1

Fleet StrategyInvestor Day 2007Frankfurt, January 25th, 2007

Nico BuchholzSVP Corporate FleetDeutsche Lufthansa AG

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Overview

ImplementationEvaluationStrategy Conclusion

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Lufthansa Corporate Fleet

Is responsible for Fleet Strategy, Development of Aircrafttogether with the Manufacturer, as well as Aircraft Purchasesand Sales within the Lufthansa Group.

This includes§ passenger aircraft from 30 seats to 500 seats§ cargo aircraft

This includes the same activities for the engine market.

Additionally the Aircraft Asset Management is also performedalong with Aircraft Leasing Activities.

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Each market needs a different approach

Long-haul

Short-haul

53

30

2006 2010

83

106

119

73

2006 2010

298

market drivenrequirement

possibleaircraft types

200-300 A350/B787Seater

400 Seater B747-8

550 Seater A380

150-250 Seater A320Fam/B737Fam

80-150 Seater A320Fam/B737FamCRJ/C-Series/EMB/Sukhoi

50-70 Seater CRJ/EMB/Sukhoi

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Strategy/Longtermplanning

Earlynegotiation

Finalnegotiation Contract Controlling

Phase-out&

remarketing

Fly SellBuy

Aircraft Asset Management = Corporate fleet

Finance

Tax Balance Sheet Financing

Aircraft evaluation and manufacturer discussionsAircraft evaluation and manufacturer discussions

Detailedspecification

Plan

Life Cycle: The Airline perspective (> 30 years)

Source: Corporate Fleet

OperationalPlanning

Roughspecification

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ConceptDevelopment

DetailedDesign

ProgramDefinition

Test &Evaluation Production Ops &

Support Disposal

Action here has the most leverage on costs later on,

here, in the business envelope of LH.

80% of costs committed, <15% incurred

4. Feedback loop to transmit& secure targets set

during acquisition processThe majority of leverage into LH s businesscase appears to be here.This means being proactive as an Airline,early in the LC.

2. Acquisitionprocess

3. LH b.cOps process

1. Engage the LC before acquisition / operations

5. Disposalprocess

Source: Corporate Fleet Strategy and Aircraft Evaluation

Life Cycle: The Manufacturer Perspective

20% of costs committed, >75% incurred

Enhance Shareholder value

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The STRATEGY of today: focused on delivering the bestvalue proposition for LH and linked to the output of theoverall strategy process

Situation auditGap analysis level of fit (fleet)

Potential scenarios fleet development

Evaluation of scenarios

Market driven corporate strategyMaximize shareholder value (network,

KSF s (fleet), restrictions (risk + finance)

Qualitative

Quantitative

Fleet StrategyOpportunity, Risk, Scale, Build-

up

Benchmark

Max. Value = Fleet Strategy

Source: Corporate Fleet Strategy and Aircraft Evaluation

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Evaluation of Life Cycle Benefit

LH Strategy - - - - - - -

Aircraft Choice

Cash Operating Cost

Price

Delivery DateTechnology

Spare Price Developments

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Definitions as used

Aircraft related

MTOW: max permissible weight of the aircraft at the start of the takeoff rollMEW: weight of the structure, power plant, furnishings, systems and other equipment

that are considered an integral part of the aircraftMZFW: maximum weight permitted before usable fuel is loaded into the airplaneOEW: manufacturer's empty weight plus the operator's itemsCOC: all cost to operate an aircraft (fuel, crew, maintenance, landing and

air traffic control fees, except capital cost and insurance)Range: range in still air, in nautical milesSFC: Specific Fuel Consumption = the fuel efficiency of an engine design. It measures the

fuel needed to provide a given thrust over a certain period of operation(in kg fuel per lbs thrust)

Other expressions

Evaluation of an Aircraft:considers technological impacts and COC over the operational life spanis not related to price at the initial phaseis not linked to strategy at the initial phase

Lufthansa life cycle:From Entry Into Service (EIS) at LH until and including divestment from LHOriginal Equipment Manufacturer (OEM) life cycle =From conception of programme, through production phase, until fleet size has declined to aminimum operational fleet

back up

10

1970 ------ >> 2006 >2014

Passenger Airline:Where we are, how we got there And where to go

70 Seats

94 Seats

115 Seats

16F/128C

A380

IntercontIntercont

Source: Corporate Fleet Strategy and Aircraft Evaluation

B747-8

200 300 seatswide body

100 250 seatsshort haul

Regional Aircraft

ContCont

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TECHNOLOGYTECHNOLOGY

19891989 ExampleExample: A340 vs. DC: A340 vs. DC--10102-Man vs. 3-Man Cockpit - 8%Fuel-Consumption-Reduction - 25%Maintenance - 9%Extended Range (A340 vs. DC-10)Commonality to A320-FleetLess NoiseMore Comfort

.

The last long-haul aircraft rollover can be measured.It proved our assessment.

DC-10

A340-300

(unit cost reduction)

Source: Corporate Fleet Strategy and Aircraft Evaluation

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Overview

ImplementationEvaluationStrategy Conclusion

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The target

OEW

Range =

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To manage cost is to understand the levers that impacteach cost element

Fuel

Total Maintenance Cost

Landing Fees

Handling Fees

Navigation Fees

Cockpit Crews

Cabin Crews

typi

calc

ash

oper

atin

gco

st(C

OC

)of

long

haul

airc

raft

Cost elements have to be measured fortheir competitive sustainability

100%

Source: Corporate Fleet Strategy and Aircraft Evaluation

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Structural/MaterialCarbon fibre; CompositesNew alloys; GlareLaser beam weldingMaintenance cost

EnginesFuel burn reduction

Slow rotating fanNew compressor-/turbine profilesNew alloysVariable pitch fan

Low emission combustor / double stage burnerNoise reduction

Aerodynamic/FlightmechanicsLarger laminar areaAdaptive wingRibletsOptimized stabilityReduction of noise

Systems / ATCNew Cockpit-ArchitectureFly by light

Integrated networks & ground dataexchange/linkMore electric / less hydraulicNew APU technology / fuel cellFree flight concept

Cabin designLower deck seatingNew Entertainment systemsNew Catering Systemes

Technology assessment leads to cash operating costsensitivities over our lifecycle

Pic-Source: NASA

Progress is expected to focus on detail improvements of aerodynamics, engines,production and systems

Source: Corporate Fleet Strategy and Aircraft Evaluation

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Impact of Fuel price

Source: TECSON

Source: TECSON

Source: TECSON

Source: TECSON

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Del

tasf

c(%

)1980s

~ 15 %improvement

Datum =>

Current programs show a significant improvement in specificCurrent programs show a significant improvement in specificfuel consumption (fuel consumption (sfcsfc))

1990s2000 >2007

Source: Corporate Fleet Strategy and Aircraft Evaluation

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Aircraft Maintenance

Engine: i.e. materials, repair procedures,design of engines, less partsreduce cost

i.e. landing gear and brakes, newmaterials, multiple source and thebraking procedures reduce cost

self diagnostic maintenance andoptimised design reduce cost(i.e. simplified flap system,electrically instead of hydraulicallyactivated)

Components:

Airframe:

*) slices not corresponding to absolut levels

Source: Corporate Fleet

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Dealing with the manufacturers

GE RRPW

AIRBUS

Embraer SukhoiBombardier

multiple supplier strategy for key elements

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Fees

Navigation Landing Handling

Input MTOW Payload + SpaceMTOW

As payload is the only driver yielding revenues,thus weights are critical in any evaluation.

for

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-10%

-5%

0%

5%

10%

15%

-10% -5% 0% 5% 10% 15% 20%relative cost per trip

rela

tive

unit

cost

per s

eat

Increaseaircraft

size

Decreaseaircraft

size

NewTechnology

Type X

Type X stretched

The operating cost chart enables us to easily positioncomparable aircraft

Type X shortened unattractivearea

Source: Corporate Fleet Strategy and Aircraft Evaluation

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Overview

ImplementationEvaluationStrategy Conclusion

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Putting strategy and evaluation into practice

Decisions on fleet gobeyond economics

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A380-800

A340-600

B747-400

A340-300

344

549

306

221+ 38%

+ 34%

+ 34%

550

450

350

250

The B747The B747--8 will8 will bebe helpinghelping toto optimizeoptimize thethe capacitycapacitystaggeringstaggering of the Lufthansaof the Lufthansa longlong--rangerange fleetfleet,, whilewhile alsoalsoofferingoffering anan attractiveattractive costcost positionposition

B747-8

approx.410

Long haul

Source: Corporate Fleet Strategy and Aircraft Evaluation

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COPYRIGHT © 2006 THE BOEING COMPANY

Quiet for CommunitiesFrankfurt/Main Airport, Germany RWY 25R85 dBA NADP 1 (ICAO-A) Takeoff noise contours 6000nmi Mission

747-400

747-8

FRA-11152006001

B747-400

B747-8

Source: Boeing

and reducingemissions

Kelsterbach

Hattersheim

Raunheim

Walldorf

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Competitive Positioning

§ Own assets§ no cash out for leases and no worry on redelivery cost§ flexible dispositon and planning for replacement, growth and reduction§ well balanced mix between depreciated and new assets

§ Modern fuel efficient fleet to hedge against fuel price fluctuations§ advantage over i.e. 767 fleets by using the A330§ 747-8 entry into service in 2010 offers a position close to the larger aircraft

§ Early delivery dates§ first on 747-8§ unique fast delivery slot management within the September 2006 order: A320s end of 2007,

A330s early 2008

§ Capacity management harmonized through central unit allows less expenditure forrequirements across the group Lufthansa, Germanwings, Swiss, use the sameaircraft pool

§ Aircraft sizes suited to allow operations on frequency driven routes and size drivenroutes

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Planning of invest and capacities requires a long term fleet strategy and a broad horizon.Fleet decisions on types have to satisfy multiple criteria such as taking into account

conflicting interestsHomogeneous fleet versus Operational flexibilityEconomies of Scale versus Product differentiationFleet commonality versus Risk mitigation/-spreadInnovative aircraft versus Low capital expenditure

The target of Fleet Development:Determine a low complexity fleet, market drivenmultiple aircraft sizes offering high flexibility inoperation and performance while being state of

the (technical) art and sustainable highly economical.

To close: the constant challenge

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Q & ANico BuchholzSVP Corporate FleetDeutsche Lufthansa AG

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DisclaimerThis presentation is for informational purposes only, contains preliminary financialand other information about Lufthansa and is subject to updating, revision,amendment and completion. This presentation does not and is not intended toconstitute or contain any offer of securities for sale or a solicitation of an offer topurchase any securities of Deutsche Lufthansa AG or any other company andneither this presentation nor anything contained herein shall form the basis of anycontract or commitment.Certain statements contained in this presentation may be statements of futureexpectations and other forward-looking statements or trend information that arebased on management's current views and assumptions and involve known andunknown risks and uncertainties. In addition to statements which are forward-looking by reason of context, including without limitation, statements referring to risklimitations, operational profitability, financial strength, performance targets, profitablegrowth opportunities, and risk adequate pricing, as well as the words "may, will,should, expects, plans, intends, anticipates, believes, estimates, predicts, orcontinue", "potential, future, or further", and similar expressions identify forward-looking statements. Actual results, performance or events may differ materially fromthose in such statements. Lufthansa assumes no obligation to update any suchstatements or any other information contained herein.