Growing through Alliances and Consolidation

Transcription

1 Growing through Alliances and Consolidation Götz Ahmelmann VP Alliances, Strategy and Subsidiaries Deutsche Lufthansa AG MUC, Terminal 2 June 25, 2008

2 The objectives of Lufthansa Passenger Airline 1 Leading Carrier in Europe 2 Global Offering by serving all major traffic flows 3 Increase global Market Access 4 Underline positioning as a Premium Carrier 5 Secure Independency 2

3 The further development of our market position is building on the integration of smaller markets into our longhaul-network 48,0 Mio. (63%) local longhaul passengers from major alliance hub catchments 28,2 Mio. (37%) local longhaul passengers outside major alliance hub catchments 18,3 18,8 MAD (2,8) LON (15,5) MIL (2,1) ROM (2,4) MOW (2,5) AMS (3,6) PAR (8,2) LH-System needs local Markets and Transfer Passengers 10,9 VIE (0,9) CPH (1,0) IST (1,5) ZRH (1,5) MUC (1,5) FRA (4,5) Oneworld SkyTeam STAR OPO 0,2 LIS 0,8 DUB 1,0 GLA 0,5 BHX 0,5 EDI 0,3 MAN 1,9 BCN 1,1 BRU 1,2 LYS 0,3 MRS 0,3 HAJ 0,2 CGN 0,1 OSL 0,4 HAM 0,5 BER 0,6 DUS 0,7 STR 0,3 GVA 0,7 FLR 0,3 BLQ 0,2 Other 11,8 VCE 0,5 STO 0,8 PRG 0,5 BUD 0,4 WAW 0,4 HEL 0,5 ATH 0,9 BUH 0,3 Source: O&D Marketsizes 02/07 to 01/08, all local Longhaul-Passengers (Mio.) ex European Cities 3

4 Therefore LH has chosen a Multi-Hub /-Brand philosophy to cover the European markets Lufthansa s philosophy Competitor s philosophy Access to local Markets through LH and other Brands Coverage of Markets via Feed into LH Hubs and a coordinated Networks/Hubs of independent Companies One or two dominant Mega-Hubs target Europe as total market Centralized Steering and Planning of Subsidiaries 4

5 Our growth is resting on three pillars Organic growth Partner & Alliances Acquisitions Secure leading role of LH in European traffic flows Expand global presence Strengthen position in European & strat. markets Innovation, Quality, Cost Reduction 5

6 Organic growth: In the next seven years Lufthansa will receive almost 150 new aircrafts Long-haul 7 A A A A/C Short-haul 20 B A A A320 5 A319 4 A320 6 A A/C Regional 15 CR9 30 E A/C Figures relate to Lufthansa Passenger Airline only 147 A/C 6

7 Partner & Alliances: Comprehensive Star Alliance network daily flights to 965 Destinations in 162 Countries 7

8 Star Alliance is No. 1 and has grown considerably Available seat kilometers* number of members since 1997 Others 20,5% 31,7% 20 25,8% 22,0% 10 ASK (bil) Star oneworld Skyteam MAY1997 FEB1999 JUN Source: Star Alliance, IATA WATS published 2007, UPS & FedEx not included, *year

9 Star Alliance is focusing on value drivers Contribute to the long-term profitability of Star Alliance members beyond individual capabilities through initiatives that focus on... Customer benefits Innovation / leadership Synergies Strengthen the value proposition to the customers Foster innovation and set industry standards Capitalize on economies of scale, alliance bargaining power and strengths of individual members 9

10 Customer benefits have increased through better network quality More choices and more flexibility Daily departures and destinations by alliances (2008) 965 Development of code-sharing (flights per week) StarAlliance SkyTeam OneWorld % 17% 54% LH on OAL OAL on LH LH Only 54% 36% % Daily Departures Destinations Source: Star Alliance, C/S Flights 1997/

11 Additional customer benefits Harmonized rules and move under one roof / co-location to simplify travel processes at major alliance airports Lounge access policy and STAR Gold/Silver services to secure premium customer recognition and handling Interline electronic ticketing to provide paperless tickets across the global network STAR-wide FFP-agreements with mileage upgrade awards to offer unlimited access to and benefits from any FFP within the alliance Corporate program to harmonize corporate programs and processes among the alliance 11

12 Some white spots remain... Central Europe: * * Star Regional: *Egypt Air and Air India are the next carriers to join STAR 12

13 ...but are being filled Integration of Air China and Shanghai Airlines into Star completed in December 2007 Acceptance of Air India by CEB in December 2007, LH to serve as mentor for integration process Integration of Turkish completed on April 2008 and of Egypt Air planned for July 2008 Codeshare and FFP partnership with Ethiopian since April 2008 FFP Partnership with TAM since February Code-share launch in August 2008 Deepening of relationship with Air Astana and new Russian carrier AiRUnion. LH changed from SVO to DME airport in Moscow on April 1,

14 North America: New partner Continental Airlines Financials (2007) Revenue: Mio. USD Profit: 459 Mio. USD 51 Mio. passengers Alliance: SkyTeam, switching to Star Alliance Frequent flyer program: OnePass Network Main Base: Houston Hub Cities: Newark, Cleveland, Guam Number of Destinations: 164 Number of A/C: on order Average age: 10,2 years 14

15 With Continental Star Alliance becomes the biggest Transatlantic alliance Increasing market share and adding new destinations Alliance capacity share EU-USA (%) Continental destinations in EU from Newark (EWR) 17% OAL 17% 22% OneWorld 22% 25% Star Alliance 34% 36% SkyTeam 27% 2007 Source: Flash, RATI

16 Acquisitions: Active role in consolidation process but only if the conditions are right Our logic of consolidation DUB CPH HEL Market position Strong (growing) Catchment Significant Demand for Longhaul-Traffic Improvement of relative Market Share Connectivity to LH-Hub-System LHR CDG AMS FRA MUC ZRH VIE MXP PRG WAW Financial and operational performance Stand-alone Profitability Cost- and Revenue Synergies Ability to restructure LIS MAD FCO Values and cultural fit Governance Entrepreneurship Cultural Fit 16

17 External growth in strategic markets: jetblue Airways Company profile Founding in 1998, starting operation in February 2000 Today No. 8 in USA 134 Aircraft (104 A320, 30 Embraer 190) ca. 23 Mio. passengers p.a. ca employees Leading position in New York, the most important market in the USA Market leader in domestic flights from/to JFK No. 2 in JFK in terms of Slots (app. 28% of Slots, Delta app. 31%) Business model "Low Cost" with Premium Product and strong brand Low costs, high aircraft productivity innovative pricing models Premium on board product (comfortable seat pitch, Live TV, free food and beverages) Several honors eg. Best Domestic Airline (Condé Nast Traveler) 17

18 Thank You! 18

19 Disclaimer This presentation is for informational purposes only, contains preliminary financial and other information about Lufthansa and is subject to updating, revision, amendment and completion. This presentation does not and is not intended to constitute or contain any offer of securities for sale or a solicitation of an offer to purchase any securities of Deutsche Lufthansa AG or any other company and neither this presentation nor anything contained herein shall form the basis of any contract or commitment. Certain statements contained in this presentation may be statements of future expectations and other forward-looking statements or trend information that are based on management's current views and assumptions and involve known and unknown risks and uncertainties. In addition to statements which are forwardlooking by reason of context, including without limitation, statements referring to risk limitations, operational profitability, financial strength, performance targets, profitable growth opportunities, and risk adequate pricing, as well as the words "may, will, should, expects, plans, intends, anticipates, believes, estimates, predicts, or continue", "potential, future, or further", and similar expressions identify forwardlooking statements. Actual results, performance or events may differ materially from those in such statements. Lufthansa assumes no obligation to update any such statements or any other information contained herein. 19