Deutsche Lufthansa AG — Interim / Quarterly Report 2018

May 22, 2018

1ST INTERIM REPORT January – March 2018

Adjusted EBIT improves slightly year on year to EUR 26m | Network Airlines and Lufthansa Cargo with significant margin improvements | Lufthansa German Airlines achieves its best first-quarter margin in ten years | SWISS posts new record result | Eurowings Group result burdened by one-off integration costs | Unit revenues increase, unit costs further decrease | Full-year earnings guidance confirmed

Lufthansa Group

KEY FIGURES LUFTHANSA GROUP

		Jan.– March 2018	Jan.– March 2017	Change in %
Revenue and result
Total revenue	€m	7,640	7,691	–0.7
of which traffic revenue	€m	5,785	5,808	–0.4
Adjusted EBITDA	€m	471	446	5.6
Adjusted EBIT	€m	26	25	4.0
EBIT	€m	27	16	68.8
Net profit/loss	€m	–57	–68	16.2
Key balance sheet and cash flow statement figures
Total assets	€m	38,308	37,946	1.0
Equity ratio	%	22.5	17.9	4.6 pts
Net indebtedness	€m	2,090	1,925	8.6
Pension provisions	€m	5,541	8,656	–36.0
Cash flow from operating activities	€m	1,625	1,648	–1.4
Capital expenditure (gross)1)	€m	714	755	–5.4
Free cash flow	€m	790	1,094	–27.8
Key profitability and value creation figures
Adjusted EBITDA margin	%	6.2	5.8	0.4 pts
Adjusted EBIT margin	%	0.3	0.3	0.0 pts
EBIT margin	%	0.4	0.2	0.2 pts
Lufthansa share
Share price at the quarter-end	€	25.94	15.20	70.7
Earnings per share	€	–0.12	–0.15	20.0
Traffic figures2)
Flights	number	267,857	246,864	8.5
Passengers	thousands	28,571	25,255	13.1
Available seat-kilometres	millions	74,771	68,874	8.6
Revenue seat-kilometres	millions	58,184	52,444	10.9
Passenger load factor	%	77.8	76.1	1.7 pts
Available cargo tonne-kilometres	millions	3,767	3,558	5.9
Revenue cargo tonne-kilometres	millions	2,621	2,499	4.9
Cargo load factor	%	69.6	70.2	–0.7 pts
Employees
Employees as of 31.3.	number	132,620	128,541	3.2

1) Without acquisition of equity investments.

2) Previous year's figures have been adjusted.

Date of publication: 26 April 2018.

Contents

1 Interim management report

• 1 Course of business
• 1 Significant events
• 1 Financial performance
• 5 Business segments
• 9 Opportunities and risk report
• 9 Forecast

10 Interim financial statements

• 10 Consolidated income statement
• 11 Statement of comprehensive
• income
• 12 Consolidated balance sheet
• 14 Consolidated statement of changes in shareholders' equity
• 15 Consolidated cash flow statement
• 16 Notes

25 Further information

• 25 Declaration by the legal representatives
• 26 Credits/Contact Financial calendar 2018/2019

Course of business

Lufthansa Group reports solid performance

in first quarter of financial year

• Revenue down by 0.7 per cent to EUR 7.6bn due to effects of first-time application of IFRS 15 (Revenue from Contracts with Customers); revenue up by 4.5 per cent on previous year excluding IFRS 15 effects
• Adjusted EBIT up by 4.0 per cent to EUR 26m; EBIT up by 68.8 per cent to EUR 27m
• Positive earnings performance in the segments Network Airlines, Logistics and Catering
• Cash flow from operating activities down by 1.4 per cent to EUR 1,625m; gross capital expenditure (without acquisition of equity investments) down by 5.4 per cent to EUR 714m
• Net debt down on year-end 2017 by 27.5 per cent to EUR 2.1bn

Significant events

Lufthansa Group acquires Luftfahrtgesellschaft Walter

• Lufthansa Group acquired all shares in Luftfahrtgesellschaft Walter as of 9 January 2018
• Acquisition based on the agreement signed by Lufthansa Group and Air Berlin group on 13 October 2017
• The purchase price amounts to EUR 24m

Lufthansa Group and ver.di conclude long-term tariff agreement

• On 7 February 2018, Lufthansa Group and ver.di concluded long-term tariff agreements from 1 January 2018 to 30 September 2020 for the around 28,000 ground staff employed by Lufthansa German Airlines, Lufthansa Cargo, Lufthansa Technik and the LSG group in Germany
• Wage agreement prescribes a total increase in remuneration of 4.9 to 6.1 per cent over the full term; increase depends on Adjusted EBIT margin in the individual segments

Carsten Spohr confirmed as Chairman of the Executive Board and CEO for another five years

— Supervisory Board of Deutsche Lufthansa AG appointed Carsten Spohr on 14 March 2018 as Chairman of the Executive Board and CEO for five more years until year-end 2023

Financial performance

— First-time application of the accounting standard IFRS 15 (Revenue from Contracts with Customers) leads to significant changes in the presentation of individual income and expense items in the segments Network Airlines and Eurowings Group; previous year's figures were not adjusted

EARNINGS POSITION

REVENUE, INCOME AND EXPENSES

	Jan.– March 2018	Jan.– March 2017	Change
	in €m	in €m	in %
Traffic revenue	5,785	5,808	–0.4
Other revenue	1,855	1,883	–1.5
Total revenue	7,640	7,691	–0.7
Other operating income1)	400	536	–25.4
Total operating income	8,040	8,227	–2.3
Cost of materials and services	4,083	4,386	–6.9
of which fuel	1,221	1,210	0.9
of which fees and charges	1,022	1,396	–26.8
of which operating lease/charter	184	131	40.5
of which external services MRO	409	397	3.0
Staff costs2)	2,104	2,049	2.7
Depreciation3)	445	421	5.7
Other operating expenses1)	1,385	1,352	2.4
Total operating expenses	8,017	8,208	–2.3
Result from equity investments	3	6	–50.0
Adjusted EBIT	26	25	4.0
Total reconciliation EBIT	1	–9	–111.1
EBIT	27	16	68.8

1) Without write-backs from fixed assets and book gains/losses.

2) Without past service cost/settlements.

3) Without impairment loss.

Revenue and operating income increase excluding IFRS 15 effects

— First-time application of IFRS 15 results in netting of EUR 482m in traffic revenue and passenger-related airport fees previously shown in gross, and reclassification of training and travel management income of EUR 87m from other operating income to revenue

• Traffic revenue up by 7.9 per cent excluding IFRS 15 effects, mainly due to higher transport volumes at lower yields after adjustment due to exchange rate movements
• Other operating revenue declines by 6.1 per cent excluding IFRS 15 effects, mainly due to negative exchange rate effects on revenue in Aviation Services
• Revenue up by 4.5 per cent excluding IFRS 15 effects; total operating income up by 3.6 per cent excluding IFRS 15 effects
• With capacity up by 8.6 per cent, constant currency unit revenues at passenger airlines (RASK1)) up by 1.2 per cent excluding IFRS 15 effects

Operating expenses also up excluding IFRS 15 effects

• Operating expenses up by total of 3.5 per cent excluding IFRS 15 effects on fees and charges
• Fuel costs up by 0.9 per cent; higher average prices after hedging (+8.9 per cent) and higher volumes (+6.1 per cent) offset by exchange rate effects (–14.1 per cent)
• Increase in fees and charges excluding IFRS 15 effects of 7.7 per cent from higher cargo volume and higher passenger numbers
• Charter and lease expenses up by 40.5 per cent, mainly due to external capacities arising from rapid growth in the Eurowings Group
• Staff costs up by 2.7 per cent; higher number of employees (+3.2 per cent) are partly offset by opposing exchange rate movements
• Aircraft and reserve engines account for EUR 363m of depreciation and amortisation (+7.4 per cent)
• Constant currency unit costs excluding fuel for passenger airlines (CASK2)) down by 0.5 per cent excluding IFRS 15 effects

Earnings on previous year's level

• Volume-related revenue and expense growth results in stable Adjusted EBIT of EUR 26m (previous year: EUR 25m)
• Exchange rate gains and losses as well as changes in foreign currency effects year on year reduced Adjusted EBIT by EUR 21m.
• Adjusted EBIT margin of 0.3 per cent remains unchanged

DEVELOPMENT REVENUE, ADJUSTED EBIT in €m (Jan.– March) AND ADJUSTED EBIT MARGIN in % (Jan.– March)

Net profit up on previous year

• Improved net interest of EUR –41m (EUR +36m) due to non-recurring additional interest on back payments on taxes in connection with audits in the previous year; other financial items down by EUR 31m to EUR –25m, mainly due to positive valuation effects from foreign currency based on US dollar borrowings in the previous year
• Income tax expense (EUR 10m) and earnings attributable to minority interests (EUR 8m) result in a net loss for the period of EUR 57m (previous year: loss of EUR 68m)

1) RASK: Total operating income (excluding reconciliation items from Adjusted EBIT), adjusted for income from the write-back of provisions and including all exchange rate gains and losses recognised in other operating income or expenses. Figures from the previous year were adjusted in accordance with the changes due to IFRS 15.

2) CASK: Total operating expenses (excluding reconciliation items within Adjusted EBIT) excluding the foreign exchange losses recognised in other operating expenses, adjusted for income from the write-back of provisions.

FINANCIAL POSITION

• Cash flow from operating activities down by 1.4 per cent to EUR 1,625m; higher pre-tax earnings reduced mainly by cash-effective accounting changes for other assets and liabilities, such as pension provisions
• Free cash flow (cash flow from operating activities less net capital expenditure) down by 27.8 per cent to EUR 790m
• Gross capital expenditure (without acquisition of equity investments) down by EUR 41m to EUR 714m; cash outflows of EUR 19m resulted from the acquisition of equity investments, which is in contrast with the previous year by cash inflows of EUR 198m from acquired cash holdings at Brussels Airlines
• Capital expenditure on aircraft and reserve engines EUR 639m less than last year (EUR 678m); relates mainly to 15 aircraft purchases (including finance leases) and six advance payments
• Cash outflows of EUR 497m due to increase in current securities and funds (previous year: outflow of EUR 1.1bn)
• Net cash outflows from financing activities of EUR –98m mainly relate to scheduled debt repayments
• Adjusted Net Debt/Adjusted EBITDA improves on year-end 2017 by 5.2 per cent to 1.6

CASH FLOW AND CAPITAL EXPENDITURE in €m (as of 31.3.2018)

1) Without acquisition of equity investments.

NET ASSETS

• Total assets increase on year-end 2017 by 5.6 per cent to EUR 38.3bn, mostly due to seasonal reasons; proportion of current assets increases to 32.9 per cent due to higher cash holdings and higher working capital
• Proportion of current debt/liabilities increases to 43.4 per cent due to reclassification effects from IFRS 15 on liabilities from customer loyalty programmes (EUR 1.2bn, from non-current to current) and from the seasonal increase in working capital items
• Net debt down on year-end 2017 by 27.5 per cent to EUR 2.1bn; Adjusted Net Debt (sum of adjusted net indeptedness1) and pension provisions) down by 4.8 per cent to EUR 7.4bn
• Increase of EUR 474m in non-current assets is mainly the result of investments in aircraft and repairable spare parts and higher deferred tax assets, particularly in connection with neutral valuation effects on pensions, market values and IFRS 15 adjustments
• Increase of EUR 1.6bn in current assets results mainly from cash (current securities and cash-in-hand up by EUR 681m to EUR 4.6bn), which increased due to positive free cash flow, and trade receivables including contract assets that rose by EUR 635m for seasonal/operating reasons
• Shareholders' equity fell on year-end 2017 by a total of 10.4 per cent to EUR 8.6bn due to neutral valuation effects on pensions (EUR 437m) and hedging transactions (EUR 147m) as well as cumulative changes of EUR 318m due to adjustment effects with the first-time application of IFRS 15 and IFRS 9 (Financial Instruments)
• Equity ratio down by 4.0 percentage points to 22.5 per cent

• Pension provisions up by 8.3 per cent to EUR 5.5bn, mainly due to fall in discount rate from 2.0 per cent to 1.9 per cent and negative changes in plan assets

• Non-current borrowing down by EUR 229m to EUR 5.9bn, mainly due to reclassifications of maturities

• Liabilities from unused flight documents up by 47.4 per cent to EUR 5.6bn for seasonal reasons
• Amendments in connection with the first-time application of IFRS 15 as of 1 January 2018 result in higher accruals/ deferrals for obligations under customer loyalty programmes and fees and charges received of EUR 413m; IFRS 15 requires separate items for contract liabilities (current/non-current; EUR 2.3bn), which were not previously shown under non-financial liabilities and received advance payments. They include obligations from customer loyalty programmes (EUR 2.1bn in total) and advance payments on contracts

CALCULATION OF NET INDEBTEDNESS

	31 March	31 Dec.	Change
	2018 in €m	2017 in €m	in %
Liabilities to banks	2,032	2,044	–0.6
Bonds	1,006	1,005	0.1
Other non-current borrowing	3,637	3,765	–3.4
	6,675	6,814	–2.0
Other bank borrowing	44	18	144.4
Group indebtedness	6,719	6,832	–1.7
Cash and cash equivalents	1,558	1,397	11.5
Securities	3,071	2,551	20.4
Net indebtedness	2,090	2,884	–27.5
Pension provisions	5,541	5,116	8.3
Net indebtedness and pensions	7,631	8,000	–4.6

RECONCILIATION OF RESULTS

	Jan.– March 2018		Jan.– March 2017
in €m	Income statement	Reconciliation Adjusted EBIT	Income statement	Reconciliation Adjusted EBIT
Total revenue	7,640	–	7,691	–
Changes in inventories	24	–	55	–
Other operating income	381	–	506	–
of which book gains	–	–4	–	–24
of which write-ups on capital assets	–	0*	–	0*
of which badwill	–	0*	–	0*
Total operating income	8,045	–4	8,252	–24
Cost of materials and services	–4,083	–	–4,386	–
Staff costs	–2,106	–	–2,081	–
of which past service costs/settlement	–	2	–	32
Depreciation	–446		–422
of which impairment losses	–	0*	–	0*
Other operating expenses	–1,386		–1,353
of which impairment losses on assets held for sale	–	0*	–	0*
of which expenses incurred from book losses	–	1	–	1
Total operating expenses	–8,021	3	–8,242	33
Profit/loss from operating activities	24	–	10	–
Result from equity investments	3	–	6	–
EBIT	27		16
Total amount of reconciliation Adjusted EBIT	–	–1	–	9
Adjusted EBIT	–	26	–	25
Write-downs (included in profit from operating activities)	446	–	422	–
Write-downs on assets held for sale	–	–	0*	–
EBITDA	473	–	438	–

* Rounded below EUR 1m.

Business segments

NETWORK AIRLINES BUSINESS SEGMENT

KEY FIGURES NETWORK AIRLINES

		Jan.– March 2018	Jan.– March 2017	Change in %
Revenue	€m	4,728	4,929	–4.1
of which with companies of the
Lufthansa Group	€m	166	145	14.5
Adjusted EBITDA	€m	417	261	59.8
Adjusted EBIT	€m	114	–40
EBIT	€m	119	–53
Adjusted EBIT margin	%	2.4	–0.8	3.2 pts
Segment capital expenditure	€m	490	564	–13.1
Employees as of 31.3.	number	51,005	49,294	3.5
Passengers1)	thousands	21,198	19,707	7.6
Flights1)	number	197,611	189,411	4.3
Available seat-kilometres1)	millions	61,990	58,949	5.2
Revenue seat-kilometres1)	millions	48,202	45,107	6.9
Passenger load factor	%	77.8	76.5	1.2 pts
Yields2)	€ cent	8.9	9.2	–3.8
Unit revenue (RASK)2)	€ cent	7.7	8.0	–3.1
Unit cost (CASK)2)	€ cent	7.5	8.0	–6.2

1) Previous year's figures have been adjusted.

2) Previous year's figures including IFRS 15 effects.

• Fleet renewal continues at all airlines
• Customer services expanded further
• Traffic revenue down by 4.6 per cent to EUR 4.3bn; traffic revenue up year on year by 3.5 per cent excluding IFRS 15 effects; higher volumes (+6.9 per cent) offset by lower yields due to exchange rates
• Revenue down by 4.1 per cent to EUR 4.7bn; revenue up year on year by 3.3 per cent excluding IFRS 15 effects

TRENDS IN TRAFFIC REGIONS

Network Airlines

• Constant currency unit revenues up by 1.5 per cent due to higher load factors and positive pricing effects
• Operating expenses amount to EUR 4.8bn; on previous year's level excluding IFRS 15 effects
• Constant currency unit costs excluding fuel down by 1.9 per cent
• Fuel costs down by 3.5 per cent to EUR 955m, despite higher average prices, after adjustment for exchange rates; MRO expenses down by 10.3 per cent to EUR 452m, mainly due to events
• Staff costs up by 1.7 per cent to EUR 990m; number of employees up by 3.5 per cent, which is partly offset by lower pension expenses due to new plans in Germany
• Adjusted EBIT improves by EUR 154m to EUR 114m; EBIT improves by EUR 172m to EUR 119m
• Adjusted EBIT margin improves by 3.2 percentage points to 2.4 per cent
• Segment capital expenditure down by 13.1 per cent to EUR 490m, which is primarily for new aircraft

KEY FIGURES LUFTHANSA GERMAN AIRLINES1)

		Jan.– March 2018	Jan.– March 2017	Change in %
Revenue	€m	3,340	3,482	–4.1
Adjusted EBITDA	€m	285	190	50.0
Adjusted EBIT	€m	83	–12
EBIT	€m	87	–34
Employees as of 31.3.	number	34,283	33,210	3.2
Passengers	thousands	14,757	13,711	7.6
Flights	number	131,063	123,579	6.1
Available seat-kilometres2)	millions	43,373	41,238	5.2
Revenue seat-kilometres	millions	33,914	31,842	6.5
Passenger load factor	%	78.2	77.2	1.0 pts

1) Including regional partners.

2) Previous year's figure has been adjusted.

	Net traffic revenue external revenue		Number of passengers		Available seat-kilometres		Revenue seat-kilometres		Passenger load factor
	Jan.– March 2018 in €m	Change1) in %	Jan.– March 2018 in thousands	Change in %	Jan.– March 2018 in millions	Change in %	Jan.– March 2018 in millions	Change in %	Jan.– March 2018 in %	Change in pts
Europe	1,783	7.5	16,154	8.4	17,542	8.1	12,412	8.9	70.8	0.5
America	1,353	1.7	2,330	5.9	22,866	4.0	18,082	6.8	79.1	2.1
Asia/Pacific	796	0.8	1,581	4.9	15,342	5.2	12,742	5.3	83.1	0.1
Middle East/ Africa	344	–2.1	1,133	3.6	6,239	1.6	4,965	6.0	79.6	3.3
Total	4,276	3.5	21,198	7.6	61,990	5.2	48,202	6.9	77.8	1.2

1) IFRS 15 restatement in 2018.

• 100-year anniversary of the Lufthansa crane: new, updated brand image presented on 7 February 2018; first aircraft in new livery underway; further product and service improvements
• Seventh Airbus A350 in service in Munich
• First of a total of five A380s based in Munich
• Revenue down by 4.1 per cent to EUR 3.3bn, primarily due to application of IFRS 15; revenue was 4.0 per cent up on the year excluding IFRS 15 effects due to volumes
• Operating expenses down by 7.2 per cent to EUR 3.4bn
• Fees and charges down by 34.6 per cent to EUR 471m, particularly because of application of IFRS 15; fuel costs down by 3.5 per cent to EUR 669m
• Adjusted EBIT improves by EUR 95m to EUR 83m; EBIT improves by EUR 121m to EUR 87m

SWISS

KEY FIGURES SWISS1)

		Jan.– March 2018	Jan.– March 2017	Change in %
Revenue	€m	1,061	1,061	0.0
Adjusted EBITDA	€m	168	104	61.5
Adjusted EBIT	€m	99	35	182.9
EBIT	€m	99	37	167.6
Employees as of 31.3.	number	9,633	9,499	1.4
Passengers2)	thousands	4,106	3,950	4.0
Flights2)	number	37,370	38,082	–1.9
Available seat-kilometres2)	millions	13,478	12,711	6.0
Revenue seat-kilometres2)	millions	10,556	9,849	7.2
Passenger load factor2)	%	78.3	77.5	0.8 pts

1) Including Edelweiss Air.

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

2) Previous year's figures have been adjusted.

• Last two of a total of ten Boeing 777s and two from a total of 20 Bombardier CS300s entered into service
• New first-class lounge opened at Zurich Airport
• Revenue unchanged year on year at EUR 1.1bn; revenue up by 0.8 per cent on the previous year excluding IFRS 15 effects due to exchange rates

• Operating expenses down by 5.4 per cent to EUR 1.0bn

• MRO expenses down by 36.6 per cent to EUR 45m; fees and charges down by 13.4 per cent to EUR 194m, particularly because of application of IFRS 15 and also due to exchange rates

• Adjusted EBIT up by 182.9 per cent to EUR 99m; EBIT up by 167.6 per cent to EUR 99m

Austrian Airlines

KEY FIGURES AUSTRIAN AIRLINES1)

		Jan.– March 2018	Jan.– March 2017	Change in %
Revenue	€m	396	440	–10.0
Adjusted EBITDA	€m	–35	–29	–20.7
Adjusted EBIT	€m	–67	–59	–13.6
EBIT	€m	–67	–55	–21.8
Employees as of 31.3.	number	7,089	6,585	7.7
Passengers	thousands	2,481	2,189	13.3
Flights	number	31,280	29,808	4.9
Available seat-kilometres	millions	5,230	5,087	2.8
Revenue seat-kilometres2)	millions	3,800	3,483	9.1
Passenger load factor	%	72.7	68.5	4.2 pts

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

2) Previous year's figure has been adjusted.

• Premium Economy introduced on all long-haul routes; new travel class offers additional services, more leg-room and a larger baggage allowance
• New lounges opened at Vienna Airport
• Revenue down by 10.0 per cent to EUR 396m, primarily due to application of IFRS 15; revenue 6.8 per cent up on previous year excluding IFRS 15 effects
• Operating expenses down by 8.4 per cent to EUR 482m
• Fees and charges down by 40.1 per cent to EUR 85m, mainly because of application of IFRS 15; MRO costs down by 35.0 per cent to EUR 39m
• Adjusted EBIT down by 13.6 per cent to EUR –67m; EBIT down by 21.8 per cent to EUR –67m; development mainly due to costs of staff meetings and warning strikes in March, weak demand in the Middle East and tightened competitive conditions at Vienna Airport

EUROWINGS GROUP BUSINESS SEGMENT

KEY FIGURES EUROWINGS GROUP

		Jan.– March 2018	Jan.– March 2017	Change in %
Revenue	€m	793	683	16.1
of which with companies of the Lufthansa Group	€m	–2	–
Adjusted EBITDA	€m	–138	–89	–55.1
Adjusted EBIT	€m	–203	–132	–53.8
EBIT	€m	–204	–133	–53.4
Adjusted EBIT margin	%	–25.6	–19.3	–6.3 pts
Segment capital expenditure	€m	177	121	46.3
Employees as of 31.3.	number	9,273	7,048	31.6
Passengers	thousands	7,374	5,548	32.9
Flights	number	67,877	55,169	23.0
Available seat-kilometres	millions	12,781	9,925	28.8
Revenue seat-kilometres	millions	9,982	7,337	36.0
Passenger load factor	%	78.1	73.9	4.2 pts
Yields1)	€ cent	7.7	7.7	–0.2
Unit revenue (RASK)1)	€ cent	6.4	6.2	3.0
Unit cost (CASK)1)	€ cent	7.9	7.5	5.5

1) Previous year's figures including IFRS 15 effects.

• The segment Point-to-Point renamed as Eurowings Group to reflect its role as fastest-growing airline in the Lufthansa Group
• Expansion of fleet and route networks continues; 185 aircraft currently in service
• Significant capacity growth continues; further expansion of capacity planned for the summer flight timetable 2018
• Strongest growth in Düsseldorf, Germany's largest catchment area, with additional short- and long-haul routes

TRENDS IN TRAFFIC REGIONS Eurowings Group

	Net traffic revenue external revenue		Number of passengers		Available seat-kilometres		Revenue seat-kilometres		Passenger load factor
	Jan.– March 2018 in €m	Change1) in %	Jan.– March 2018 in thousands	Change in %	Jan.– March 2018 in millions	Change in %	Jan.– March 2018 in millions	Change in %	Jan.– March 2018 in %	Change in pts
Short-haul	559	34.7	6,660	33.5	7,930	31.7	5,920	44.4	74.7	6.5
Long-haul	205	32.0	714	27.2	4,852	24.3	4,062	25.5	83.7	0.8
Total	764	34.0	7,374	32.9	12,781	28.8	9,982	36.0	78.1	4.2

1) IFRS 15 restatement in 2018.

• Traffic revenue up by 15.9 per cent to EUR 764m, mainly due to volumes and despite application of IFRS 15; traffic revenue up by 34.0 per cent on previous year excluding IFRS 15 effects
• Revenue up by 16.1 per cent to EUR 793m; revenue up year on year by 33.5 per cent excluding IFRS 15 effects
• Constant currency unit revenues up by 3.5 per cent, mainly due to volumes
• Operating expenses up by 24.1 per cent to EUR 1.0bn
• Constant currency unit costs excluding fuel rose 7.6 per cent, mainly due to significant one-off expenses related to the integration of additional capacities after the insolvency of Air Berlin
• Leasing expenses up by 78.8 per cent to EUR 93m; MRO costs up by 50.7 per cent to EUR 110m
• Adjusted EBIT down by 53.8 per cent to EUR –203m; EBIT down by 53.4 per cent to EUR –204m

LOGISTICS BUSINESS SEGMENT

KEY FIGURES LOGISTICS

		Jan.– March 2018	Jan.– March 2017	Change in %
Revenue	€m	641	569	12.7
of which with companies of the
Lufthansa Group	€m	8	7	14.3
Adjusted EBITDA	€m	86	53	62.3
Adjusted EBIT	€m	65	33	97.0
EBIT	€m	65	33	97.0
Adjusted EBIT margin	%	10.1	5.8	4.3 pts
Segment capital expenditure	€m	4	6	–33.3
Employees as of 31.3.	number	4,356	4,500	–3.2
Available cargo tonne-kilometres	millions	3,104	2,920	6.3
Revenue cargo tonne-kilometres1)	millions	2,142	2,047	4.6
Cargo load factor	%	69.0	70.1	–1.1 pts

1) Previous year's figure has been adjusted.

TRENDS IN TRAFFIC REGIONS

Lufthansa Cargo

	Net traffic revenue external revenue		Available cargo-tonne-kilometers			Revenue cargo tonne-kilometres		Cargo load factor
	Jan.– March 2018 in €m	Change in %	Jan.– March 2018 in millions	Change in %	Jan.– March 2018 in millions	Change in %	Jan.– March 2018 in %	Change in pts
Europe	48	4.3	163	4.5	79	–2.3	48.2	–3.3
America	257	13.7	1,387	6.4	948	6.1	68.4	–0.2
Asia/Pacific	257	17.9	1,275	9.7	983	5.3	77.1	–3.2
Middle East/Africa	40	–9.1	278	–6.7	132	–5.9	47.5	0.4
Total	602	12.7	3,104	6.3	2,142	4.6	69.0	–1.1

• Strategic cost-cutting programme still being pursued and successful
• Digitalisation projects progressing
• Revenue up by 12.7 per cent to EUR 641m, largely due to pricing
• Total operating income up by 11.8 per cent to EUR 653m
• Total operating expenses up by 6.8 per cent to EUR 593m, primarily due to an increase in the cost of materials and services
• Adjusted EBIT and EBIT both up by 97.0 per cent to EUR 65m; mainly driven by good revenue growth
• Segment capital expenditure down by 33.3 per cent to EUR 4m

MRO BUSINESS SEGMENT

KEY FIGURES MRO

		Jan.– March 2018	Jan.– March 2017	Change in %
Revenue	€m	1,428	1,455	–1.9
of which with companies of the Lufthansa Group	€m	501	477	5.0
Adjusted EBITDA	€m	132	165	–20.0
Adjusted EBIT	€m	103	137	–24.8
EBIT	€m	103	138	–25.4
Adjusted EBIT margin	%	7.2	9.4	–2.2 pts
Segment capital expenditure	€m	34	47	–27.7
Employees as of 31.3.	number	21,867	21,051	3.9

• New client contracts signed with a total volume of EUR 456m for 2018 and subsequent years
• Number of aircraft serviced under exclusive contracts up on year-end 2017 by 2.2 per cent to 4,656
• Revenue down by 1.9 per cent to EUR 1.4bn due to volumes and exchange rates
• Total operating income down by 2.9 per cent to EUR 1.5bn
• Operating expenses down by 0.9 per cent to EUR 1.4bn due to volumes and exchange rates
• Adjusted EBIT down by 24.8 per cent to EUR 103m; EBIT down by 25.4 per cent to EUR 103m; main drivers are lower capacity use in the engine division and weaker US dollar compared with last year
• Segment capital expenditure down by 27.7 per cent to EUR 34m

CATERING BUSINESS SEGMENT

KEY FIGURES CATERING

		Jan.– March 2018	Jan.– March 2017	Change in %
Revenue	€m	722	769	–6.1
of which with companies of the Lufthansa Group	€m	155	149	4.0
Adjusted EBITDA	€m	16	14	14.3
Adjusted EBIT	€m	1	–2
EBIT	€m	1	–2
Adjusted EBIT margin	%	0.1	–0.3	0.4 pts
Segment capital expenditure	€m	10	13	–23.1
Employees as of 31.3.	number	34,950	35,482	–1.5

• Transformation continues: Construction starts on two regional production plants in the Czech Republic and the west of Germany to centralise European production and logistics processes
• Important catering contracts extended with United Airlines and American Airlines
• Revenue down by 6.1 per cent to EUR 722m, largely due to exchange rates
• Total operating income down by 5.8 per cent to EUR 735m
• Operating expenses down by 6.3 per cent to EUR 735m, mainly due to exchange rates
• Adjusted EBIT and EBIT both improve by EUR 3m to EUR 1m; mainly driven by lower transformation costs in Europe
• Segment capital expenditure down by 23.1 per cent to EUR 10m

ADDITIONAL BUSINESSES AND GROUP FUNCTIONS

KEY FIGURES ADDITIONAL BUSINESSES AND GROUP FUNCTIONS

		Jan.– March 2018	Jan.– March 2017	Change in %
Revenue	€m	244	107	128.0
of which with companies of the Lufthansa Group	€m	88	43	104.7
Adjusted EBITDA1)	€m	–11	7
Adjusted EBIT	€m	–25	–6	–316.7
EBIT	€m	–26	0*
Segment capital expenditure	€m	11	5	120.0
Employees as of 31.3.	number	11,169	11,166	0.0

* Rounded below EUR 1m.

1) Previous year's figure has been adjusted.

• Operating income down by 2.1 per cent to EUR 664m, mainly due to exchange rates
• Operating expenses up by 0.9 per cent to EUR 690m, mainly due to exchange rates
• Adjusted EBIT down by EUR 19m to EUR –25m; EBIT down by EUR 26m to EUR –26m

Opportunities and risk report

There have been no significant changes in the opportunities and risks for the Group described in detail in the Annual Report 2017.

Forecast

After a solid performance in the first quarter, the Lufthansa Group is still expecting revenue excluding IFRS 15 effects to be significantly higher and Adjusted EBIT to be slightly lower in financial year 2018 as compared with the previous year. There have been no significant changes in the main earnings variables and parameters since the forecast was published in the Annual Report 2017. The Lufthansa Group's expected fuel expenses are now EUR 600m higher than in the previous year, however.

There have been no changes in the forecasts for the individual segments compared with the information in the Annual Report 2017.

In the forecast for the cumulative operating performance indicators in the segments Network Airlines and Eurowings Group, compared with the information in the Annual Report 2017, only anticipated organic capacity growth has declined to 6 per cent. The expectation is that the other operating performance indicators will evolve in line with the existing forecast.

Consolidated income statement January– March 2018

CONSOLIDATED INCOME STATEMENT

in €m	Jan.– March 2018	Jan.– March 2017
Traffic revenue	5,785	5,808
Other revenue	1,855	1,883
Total revenue	7,640	7,691
Changes in inventories and work performed by entity and capitalised	24	55
Other operating income	381	506
Cost of materials and services	–4,083	–4,386
Staff costs	–2,106	–2,081
Depreciation, amortisation and impairment	–446	–422
Other operating expenses	–1,386	–1,353
Profit/loss from operating activities	24	10
Result of equity investments accounted for using the equity method	1	5
Result of other equity investments	2	1
Interest income	9	17
Interest expenses	–50	–94
Other financial items	–25	6
Financial result	–63	–65
Profit/loss before income taxes	–39	–55
Income taxes	–10	–4
Profit/loss after income taxes	–49	–59
Profit/loss attributable to minority interests	–8	–9
Net profit/loss attributable to shareholders of Deutsche Lufthansa AG	–57	–68
Basic/diluted earnings per share in €	–0.12	–0.15

Statement of comprehensive income January– March 2018

STATEMENT OF COMPREHENSIVE INCOME in €m Jan.– March 2018 Jan.– March 2017 Profit/loss after income taxes –49 –59 Other comprehensive income Other comprehensive income with subsequent reclassification to the income statement Differences from currency translation –32 –9 Subsequent measurement of available-for-sale financial assets –6 56 Subsequent measurement of cash flow hedges –188 –333 Other comprehensive income from investments accounted for using the equity method 1 2 Other expenses and income recognised directly in equity 1 –4 Income taxes on items in other comprehensive income 47 69 Other comprehensive income without subsequent reclassification to the income statement Revaluation of defined-benefit pension plans –520 –129 Income taxes on items in other comprehensive income 83 76 Other comprehensive income after income taxes –614 –272 Total comprehensive income –663 –331 Comprehensive income attributable to minority interests –6 –11 Comprehensive income attributable to shareholders of Deutsche Lufthansa AG –669 –342

Consolidated balance sheet as of 31 March 2018

CONSOLIDATED BALANCE SHEET – ASSETS

in €m	31.3.2018	31.12.2017	31.3.2017
Intangible assets with an indefinite useful life1)	1,362	1,343	1,379
Other intangible assets	481	492	518
Aircraft and reserve engines	16,214	15,959	15,382
Repairable spare parts for aircraft	1,885	1,758	1,715
Property, plant and other equipment	2,170	2,186	2,199
Investments accounted for using the equity method	579	585	519
Other equity investments	233	221	211
Non-current securities	34	32	25
Loans and receivables	473	475	508
Derivative financial instruments	424	642	1,318
Deferred charges and prepaid expenses	9	9	12
Effective income tax receivables	15	12	6
Deferred tax assets	1,832	1,523	1,672
Non-current assets	25,711	25,237	25,464
Inventories	882	907	857
Contract assets 2)	227	–	–
Trade receivables and other receivables	5,889	5,314	5,490
Derivative financial instruments	645	600	362
Deferred charges and prepaid expenses	251	197	213
Effective income tax receivables	68	58	38
Securities	3,071	2,551	3,732
Cash and cash equivalents	1,558	1,397	1,657
Assets held for sale	6	6	133
Current assets	12,597	11,030	12,482

Total assets	38,308	36,267	37,946

1) Including goodwill.

2) Recognition will occur separately for the first time from the 2018 financial year in accordance with IFRS 15.

in €m	31.3.2018	31.12.2017	31.3.2017
Issued capital	1,206	1,206	1,200
Capital reserve	263	263	222
Retained earnings	5,840	4,141	3,272
Other neutral reserves	1,256	1,521	2,092
Net profit/loss	–57	2,364	–68
Equity attributable to shareholders of Deutsche Lufthansa AG	8,508	9,495	6,718
Minority interests	96	103	92
Shareholders' equity	8,604	9,598	6,810
Pension provisions	5,541	5,116	8,656
Other provisions	643	601	594
Borrowings	5,913	6,142	6,482
Contract liabilities1)	43	–	–
Other financial liabilities	125	243	125
Advance payments received, deferred income and other non-financial liabilities	55	1,289	1,271
Derivative financial instruments	253	190	56
Deferred tax liabilities	491	449	456
Non-current provisions and liabilities	13,064	14,030	17,640
Other provisions	872	990	990
Borrowings	762	672	801
Trade payables and other financial liabilities	5,749	5,250	5,133
Contract liabilities from unused flight documents	5,560	3,773	4,922
Other contract liabilities1)	2,278	–	–
Advance payments received, deferred income and other non-financial liabilities	421	992	972
Derivative financial instruments	164	124	220
Effective income tax obligations	834	838	458
Current provisions and liabilities	16,640	12,639	13,496
Total shareholders' equity and liabilities	38,308	36,267	37,946

CONSOLIDATED BALANCE SHEET – SHAREHOLDERS' EQUITY AND LIABILITIES

1) Recognition will occur separately for the first time from the 2018 financial year in accordance with IFRS 15.

Consolidated statement of changes in shareholders' equity as of 31 March 2018

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
in €m	Issued capital	Capital reserve	Fair value measure ment of financial instru ments	Currency differ ences	Reva luation reserve (due to business combina tions)	Other neutral reserves	Total other neutral reserves	Retained earnings	Net profit/ loss	Equity attrib utable to share holders of Deutsche Lufthansa AG	Minority interests	Total share holders' equity
As of 31.12.2016	1,200	222	1,081	670	236	326	2,313	1,549	1,776	7,060	89	7,149
Capital increases/reductions	–	–	–	–	–	–	–	–	–	–	–	–
Reclassifications	–	–	–	–	–	–	–	1,776	–1,776	–	–	–
Dividends to Lufthansa shareholders/ minority interests	–	–	–	–	–	–	–	–	–	–	–8	–8
Transactions with minority interests	–	–	–	–	–	–	–	–	–	–	–	–
Consolidated net profit/loss attributable to Lufthansa shareholders/minority interests	–	–		–	–	–	–	–	–68	–68	9	–59
Other expenses and income recognised directly in equity	–	–	–208	–9	–	–4	–221	–53	–	–274	2	–272
As of 31.3.2017	1,200	222	873	661	236	322	2,092	3,272	–68	6,718	92	6,810
As of 31.12.2017	1,206	263	693	266	236	326	1,521	4,141	2,364	9,495	103	9,598
Restatement IFRS 9	–	–	–90	–	–		–90	82	–	–8	–	–8
Restatement IFRS 15	–	–	–	–	–		–	–310	–	–310	–	–310
Adjusted as of 1.1.2018	1,206	263	603	266	236	326	1,431	3,913	2,364	9,177	103	9,280
Capital increases/reductions	–	–	–	–	–	–	–	–	–	–	–	–
Reclassifications	–	–	–	–	–	–	–	2,364	–2,364	–	–	–
Dividends to Lufthansa shareholders/ minority interests	–	–	–	–	–	–	–	–	–	–	–13	–13
Transactions with minority interests	–	–	–	–	–	–	–	–	–	–	–	–
Consolidated net profit/loss attributable to Lufthansa shareholders/minority interests	–	–		–	–	–	–	–	–57	–57	8	–49
Other expenses and income recognised directly in equity	–	–	–147	–32	–	4	–175	–437	–	–612	–2	–614
As of 31.3.2018	1,206	263	456	234	236	330	1,256	5,840	–57	8,508	96	8,604

Consolidated cash flow statement January – March 2018

CONSOLIDATED CASH FLOW STATEMENT
in €m	Jan.– March 2018	Jan.– March 2017
Cash and cash equivalents 1.1.	1,218	1,138
Net profit/loss before income taxes	–39	–55
Depreciation, amortisation and impairment losses on non-current assets (net of reversals)	446	421
Depreciation, amortisation and impairment losses on current assets (net of reversals)	16	7
Net proceeds on disposal of non-current assets	–3	–23
Result of equity investments	–3	–6
Net interest	41	77
Income tax payments/reimbursements	–45	–27
Significant non-cash-relevant expenses/income	14	–12
Change in trade working capital	1,390	1,154
Change in other assets/shareholders' equity and liabilities	–192	112
Cash flow from operating activities	1,625	1,648
Capital expenditure for property, plant and equipment and intangible assets	–708	–747
Capital expenditure for financial investments	–6	–8
Additions/loss to repairable spare parts for aircraft	–147	–110
Proceeds from disposal of non-consolidated equity investments	1	0*
Proceeds from disposal of consolidated equity investments	–	0*
Cash outflows for acquisitions of non-consolidated equity investments	–7	0*
Cash outflows for acquisitions of consolidated equity investments	–12	198
Proceeds from disposal of intangible assets, property, plant and equipment and other financial investments	19	53
Interest income	13	57
Dividends received	12	3
Net cash from/used in investing activities	–835	–554
Purchase of securities/fund investments	–837	–1,083
Disposal of securities/fund investments	340	27
Net cash from/used in investing and cash management activities	–1,332	–1,610
Capital increase	–	–
Transactions by minority interests	–	–
Non-current borrowing	75	693
Repayment of non-current borrowing	–136	–262
Dividends paid	–13	–8
Interest paid	–24	–71
Net cash from/used in financing activities	–98	352
Net increase/decrease in cash and cash equivalents	195	390
Changes due to currency translation differences	–12	5
Cash and cash equivalents 31.3.1)	1,401	1,533
Securities	3,071	3,732
Liquidity	4,472	5,265
Net increase/decrease in liquidity	703	1,446

* Rounded below EUR 1m.

1) Excluding fixed-term deposit with terms of three to twelve months (2018: EUR 157m, 2017: EUR 124m).

Notes

1 Standards applied and changes in the group of consolidated companies

The consolidated financial 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 (IFRIC) as applicable in the European Union (EU). This interim report as of 31 March 2018 has been prepared in condensed form in accordance with IAS 34.

In preparing the interim financial statements, the standards and interpretations applicable as of 1 January 2018 have been applied. The interim financial statements as of 31 March 2018 have been prepared using the same accounting policies as those on which the preceding consolidated financial statements as of 31 December 2017 were based. The standards and interpretations mandatory from 1 January 2018 onwards, particularly IFRS 9, Financial Instruments, and IFRS 15, Revenue from Contracts with Customers, had the following effects on the Group's net assets, financial and earnings position.

IFRS 15

Based on the modified retrospective method, the cumulative effects of the changes were recognised in retained earnings as of 1 January 2018. The following table summarises the effects of transition to IFRS 15 on retained earnings at 1 January 2018:

RETAINED EARNINGS

in €m	Effect of adopting IFRS 15 at 1 January 2018
Shift in timing of recognition for fees	29
Customer loyalty programmes	385
Related taxes	–104
Effect at 1 January 2018	310

Contractual items that have not been performed in full are to be presented in the balance sheet as contract assets or liabilities (current and non-current, in each case). Obligations in respect of unused flight documents are still presented separately. Otherwise, the presentation mainly concerns obligations from work in progress in connection with longerterm production and service contracts and obligations under customer loyalty programmes. Obligations from customer loyalty programmes have previously been recognised under non-financial liabilities and deferrals and accruals (noncurrent and current). Since the timing of the fulfilment of these obligations is beyond the control of the Company, they are all presented as current, in accordance with IFRS 15. As a result, as of 1 January 2018, there is a reclassification of debts amounting to EUR 1.2bn from non-current to current.

From 2018 onwards, for ticket revenue, the airport fees received and the corresponding airport invoices will no longer be recognised in the income statement. Applied to the first quarter 2018, this approach reduced revenue and expenses by EUR 482m. Otherwise, there are no material differences between revenue recognition under IFRS 15 and revenue recognition under IAS 11 or IAS 18. Also, in connection with IFRS 15, income from training and travel management was reclassified from other operating income to revenue. This had the effect of increasing revenue in the first quarter 2018 by EUR 87m. In the prior-year period, EUR 85m was shown under other operating income.

IFRS 9

In accordance with the transitional provisions of IFRS 9, Financial Instruments, the Lufthansa Group has not adjusted the figures for the previous year and recognised the cumulative transitional effects as of 1 January 2018 in retained earnings.

In the phase I ("classification"), the transition of share items held as securities from the IAS 39 category "available for sale" (AfS) to the IFRS 9 category "fair value through profit or loss" (FVTPL) only leads to a transfer within reserves, between the cumulative market value reserve and retained earnings. Another transfer effect is caused due to the reclassification of a share item from AfS to fair value without effect on profit and loss (without recycling). Debt instruments are still generally classified as at fair value without effect on profit and loss. There are no reclassification effects in phase I for loans and receivables, either, since they are still held at amortised cost.

As part of phase II ("impairment rules"), the initial application of the expected loss model in line with IFRS 9 led to an additional need to recognise an impairment of EUR 8m (after tax), which was recognised in equity without effect on profit or loss as of 1 January 2018. The effects from this on income in the first quarter 2018 were immaterial.

For fuel hedging transactions, the Group uses the component approach for fuel hedging, with crude oil as the designated component and regular rebalancing. This leads to a reduction in volatility in the income statement from changes in the market value of derivatives. Accounting for the time values of options without effect on profit and loss under IFRS 9 means that the changes in time value previously recognised through profit or loss as of year-end 2017 were transferred within equity to the market value reserve as of 1 January 2018. In this context, changes in time value of EUR 20m were recognised in reserves in the first quarter 2018.

CHANGES IN THE GROUP OF CONSOLIDATED COMPANIES

With effect from 9 January 2018, Lufthansa Commercial Holding GmbH acquired all the shares in Luftfahrtgesellschaft Walter mbH. The acquisition is based on the purchase agreement signed by Lufthansa Group and the Air Berlin group on 13 October 2017. The purchase price is EUR 24m. Within the Eurowings Group segment, the company will act as a platform with its own air operator certificate and provide services to the Eurowings Group on the basis of wet-lease agreements for 20 Bombardier DH-8 Q400s and 13 Airbus A320/319s on current plans; 23 aircraft were in service as of late March. The company operates without its own fleet and does not operate solely within the Eurowings Group. At the time of initial consolidation, it had gross assets of EUR 19m and net assets of EUR 1m. The difference of EUR 23m resulting from the purchase price allocation was classified in full as goodwill, given the peculiarities of the acquired business operations, and assigned to the Eurowings Group. Since it only provides services within the Group, the effects on Group earnings are immaterial.

The other changes to the group of consolidated companies had no significant effects on the Group's net assets, financial and earnings position.

2 Notes to the income statement, balance sheet, cash flow statement and segment reporting

ASSETS HELD FOR SALE

in €m	31.3.2018	31.12.2017	31.3.2017
Assets
Aircraft and reserve engines	–	–	128
Financial assets	–	–	–
Other assets	6	6	5

In the following tables, revenue is disaggregated by primary geographical markets and the Group's major operating areas.

TRAFFIC REVENUE BY AREA OF OPERATIONS

in €m	2018	Europe1)	North America1)	Central and South America1)	Asia/ Pacific1)	Middle East1)	Africa1)	20172)
Network Airlines	4,3943)	3,038	686	103	404	111	52	4,5953)
Lufthansa German Airlines	3,016							3,183
SWISS	1,0303)							1,0193)
Austrian Airlines	348							393
Eurowings Group	7893)	717	25	1	10	5	31	6793)
Logistics	602	329	61	24	168	6	14	534
Total	5,785							5,808

1) Traffic revenue is allocated according to the original location of sale.

2) Application of the modified retrospective approach; revenue measured for 2017 according to IAS 11 and IAS 18.

3) Disclosure of traffic revenue, including belly revenue; this is reported in the segment reporting in the reconciliation column.

OTHER OPERATING REVENUE BY AREA OF OPERATIONS
in €m	2018	Europe	North America	Central and South America	Asia/ Pacific	Middle East	Africa	20171)
MRO	927	420	230	36	168	35	38	978
MRO services	842							885
Other operating revenue	85							93
Catering	567	99	272	40	133	14	9	620
Catering services	488							551
Revenue from in-flight sales	28							16
Other services	51							53
Network Airlines	167	134	13	2	13	3	2	190
Eurowings Group	8	5	1	–	–	–	2	4
Logistics	30	16	12	–	–	2	–	27
Additional Businesses and Group Functions	156	120	11	3	16	4	2	64
IT services	70							64
Travel management	68							–
Other	18							–
Total	1,855							1,883

1) Application of the modified retrospective approach; revenue measured for 2017 according to IAS 11 and IAS 18.

Detailed comments on the income statement, the statement of financial positions, the cash flow statement and the segment reporting can also be found in the ↗ interim management report, p. 1–9.

3 Seasonality

The Group's business activities are mainly exposed to seasonal effects via the Network Airlines and Eurowings Group segments. As such, revenue in the first and fourth quarters is generally lower, since people travel less, while higher revenue and operating profits are normally earned in the second and third quarters.

4 Contingencies and events after the balance sheet date

CONTINGENT LIABILITIES
in €m	31.3.2018	31.12.2017
From guarantees, bills of exchange and cheque guarantees	851	881
From warranty contracts	327	354
From providing collateral for third-party liabilities	39	39
	1,217	1,274

Provisions for other contingent liabilities were not made because it was not sufficiently probable that they would be drawn down. The potential financial effect of these provisions on the result would have been EUR 81m in total (as of 31.12.2017: EUR 80m).

At the end of March 2018, there were order commitments of EUR 12.1bn for capital expenditure on property, plant and equipment, including repairable spare parts, and for intangible assets. As of 31 December 2017, the order commitments came to EUR 13.0bn.

Contracts for the sale of aircraft signed as of 31 December 2017 yielded profits and cash receipts of less than EUR 1m by 31 March 2018.

5 Financial instruments and financial liabilities

FINANCIAL INSTRUMENTS

The following table shows financial assets and liabilities held at fair value by level in the fair value hierarchy. The levels are defined as follows:

Level 1: Financial instruments traded on active markets, the quoted prices for which are taken for measurement unchanged.

Level 2: Measurement is made by means of valuation methods with parameters derived directly or indirectly from observable market data.

Level 3: Measurement is made by means of valuation methods with parameters not based exclusively on observable market data.

As of 31 March 2018, the fair value hierarchy for assets and liabilities held at fair value was as follows:

ASSETS AS OF 31.3.2018
in €m	Level 1	Level 2	Level 3	Total
Financial assets at fair value through profit and loss
Financial derivatives classified as held for trading	–	12	–	12
Securities	1,469	3	–	1,472
Total financial assets through profit and loss	1,469	15	–	1,484
Derivative financial instruments which are an effective part of a hedging relationship	–	1,053	–	1,053
Financial assets at fair value without effect on profit and loss	12	1,511	–	1,523
Total assets	1,481	2,579	–	4,060

LIABILITIES AS OF 31.3.2018

in €m	Level 1	Level 2	Level 3	Total
Derivative financial instruments at fair value through profit or loss	–	13	–	13
Derivative financial instruments which are an effective part of a hedging relationship	–	400	–	400
Total liabilities	–	413	–	413

As of 31 December 2017, the fair value hierarchy for assets and liabilities held at fair value was as follows:

ASSETS AS OF 31.12.2017
in €m	Level 1	Level 2	Level 3	Total
Financial assets at fair value through profit and loss
Financial derivatives classified as held for trading	–	131	–	131
Securities	–	–	–	–
Total financial assets through profit and loss	–	131	–	131
Derivative financial instruments which are an effective part of a hedging relationship	–	1,110	–	1,110
Financial assets at fair value without effect on profit and loss	410	2,173	–	2,583
Total assets	410	3,414	–	3,824
LIABILITIES AS OF 31.12.2017
in €m	Level 1	Level 2	Level 3	Total
Derivative financial instruments at fair value through profit or loss	–	123	–	123
Derivative financial instruments which are an effective part of a hedging relationship	–	191	–	191
Total liabilities	–	314	–	314

Since the start of the year, the simplified evidence of effectiveness required by IFRS 9 means that cross currency swaps used to hedge foreign currency liabilities are now designated as a hedging instrument. The cross currency swaps are designated both as fair value hedges and as cash flow hedges. This reduces both the market value of, and the earnings item pertaining to, stand-alone derivatives and the exchange rate effect of financial liabilities, which is offset by the opposing exchange rate effect of the cross currency swaps used to hedge them.

The fair values of interest rate derivatives correspond to their respective market values, which are measured using appropriate mathematical methods, such as discounting expected future cash flows. Discounting takes market standard interest rates and the residual term of the respective instruments into account. Forward currency transactions and swaps are individually discounted to the balance sheet date based on their respective futures rates and the appropriate interest rate curve. The market prices of currency options and the options used to hedge fuel prices are determined using acknowledged option pricing models.

The fair values of debt instruments also correspond to their respective market values, which are measured using appropriate mathematical methods, such as discounting expected future cash flows. Discounting takes market standard interest rates and the residual term of the respective instruments into account.

The carrying amount for cash, trade receivables and other receivables, trade payables and other liabilities is assumed to be a realistic estimate of fair value.

FINANCIAL LIABILITIES

The following table shows the carrying amounts and market values for individual classes of financial liabilities. Market values for bonds are equal to the listed prices. The market values for other types of financial liability have been calculated using the applicable interest rates for the remaining term to maturity and repayment structures at the balance sheet date based on available market information (Reuters).

FINANCIAL LIABILITIES

	31.3.2018	31.12.2017
in €m	Carrying amount	Market value	Carrying amount	Market value
Bonds	1,006	1,055	1,005	1,063
Liabilities to banks	2,032	2,096	2,044	2,113
Leasing liabilities and other loans	3,637	3,583	3,765	3,722
Total	6,675	6,734	6,814	6,898

6 Earnings per share

		31.3.2018	31.3.2017
Basic earnings per share	€	–0.12	–0.15
Consolidated net profit/loss	€m	–57	–68
Weighted average number of shares		471,259,542	468,817,760
Diluted earnings per share	€	–0.12	–0.15
Consolidated net profit/loss	€m	–57	–68
Weighted average number of shares		471,259,542	468,817,760

7 Issued capital

A resolution passed at the Annual General Meeting on 29 April 2014 authorised the Executive Board until 28 April 2019, subject to approval by the Supervisory Board, to increase the Company's issued capital by up to EUR 29,000,000 by issuing new registered shares to employees (Authorised Capital B) for payment in cash. Existing shareholders' subscription rights are excluded.

A resolution passed at the Annual General Meeting held on 29 April 2015 authorised the Executive Board pursuant to Section 71 Paragraph 1 No. 8 Stock Corporation Act (AktG) to purchase treasury shares until 28 April 2020. The authorisation is limited to 10 per cent of current issued capital. According to the resolution of the Annual General Meeting held on 29 April 2015, the Executive Board is also authorised to purchase treasury shares by means of derivatives and to conclude corresponding derivative transactions.

A resolution passed at the Annual General Meeting on 29 April 2015 authorised the Executive Board until 28 April 2020, subject to approval by the Supervisory Board, to increase the Company's issued capital by up to EUR 561,160,092 by issuing new registered shares on one or more occasions for payment in cash or in kind (Authorised Capital A). In certain cases, the shareholders' subscription rights can be excluded with the approval of the Supervisory Board.

8 Segment reporting

Segment reporting has now also been adjusted in line with the internal management reporting, which now focuses more on the performance indicator Adjusted EBIT. The individual expense and income categories no longer include the reconciliation items (especially impairment losses and pension

measurement effects). The resulting performance indicator is therefore Adjusted EBIT. The reconciliation items and the resulting EBIT are then shown as additional information. The previous year's figures are presented accordingly.

There have been no changes in the segmentation compared with the financial statements as of 31 December 2017.

SEGMENT INFORMATION FOR THE REPORTING SEGMENTS January – March 2018
in €m	Network Airlines	Eurowings Group	Logistics	MRO	Catering	Total reportable operating segments	Additional Businesses and Group Functions	Recon ciliation	Group
External revenue	4,562	795	633	927	567	7,484	156	–	7,640
of which traffic revenue	4,276	764	602	–	–	5,642	–	143	5,785
Inter-segment revenue	166	–2	8	501	155	828	88	–916	–
Total revenue	4,728	793	641	1,428	722	8,312	244	–916	7,640
Other operating income	160	56	12	58	13	299	420	–319	400
Total operating income	4,888	849	653	1,486	735	8,611	664	–1,235	8,040
Operating expenses	4,779	1,039	593	1,385	735	8,531	690	–1,204	8,017
of which cost of materials	2,635	681	412	804	306	4,838	56	–811	4,083
of which staff costs	990	139	102	350	283	1,864	241	–1	2,104
of which depreciation and amortisation	303	65	21	29	15	433	14	–2	445
of which other operating expenses	851	154	58	202	131	1,396	379	–390	1,385
Results of equity investments	5	–13	5	2	1	0*	1	2	3
of which result of investments accounted for using the equity method	4	–13	5	2	1	–1	–	2	1
Adjusted EBIT	114	–203	65	103	1	80	–25	–29	26
of which reconciliation items
Impairment losses/gains	–1	–1	–	–	–	–2	1	1	0*
Effects from pension provisions	–	2	–	–	–	2	–	–	2
Results of disposal of assets	–4	0*	0*	0*	0*	–4	–	1	–3
EBIT1)	119	–204	65	103	1	84	–26	–31	27
Total adjustments									–1
Other financial result									–66
Profit/loss before income taxes									–39
Capital employed at end of period2)	8,399	1,806	1,063	4,639	1,250	17,157	3,326	–448	20,035
of which from investments accounted for using the equity method	54	115	54	243	127	593	6	–20	579
Segment capital expenditure	490	177	4	34	10	715	11	7	733
of which from investments accounted for using the equity method	–	–	–	7	–	7	–	–	7
Number of employees at end of period	51,005	9,273	4,356	21,867	34,950	121,451	11,169	–	132,620

* Rounded below EUR 1m.

1) For detailed reconciliation from EBIT to Adjusted EBIT ↗ p. ⁴ in the interim Group management report.

2) The capital employed results from total assets adjusted for non-operating items (deferred taxes, positive market values, derivatives) less non-interest bearing liabilities (including trade payables and liabilities from unused flight documents).

Recon Network Eurowings Logistics MRO Catering Total Additional Airlines Group reportable Businesses ciliation operating and Group in €m segments Functions External revenue 4,784 683 562 978 620 7,627 64 of which traffic revenue 4,482 659 534 – – 5,675 – Inter-segment revenue 145 0* 7 477 149 778 43 –821 Total revenue 4,929 683 569 1,455 769 8,405 107 –821 Other operating income 175 29 15 76 11 306 571 –341 Total operating income 5,104 712 584 1,531 780 8,711 678 –1,162 Operating expenses 5,147 837 555 1,398 784 8,721 684 –1,197 of which cost of materials 3,055 565 369 814 330 5,133 53 –800	Group – 7,691 133 5,808 7,691 536 8,227 8,208 4,386 –2 2,049 0 421
of which staff costs 973 114 102 332 306 1,827 224
of which depreciation and amortisation 301 43 20 28 16 408 13
of which other operating expenses 818 115 64 224 132 1,353 394 –395	1,352
Results of equity investments 3 –7 4 4 2 6 0*	0* 6
of which result of investments accounted for using the equity method 2 –7 4 4 2 5 –	– 5
Adjusted EBIT –40 –132 33 137 –2 –4 –6	35 25
of which reconciliation items
Impairment losses/gains –1 1 – –1 – –1 –1	2 0*
Effects from pension provisions 32 – – – – 32 –	– 32
Results of disposal of assets –18 – – – – –18 –5	– –23
EBIT1) –53 –133 33 138 –2 –17 0*	33 16
Total adjustments	9
Other financial result	–71
Profit/loss before income taxes	–55
Capital employed at the end of period2) 9,446 1,504 1,052 4,017 1,369 17,388 3,841 –132	21,097
of which from investments accounted for using the equity method 14 92 55 218 132 511 6	2 519
Segment capital expenditure 564 121 6 47 13 751 5 –199	557
of which from investments accounted for using the equity method – – – – – – –	– –
Number of employees at end of period 49,294 7,048 4,500 21,051 35,482 117,375 11,166	– 128,541

* Rounded below EUR 1m.

1) For detailed reconciliation from EBIT to Adjusted EBIT ↗ p. ⁴ in the interim Group management report.

2) The capital employed results from total assets adjusted for non-operating items (deferred taxes, positive market values,

derivatives) less non-interest bearing liabilities (including trade payables and liabilities from unused flight documents).

FIGURES BY REGION January – March 2018
----------------------------------------	--	--	--

in €m	Europe	thereof Germany	North America	thereof USA	Central and South America	Asia/Pacific	Middle East	Africa	Total
Traffic revenue1)	4,084	1,902	772	699	128	582	122	97	5,785
Other operating revenue	809	280	534	438	78	328	55	51	1,855
Total revenue	4,893	2,182	1,306	1,137	206	910	177	148	7,640

1) Allocated according to the original location of sale.

FIGURES BY REGION January – March 2017

in €m	Europe	thereof Germany	North America	thereof USA	Central and South America	Asia/Pacific	Middle East	Africa	Total
Traffic revenue1)	3,950	1,775	881	805	125	607	144	101	5,808
Other operating revenue	725	199	527	436	77	406	98	50	1,883
Total revenue	4,675	1,974	1,408	1,241	202	1,013	242	151	7,691

1) Allocated according to the original location of sale.

9 Related party disclosures

As stated in ↗ Note 46 to the consolidated financial statements in the Annual Report 2017, p.177 ff., the segments in the Lufthansa Group render numerous services to affiliated companies 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 significant changes in comparison with the balance sheet date. The contractual relationships with the group of related parties described in the ↗ Remuneration report of the Annual Report 2017, p. 87 ff., and in ↗ Note 47, p. 180, of the 2017 consolidated financial statements also still exist unchanged, but are not of material significance for the Group.

10 Published standards that have not yet been applied

IFRS 16, Leases, must be applied from 1 January 2019. The Lufthansa Group has decided to apply the modified retroactive approach. In the modified retroactive approach, the comparable figures for the previous year are not adjusted and all adjustment effects as of 1 January 2019 are therefore to be presented as adjustments to retained earnings. The Lufthansa Group has also decided to recognise right-of-use assets pertaining to lease liabilities upon initial application, identical to the corresponding lease liabilities. This will therefore not have any impact on equity as of the effective date. The Lufthansa Group has set up a Group-wide project to implement the new leasing standard. One important change identified to date is that the Group will recognise new assets and liabilities for its operating leases. These right-of-use assets will mainly consist of buildings and, to a lesser extent, of leased aircraft (7 per cent of the Group fleet are on operating leases as of 31 March 2018). It is still too early to reliably quantify the concrete impact this will have on the consolidated financial statements.

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 financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the interim management report of the Group includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group for the remaining months of the financial year.

Frankfurt, 24 April 2018 Executive Board

Carsten Spohr Chairman of the Executive Board and CEO

Thorsten Dirks Member of the Executive Board Eurowings and Aviation Services

Harry Hohmeister Member of the Executive Board Hub Management

Ulrik Svensson Member of the Executive Board Chief Financial Officer

Dr Bettina Volkens Member of the Executive Board Corporate Human Resources and Legal Affairs

Credits

Published by

Deutsche Lufthansa AG Linnicher Str. 48 50933 Cologne Germany

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

Editorial staff

Andreas Hagenbring (Editor) Anne Katrin Brodowski Patrick Winter

Concept, design and realisation

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

ISSN 1616-0231

Contact

Andreas Hagenbring +49 69 696–28001

Frédéric Depeille +49 69 696–28013

Phuc-Thi Thai +49 69 696–28003

Deutsche Lufthansa AG Investor Relations LAC, Airportring 60546 Frankfurt/Main Germany Phone: +49 69 696–28001 Fax: +49 69 696–90990 E-Mail: investor.relations@dlh.de

The Lufthansa 1st Interim Report is a translation of the original German Lufthansa Zwischenbericht 1/2018. Please note that only the German version is legally binding.

You can order the Annual Report in German via our website – www.lufthansagroup.com/investor-relations – or from the address above.

The latest financial information on the internet: www.lufthansagroup.com/investor-relations

Financial calendar 2018/2019

2018

8 May Annual General Meeting 31 July Release of Interim Report January – June 2018 30 Oct. Release of Interim Report January – September 2018

2019

	14 March Release of Annual Report 2018
30 April	Release of Interim Report January – March 2019
7 Mai	Annual General Meeting
30 July	Release of Interim Report January – June 2019
29 Oct.	Release of Interim Report January – September 2019

Disclaimer in respect of forward-looking statements

Information published in the 1st Interim Report 2018, with regard to the future development of the Lufthansa Group and its subsidiaries consists purely of forecasts and assessments and not of definitive facts. Its purpose is exclusively informational, and can be identified by the use of such cautionary terms as "believe", "expect", "forecast", "intend", "project", "plan", "estimate", "anticipate", "can", "could", "should" or "endeavour". These forward-looking statements are based on discernible information, facts and expectations available at the time that the statements were made. They are therefore subject to a number of risks, uncertainties and factors, including, but not limited to, those described in disclosures, in particular in the Opportunities and risk report in the Annual Report. Should one or more of these risks occur, or should the underlying expectations or assumptions fail to materialise, this could have a significant effect (either positive or negative) on the actual results.

It is possible that the Group's actual results and development may differ materially from the results forecast in the forward-looking statements. Lufthansa does not assume any obligation, nor does it intend, 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.

Note

Unless stated otherwise, all change figures refer to the corresponding period from the previous year. Due to rounding, some of the figures may not add up precisely to the stated totals, and percentages may not precisely reflect the absolute figures.

Deutsche Lufthansa AG

Investor Relations Lufthansa Aviation Center Airportring 60546 Frankfurt/Main Germany

E-mail: investor.relations@dlh.de

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