Lufthansa Expects a Strong Summer and Rising Yields

Deutsche Lufthansa reported strong cash flows aided by advanced booking as the group is approaching EBITDA breakeven. Bookings are looking strong, reaching 2019 levels, while the group echoed a lot of Air France-KLM’s comments around the definite recovery of corporate travel and rising yields. Capacity in the first quarter was 57.5% of 2019 levels and is expected to reach 85% by summer on the back of strong demand. Lufthansa has hedged 63% of its fuel exposure for 2022 and will pass on excess cost inflation to customers. No financial guidance has been provided for 2022, but management maintains its 8% EBIT margin target by 2024. We make no changes to our EUR 8.15 fair value estimate. The shares appear cheap, but we caution against the extreme uncertainty due to the company's high debt levels.