DAVY VIEW

In 2025, Lufthansa achieved nearly €40bn in revenue and €2bn (€1960m, +19%, Davy: €1970m, consensus: €1912m) in operating profit. At the AGM, it is proposing a dividend increase to €0.33 per share. Outlook for 2026: earnings once again are expected to be significantly above the previous year's level, but with increased forecast uncertainty due to the situation in the Middle East. Circa 80% fuel hedging at the top end of European and US peers (the US are unhedged) will help and it is seeing a ‘sharp’ rise in demand of routes from Africa and Asia. Air cargo will also benefit from the disruption of trade flows. Levers to achieve 8-10% EBIT margins in the mid-term continue. We remain ‘Outperform’ with a price target of €12.