The Airline Industry of Germany

Presented by

Elizabeth ChiJia Liu

Market overviewPorter's five forces analysisMajor airports and airlines The trend for the future?

To be discussed...

German Airline Industry Volume vs. Value

German Airlines Market SegmentationVolume vs. Value

Market Forecasts Volume vs. Value

Porter’s Five Forces Analysis

Leading Companies

Lufthansa Air Berlin PLC & Co. Luftverkehrs

KG

Germanwings GmbH

Ryanair Holdings plc

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

Hub/base of Airlines

Strategic location

The importance of slots

Airports

Frankfurt am Main International Airport Passenger traffic -- No.1 in Germany; No.3 in Europe; No.8 worldwideCargo 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 worldIt was named the "Best Airport in Europe" and the 4th best worldwideA hub for Lufthansa and Star Alliance airlines, main base for dba and LTU

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

Hamburg AirportGermany's oldest airport in operationThe 4th biggest German airport

Berlin Tegel International AirportHas the most scheduled flights among 3 Berlin Int'l airportsThe main base for Air Berlin and LTUTogether with Tempelhof International Airport, the 2nd oldest commercial airport in the world, would be replaced by Berlin-Brandenburg International (BBI) airport in 2012

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

German Flag carrier Key Metrics

in € millionRevenue (+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

· 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

· 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

· 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 shareCatering

Passenger Transportation

Logistics

MRO

IT Services

Founded in 1978 and based in Berlin Second Largest airline in Germany The biggest low-fare carrier in Germany and the third largest in

Europe 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%)

Company Profile

in € millionRevenue (+61%)

2,536 in 2007

1,575 in 2006

Net Profit21 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

Key Metrics

Acquisition Based Growth

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 business—closing 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

A Hybrid Business Model

Other Major Players

Germanwings

Ryanair

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.

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?

Business ModelsMerge?

Low-costCarriers

TraditionalCarriers

TraditionalCarriers

Low-costCarriers

Full priceGood service

Low priceLimited Service

Low price, full service

Thank you and have fun flying Lufthansa!

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

Any Questions?