields and thereby limit the impact on earnings. Nevertheless, the operating result fell short of last year's.

Operating performance The companies in the Passenger Airline Group carried a total of 49.4 million passengers in the fi rst six months of 2012. This represents an increase of 3.9 per cent over last year. Due to the segment's cautious capacity management, the airlines' capacity increased by just 2.3 per cent during the period, while revenue seat-kilometres rose by 3.8 per cent. Consequently, the passenger load factor improved by 1.0 percentage points to 76.9 per cent and average yields rose by 3.7 per cent. Traffi c revenue grew by a total of 7.6 per cent.

In the fi rst half-year of 2012, the business segment succeeded in boosting traffi c revenue in all traffi c regions, see table on p. 11 . The highest sales growth was recorded in the Europe traffi c region, where average yields rose by 2.6 per cent and traffi c revenue grew by 7.9 per cent.

Traffi c revenue increased particularly sharply (11.0 per cent) in the Americas traffi c region. With capacity remaining stable, this region saw the most marked improvement in its utilization. Average yields increased by 8.4 per cent as a result.

The trend in traffi c revenue was also positive in the Asia/Pacifi c region (+ 4.8 per cent). This was primarily due to sales developments, while average yields remained on a par with last year (+ 0.1 per cent).

By contrast, improved average yields (+ 4.0 per cent) were largely responsible for boosting traffi c revenue in the Middle East/Africa traffi c region by 3.9 per cent.

The world's largest airline alliance – Star Alliance – celebrated its 15th anniversary in May 2012. Since it was established in 1997 as a group of fi ve airlines, Star Alliance has grown into a network comprising 27 carriers and now offers 21,500 connections to 1,356 destinations in 193 countries. Avianca, Taca Airlines and Copa Airlines became the latest carriers to join the alliance in June 2012, adding almost 50 new airports in Central and Latin America to the network.

Revenue and earnings development Increased traffi c meant that the segment's traffi c revenue climbed year on year to EUR 10.3bn (+ 7.6 per cent). In addition to the 3.8 per cent increase in sales volumes, higher prices (+ 1.3 per cent) and exchange rate effects (+ 2.5 per cent) also lifted revenue. In total, revenue grew to EUR 11.2bn (+ 7.2 per cent).

Other operating income declined by 26.3 per cent to EUR 453m. As well as lower exchange rate gains (EUR – 57m) this was due above all to the non-recurring income received in the same period last year (reimbursement of air traffi c control charges and compensation payments).

Total operating income therefore went up by 5.3 per cent to EUR 11.7bn.

Compared with the previous year, operating expenses grew by 6.0 per cent to EUR 11.9bn. Fuel costs were the main factor, rising by 23.7 per cent to EUR 3.3bn. This drove the cost of materials and services up sharply to EUR 7.7bn (+ 10.2 per cent). Fees and charges were also up by a total of 5.2 per cent to EUR 2.4bn, mainly due to greater traffi c. The main components of the increase were higher passenger fees (+ 11.0 per cent), the air traffi c tax (+ 8.6 per cent), take-off and landing fees (+ 5.0 per cent) and air traffi c control charges (+ 3.0 per cent).

Staff costs fell by 0.9 per cent, while the average headcount increased by 2.4 per cent. This is mainly due to a reduction in expenses associated with pension provisions, caused by adjustments to retirement saving schemes for cabin crew from Austrian Airlines which were agreed when the carrier's fl ight operations were transferred to Tyrolean Airways. This reduction was largely offset by cost increases from exchange rate movements and rises resulting from the new wage settlements.

Depreciation and amortisation was up by 6.1 per cent to a total of EUR 697m mainly due to new aircraft deliveries this year and last.

Other operating expenses shrank by 4.0 per cent to EUR 1.6bn. A fall in expenses from exchange rate losses was offset by higher indirect staff costs.

At EUR – 179m, the operating result for the fi rst half was EUR 79m below that for the same period last year. Comments on the earnings contributions from the individual airlines can be found on the following pages.

Other segment income of EUR 50m (previous year: EUR 66m) was attributable above all to income from write-backs of provisions (EUR 33m) and book gains on the disposal of non-current assets (EUR 10m).

Other segment expenses came to EUR 60m (previous year: EUR 40m). They include impairment losses of EUR 45m related to three Boeing 747-400s and seven B737-300s, which have been decommissioned or are held for disposal. Impairment losses of EUR 12m were also incurred on one Airbus A330-200 and fi ve Avro RJs shown in the balance sheet as "assets held for sale". The result of the equity valuation of EUR – 52m (previous year: EUR – 35m) mainly relates to SunExpress and SN Airholding. The segment result fell overall by EUR 132m to EUR – 241m.

At EUR 1.2bn, the segment's capital expenditure was 5.8 per cent lower than last year's and was mainly incurred for new aircraft. In the fi rst half-year, the segment took delivery of two Boeing 747- 8is, two Airbus A380s, fi ve A330s, fi ve A321s, four A320s, two A319s and fi ve Embraer 195s as part of its ongoing fl eet moder nisation efforts.

		Net traffi c revenue in €m external revenue		Number of passengers in thousands		Available seat-kilometres in millions	Revenue seat-kilometres in millions		Passenger load factor in %
	Jan. – June 2012	Change in %	Jan. – June 2012	Change in %	Jan. – June 2012	Change in %	Jan. – June 2012	Change in %	Jan. – June 2012	Change in pts
Europe	4,776	7.9	39,315	4.3	44,232	4.1	31,086	5.2	70.3	0.8
America	2,601	11.0	4,296	1.8	38,152	0.0	32,038	2.4	84.0	2.0
Asia / Pacifi c	1,970	4.8	3,037	3.5	29,466	3.4	23,675	4.7	80.3	0.9
Middle East / Africa	910	3.9	2,275	2.0	12,975	– 1.4	9,321	0.0	71.8	0.9
Total scheduled services	10,256	7.7	48,923	3.9	124,825	2.1	96,119	3.6	77.0	1.1
Charter	78	– 4.9	442	1.3	2,051	17.8	1,507	1.1	73.5	– 2.0
Total	10,334	7.6	49,365	3.9	126,876	2.3	97,626	3.8	76.9	1.0

Trends in traffi c regions Passenger Airline Group *

* Lufthansa Passenger Airline, SWISS and Austrian Airlines.

Forecast Capacity management by the companies in the airline group bolstered the load factor and revenue in the period from January to June. However, the increase in income was unable to fully compensate for higher expenses, especially for fuel. The price of oil fell recently, after a volatile half-year. Its further development will infl uence the cost side. A great deal of uncertainty still surrounds the future development of market parameters. It is therefore impossible to predict at present whether the robust bookings we are currently seeing will be able to compensate for the additional expenses listed above. In response to this, the airlines in the Passenger Airline Group will continue to manage capacity carefully. As a result, the planned capacities for this year have been readjusted to a growth fi gure of just 0.5 per cent. These plans include the 2012/2013 winter fl ight timetable, which is currently expected to comprise approximately 2.5 per cent less capacity than last year's. To achieve this goal, Lufthansa Passenger Airlines in particular will decommission a larger number of older planes than originally planned in return for the forthcoming new aircraft deliveries.

In the 2012 fi nancial year, the Passenger Airline Group is still expected to increase its revenue and generate an operating profi t. The absolute earnings level nonetheless will depend on the uncertainties described above in view of the external infl uences. All the carriers are involved in the SCORE programme with the aim of bringing about sustainable, structural increases in the airline group's earnings. Forward-looking models are currently being developed to make greater use of synergies.

Lufthansa Passenger Airlines

Lufthansa Passenger Airlines was able to post a moderately positive revenue trend in the fi rst half-year of 2012. However, it was faced with high fuel prices, which only eased towards the end of the second quarter. Operations were also impaired by the nightfl ight ban imposed at Frankfurt Airport.

Since the beginning of 2012 the fi gures for Germanwings have been consolidated with those of Lufthansa Passenger Airlines. Last year's fi gures have been adjusted accordingly. Lufthansa Passenger Airlines transported 35.8 million passengers in the fi rst six months, 3.4 per cent more than last year. Capacity management was successful: while revenue seat-kilometres increased by 2.8 per cent, capacity was up by just 1.8 per cent. This prompted the passenger load factor to improve by 0.8 percentage points to 76.5 per cent. Average yields rose by 4.4 per cent compared with last year as a result. Traffi c revenue also increased by 7.4 per cent to EUR 7.6bn and revenue climbed to EUR 8.2bn (+ 6.6 per cent).

Operating expenses increased by 7.3 per cent compared with the fi rst half-year of 2011. This is mainly due to increased expenses for fuel (EUR + 469m) along with fees and charges (EUR + 74m). The operating result was EUR 154m down on the previous year at EUR – 300m.

Scheduled services with the fi rst Boeing 747-8i commenced on the Frankfurt–Washington D.C. route on 1 June 2012. This latest member of the Lufthansa fl eet boasts enhanced fuel effi ciency and 30 per cent lower noise emissions compared to the B747-400. Lufthansa will take delivery of 20 aircraft of this new type. Four of them are scheduled for delivery this year. The jets will initially operate on routes to North America and India. Furthermore, Lufthansa Passenger Airlines continued to invest in modernising and renewing its in-fl ight product in all classes of travel during the fi rst halfyear of 2012. A noticeable, sustained improvement was also made to punctuality in Frankfurt with the opening of the new runway. Due to the delayed opening of the new Berlin Brandenburg Airport, the planned fl ights are currently operating out of Berlin Tegel.

On 1 June 2012, the remits held by the members of the Executive Board of Lufthansa Passenger Airlines were adjusted and Peter Gerber was given responsibility for the newly created Human Resources and Infrastructure Services Division. He was previously in charge of Finance and Human Resources on the Executive Board of Lufthansa Cargo. On the Executive Board at Lufthansa Passenger Airlines, the previous Finance and Human Resources Division headed by Dr. Roland Busch has taken over responsibility for the Business Development area and has been renamed Finance and Information Management.

As part of the Group programme SCORE, Lufthansa Passenger Airlines aims to make an earnings contribution of EUR 920m with cost-cutting making up two thirds of this, and the remaining third coming from sustainable increases in earnings. Various projects have already been rolled out to achieve this, such as SPRINT, which is designed to boost profi tability in intercontinental traffi c. The direct4U project strives to merge Lufthansa Direct Services and Germanwings in both business and organisational terms. Its aim is to heighten combined competitiveness and turn a profi t on decentralised European traffi c.

Over the remainder of the year, Lufthansa Passenger Airlines expects to see ongoing uncertainty regarding economic developments and key cost items, particularly fuel. Nevertheless, the company still anticipates rising revenue for the 2012 fi nancial year. Whether it is possible to meet the target of an operating profi t depends largely on whether the steps taken are suffi cient to compensate for the leap in fuel prices.

Other Group airlines

SWISS Jan. – June 2012 Jan. – June 2011 Change in % Revenue €m 2,034 1,870 8.8 Operating result €m 48 104 – 53.8 EBITDA €m 200 242 – 17.4 Passengers carried thousands 8,095 7,774 4.1 Employees as of 30.6. number 8,267 7,820 5.7

Further information on SWISS can be found at www.swiss.com.

The challenging market environment curbed business developments at SWISS. Following a diffi cult start to the year, business developments remained muted in the second quarter. Despite posting higher revenue of EUR 2.0bn (previous year: EUR 1.9bn), SWISS generated an operating profi t of EUR 48m, – 53.8 per cent less than a year earlier. This was due to the persistently strong Swiss franc and high fuel prices.

Passenger numbers increased by 4.1 per cent to 8.1 million. SWISS upped its sales by 6.5 per cent and took its passenger load factor up to 80.5 per cent (+ 1.2 percentage points).

SWISS currently serves 70 destinations in 37 countries with a fl eet of 97 aircraft. Two new Airbus A330-300s and two A320s were added to the fl eet. Starting in 2014, SWISS will also replace its entire regional fl eet of Avro RJs with newly developed aircraft from the Bombardier C-Series, which have lower emissions and a reduced noise footprint.

SWISS's ground product is also being refi ned. For instance, a new arrivals lounge was offi cially opened at the Zurich hub in April. Since July, SWISS has also been offering its passengers a home collecting service for luggage.

SWISS increased both fuel surcharges and ticket prices on intercontinental and European routes. Since the beginning of the year, SWISS has also initiated extensive measures to safeguard earnings, such as a hiring freeze for administrative staff. As part of the Group programme SCORE, local traffi c is also being optimised and fuel management is being stepped up. Decisions will be made on additional structural measures over the coming months.

Considering the challenging market environment SWISS expects business to remain diffi cult for the remainder of 2012. It therefore still looks unlikely that the company will match last year's operating result, despite the anticipated growth in sales.

Austrian Airlines

		Jan. – June 2012	Jan. – June 2011	Change in %
Revenue	€m	1,029	949	8.4
Operating result	€m	26	– 64
EBITDA	€m	104	39	166.7
Passengers carried	thousands	5,441	5,094	6.7
Employees as of 30.6.	number	6,686	6,898	– 3.1

Further information on Austrian Airlines can be found at www.austrian.com.

In the six months to June 2012, Austrian Airlines succeeded in raising its passenger numbers by 6.7 per cent to approximately 5.4 million. A moderate 1.6 per cent increase in capacity was more than matched by sales growth of 6.3 per cent. The load factor rose by 3.3 percentage points to 74.0 per cent and revenue climbed by 8.4 per cent to EUR 1.0bn.

In early 2012, Austrian Airlines launched a wide-ranging restructuring programme to take the company to sustainable profi tability. As it proved impossible to reach a consensus about restructuring fl ight operations in discussions with the bargaining partners, the Executive Board decided on 30 April to transfer fl ight operations to the Group subsidiary Tyrolean Airways. The transfer was completed as planned on 1 July. In connection with this, one-off expenses and income were incurred which affected earnings developments in the fi rst half-year of 2012. Most of the expenses related to severance payments, while the income was derived from lower future obligations, such as anniversary awards, severance payments and pension payments. As a result, Austrian Airlines increased its operating result in the fi rst six months of 2012 to EUR 26m (previous year: EUR – 64m). Adjusted for the abovementioned non-recurring effects, the operating result came in at EUR – 56m. In order to fi nance the restructuring, Lufthansa decided on a contingent capital increase of up to EUR 140m in March 2012. The fi rst EUR 70m tranche was implemented in July.

COO Peter Malanik left the company by mutual agreement effective 25 May 2012. CEO Jaan Albrecht and CCO Karsten Benz have jointly taken over his responsibilities.

Austrian Airlines expects demand to keep fl uctuating and believes that fuel costs will remain high. The effects of the restructuring programme which has been initiated will become apparent in the second half-year of 2012 due to cost-cutting in various areas, such as human resources, fees and charges, and catering. The positive one-off effects from the transfer of fl ight operations will generate an operating profi t in 2012 already.

Logistics business segment

Key fi gures Logistics

		Jan. – June 2012	Jan. – June 2011	Change in %	April – June 2012	April – June 2011	Change in %
Revenue	€m	1,352	1,503	– 10.0	690	761	– 9.3
of which with companies of the Lufthansa Group	€m	13	13	0.0	6	7	– 14.3
Operating result	€m	47	133	– 64.7	28	69	– 59.4
Segment result	€m	56	137	– 59.1	31	75	– 58.7
EBITDA *	€m	86	184	– 53.3	45	99	– 54.5
Segment capital expenditure	€m	83	35	137.1	49	21	133.3
Employees as of 30.6.	number	4,603	4,542	1.3	4,603	4,542	1.3
Freight and mail	thousand tonnes	864	953	– 9.2	439	483	– 9.1
Available cargo tonne-kilometres	millions	6,376	6,902	– 7.6	3,296	3,547	– 7.1
Revenue cargo tonne-kilometres	millions	4,360	4,768	– 8.5	2,220	2,424	– 8.4
Cargo load factor	%	68.4	69.1	– 0.7 pts	67.4	68.3	– 0.9 pts

* Before profi t / loss transfer from other companies.

Segment structure and course of business In addition to Lufthansa Cargo AG, the Logistics segment includes Lufthansa Cargo Charter Agency GmbH, the airfreight container specialist Jettainer GmbH and equity investments in the cargo airline AeroLogic GmbH and various handling fi rms. Lufthansa Cargo markets capacities on its own freighters and chartered cargo aircraft along with belly capacities on passenger planes operated by Lufthansa Passenger Airlines and Austrian Airlines.

Demand for freight services was restrained around the world in the fi rst half-year of 2012. The high fuel price and the night-fl ight ban in Frankfurt placed additional pressure on the company. In this challenging market environment, Lufthansa Cargo succeeded in aligning capacities closely with trends in demand, curbing costs and posting a profi t at the end of the half-year.

In June, the Board of Directors at Lufthansa Cargo's joint venture Jade Cargo International Ltd. decided to dissolve the company. This decision followed unsuccessful restructuring negotiations with the Chinese UniTop Group due to diffi cult market conditions in China.

With effect as of 1 June 2012, Peter Gerber – previously director of fi nance and human resources at Lufthansa Cargo – was appointed Director of Human Resources and Infrastructure Services at Lufthansa Passenger Airlines. The Chairman of the Executive Board and CEO of Lufthansa Cargo, Karl Ulrich Garnadt, has taken on Mr Gerber's previous remit for the time being.

Product and route network Lufthansa Cargo expanded its range of express freight products by adding Courier.Solutions and Emergency.Solutions.

The quality initiative launched in the German market in 2010 is still ongoing. In March, Lufthansa Cargo became one of fi ve airlines in the world to receive a platinum seal for its own quality management as part of the IATA industry initiative Cargo 2000. As in the previous years, Lufthansa Cargo was again named best European freight airline at the Cargo Airline of the Year Awards run by the British Air Cargo Media Group. Hellmann Worldwide Logistics granted Lufthansa Cargo its European Award.

Lufthansa Cargo continued to further develop its route network without changing capacity by reducing frequencies on individual routes this year. It started operating fl ights to the Chinese metropolis Chongqing and to Detroit – the centre of the US automotive industry – using MD-11 freighters for the fi rst time. In South America, Montevideo was added to the route network. The current summer timetable offers Lufthansa Cargo's customers fl ights to 303 destinations in 99 countries.

Operating performance In the fi rst half-year of 2012, the volume of freight transported fell by 9.2 per cent compared with last year. Lufthansa Cargo responded to this development with targeted capacity adjustments and cancellations on specifi c frequencies, enabling it to maintain its presence in all markets. As a result, capacity was reduced by 7.6 per cent compared with the fi rst half-year of 2011. Revenue tonne-kilometres fell by 8.5 percentage points, meaning that the load factor only dipped slightly, to 68.4 per cent. See the table on p. 15 .

Thanks to constant capacity adjustments, the load factor improved in the Pacifi c/Asia traffi c region. Meanwhile, the cargo load factor went down in America, while capacity remained constant. In Europe – much like in Asia – the company managed to compensate for dwindling demand by adjusting capacities. The load factor rose sharply as a result. In the Middle East/Africa region, markets stabilised in the six months to June 2012. Consequently, the cargo load factor only fell marginally.

Revenue and earnings development Lufthansa Cargo's revenue shrank by 10.0 per cent in comparison with last year to EUR 1.4bn. Lower traffi c revenue of EUR 1.3bn (– 9.6 per cent) was the main reason. Other revenue sank to EUR 50m (– 21.9 per cent), in particular due to lower income from aircraft charters. At EUR 38m, other operating income was marginally higher than a year ago. Total operating income therefore decreased to EUR 1.4bn (– 9.7 per cent).

Operating expenses came in 4.5 per cent down on the fi rst half of last year at EUR 1.3bn. This was largely due to the reduced cost of materials and services, which stood at EUR 982m (– 5.4 per cent). This includes fuel expenses, which despite lower transport volumes went up to EUR 258m (+ 3.6 per cent) on the back of a sharp increase in kerosene prices. MRO expenses went up by 6.7 per cent to EUR 64m due to higher prices and more service inspections. These rises in expenses were more than offset by lower charter expenses of EUR 469m (– 11.8 per cent) and reduced air traffi c control and handling charges of EUR 141m (– 7.8 per cent).

Due to an increase in basic rates of pay and a slightly higher headcount, staff costs rose by 7.4 per cent to EUR 188m. In the reporting period the Logistics segment had an average of 4,605 employees (+ 1.8 per cent).

Depreciation and amortisation was 35.6 per cent lower than in the previous year at EUR 29m. This was mainly because depreciation of other MD-11 freighters had come to an end.

At EUR 144m, other operating expenses were marginally lower than one year ago.

Lufthansa Cargo generated an operating profi t of EUR 47m in the fi rst six months of 2012. As expected, this was below last year's fi gure of EUR 133m.

Other segment income – which consists largely of provision reversals – amounted to EUR 2m in the reporting period (previous year: EUR 5m). There were no other segment expenses. The segment result was EUR 56m (previous year: EUR 137m). This includes pro rata income of EUR 7m (previous year: EUR 0m) from equity investments accounted for using the equity method.

Segment capital expenditure went up to EUR 83m in the reporting period (previous year: EUR 35m). The rise was due largely to the down payments for fi ve Boeing 777F aircraft.

Forecast Although the general market environment is challenging, Lufthansa Cargo remains cautiously optimistic about the remainder of the year. This is based on fl exible, demand-oriented capacity management and ongoing strict cost control. However, a slight upswing in demand is expected towards the end of the year at the earliest. Lufthansa Cargo is still anticipating an operating profi t in the three-digit million euro range for the fi nancial year 2012. A repeat of last year's very strong result is not to be expected, however, due to the effects of the night-fl ight ban in Frankfurt and as demand for airfreight remains hesitant in many markets.

	Net traffi c revenue in €m external revenue *		Freight /mail in thousand tonnes		Available cargo tonne kilometres in millions		Revenue cargo tonne kilometres in millions		Cargo load factor in %
	Jan. – June 2012	Change in %	Jan. – June 2012	Change in %	Jan. – June 2012	Change in %	Jan. – June 2012	Change in %	Jan. – June 2012	Change in pts
Europe	123	0.0	299	– 6.0	348	– 17.0	176	– 7.6	50.6	5.1
America	516	– 3.2	263	– 9.4	2,794	– 0.3	1,886	– 5.9	67.5	– 4.0
Asia / Pacifi c	552	– 16.6	236	– 13.1	2,621	– 13.7	1,945	– 11.4	74.2	2.0
Middle East / Africa	103	– 8.8	68	– 8.1	613	– 4.7	353	– 6.6	57.6	– 1.2
Total	1,294	– 9.6	864	– 9.2	6,376	– 7.6	4,360	– 8.5	68.4	– 0.7

Trends in traffi c regions Lufthansa Cargo

* Not including Extracharter.

MRO business segment

Key fi gures MRO

		Jan. – June 2012	Jan. – June 2011	Change in %	April – June 2012	April – June 2011	Change in %
Revenue	€m	2,016	2,047	– 1.5	990	1,020	– 2.9
of which with companies of the Lufthansa Group	€m	773	881	– 12.3	343	436	– 21.3
Operating result	€m	144	106	35.8	82	37	121.6
Segment result	€m	173	131	32.1	98	53	84.9
EBITDA *	€m	204	202	1.0	91	82	11.0
Segment capital expenditure	€m	63	51	23.5	30	36	– 16.7
Employees as of 30.6.	number	20,345	19,584	3.9	20,345	19,584	3.9

* Before profi t / loss transfer from other companies.

Segment structure and course of business The Lufthansa Technik group consists of 33 technical maintenance fi rms around the world, including the main site in Hamburg. The company also holds direct and indirect stakes in 56 companies across the world. The group of consolidated companies grew by two companies.

Demand for maintenance, repair and overhaul (MRO) services continued to stabilise at lower price levels. The biggest challenges that Lufthansa Technik face are the persistently tense fi nancial and earnings situation in the airline industry, expanding MRO capacities around the world twinned with market consolidation. As last year's result contained one-off expenses, the segment was able to post a much higher operating profi t for the fi rst half-year of 2012.

Products With its product portfolio, Lufthansa Technik is the world's market-leading provider of MRO services for commercial aircraft. The company also started providing regular maintenance services for the Boeing 747-8i at Lufthansa Passenger Airlines on 1 June 2012, when the fi rst passenger fl ight was completed with the new aircraft model. A number of initial research projects also paved the way for expanding the portfolio with additional "green MRO" services. Following a decision to realign the group, complete aircraft repainting work in Hamburg ceased at the end of May.

Operating performance So far, Lufthansa Technik has signed some 190 new contracts with a volume of EUR 348m for 2012, further adding to the number of customers and aircraft serviced. Major successes in recent months include the signing of a seven-year agreement to supply components to the Scandinavian Airlines fl eet of approximately 140 aircraft and the extension of the company's collaboration with Airbus. A number of projects have already been initiated as part of the Group-wide programme SCORE. One such project is iSave, which is examining costcutting potential in the engine overhaul unit. The KICK15 project aims to reduce unit costs for component repairs by 15 per cent.

Revenue and earnings development The business segment's revenue in the fi rst six months of 2012 came in at EUR 2.0bn, just under the previous year's fi gure. Intra-Group revenue fell by 12.3 per cent compared with last year to EUR 773m due to the sale of bmi and a high-revenue modifi cation programme in 2011. However, external revenue climbed to EUR 1.2bn (+ 6.6 per cent). Other operating income fell to EUR 96m due to exchange rate movements (previous year: EUR 111m). Total operating income therefore remained slightly down year on year at EUR 2.1bn (– 2.1 per cent).

As a result, total operating expenses decreased by 4.1 per cent to EUR 2.0bn. The cost of materials and services dropped by 7.5 per cent to EUR 973m. Because of the additions of consolidated companies to the group, the average headcount rose by 3.5 per cent to 20,396. In combination with a wage increase in place since the start of the year and additional partial retirement agreements this drove up staff costs by 10.3 per cent to EUR 610m. Depreciation and amortisation came to EUR 49m (EUR + 5m). Other operating expenses fell by 16.6 per cent to EUR 336m due to currency movements and last year's provisions for impending losses in connection with long-standing contracts.

Lufthansa Technik increased its operating profi t to EUR 144m (previous year: EUR 106m). Other segment income rose to EUR 18m, whereas the result of the equity valuation remained virtually unchan ged at EUR 12m. Lufthansa Technik reported a segment result of EUR 173m (+ 32.1 per cent). Segment capital expenditure, which included expenditure on expanding the infrastructure at some sites as well as in the procurement of reserve engines, climbed to EUR 63m (EUR + 12m).

Forecast Considering the cost-cutting and sales measures which have been initiated, Lufthansa Technik still expects to see a moderate increase in revenue for the 2012 fi nancial year. The company also expects its operating profi t to come in slightly up on last year's. This is subject to stable overall developments in the airline industry.

IT Services business segment

Key fi gures IT Services

		Jan. – June 2012	Jan. – June 2011	Change in %	April – June 2012	April – June 2011	Change in %
Revenue	€m	301	289	4.2	155	142	9.2
of which with companies of the Lufthansa Group	€m	175	179	– 2.2	88	89	– 1.1
Operating result	€m	8	6	33.3	5	3	66.7
Segment result	€m	7	4	75.0	4	1	300.0
EBITDA	€m	44	22	100.0	32	11	190.9
Segment capital expenditure	€m	10	16	– 37.5	4	9	– 55.6
Employees as of 30.6.	number	2,773	2,870	– 3.4	2,773	2,870	– 3.4

Segment structure and course of business Lufthansa Systems offers consultancy and IT services for selected industries and is a global leader in the aviation sector. Its portfolio includes advising on, developing and implementing bespoke industry solutions along with operating both systems and applications at its own data centres. In addition to its headquarters and branches in Germany, the company has international sites in 16 countries. Lufthansa Systems succeeded in maintaining its market position in the fi rst half-year of 2012. The segment's revenue and operating result were both up on the fi rst six months of last year.

Products Lufthansa Systems offers an extensive range of products for airlines' complex business processes. Its industrial portfolio comprises consultancy, individual applications, proprietary industry solutions and software for specifi c sectors. As a certifi ed SAP partner, the company also provides a wide spectrum of services in this fi eld. Lufthansa Systems uses innovations such as cloud computing and mobile technologies for all its solutions, including the wireless in-fl ight entertainment system BoardConnect, which has won the renown Crystal Cabin Award.

Operating performance Lufthansa Systems signed several important contracts in the fi rst half-year of 2012. Lufthansa Passenger Airlines, Lufthansa Cargo and Star Alliance all extended their contracts for the management of their global data networks. The IT workplace model deskBase is currently being rolled out in several of the Lufthansa Group divisions. The segment gained Air France as a new user of its Lido/Flight planning software. Condor became the fi rst client to order the new-generation Revenue Integrity product for the identifi cation of blind bookings and duplicates. Both Lufthansa CityLine and Augsburg Airways opted for new crew optimisation solutions. The staff travel system myIDTravel now has more than 140 customers around the world. The industrial division secured new consultancy contracts with Volkswagen and GlaxoSmithKline. Several agreements were also extended: the contract with AirPlus to operate all business-critical credit card handling processes and the SAP operating agreement with Bosch Thermotechnology.

Revenue and earnings development Lufthansa Systems generated revenue of EUR 301m in the six months to June 2012 (+ 4.2 per cent). This growth was primarily attributable to higher revenue with non-Lufthansa Group clients, which came in at EUR 126m (EUR + 16m). By contrast, intra-Group revenue fell slightly to EUR 175m (EUR – 4m). Other operating income came to EUR 8m in the reporting period (previous year: EUR – 3m). As a result, total operating income went up to EUR 309m (EUR + 9m).

Total operating expenses amounted to EUR 301m (EUR + 7m) in the period under review. This was partly due to a rise in the cost of materials and services to EUR 44m (EUR + 5m), caused by the elevated volume of sales. Lufthansa Systems employed 2,788 members of staff in the period from January to June (– 3.0 per cent). Staff costs climbed to EUR 120m (EUR + 4m) in connection with pay increases from wage settlements and higher expenses for partial retirement. Depreciation and amortisation stood at EUR 18m (EUR + 2m). At EUR 119m, other operating expenses were down EUR 4m on last year.

The operating result came in at EUR 8m, exceeding the previous year's fi gure by EUR 2m. The segment result was EUR 7m (EUR + 3m). Capital expenditure on property, plant and equipment plus intangible assets fell to EUR 10m (previous year: EUR 16m). The higher level of capital expenditure was prompted by implementation activities associated with the IT workplace model deskBase.

Forecast The restructuring completed in 2011 lays the foundations for a return to profi table growth in the current fi nancial year and thereafter. Revenue from Lufthansa Passenger Airlines will decrease in the medium term because the company will make increasing use of lower-cost technologies. However, the segment will step up its focus on new and additional business with external clients. Overall, Lufthansa Systems therefore still expects to see positive developments in its revenue and earnings for the 2012 fi nancial year.

Catering business segment

Key fi gures Catering

		Jan. – June 2012	Jan. – June 2011	Change in %	April – June 2012	April – June 2011	Change in %
Revenue	€m	1,203	1,089	10.5	635	569	11.6
of which with companies of the Lufthansa Group	€m	276	270	2.2	145	144	0.7
Operating result	€m	23	21	9.5	28	19	47.4
Segment result	€m	29	25	16.0	33	21	57.1
EBITDA	€m	52	59	– 11.9	42	32	31.3
Segment capital expenditure	€m	24	30	– 20.0	14	16	– 12.5
Employees as of 30.6.	number	29,750	29,210	1.8	29,750	29,210	1.8

Segment structure and course of business The LSG Sky Chefs group consists of 149 companies with approximately 200 sites in 52 countries. The group's parent company is LSG Lufthansa Service Holding AG, based in Neu-Isenburg. The group of consolidated companies was expanded by a total of 14 companies.

The proposal to establish a joint venture with the UK-based Alpha Flight Group was approved by the competition authorities and will be implemented by 1 October 2012. In Nuremberg, negotiations with the works council commenced in late June about the planned site closure.

Passenger volumes increased moderately on a global scale in the fi rst half-year. This was refl ected in all traffi c regions. LSG Sky Chefs achieved a higher fi rst-half operating profi t than it did last year.

Products LSG Sky Chefs is expanding its capabilities in the fi eld of equipment and logistics with a strong focus on eco-friendliness and innovativeness. The lightweight Quantum trolley has been helping to slash fuel consumption on Lufthansa's long-haul routes since spring and will be used throughout the Condor fl eet starting in summer.

Operating performance LSG Sky Chefs attracted a number of new clients and extended major contracts. For example, its agreements with Thomson Airways in the UK and TUIfl y Nordic in Scandinavia were both extended. However, the company's long-standing contracts with Virgin Atlantic in the UK and TUIfl y in Germany will expire.

In early 2012, a new wage agreement was signed for the company's circa 8,000 staff in the USA. This agreement will run until spring 2015. A pay freeze until January 2013 was agreed with the employees in Germany. However, structural negotiations with the trade union in Germany were wrapped up at the end of May without result.

Revenue and earnings development LSG Sky Chefs grew its revenue by 10.5 per cent to EUR 1.2bn. Higher volumes and positive effects from currency movements contributed to this increase. Other operating income also went up to EUR 42m (EUR + 17m). Overall, total operating income went up by 11.8 per cent to EUR 1.2bn.

At EUR 1.2bn, total operating expenses were also 11.8 per cent up on last year. The cost of materials and services amounted to EUR 547m (+ 13.7 per cent). In the fi rst six months, LSG Sky Chefs had an average of 29,638 employees (+ 2.7 per cent). Exchange rate movements, additions to the group of consolidated companies and one-off wage payments in the USA lifted staff costs by 10.4 per cent to EUR 436m.

Depreciation and amortisation went up by 14.3 per cent to EUR 32m, due to greater capital expenditure in 2011. Other operating expenses rose to EUR 207m (+ 9.5 per cent) due mainly to the higher volume of business.

LSG Sky Chefs achieved an operating profi t of EUR 23m for the fi rst six months of 2012 (previous year: EUR 21m). The balance of other segment income in the reporting period came in at EUR 1m and was therefore EUR 3m above last year's fi gure. The result of the equity method valuation was EUR 1m down on last year at EUR 5m. The segment result was in total EUR 29m (previous year: EUR 25m). Segment capital expenditure of EUR 24m was EUR 6m lower than last year.

Forecast LSG Sky Chef continues to anticipate a moderate increase in all regions' passengers numbers for 2012. However, this will only have a limited effect on growth in catering due to cost pressure from airlines. As part of the SCORE programme, LSG Sky Chefs is focusing on further adjusting its wage structures, completing a critical examination of its site network and administrative departments, and making both more fl exible. LSG Sky Chefs' forecast for the 2012 fi nancial year remains unchanged: the company anticipates higher revenue than in the previous year. In the light of increasing cost pressure due to the gloomier economic prospects the company now expects its operating profi t to be on a par with last year's.

Catering Other

Risk and opportunities report

Other

Other

		Jan. – June 2012	Jan. – June 2011	Change in %	April – June 2012	April – June 2011	Change in %
Total operating income	€m	704	650	8.3	356	289	23.2
Operating result	€m	– 71	0	–	– 66	– 30	– 120.0
Segment result	€m	– 77	8	–	– 72	– 30	– 140.0
EBITDA *	€m	29	55	– 47.3	– 83	7	–
Segment capital expenditure	€m	7	12	– 41.7	4	5	– 20.0
Employees as of 30.6.	number	4,032	3,873	4.1	4,032	3,873	4.1

* Before profi t / loss transfer from other companies.

Structure The segment Other includes the Service and Financial Companies which incorporate the Group's fi nancial and service activities. They include AirPlus, Lufthansa Flight Training and Lufthansa Commercial Holding. This segment also comprises the Central Group Functions of Deutsche Lufthansa AG.

Companies' performance Growth on the business travel markets remained stable, with positive double-digit growth rates. Billing revenue for AirPlus business travel products was 13 per cent up on last year. In absolute terms, revenue growth was strongest in Germany, followed by China, Italy, the USA and Canada. This positive trend is also shown in the performance indicators. Total operating income was 3.1 per cent higher and the operating result was also up 5.6 per cent on the previous year's fi gure at EUR 19m.

Capacity utilisation for the simulators at Lufthansa Flight Training remained high. Due to the diffi cult macroeconomic environment, the total operating income was down 1.1 per cent at EUR 89m, while the operating result fell 23.8 per cent year on year to stand at EUR 16m. Measures are being developed within the Group programme SCORE to sustainably improve the cost structure.

The earnings contribution by the Group functions refl ected exchange rate fl uctuations, which were very pronounced at times. While the total operating income fell by 11.6 per cent to EUR 335m, operating expenses rose to EUR 446m (+ 4.9 per cent). The operating result came in at EUR – 111m (previous year: EUR – 46m).

Revenue and earnings development Total operating income in the Other segment climbed to EUR 704m (+ 8.3 per cent) in the period under review. Operating expenses rose disproportionately by 19.2 per cent to EUR 775m. This was primarily due to currency movements. The segment therefore reported an operating result of EUR – 71m (previous year: EUR 0m). The segment result was EUR – 77m (previous year: EUR 8m).

Risk and opportunities report

As an international aviation company Lufthansa is exposed to macroeconomic, sector-specifi c and Company risks. These are primarily market and competition risks which affect capacity and load factors. They are fl anked by political risks, operational and collective bargaining risks, legal risks and contingencies, procurement risks, IT risks and fi nancial and treasury risks.

The constantly updated management systems make it possible to identify both risks and opportunities at an early stage and act accordingly. For further information on the opportunity and risk management system and the Group's risk situation, please see the "Annual Report 2011" from p. 114 .

In the fi rst six months of 2012, the opportunities and risks for the Group described in detail in the annual report have materialised or developed as follows.

The recovery of the global economy expected in spring emerged later than anticipated and is proceeding at a much slower pace in all regions. Europe's sovereign debt crises and efforts to overcome them are having a greater impact on global economic developments than anticipated. Global trends have not yet impaired traffi c volumes in passenger air travel worldwide. However, traffi c developments are still highly disparate in the various regions. In the cargo business – which traditionally serves as an early indicator for other aviation sectors – the consequences of slower economic growth are already having a more pronounced effect, prompting trade volumes and transport orders to dwindle. The airlines in the Lufthansa Group have responded to indicators that the pace of growth will drop by signifi cantly reducing their planned capacity growth, see the "Forecast" section on p. 20 .

After peaking in spring, fuel prices have fallen due to the less optimistic economic outlook. However, they still remain high. The Group's established hedging mechanisms reduce the risk, but it is unlikely that the Company will be able to compensate fully for the effect of extra costs by upping income – even with ticket price surcharges – in a market where competition remains tough.

The confi rmation of the absolute night-fl ight ban at Frankfurt Airport will exacerbate distortions to competition, in particular against statesubsidised airlines and air traffi c systems.

Altogether, and even considering the particular macroeconomic situation and all other known issues and circumstances, there are currently no identifi able developments which could endanger the Company's continued existence.

Supplementary report

Since 1 July 2012 no events of particular importance have occurred that could be expected to have a signifi cant infl uence on the net assets, fi nancial and earnings position.

Forecast

GDP development

in %	2012*	2013*	2014*	2015*	2016*
World	2.7	3.0	3.8	4.1	4.0
Europe	0.1	0.5	1.2	2.4	2.4
Germany	1.0	1.1	1.3	1.6	1.7
North America	2.0	2.0	2.7	3.3	3.0
South America	3.2	3.8	4.6	4.1	4.3
Asia / Pacifi c	5.1	5.1	5.9	5.9	5.6
China	7.8	7.9	8.2	8.2	7.9
Middle East	3.3	3.1	4.6	4.3	4.1
Africa	4.6	5.2	5.3	5.1	4.9

Source: Global Insight World Overview as of 15.7.2012.

* Forecast.

Macroeconomic outlook The prospects for global economic developments have worsened. They are shaped to a large degree by the progress of the euro area's sovereign debt crises and their effect on the globalised commodity and capital markets. However, the world economy is expected to recover gradually starting in late 2012, driven primarily by the growing rate at which Asia's emerging countries are expanding. World trade is also forecast to pick up steadily over the course of the year. Global economic growth of 2.7 per cent is predicted for 2012; this is lower than last year's fi gure of 3.0 per cent, however.

Europe's economy will remain strained – its growth forecast was recently revised downwards to 0.1 per cent. Germany is in a much better position than other European countries, having had its economic outlook corrected upwards to 1.0 per cent growth. Nevertheless, the effects of the euro area's sovereign debt crises are expected to be felt here too.

Heightened uncertainty about global growth prospects are also impacting oil prices. Futures contracts suggest that on an overall high level the oil price is expected to fall slightly. Lufthansa would benefi t from this to a large degree as part of its hedging policy.

All in all, the airline industry's profi t outlook for this year has worsened. The IATA downgraded its net profi t forecast for the industry to USD 3.0bn (previous year: USD 7.9bn) in June. Of this, European airlines are expected to account for a loss totalling USD 1.1bn.

Lufthansa Group Following a mixed fi rst half-year, we currently expect the existing trends to continue in the Lufthansa Group's business segments. In the passenger business, robust booking trends continue to be accompanied by high upwards pressure on costs from fuel prices. Our efforts are therefore focusing on intensifying measures to cut costs and pursuing our policy of strict capacity and yield management. Rigorous capacity management will also continue in the cargo segment to align developments in costs with demand, which remains restrained. The service segments will have their usual stabilising effect on the Group's earnings performance in 2012.

In light of this, we still anticipate a year-on-year increase in Group revenue overall and an operating profi t in the mid three-digit million euro range for the 2012 fi nancial year. This earnings forecast does not take into account the restructuring costs which we expect to incur in connection with the job cuts that are necessary as part of SCORE. As negotiations with the works councils are still ongoing, it is not yet possible to put a fi nal fi gure on these restructuring costs. Based on current estimates, we project associated expenses of between EUR 100m and EUR 200m for the 2012 fi nancial year.

However, the measures being undertaken in all business segments as part of this Group-wide programme will sustainably improve earnings quality at the Lufthansa Group. All of the companies will contribute to this, both with individually tailored programmes and with Group-level projects, such as to step up the use of shared business services, optimise local traffi c and pool purchasing.

Risk and opportunities report Supplementary report Forecast

Consolidated income statement Statement of comprehensive income

Consolidated income statement

January – June 2012

in €m	Jan. – June 2012	Jan. – June 2011	April – June 2012	April – June 2011
Traffi c revenue	11,851	11,243	6,502	6,179
Other revenue	2,658	2,442	1,388	1,238
Total revenue	14,509	13,685	7,890	7,417
Changes in inventories and work performed by entity and capitalised	71	24	26	– 5
Other operating income	969	1,320	453	613
Cost of materials and services	– 8,754	– 8,028	– 4,584	– 4,218
Staff costs	– 3,399	– 3,309	– 1,665	– 1,656
Depreciation, amortisation and impairment	– 895	– 822	– 432	– 412
Other operating expenses	– 2,550	– 2,598	– 1,358	– 1,348
Profi t / loss from operating activities	– 49	272	330	391
Result of equity investments accounted for using the equity method	– 28	– 18	8	9
Result of other equity investments	59	35	46	22
Interest income	80	96	43	52
Interest expenses	– 241	– 240	– 121	– 117
Other fi nancial items	– 148	– 308	– 132	77
Financial result	– 278	– 435	– 156	43
Profi t / loss before income taxes	– 327	– 163	174	434
Income taxes	130	77	25	– 78
Profi t / loss from continuing operations	– 197	– 86	199	356
Profi t / loss from discontinued operations	36	– 113	34	– 52
Profi t / loss after income taxes	– 161	– 199	233	304
Profi t / loss attributable to minority interests	– 7	– 7	– 4	– 3
Net profi t / loss attributable to shareholders of Deutsche Lufthansa AG	– 168	– 206	229	301
Basic / diluted earnings per share in €	– 0.37	– 0.45	0.50	0.66
of which from continuing operations	– 0.45	– 0.20	0.43	0.77
of which from discontinued operations	0.08	– 0.25	0.07	– 0.11

Statement of comprehensive income

January – June 2012

in €m	Jan. – June 2012	Jan. – June 2011	April – June 2012	April – June 2011
Profi t / loss after income taxes	– 161	– 199	233	304
Other comprehensive income
Differences from currency translation	62	36	72	136
Subsequent measurement of available-for-sale fi nancial assets	157	– 65	87	30
Subsequent measurement of cash fl ow hedges	– 113	– 13	– 66	– 535
Other comprehensive income from investments accounted for using the equity method	2	2	0	0
Other expenses and income recognised directly in equity	4	– 6	5	0
Income taxes on items in other comprehensive income	21	25	7	112
Other comprehensive income after income taxes	133	– 21	105	– 257
Total comprehensive income	– 28	– 220	338	47
Comprehensive income attributable to minority interests	– 10	– 1	– 9	– 3
Comprehensive income attributable to shareholders of Deutsche Lufthansa AG	– 38	– 221	329	44

Consolidated balance sheet

as of 30 June 2012

Assets
in €m	30.6.2012	31.12.2011	30.6.2011
Intangible assets with an indefi nite useful life *	1,197	1,191	1,580
Other intangible assets	369	384	338
Aircraft and reserve engines	12,030	11,592	11,771
Repairable spare parts for aircraft	879	840	853
Property, plant and other equipment	2,116	2,118	2,070
Investments accounted for using the equity method	366	394	348
Other equity investments	1,037	898	1,052
Non-current securities	20	134	131
Loans and receivables	560	616	605
Derivative fi nancial instruments	297	343	188
Deferred charges and prepaid expenses	25	24	23
Effective income tax receivables	62	60	62
Deferred tax assets	37	33	67
Non-current assets	18,995	18,627	19,088
Inventories	654	620	625
Trade receivables and other receivables	4,509	3,437	4,221
Derivative fi nancial instruments	217	414	615
Deferred charges and prepaid expenses	175	171	169
Effective income tax receivables	131	128	82
Securities	3,615	3,111	3,400
Cash and cash equivalents	958	887	1,232
Assets held for sale	107	686	85
Current assets	10,366	9,454	10,429
Total assets	29,361	28,081	29,517

* Including goodwill.

Shareholders' equity and liabilities

in €m	30.6.2012	31.12.2011	30.6.2011
Issued capital	1,172	1,172	1,172
Capital reserve	1,366	1,366	1,366
Retained earnings	3,678	3,800	3,800
Other neutral reserves	1,754	1,624	1,614
Net profi t / loss	– 168	– 13	– 206
Equity attributable to shareholders of Deutsche Lufthansa AG	7,802	7,949	7,746
Minority interests	79	95	88
Shareholders' equity	7,881	8,044	7,834
Pension provisions	2,033	2,165	2,492
Other provisions	563	578	578
Borrowings	5,922	5,808	5,268
Other fi nancial liabilities	162	128	112
Advance payments received, deferred income and other non-fi nancial liabilities	1,182	1,156	1,129
Derivative fi nancial instruments	112	55	324
Deferred tax liabilities	138	364	225
Non-current provisions and liabilities	10,112	10,254	10,128
Other provisions	855	818	931
Borrowings	934	616	870
Trade payables and other fi nancial liabilities	4,833	4,227	4,662
Liabilities from unused fl ight documents	3,573	2,359	3,651
Advance payments received, deferred income and other non-fi nancial liabilities	1,031	939	1,118
Derivative fi nancial instruments	15	37	224
Effective income tax obligations	101	71	99
Liabilities related to assets held for sale	26	716	0
Current provisions and liabilities	11,368	9,783	11,555
Total shareholders' equity and liabilities	29,361	28,081	29,517

Consolidated statement of changes in shareholders' equity

as of 30 June 2012

in €m	Issued capital	Capital reserve	Fair value measure ment of fi nancial instru ments	Currency differ ences	Revalu - ation reserve (due to business combi nations)	Other neutral reserves	Total other neutral reserves	Retained earnings	Net profi t / loss	Equity attrib - ut able to share holders of Deutsche Lufthansa AG	Minority interests	Total share holders' equity
As of 31.12.2010	1,172	1,366	856	241	193	339	1,629	2,944	1,131	8,242	98	8,340
Capital increases / reductions	–	–	–	–	–	–	–	–	–	–	–	–
Reclassifi cations	–	–	–	–	–	–	–	856	– 856	–	–	–
Dividends to Lufthansa shareholders / minority interests	–	–	–	–	–	–	–	–	– 275	– 275	– 11	– 286
Consolidated net profi t / loss attributable to Lufthansa shareholders / minority interests	–	–	–	–	–	–	–	–	– 206	– 206	7	– 199
Other expenses and income recognised directly in equity	–	–	– 53	36	–	2	– 15	–	–	– 15	– 6	– 21
As of 30.6.2011	1,172	1,366	803	277	193	341	1,614	3,800	– 206	7,746	88	7,834
As of 31.12.2011	1,172	1,366	766	322	193	343	1,624	3,800	– 13	7,949	95	8,044
Capital increases / reductions	–	–	–	–	–	–	–	–	–	–	–	–
Reclassifi cations	–	–	–	–	–	–	–	– 127	127	–	–	–
Dividends to Lufthansa shareholders / minority interests	–	–	–	–	–	–	–	–	– 114	– 114	– 11	– 125
Transactions with minority interests	–	–	–	–	–	–	–	5	–	5	– 15	– 10
Consolidated net profi t / loss attributable to Lufthansa shareholders / minority interests	–	–	–	–	–	–	–	–	– 168	– 168	7	– 161
Other expenses and income recognised directly in equity	–	–	65	62	–	3	130	–	–	130	3	133
As of 30.6.2012	1,172	1,366	831	384	193	346	1,754	3,678	– 168	7,802	79	7,881

Consolidated statement of changes in shareholders' equity Consolidated cash fl ow statement

Consolidated cash fl ow statement

January – June 2012

in €m	Jan. – June 2012	Jan. – June 2011	April – June 2012	April – June 2011
Cash and cash equivalents 1.1. 1)	887	1,097	915	1,210
Net profi t / loss before income taxes	– 327	– 163	174	434
Depreciation, amortisation and impairment losses on non-current assets (net of reversals)	902	841	437	414
Depreciation, amortisation and impairment losses on repairable spare parts for aircraft (net of reversals)	36	– 4	11	– 13
Net proceeds on disposal of non-current assets	– 16	– 34	– 12	– 21
Result of equity investments	– 31	– 17	– 54	– 31
Net interest	161	144	78	65
Income tax payments / reimbursements	– 67	– 172	– 54	– 36
Measurement of fi nancial derivatives through profi t or loss	139	287	124	– 80
Change in working capital 2)	947	840	152	230
Cash fl ow from continuing operations	1,744	1,722	856	962
Cash fl ow from discontinued operations	– 82	– 30	– 27	– 25
Cash fl ow from operating activities	1,662	1,692	829	937
Capital expenditure for property, plant and equipment and intangible assets	– 1,372	– 1,359	– 789	– 685
Capital expenditure for fi nancial investments	– 13	– 58	– 4	–
Increase / decrease in repairable spare parts for aircraft	– 69	18	– 14	20
Proceeds from disposal of non-consolidated equity investments	5	1	5	–
Proceeds from disposal of consolidated equity investments	– 168	–	– 168	–
Cash outfl ows for acquisitions of non-consolidated equity investments	–	– 20	–	– 8
Cash outfl ows for acquisitions of consolidated equity investments	–	–	–	–
Proceeds from disposal of intangible assets, property, plant and equipment and other fi nancial investments	275	287	52	95
Interest income	189	195	73	77
Dividends received	75	53	60	39
Net cash from / used in investing activities	– 1,078	– 883	– 785	– 462
of which from discontinued operations	– 130	– 14	– 168	– 5
Purchase of securities / fund investments 3)	– 851	– 636	– 468	– 134
Disposal of securities / fund investments	317	1,346	92	535
Net cash from / used in investing and cash management activities	– 1,612	– 173	– 1,161	– 61
of which from discontinued operations	– 130	– 6	– 168	– 1
Capital increase	–	–	–	–
Non-current borrowing	752	113	541	38
Repayment of non-current borrowing	– 380	– 954	– 70	– 555
Other fi nancial debt	– 4	8	– 8	1
Dividends paid	– 126	– 286	– 120	– 278
Interest paid	– 235	– 269	– 68	– 86
Net cash from / used in fi nancing activities	7	– 1,388	275	– 880
of which from discontinued operations	– 5	– 18	–	– 2
Net increase / decrease in cash and cash equivalents	57	131	– 57	– 4
Changes due to currency translation differences	14	4	12	26
Cash and cash equivalents 30.6. 4)	958	1,232	870	1,232
Securities	3,615	3,400	3,615	3,400
Total liquidity	4,573	4,632	4,485	4,632
Net increase / decrease in total liquidity	575	– 860	– 681	– 534

1) Presented for the individual quarter, cash and cash equivalents as of 1 April.

2) Working capital consists of inventories, receivables, liabilities and provisions.

3) Previous year adjusted to current year's presentation.

4) In previous year including transfer to LH Pension Trust of EUR 168m.

Notes

1) Standards applied and changes in the group of consolidated companies

The consolidated fi nancial statements of Deutsche Lufthansa AG and its subsidiaries have been prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), taking account of interpretations by the IFRS Interpretations Committee (IFRS IC) as applicable in the European Union (EU).

This interim report as of 30 June 2012 has been prepared in condensed form in accordance with IAS 34. In preparing the interim fi nancial statements the standards and interpretations applicable as of 1 January 2012 have been applied. The standards mandatory for the fi rst time as of 1 January 2012 did not have a signifi cant effect on the Group's net assets, fi nancial and earnings position. With the exception of the sale of bmi, the changes to the group of consolidated companies (see table) had no signifi cant infl uence on the Group's net assets, fi nancial and earnings position. The following section provides details of the result posted by bmi, including the proceeds from the company's fi nal consolidation.

Changes in the group of consolidated companies in the period 1.7.2011 to 30.6.2012

Name, registered offi ce	Additions	Disposals	Reason
Passenger Airline Group segment
ALIP No. 4 Co., Ltd., Tokyo, Japan	26.10.11		Established
ALIP No. 6 CO., Ltd., Tokyo, Japan	26.10.11		Established
Gina Leasing Co. Ltd., Tokyo, Japan	16.12.11		Established
NBB Cologne Lease Co., Ltd., Tokyo, Japan	23.12.11		Established
TimBenNico Finance 2011 S.N.C., Paris, France	5.7.11		Established
AUA A320/A321 2001 Ltd., George Town, Cayman Islands		15.12.11	Liquidation
Lufthansa Leasing GmbH & Co. Fox-Alfa oHG, Grünwald, Germany		11.7.11	Company purpose suspended
Lufthansa Leasing GmbH & Co. Fox-Delta oHG, Grünwald, Germany		1.7.11	Merger
Lufthansa Leasing GmbH & Co. Fox-Echo oHG, Grünwald, Germany		1.7.11	Merger
Lufthansa Leasing GmbH & Co. Fox-Hotel oHG, Grünwald, Germany		11.7.11	Company purpose suspended
British Midland Airways Ltd., Donington Hall, United Kingdom		19.4.12	Disposal
British Midland Ltd., Donington Hall, United Kingdom		19.4.12	Disposal
MRO segment
Lufthansa Technik Component Services LLC, Dallas, USA	1.1.12		Consolidated for the fi rst time
Lufthansa Technik Logistik Services GmbH, Hamburg, Germany	1.1.12		Consolidated for the fi rst time
Catering segment
Constance Food Group, Inc., New York, USA	1.11.11		Acquisition
LSG France SAS, Paris, France	28.9.11		Established
LSG Sky Chefs Berlin GmbH, Neu-Isenburg, Germanybbb	1.7.11		Established
LSG Sky Chefs Bremen GmbH, Neu-Isenburg, Germanybbbbbb	1.7.11		Established
LSG Sky Chefs Düsseldorf GmbH, Neu-Isenburg, Germany	1.7.11		Established
LSG Sky Chefs Frankfurt International GmbH, Neu-Isenburg, Germany	1.7.11		Established
LSG Sky Chefs Frankfurt ZD GmbH, Neu-Isenburg, Germany	1.7.11		Established
LSG Sky Chefs Hamburg GmbH, Neu-Isenburg, Germany	1.7.11		Established
LSG Sky Chefs Hannover GmbH, Neu-Isenburg, Germany	1.7.11		Established
LSG Sky Chefs Köln GmbH, Neu-Isenburg, Germany	1.7.11		Established
LSG Sky Chefs Leipzig GmbH, Neu-Isenburg, Germanybbbb	1.7.11		Established
LSG Sky Chefs München GmbH, Neu-Isenburg, Germanybbbbb	1.7.11		Established
LSG Sky Chefs Nürnberg GmbH, Neu-Isenburg, Germany	1.7.11		Established
LSG Sky Chefs Stuttgart GmbH, Neu-Isenburg, Germanybb	1.7.11		Established
LSG Sky Chefs Spain, S.A., Madrid, Spain	15.2.12		Established
LSG Sky Chefs Germany GmbH, Neu-Isenburg, Germany		1.7.11	Split-off
Other
Lufthansa Blues Beteiligungs GmbH, Frankfurt am Main, Germany	21.3.12		Acquisition
Lufthansa Malta Blues General Partner GmbH & Co. KG, Frankfurt am Main, Germany	21.3.12		Acquisition
Lufthansa Malta Blues LP, St. Julians, Malta	29.3.12		Established
Lufthansa Asset Management GmbH, Frankfurt am Main, Germany	27.4.12		Established

2) Notes to the income statement, balance sheet, cash fl ow statement and segment reporting

Assets held for sale

in €m	Group 30.6.2012	Financial statements 31.12.2011	Group 30.6.2011
Assets
Aircraft and reserve engines	66	172	73
Financial assets	4	47	9
Other assets	37	467	3
Equity / liabilities associated with assets held for sale
Shareholders' equity	–	–	–
Liabilities	26	716	–

The British Midland Group represented a separate cash-generating unit within the Passenger Airline Group segment of the Lufthansa Group. It is therefore a separate line of business within the meaning of IFRS 5, to which clearly defi ned cash fl ows are attributed for operating and accounting purposes. As a result of the contract for the sale of British Midland Ltd. (bmi) to International Consolidated Airlines Group, S.A. (IAG) signed by Deutsche Lufthansa AG and IAG on 22 December 2011, bmi is to be presented in the Group's income statement as a discontinued operation in line with IFRS 5. bmi underwent fi nal consolidation when the sale transaction was completed on 19 April 2012. The proceeds from the discontinued operation shown in this interim report include the after-tax result recorded for bmi until its disposal and changes in the valuation or proceeds of disposal for the discontinued operation compared with the 2011 fi nancial statements, which in this case are the proceeds of the aforementioned contractual agreement. The fi gures for the previous year have been adjusted in accordance with the presentation in the reporting period.

The following table shows the result of the discontinued operations at British Midland Group:

in €m	Jan. – June 2012	Jan. – June 2011
Income	237	405
Expenses	– 330	– 522
Current result from discontinued operations before taxes	– 93	– 117
Taxes on income and earnings for discontinued operations	13	4
Current result from discontinued operations after taxes	– 80	– 113
Valuation / disposal proceeds from discontinued operations	135	–
Taxes on valuation / disposal proceeds	– 19	–
Valuation / disposal proceeds from discontinued operations after taxes	116	–
Result from discontinued operations	36	– 113

The result from discontinued operations in the fi rst half of 2012 was mainly due to price adjustments made as a result of bmi's better than expected liquidity position.

Assets of EUR 576m and liabilities of EUR 690m attributable to bmi were shown separately in the balance sheet as of 31 December 2011 in accordance with IFRS 5. These were closed out in conjunction with the fi nal consolidation completed on 19 April 2012.

Detailed comments on the income statement, the balance sheet, the cash fl ow statement and the segment reporting can also be found in the management report on p. 2 – 20 .

3) Seasonality

The Group's business is mainly exposed to seasonal effects via the Passenger Airline Group segment. As such, revenue in the fi rst and fourth quarters is generally lower as people travel less, while higher revenue and operating profi ts are normally earned in the second and third quarters.

4) Contingencies and events after the balance sheet date

Contingent liabilities
in €m	30.6.2012	31.12.2011
From guarantees, bills of exchange and cheque guarantees	907	874
From warranty contracts	1,055	977
From providing collateral for third-party liabilities	46	35

Several provisions could not be made because an outfl ow of resources was not suffi ciently probable. The potential fi nancial effect of these provisions on the result would have been EUR 163m for subsequent years. As of the year-end 2011 reporting date the fi gure came to EUR 161m. Contracts signed at the end of 2011 for the sale of three Canadair Regional Jet 200s resulted in profi ts up to 30 June 2012 of EUR 1m and cash infl ows of EUR 6m. Signed contracts for the sale of four Avro RJ 85s are expected to give rise to cash infl ows of a further EUR 6m by the end of 2012. At the end of June 2012, there were order commitments of EUR 6.6bn for capital expenditure on property, plant and equipment and intangible assets. As of 31 December 2011, the order commitments came to EUR 7.7bn.

Please refer to the comments on p. 20 of the management report for events after the balance sheet date.

5) Earnings per share

		30.6.2012	30.6.2011
Basic earnings per share	€	– 0.37	– 0.45
Consolidated net profi t / loss	€m	– 168	– 206
Weighted average number of shares		457,937,406	457,937,567
Diluted earnings per share	€	– 0.37	– 0.45
Consolidated net profi t / loss	€m	– 168	– 206
+ interest expenses on the convertible bonds	€m	–	–
– current and deferred taxes	€m	–	–
Adjusted net profi t / loss for the period	€m	– 168	– 206
Weighted average number of shares		457,944,882	458,273,971

6) Issued capital

A resolution passed at the Annual General Meeting on 24 April 2009 authorised the Executive Board until 23 April 2014, subject to approval by the Supervisory Board, to increase the Company's issued capital by up to EUR 25m by issuing new registered shares to employees for payment in cash. The new shares are to be offered for sale solely to employees of Deutsche Lufthansa AG and its affi liated companies. Existing shareholders' subscription rights are excluded. Following a resolution of the Annual General Meeting held on 8 May 2012 the distributable profi t of EUR 114m shown in the 2011 fi nancial statements was paid out as dividends. This corresponds to a dividend of EUR 0.25 per share for the fi nancial year 2011. The convertible bonds still outstanding as of 31 December 2011, which entitled holders to convert them into 336,404 shares in Deutsche Lufthansa AG at a share price of EUR 19.86, were redeemed in full on 4 January 2012.

7) Segment reporting

Segment information by operating segment January – June 2012

in €m	Passenger Airline Group	Logistics	MRO	IT Services	Catering	Total reportable operating segments		Other Reconciliation	Group
External revenue	10,874	1,339	1,243	126	927	14,509	–	–	14,509
of which traffi c revenue	10,334	1,294	–	–	–	11,628	–	223	11,851
Inter-segment revenue	349	13	773	175	276	1,586	–	– 1,586	–
Total revenue	11,223	1,352	2,016	301	1,203	16,095	–	– 1,586	14,509
Other operating income	453	38	96	8	42	637	704	– 390	951
Total operating income	11,676	1,390	2,112	309	1,245	16,732	704	– 1,976	15,460
Operating expenses	11,855	1,343	1,968	301	1,222	16,689	775	– 1,984	15,480
of which cost of materials and services	7,659	982	973	44	547	10,205	49	– 1,500	8,754
of which staff costs	1,900	188	610	120	436	3,254	151	– 4	3,401
of which depreciation and amortisation	697	29	49	18	32	825	21	2	848
of which other operating expenses	1,599	144	336	119	207	2,405	554	– 482	2,477
Operating result 1)	– 179	47	144	8	23	43	– 71	8	– 20
Other segment income	50	2	18	0 *	1	71	11	7	89
Other segment expenses	60	0 *	1	1	0 *	62	17	39	118
of which impairment losses	59	–	–	–	–	59	–	–	59
Result of investments accounted for using the equity method	– 52	7	12	–	5	– 28	0 *	–	– 28
Segment result 2)	– 241	56	173	7	29	24	– 77	– 24	– 77
Other fi nancial result									– 250
Profi t / loss before income taxes									– 327
Segment assets 3)	15,715	907	3,143	281	1,339	21,385	1,792	6,184	29,361
of which from investments accounted for using the equity method	27	53	193	–	87	360	6	–	366
Segment liabilities 4)	10,451	431	1,250	121	517	12,770	1,905	6,805	21,480
Segment capital expenditure 5)	1,177	83	63	10	24	1,357	7	21	1,385
of which on investments accounted for using the equity method	–	–	–	–	–	–	–	–	–
Employees on balance sheet date	55,913	4,603	20,345	2,773	29,750	113,384	4,032	–	117,416

* Rounded below EUR 1m. 1) See page 6 of the interim management report for reconciliation between operating result and profi t from operating activities.

2) Profi t from operating activities including result of investments measured at equity.

3) Intangible assets, property, plant and equipment, investments accounted for using the equity method, inventories, trade receivables

and other assets constitute assets. Under the heading "Group" all assets are shown.

4) All liabilities with the exception of fi nancial debt, liabilities to Group companies, derivative fi nancial instruments,

other deferred income and tax obligations. Under the heading "Group" all liabilities are shown.

5) Capital expenditure for intangible assets, property, plant and equipment, and investments accounted for using the equity method.

Segment information by operating segment January – June 2011

in €m	Passenger Airline Group 1)	Logistics	MRO	IT Services	Catering	Total reportable operating segments		Other Reconciliation	Group 1)
External revenue	10,100	1,490	1,166	110	819	13,685	–	–	13,685
of which traffi c revenue	9,604	1,431	–	–	–	11,035	–	208	11,243
Inter-segment revenue	373	13	881	179	270	1,716	–	– 1,716	–
Total revenue	10,473	1,503	2,047	289	1,089	15,401	–	– 1,716	13,685
Other operating income	615	36	111	11	25	798	650	– 349	1,099
Total operating income	11,088	1,539	2,158	300	1,114	16,199	650	– 2,065	14,784
Operating expenses	11,188	1,406	2,052	294	1,093	16,033	650	– 2,013	14,670
of which cost of materials and services	6,947	1,038	1,052	39	481	9,557	44	– 1,573	8,028
of which staff costs	1,918	175	553	116	395	3,157	138	– 7	3,288
of which depreciation and amortisation	657	45	44	16	28	790	22	3	815
of which other operating expenses	1,666	148	403	123	189	2,529	446	– 436	2,539
Operating result 2)	– 100	133	106	6	21	166	0	– 52	114
Other segment income	66	5	14	0 *	0 *	85	27	133	245
Other segment expenses	40	1	0*	2	2	45	19	23	87
of which impairment losses	17	0*	–	–	0*	17	–	–	17
Result of investments accounted for using the equity method	– 35	0*	11	–	6	– 18	0*	–	– 18
Segment result 3)	– 109	137	131	4	25	188	8	58	254
Other fi nancial result									– 417
Profi t / loss before income taxes									– 163
Segment assets 4)	15,874	802	2,944	227	1,202	21,049	1,727	6,741	29,517
of which from investments accounted for using the
equity method	78	40	156	–	68	342	6	–	348
Segment liabilities 5)	11,083	453	1,263	196	461	13,456	1,584	6,643	21,683
Segment capital expenditure 6)	1,250	35	51	16	30	1,382	12	43	1,437
of which on investments accounted for using the equity method	–	8	1	–	–	9	0*	–	9
Employees on balance sheet date	54,836	4,542	19,584	2,870	29,210	111,042	3,873	3,851	118,766

* Rounded below EUR 1m.

1) Previous year's fi gures have been adjusted for the result from discontinued operations.

2) See page 6 of the interim management report for reconciliation between operating result and profi t from operating activities.

3) Profi t from operating activities including result of investments shown at equity.

4) Intangible assets, property, plant and equipment, investments accounted for using the equity method, inventories, trade receivables

and other assets constitute assets. Under the heading "Group" all assets are shown.

5) All liabilities with the exception of fi nancial debt, liabilities to Group companies, derivative fi nancial instruments,

other deferred income and tax obligations. Under the heading "Group" all liabilities are shown.

6) Capital expenditure for intangible assets, property, plant and equipment, and investments accounted for using the equity method.

Figures by region January – June 2012

Total revenue	8,981	3,763	2,207	1,863	407	2,142	469	303	14,509
Other operating revenue	1,229	418	587	495	87	530	127	98	2,658
Traffi c revenue *	7,752	3,345	1,620	1,368	320	1,612	342	205	11,851
in €m		Germany	America	U.S.A.	and South America
	Europe	thereof	North	thereof	Central	Asia / Pacifi c	Middle East	Africa	Total

* Traffi c revenue is allocated according to the original location of sale.

Figures by region January – June 2011

in €m	Europe	thereof Germany	North America	thereof U.S.A.	Central and South America	Asia / Pacifi c	Middle East	Africa	Total
Traffi c revenue *	7,401	3,185	1,535	1,340	250	1,549	296	212	11,243
Other operating revenue	1,128	416	568	488	43	431	160	112	2,442
Total revenue	8,529	3,601	2,103	1,828	293	1,980	456	324	13,685

* Traffi c revenue is allocated according to the original location of sale.

8) Related party disclosures

As stated in "Note 49" to the consolidated fi nancial statements for 2011 from p. 203 , the operating segments in the Lufthansa Group render numerous services to related parties within the scope of their ordinary business activities and also receive services from them. These extensive supply and service relationships take place unchanged on the basis of market prices. There have been no signifi cant changes in comparison with the balance sheet date. The contractual relationships with the group of related parties described in "Note 50" from p. 205 of the 2011 consolidated fi nancial statements also still exist unchanged, but are not of material signifi cance for the Group.

Declaration by the legal representatives

We declare that to the best of our knowledge and according to the applicable accounting standards for interim reporting the consolidated interim fi nancial statements give a true and fair view of the net assets, fi nancial and earnings position of the Group and that the Group interim management report gives a true and fair view of the course of business, including the business result, and the situation of the Group, and suitably presents the opportunities and risks to its future development in the remainder of the fi nan cial year.

Executive Board, 1 August 2012

Christoph Franz Chairman of the Executive Board

Simone Menne Member of the Executive Board Chief Financial Offi cer

Stefan Lauer Member of the Executive Board Chief Offi cer Group Airlines and Corporate Human Resources

Carsten Spohr Member of the Executive Board Chief Offi cer Lufthansa German Airlines

Certifi cation of the auditor's review

To Deutsche Lufthansa AG, Cologne

We have reviewed the condensed interim Group fi nancial statements of Deutsche Lufthansa AG, Cologne, comprising a condensed balance sheet, a condensed statement of comprehensive income, a condensed cash fl ow statement, a condensed statement of changes in equity and selected notes to the fi nancial statements, together with the interim Group management report of Deutsche Lufthansa AG, Cologne, for the period from 1 January to 30 June 2012, all of which are components of the half-year report pursuant to Sec. 37w of the German Securities Trading Act (WpHG). It is the responsibility of the Company's Executive Board to prepare the condensed interim Group fi nancial statements in accordance with IFRS pertaining to interim fi nancial reporting as applicable in the EU and the interim Group management report in accordance with the WpHG provisions applicable to interim Group management reports. It is our responsibility to provide certifi cation of the condensed interim Group fi nancial statements and the interim Group management report based on our review as the auditors.

We performed an auditor's review of the condensed interim Group fi nancial statements and of the interim Group management report subject to the German principles of auditor reviewing of fi nancial statements as stipulated by the Institute of Public Auditors in Germany (IDW) and in compliance with the International Standard on Review Engagements "Review of Interim Financial Information Performed by the Independent Auditor of the Entity"(ISRE 2410). As such, we are required to plan and execute our review such that, based on a critical appraisal, we can, to a certain degree of certainty, exclude the possibility that the condensed interim Group

fi nancial statements do not comply in essence with the IFRS pertaining to interim fi nancial reporting as applicable in the EU and that the interim Group management report does not comply in essence with the WpHG provisions applicable to interim Group management reports. An auditor's review is essentially limited to surveying company employees and to analytical assessments and, as such, does not deliver the same degree of certainty offered by an audit. As we were not commissioned with performing an audit, we are unable to issue an auditor's report.

Based on our review, we did not become aware of any issues which might lead us to presume that the condensed interim Group fi nancial statements do not comply in essence with the IFRS pertaining to interim fi nancial reporting as applicable in the EU or that the interim Group management report does not comply in essence with the WpHG provisions applicable to interim Group management reports.

Düsseldorf, 2 August 2012

PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft

Frank Hübner Dr Bernd Roese Wirtschaftsprüfer Wirtschaftsprüfer

(German Public Auditor) (German Public Auditor)

Credits

Published by

Deutsche Lufthansa AG Von-Gablenz-Str. 2– 6 50679 Cologne Germany

Entered in the Commercial Register of Cologne District Court under HRB 2168

Editorial staff

Frank Hülsmann (Editor) Claudio Rizzo Anne Katrin Brodowski

Deutsche Lufthansa AG. Investor Relations

Concept. design and realisation

HGB Hamburger Geschäftsberichte GmbH & Co. KG. Hamburg. Germany

Translation by

EnglishBusiness GbR. Hamburg. Germany

Printed by

Broermann Druck + Medien GmbH. Troisdorf. Germany. Printed on Circlesilk Premium White (100 per cent recycled paper bearing the EU Ecolabel. registration number FR/011/003)

Printed in Germany ISSN 1616-0258

This Interim Report was produced using climateneutral printing. The greenhouse gases resulting from this process were offset by relevant climate protection activities.

Disclaimer in respect of forward-looking statements

Information published in the 2nd Interim Report 2012. with regard to the future development of the Lufthansa Group and its subsidiaries consists purely of forecasts and assessments and not of defi nitive historical facts. Its purpose is exclusively informational identifi ed by the use of such cautionary terms as "believe". "expect". "forecast". "intend". "project". "plan". "estimate" or "intend". These forward-looking statements are based on all discernible information. facts and expectations available at the time. They can. therefore. only claim validity up to the date of their publication.

Since forward-looking statements are by their nature subject to uncertainties and imponderable risk factors – such as changes in underlying economic conditions – and rest on assumptions that may not or divergently occur. it is possible that the Group's actual results and development may differ materially from those implied by the forecasts. Lufthansa makes a point of checking and updating the information it publishes. It cannot. however. assume any obligation to adapt forward-looking statements to accommodate events or developments that may occur at some later date. Accordingly. it neither expressly nor conclusively accepts liability. nor gives any guarantee. for the actuality. accuracy and completeness of this data and information.

Contact

Frank Hülsmann

Head of Investor Relations + 49 69 696 – 28001

Gregor Schleussner

• 49 69 696 – 28012

Deutsche Lufthansa AG Investor Relations LAC. Airportring 60546 Frankfurt am Main Germany Phone: + 49 69 696 – 28008 Fax: + 49 69 696 – 90990 E-Mail: investor.relations@dlh.de

The Lufthansa 2nd Interim Report is a translation of the original German Lufthansa Zwischenbericht 2/2012. Please note that only the German version is legally binding.

You can order the Annual and Interim Reports in German or English via our website – www.lufthansa.com/investor-relations – or from the address above.

The latest fi nancial information on the internet: www.lufthansa.com/investor-relations

Financial calendar

2012

31 Oct.	Press Conference and Analysts'
	Conference on interim result
	January – September 2012

2013

	14 March Press Conference and Analysts' Conference on 2012 results
2 May	Release of Interim Report January – March 2013
7 May	Annual General Meeting in Cologne
1 Aug.	Release of Interim Report January – June 2013
31 Oct.	Press Conference and Analysts' Conference on interim result

January – September 2013

www.lufthansa.com www.lufthansa.com/investor-relations www.lufthansa.com/responsibility