The Airline Industry of Germany

Presented by Elizabeth Chi Jia Liu

To be discussed...

Market overview Porter's five forces analysis Major airports and airlines The trend for the future?

German Airline Industry Volume vs. Value

German Airlines Market Segmentation Volume vs. Value

Market Forecasts Volume vs. Value

Porters Five Forces Analysis

Leading Companies
Lufthansa Air Berlin PLC & Co. Luftverkehrs KG Germanwings GmbH Ryanair Holdings plc

http://www.youtube.com/watch?v=tr

Airports

Hub/base of Airlines

Strategic location

The importance of slots

Frankfurt am Main International Airport

Passenger traffic -- No.1 in Germany; No.3 in Europe; No.8 worldwide Cargo traffic -- the busiest airport in Europe A hub of Lufthansa, usually with over capacity operations

Munich International Airport

The second busiest airport in Germany and the 28th busiest in the world It was named the "Best Airport in Europe" and the 4th best worldwide A hub for Lufthansa and Star Alliance airlines, main base for dba and LTU

Dsseldorf International Airport

The third largest airport in Germany Serves as the main hub for the airline LTU and as an important secondary hub for Lufthansa

Hamburg Airport

Germany's oldest airport in operation The 4th biggest German airport

Berlin Tegel International Airport

Has the most scheduled flights among 3 Berlin Int'l airports The main base for Air Berlin and LTU Together with Tempelhof International Airport, the 2nd oldest commercial airport in the world, would be replaced by Berlin-Brandenburg

Operating services to 209 destinations in 81 countries. Together with its partners Lufthansa services over 410 destinations.

German Flag carrier

Key Metrics
in million Revenue (+13%) 22,420 in 2007 19,849 in 2006 Net Profit (+106%) 1,655 in 2007 803 in 2006 Cash flow (+36%) 2,862 in 2007 2,105 in 2006 Total assets (14.7%) 22,320 in 2007 19,461 in 2006 Employees (+7.7%) 100,779 in 2007 93,541 in 2006

Luft means air, hansa was named after Hanseatic League, the powerful medieval trading group Founded in 1926, Berlin and headquartered at Cologne 400 subsidiaries worldwide Core activity: Passenger transportation Total passengers carried in 2007: 62,894,000 --No.1 in Europe and No.5 worldwide Primary operating regions: Europe, North America, Asia Co-founded and joined in Star Alliance in 1997 Acquired Swiss Airline in 2005 Partnered with Jetblue with a 19% share purchase in 2006 Considering purchasing Polish flag carrier LOT and bidding for troubled Spanish flag carrier Iberia

Business Segments Overview

Serving 841 destinations in 157 countries with a fleet of 411 aircraft

Passenger Transportation

Operated by Lufthansa AG parent group, Air Dolomiti, Lufthansa Cityline and the Eurowings group including Germanwings A founding member of Star Alliance, a multi-lateral airline grouping Focusing on tapping passenger traffic in growing markets

Logistics

Operated by Lufthansa Cargo and undertakes freight transport The largest portion of freight is hbandled at Lufthansa cargo center, Frankfurt Provided by Lufthansa Technik, a world-leading provider of MRO services

MRO

Covering 6 product divisions: Maintenance, Overhaul, Engines, Components, VIP & Executive jet solutions Provided by Lufthansa Systems, customizing IT solutions for computer center operations and offering IT infrastructure services to other industries Provided by LSG Sky Chefs, supplying 270 international airlines with in-flight service from 190 catering facilities and having 30% market share

IT Services Catering

Company Profile

Key Metrics
in million Revenue (+61%)

Founded in 1978 and based in Berlin Second Largest airline in Germany The biggest low-fare carrier in Germany and the third largest in The fourth largest airline group in Europe in terms of traffic Slots at 20 German airports A fleet of 124 aircrafts (+6%) 28.2 million passengers (+10.4%) 135 destinations (+5.5%)

2,536 in 2007 1,575 in 2006 Net Profit 21 in 2007 40 in 2006 Cash Flow (+48%) 469 in 2007 316 in 2006 Total assets (+59%) 2,519 in 2007 1,588 in 2006 Employees (+104%) 8,360 in 2007 4,108 in 2006

Europe

Acquisition Based Growth

A Hybrid Business Model

Business model: The only European airline in the segment between traditional full-fair airlines and the low-cost carriers with competitive price/performance ratio Positioning: Low cost carrier with full service on board and a wide range of extras Strategy: Entry into long-haul businessclosing the gap between conventional low cost carriers and traditional high-priced airlines Goal: Going global after being a leading player in European aviation Action Samples:

topbonus - worldwide frequent flyer program-unparalleled in the LCC sector (more than 1 million signed up) Relax class and premium business class Formed partnership in China with Hainan Airline (fly to 80 airports) Planned to merge with Thomas Cook subsidiary Condor

Other Major Players

Germanwings

A privately held airline engaged in passenger transport A subsidiary of regional carrier Eurowings, which in turn is controlled by Lufthansa With hubs in Cologne and Stuttgart and bases in Berlin and Hamburg.

Ryanair

The largest low-cost carrier in Europe A scheduled passenger airline serving short haul, point to point routes between Ireland, UK and continental Europe

27 European bases, a fleet of over 163 aircrafts, over 50 million passengers in 2007 Seats are sold on one-way basis

The Trend for the Future?

Full price Good service

Traditional Carriers

Low-cost Carriers

Low price Limited Service

Traditional Low-cost Carriers Carriers

Low price, full service

Business Models Merge?

Thank you and have fun flying Lufthansa!

http://www.youtube.com/watch?v=6sEANBlWVy8

Any Questions?