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Lufthansa grows actively and creates value

Our corporate strategy is founded on the following pillars:

Values

All business segments centre on the brand values quality, reliability and innovation. As key success factors, these values also form the basis of the competitive edge that we have established in our business segments and seek to constantly extend. For example, we have set standards for premium customer services with HONCircle and the First Class Terminal. We consistently reinforce our proximity to the customer and invest in flexibility and entrepreneurship, which we encourage inter alia by promoting decentralised structures in the Company.

Profitability

In this area, as in many others, we are aiming for the leading position among European network carriers. To bring sustainable improvements to the Group’s earnings and cost profile we launched the Group-wide Upgrade to Industry Leadership initiative in 2007.

In addition, all business segments successfully pursue initiatives or programmes of their own to improve their cost base. We achieve our objective of further flexibility in cost structures, for example, by means of innovative agreements in wage settlements and intelligent fleet policies. To strengthen the income side we create benefits in products and services that are geared to the needs and wishes of our customers. To ensure that customers appreciate them, we sound out these needs and wishes in an intensive dialogue with our customers.

The Group and all of its business segments are committed to sustainable value creation and are measured by their success in achieving it. Cash value added (CVA) serves as an indicator to manage both the Group and its individual segments. The CVA is anchored in the planning, management and reporting systems and exercises a decisive influence on investment decisions and management remuneration.

Growth

We see the growth opportunities in our industry and intend to make active use of them. We can draw on alternative action plans in doing so – depending on the market and on our assessment of the individual risks and opportunities:

Organic growth: All our business segments have a solid base that makes it possible to generate internal growth. Lufthansa Passenger Airlines, for example, is constantly tapping new markets, especially in the emerging Asian economies. Another outstanding example is the successful integration of SWISS into the Lufthansa Group.
 
Cooperation and alliances: We also tap new markets jointly with our Star Alliance and other partners. These forms of cooperation enable us to gain swift market access. Competences complement each other while investment and the risks of market entry are limited for each partner.
 
Acquisitions: In the ongoing consolidation process we are actively reviewing opportunities for taking equity stakes in other companies up to and including full integration. The main requirement here is that the company must fit in with Lufthansa’s strategic development guidelines and meet the corporate, cultural and economic criteria for successful collaboration.

Focus on core competencies

Sustainable and profitable growth requires concentration on core competencies in view of limited financial and management resources. This applies in equal measure at a Group level and in all of the Group’s business segments. In the Group the relevance of business segments is determined mainly by how intensively their relationship and their competence fit the strategic business segment of Passenger Transportation. Where a business segment’s activities are less relevant for the positioning of Passenger Transportation or dependencies are only slight, consideration is also given to external solutions with a view to value enhancement. The sale of Lufthansa’s shareholding in Thomas Cook was based on this focus.

Financial strength

Financial flexibility ensures our strategic leeway and makes us more independent of external influences. That is why Lufthansa’s growth plans are based on a sound financial profile. This includes a minimum liquidity that conforms to exacting standards, a firm capital structure, investment-grade ratings and a large number of bilateral relations with banks.  We also support and secure operational and strategic development by means of a systematic analysis and limitation of financial risks such as the strong current fluctuation in fuel prices and exchange rates.

Details of financial strategy