Lufthansa Aktie

Ladies and gentlemen, a warm welcome to the 2026 Annual General Meeting of Deutsche Lufthansa AG at Messe Frankfurt.

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Speaking to you now is the Chairman of the Meeting and Chairman of the Supervisory Board, Dr. Karl-Ludwig Kley.

Shareholders, ladies and gentlemen, I hereby open the 73rd Annual General Meeting of Deutsche Lufthansa Aktiengesellschaft. Warmly welcome you here in the meeting hall and also welcome those joining us online. For our shareholders, the Annual General Meeting will be broadcast in full via our online service. The Executive Board and Supervisory Board are all present in person. Also with us is notary, Carsten Angersbach, who will be taking the minutes of the Annual General Meeting. He's been doing so for many years, and he's doing a very good job.

As always, we'll start with a few formalities. Without bureaucracy, nothing is possible in Germany, as everyone knows. Your admission tickets have been exchanged for general meeting card at the accreditation desk. Please keep the card safe. You will need it to take part in the voting later on. If you wish to speak here, you must register at the speakers' table, which is located to your left of the stage and is already accepting requests to speak. Some of you have done so already.

The order of the speakers will be determined in the course of this meeting. We will hold a general debate on all items on the agenda. If you leave the AGM in advance, please take a look at the rear of your card. If you want to authorize proxies from the company to vote for you, you can do so up to the end of the general debate. Please do not record shareholders here on the stage, of course, the people can all be recorded except for the notary, I'd say.

Before we look at the agenda, I would like to commemorate our former CEO and Chair of the Supervisory Board, Jurgen Weber. A year ago, Jurgen Weber passed away aged 83. He dedicated his entire professional life to our company and left an indelible mark on it. Jurgen Weber was responsible for the turnaround, restructuring and privatization of Lufthansa in the 1990s. He demonstrated his strategic vision with the founding of the Star Alliance, and also the expansion of Frankfurt Airport is largely down to his efforts. He was always very customer-oriented in each Executive Board meeting, I attended some of those, first came the customer questions for many employees. He was someone who guided them. We commemorate a great personality. Jurgen Weber holds a place of honor in the history of our company. I kindly ask you to rise from your seats in honor and memory of Jurgen Weber.

Thank you very much. The agenda for today's Annual General Meeting comprises 9 items. We begin, unsurprisingly, with agenda item 1. The presentation of the 2025 annual financial statements and the report on the current situation. The annual and consolidated financial statements as well as the management report were prepared by the Executive Board, reviewed by the Audit committee and approved by the Supervisory Board. The 2025 annual financial statements have thus been officially adopted. Our auditors, EY, have issued an unqualified audit opinion on all items audited. I would now like to ask Mr. Spohr to present the report on the 2025 financial year and the group's current situation.

Ladies and gentlemen, shareholders, and looking around the room here, Lufthansiates. And of course, a warm welcome to everybody logged in online. It's my pleasure to welcome you to the 73rd Annual General Meeting of Deutsche Lufthansa AG. Also on behalf of my Executive Board team, Grazia Vittadini, Till Streichert, Michael Niggemann and Dieter Vranckx. We look forward to the dialogue with you today.

Today, for the first time since 2019, finally back here in person. Now we usually report to you at the Annual General Meeting on the past financial year. In this very special anniversary year, I would like to broaden our perspective and reflect on the first 100 years of our history. In 1926, the first Lufthansa was founded in Berlin. It was the result of a merger of Junkers Luftverkehr and Aero Lloyd. Junkers as an aircraft manufacturer and operator brought with it its great technical expertise and the blue and yellow colors. Deutscher Aero Lloyd was a passenger and cargo airline. Its emblem was the crane. This gave rise to a business model that to this day defines your company, ladies and gentlemen, passenger transport, air cargo and technical services under the roof of an iconic brand.

From the very beginning, the young airline was part of the infrastructure and an important driver of our export nation. At the time, Berlin was the third largest city in the world. Ambitious companies were conquering international markets with trade connections from Asia all the way to Latin America. And right at the forefront, Lufthansa. It offered a dense route network of domestic German and European scheduled flights, but at the same time, with great pioneering spirit, the first intercontinental flight routes were explored. The Pamir flights over the roof of the world remain legendary to this day in aviation. By the way, we would have needed a much larger stage for an Annual General Meeting back then because in 1926, the founding year of the first Lufthansa, the Supervisory Board had 64 members. Today, you can see that the emphasis is on quality over quantity in the Supervisory Board, but we'll come back to that in more detail in due course.

Let's get back to our history for now. The darkest chapters of our history ensued as of 1933. The airline was increasingly incorporated into the establishment of a new Air Force. The first Lufthansa became an instrument of the Nazi regime. We are consciously confronting this period in our anniversary year because this is also a part of our history and because we can only call upon our heritage if it is accompanied by responsibility. With the end of the war, the first Lufthansa also ceased to have a reason to exist. It was grounded, banned and liquidated. While air travel flourished around the world after the second world war, Germany could only look on.

For 10 years post war, Germany was forbidden from operating its own airline. That is why the second Lufthansa was not able to restart flight operations until 1955. The company in which you hold shares today was inaugurated. And that with the help of the United States because there were neither German aircraft nor licensed German pilots. American pilots, who just 10 years earlier had been flying combat missions over Germany, were now training young German Lufthansa Aviators in the cockpits, in the cockpits of American aircraft because there were no German aircraft.

In the '50s for that new start, the Lockheed Super Star was emblematic. You can see that behind me and will be exhibited in our new Hangar One conference and visitor center in Frankfurt. It's not only an icon of aviation, but also a symbol of the transatlantic partnership. This partnership is once again the subject of much discussion. It has been an uninterrupted cornerstone of our business success from 1955 to this day, and ladies and gentlemen, a foundation and pillar of our western world.

The exchange between peoples is a good indicator of the quality of relations between Europe and the United States, measured in flight passengers crossing the North Atlantic daily about our now 60 flights per day. The transatlantic partnership has never been stronger than today. However, even upon the launch of the second Lufthansa in the 1950s, North Atlantic routes, including the LH400 form the backbone of the long-haul schedule. And thus, the crane, after its late restart, as I've already alluded to, embarked on an unparalleled catch-up race. This was particularly challenging because as is well known to this day, our home market, Germany, has no catchment area comparable in size to London or Paris. Nevertheless, Lufthansa soon caught up again with the global airline industry, decades shaped by the economic miracle and growth.

The 1990s, however, were then entirely defined by privatization and necessary restructuring. The state stepped back as a shareholder, private shareholders increasingly took over and in doing so, gave Lufthansa entrepreneurial freedom. They thus enabled the turnaround needed at the time. For decades, we've been able to rely on your support. I would like to thank you, our shareholders, for this support. Ladies and gentlemen, you placed your trust and invested your capital in the most important success factors of this company in aircraft, then as now cutting-edge technology, making the most effective contribution to climate protection, more than any ideology. But even more so in people, people who make up our Lufthansa.

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Thank you very much on behalf of all the colleagues. This video shows our colleagues at our 100th anniversary celebrations in Munich. And for the final picture, we brought together all of the different departments required to operate one single modern long-haul aircraft, 24 pilots, 100 cabin crew members, 20 technicians and 80 employees at stations, ground handling, cargo, flight training, IT and administration. In total, each aircraft of this size creates and secures precisely these 220 jobs for Lufthansa employees. And each and every one of them shapes our company, but our unique company surely also shapes the life of each one of them. I'd therefore like to take this opportunity to extend my heartfelt gratitude to all of the more than 100,000 employees of our group, this unique team. Some are here with us in the room, some are joining us online, thank you very much indeed, and thank you for the applause.

Your trust in this team and our company paid off again over the past year. The Lufthansa share gained 36% in value, performing significantly better than DAX and MDAX. Including the dividend, you enjoyed a total return of over 40% in 2025. For the past financial year, we are today proposing a dividend of EUR 0.33 per share. That is 10% more than the previous year. The total distribution of profit of approximately EUR 400 million corresponds thus to a payout ratio of approximately 30%. You participate in the increased profit of your company as do those who generated it because we've paid out performance-related variable remuneration of a similar magnitude to our employees covered by collective agreements.

And that brings me to the report on the past financial year. We deliberately designated 2025 as a transformation year because we are carrying out numerous transformation processes. And as such, it was a very successful year. The turnaround program of our core Lufthansa Airlines is by far the most important part of our transformation. We made significant progress in that regard in 2025, above all, in terms of operational performance. The crane was flying punctually and reliably again in 2025 as our customers and shareholders rightly expect of us. That's what you expect of the management with metrics last achieved 10 years ago. Including ITA Airways, our passenger airlines were able to welcome over 150 million passengers onboard our aircraft. I would like to express my sincere thanks to our customers at this point for their loyalty and allegiance, and I'm sure I'm also able to do this on your behalf.

Outside of Lufthansa Airlines, the group looks back on one of the best years in its history. Overall, the group generated a group revenue of EUR 39.6 billion, thus bringing us closer to the EUR 40 billion mark than ever before. We were able to increase the group's operating result, our adjusted EBIT by 20% to EUR 2 billion. And we thereby achieved a margin of 5%. With a revenue share of EUR 30 billion, all passenger airlines were profitable and contributed well over half of the group's operating profits. Lufthansa Airlines did indeed improve year-on-year, however, achieved only a modest plus of EUR 140 million and thus a margin of 0.9%. The successful execution of the turnaround, therefore, remains our priority within Lufthansa Airline. Already this year, the program is expected to deliver an earnings impact of EUR 1.5 billion and some EUR 2.5 billion by the end of 2028. These improvements will be achieved with 3 main levers.

Firstly, the modernization of our fleet and product. Last year alone, Lufthansa Airlines took delivery of 9 out of a total of 23 new aircraft. The fleet renewal is gathering more speed this year. Of the group's total 44 new deliveries, so we're talking about pretty much 1 new aircraft each week, 20 long-haul jets alone will go to Lufthansa Airlines. And they're all equipped with our new Allegris premium cabin, which has been extremely well received by our customers thus far. This is borne out by our customer satisfaction scores, which improved by more than 1/4 last year. And incidentally, that's a positive trend that continued into the first quarter of this year.

But Allegris also delights our financial controllers because in the new cabin, our guests can specifically choose between different seating options and the associated additional income in the 7-digit range already significantly exceeded our expectations this year, which were already optimistic, and they continue to do so.

The second turnaround lever lies in the accelerated growth of Lufthansa City Airlines and Discover Airlines. Both airlines are now highly cost efficient and are now an integral part of our offering in Frankfurt and Munich.

The third lever of the turnaround encompasses many hundreds of individual measures for additional savings, additional efficiency and additional revenues.

With these 3 levers, we aim to achieve our medium-term margin target of 8% to 10% in the core of the group as well. Our most profitable passenger airline, SWISS is already operating at that level today. It landed another pleasing result last year, even if it did remain a little bit below the previous year with an adjusted EBIT of EUR 600 million. Austrian Airlines slightly improved its result and contributed EUR 81 million to the passenger airlines profit. Posting an adjusted EBIT of EUR 28 million, Brussels Airlines was unfortunately significantly below the previous year. Eurowings was recognized as the best airline in Europe in its segment last year, achieving an adjusted EBIT of EUR 132 million.

The positive development of Lufthansa Cargo continued in the reporting year. With EUR 324 million, it improved its full year result by 30%. So I can safely say that our air cargo delivered in 2025 as well. The same applies to Lufthansa Technik. With an operating result of EUR 603 million, it almost matched the previous year's record level. It's particularly pleasing that our youngest group airline, ITA Airways, has already made a positive contribution to the group's success with EUR 90 million. That amount is reported in the income from equity investments because ITA's 41% minority holding is not yet fully consolidated. However, that is set to change soon.

Last year, we promised you, our shareholders, the fastest airline integration in our history. Within just 18 months of taking over the first 41% tranche, we wanted to have largely completed the integration into our hub system. Not only have we kept that promise, we've actually exceeded it. All customer-facing interfaces are already integrated today with the exception of North Atlantic flights, where regulatory approval for our merger is, as is well known, still pending. Passengers already experienced ITA Airways as an integrated part of the Lufthansa Group with unified bookings, sales and fare systems with the Miles & More, frequent-flyer program, Star Alliance membership and access to our global network of premium lounges.

Integration is also making progress in the cargo business. Lufthansa Cargo has been marketing ITA Airways cargo capacity since last year, which alone equates to the additional capacity of 3 Boeing 777 freighters. In the light of this success story, we have decided to already exercise our option to acquire a further 49% in June of this year. ITA will thereby also be organizationally and financially fully integrated in the Lufthansa Group as of 2027. It will contribute financially to the group's success and create sustainable value for you, ladies and gentlemen.

I can see that we have some Italy fans here in the room with us and quite right.. Now I started by speaking about the first and the second eras of Lufthansa. The first ended in ruins in 1945. The second began in 1955 and then transitioned after the turn of the millennium into the current third era. Deutsche Lufthansa AG became the nucleus of a European Lufthansa Group. The acquisition of SWISS in 2005, Brussels Airlines in 2008, Austrian Airlines in 2009 laid the foundations for our current multi-hub, multi-airline system, still with Lufthansa as the core brand in Munich and Frankfurt at the center and national network airlines in Zurich, Brussels, Vienna and now also in Rome.

We grow to create value for you. But where necessary, we also consolidate with the recently completed early grounding of CityLine following the closure of the equally nonviable, unfortunately, nonviable SunExpress Deutschland and Germanwings, we have now completed the strategic consolidation of our German passenger flight operations. Together, we want to find perspectives for the affected employees in other areas of the group. Strategically, we are now efficiently positioned for the future, however, with our core brand at the center complemented by Lufthansa City Airlines as a feeder airline, the leisure focus of Discover Airlines and Eurowings as a point-to-point specialist for flights outside our hubs. Added to that, we have our globally leading Lufthansa Technik and Lufthansa Cargo as further pillars of our business model. That is how we have been able to and how we can compensate in Germany for our historical and geographical disadvantage of not having a catchment area and hub the size of London or Paris. That is our strategy. That is our recipe for success, and that is our path into the future.

Now of course, on paper, a homogenous group with just one airline, one hub, just one brand in one segment would be simpler, like the model employed by most of our state-owned competitors. However, this is simply not an option we have. As a national airline with only one home market, we would no longer stand a chance in global competition. Lufthansa is thus emblematic of Europe because this logic also applies to our home continent. No single European country can take on the world powers of the U.S.A. or China or India as equals or conclude free trade agreements as recently with Latin America or India. In the united Europe, however, anything is possible. For us in aviation, too, pooling resources and networks and leveraging synergies under the roof of a strong group is therefore a strategic necessity to be able to remain at the high level globally, and we are proud to be implementing that with increasing success.

With EUR 40 billion in revenue and a group fleet of 840 aircraft, your company, the Lufthansa Group is #1 in Europe and the world's largest airline group outside the U.S.A. We've achieved this because we have successfully capitalized on growth and internationalization. And we will continue to do so in the future. Already today, less than 20% of our revenues originate in Germany. Less than half of our network airlines -- aircraft are based at our German hubs, Frankfurt and Munich. And yet, we are nevertheless affected disproportionately by the excessively high costs of Germany as an aviation location. We must continue to minimize this disadvantage and seize additional international growth opportunities with investments in ITA Airways or, for example, in new technical facilities in Porto and Calgary.

However, as a consequence, this also means that Germany will participate less and less in the global success of the Lufthansa Group. We must continue to urge policymakers to translate the growing awareness of the aviation sector situation into genuine tangible relief from these huge locational disadvantages. We, of course, have to do our part as well. The more international we are, the more important our ability to successfully integrate organizations and cultures will become. We've set ourselves the goal of making cooperation within our group even more rigorous and efficient. On the one hand, because our customers want to use the breadth of our airlines offering as seamlessly as possible. On the other hand, of course, to simply become even more profitable.

By committing ourselves to medium-term financial targets, we have made a pledge to you, our shareholders, by 2030 at the latest we want and shall raise our margin to a level of 8% to 10%, and in doing so, increase the return on capital employed to 15% to 20%. At the same time, we've set ourselves the goal of generating at least EUR 2.5 billion in free cash flow per year. Achieving these targets is also part of the evolution into the third era of our history that I have already alluded to. Thank you very much.

We're taking the group of airlines and transforming them into a synergistic and integrated Lufthansa Group with clear rules -- not only for cooperation and collaboration, but also with clear rules for the allocation of your capital. There will still be room for entrepreneurial independence, brands and market responsibility, but significantly more commonalities within the group, more synergies because in particular, amongst our passenger airlines, we have made a great step in standardizing processes, consolidating networks and merging organizational units. We are simplifying structures and pooling tasks.

Our umbrella brand, Lufthansa Group, which as of now will bear the crane emblem is becoming the ever more visible common thread there. Through its presence, for example, on all group aircraft, it interacts directly with our passengers who will also see the crane on their boarding pass when they check in with Eurowings, [indiscernible] or if they go into an ITA Airways lounge in Rome or Milan. The Lufthansa Group brand symbolizes and embodies us as a European airline group.

Our consistent evolution into the Lufthansa Group encounters, like any change, doubt and resistance at times. But after more than 35 years as a Lufthansiate, I am deeply convinced that all Lufthansa employees, including those who give voice to their protest, carry the crane in their hearts and want to secure the success of our company, of your company.

Ladies and gentlemen, amongst those who carry the crane in their hearts is also our Supervisory Board Chairman, Karl-Ludwig Kley. Today is his last day of work. Ms. Kley is here in the front row, and she'll be happy to see him more often at home. Mr. Kley, you have helped to shape the further development of our company for many, many years. You've been a member of the Supervisory Board since 2013 and its Chairman since 2017. Prior to that, from 1998 to 2006, you were Lufthansa CFO. In 2 of the years I've spoken about, you therefore, bore crucial responsibility. And in doing so, you have been key to our transformation, our shared path of success with its highs and lows, its achievements and crisis alike. And especially in times of crisis, you were always an unparalleled support for me personally. And I would like to thank you very much indeed for that.

What lots of people perhaps don't know is that before Mr. Kley, there was already a prominent figure from Cologne on the Supervisory Board of Lufthansa, Konrad Adenauer. He was already in the Supervisory Board of the first Lufthansa in 1926 and in 1949, he became Federal Chancellor of Germany. Mr. Kley, we're very, very curious and intrigued to see what you intend to do. And there's not much after the Supervisory Board of Lufthansa, Mr. Adenauer managed. It in any case, I think on behalf of everybody here, we can thank you wholeheartedly for everything you've done for our Lufthansa and wish you all the best. We wish you all the best of health and the greatest of courage for your great tasks ahead. And Ms. Kley, thank you for letting him spend more time with me than with you. Maybe we would have been able to swap roles at some stage. But without such support at home, nobody would be able to achieve what Mr. Kley did. So thank you very much indeed to you as well.

Ladies and gentlemen, this year, we are celebrating the 100th anniversary of our founding. We have grown through crises over the decades and emerged stronger from each of them. And it will be the same this time. That is my pledge. Aviation has been a growth industry for 100 years, and it will remain so in the future. Despite all of the challenges and changes, we must continue to preserve aviation as a bridge to the world because where we have bridges, we create understanding and with that peace. And I think if we look at the newspapers, we can see that the role of aviation has rarely been more important than it is today. And hence, our mission for the future remains, as it has been from the very beginning to connect people, cultures and economies in a sustainable way. Thanks to the Lufthansiates worldwide and also thanks to you, shareholders. We have evolved from the first Lufthansa in its modest beginnings of 1926 into the Lufthansa Group of 2026. You are all part of this unique success story. I thank you for your trust. Please continue to put your faith in us. Thank you very much.

Thank you, Mr. Spohr. I had definitely planned not to feel this moved. It didn't work out as you have seen. Because of this, I'd like to briefly inform you on the work of the Supervisory Board in order to come back to a more matter of fact like style. Thank you for your words. They really moved me. I'd like to report briefly on the work of the Supervisory Board because you'll find the more extensive version in the annual accounts that were made available to you. In the last year and also in 2026, the political situation came ever more into the focus of our meetings.

Aviation is always the subject of rules and regulations and state intervention in the course of the past 10 years, this effect has become ever stronger, especially the willingness of the European Union to create new rules and the cost burden in Germany are becoming a greater competitive burden for Lufthansa. Also, there's the more difficult geopolitical situation, which really has a major influence on our business and ever faster and more flexible reactions on our part become necessary. And as the Supervisory Board, we dealt with these questions intensively.

Another area was the competitive situation, especially the competition from Gulf State Airlines. And this required many measures that the Management Board reported on. And before this background, the implementation of the strategies decided by the Supervisory Board and the Management Board were a point of reference for our meetings. In 2026, we dealt with the following strategic topics, the modernization of the fleet, the further internationalization with the acquisition of ITA Airways, new locations for Lufthansa Technik and the further progress of the turnaround program of Lufthansa Airlines and the continuation of our IT and digitalization strategy. At every meeting, we discuss things intensively with the management board, especially when it comes to the economic situation and the earnings situation. We also discuss customer satisfaction and measures to continuously improve customer satisfaction. These things were presented by the management board and discussed by us.

I spent 9 years as Chairman of the Supervisory Board and this time ends today. And I'd like to make a few personal comments on this. Don't worry. This is very factual and not emotional at all. 2018 and 2019 were characterized by an overall -- overhaul of our governance systems. In 2023, the work of the Supervisory Board was added to by the further development of the ESG Committee, and this is on innovation and technology and Sustainability Committee. The reactions from institutional investors to all of these areas were very positive. Of course, it is difficult to really fulfill the wishes of all of our investors. On the one hand, different investors have different points of view. And in some cases, very difficult to harmonize these different viewpoints. And sometimes the expectations of the investors to the governance of a company change all the time. So sometimes it's hard to catch up.

I'd like to point out to you in this regards the financial report 2025. Some of these important things we learned in 2026. So that makes it hard to take these things into account. You know that for many years, it has been a personal project of mine to really focus the requirements of corporate governance to those areas that generate value. And you know me as someone from Cologne. As I sometimes say, the remainder, I'll leave it aside.

And the second focus of the work of the Supervisory Board was the strategy of the company. The strategy process was reset. And every year, the strategy discussion is an important item on the agenda in the Supervisory Board meetings in the second half. But at every Supervisory Board meeting, we look at implementation of the strategy. In 2022, 2023, we had to pull together to survive the COVID-19 crisis and to maintain the company. And from then on, we had to stabilize the airline operation and to initiate and implement the stabilization program of the airline. The past 2 years -- during the past 2 years, we're able to focus more on the implementation of the strategy and the exercise of the option to buy 90% of ITA Airways is a milestone within these strategic projects within the strategic projects that I mentioned. And since I have a personal relationship to Italy, I'm very happy that on the last day of my tenure, I can say that ITA Airways will become part and parcel of the Lufthansa Airways, [Foreign Language], Italy, ITA.

With the end of this AGM, the terms of Karl Gernandt, Wolfgang Nickl and Carsten Knobel will end. Carsten Knobel told me that he will not stand for election again. He has been a member of the Supervisory Board since 2017. And with his expert knowledge and years of experience and his career at Henkel all the way to the CEO of the company, he really enriched the work of the Supervisory Board. And he was a very important member of the Audit Committee. And at yesterday's Supervisory Board meeting, I thanked him for his work, and I'll do it again on behalf of this body and personally.

Dear shareholders, as you know, I will not be standing for reelection to the Supervisory Board either. So altogether, we will have 3 new elections for seats on the Supervisory Board. This will be handled under Item 6 on the agenda, and the Supervisory Board proposes that you reelect Karl Gernandt and like Wolfgang Nickl and Johannes Teyssen as new members of the Supervisory Board for a term of 3 years each. You already know Mr. Gernandt as a current member of the Supervisory Board. Wolfgang Nickl until May 2026 was the CFO of Bayer, and he's standing for election to the Supervisory Board for the first time. He was unable to come personally, but we have a video message of his where he would like to introduce himself.

Shareholders. My name is Wolfgang Nickl [Foreign Language].

Johannes Teyssen, former CEO of E.ON, has been nominated to succeed me as member and Chairman of the Supervisory Board. Since this is his first time standing for election to the Supervisory Board, Mr. Teyssen will introduce himself to you personally.

Chairman, Dear Karl-Ludwig, ladies and gentlemen, shareholders and members of the Supervisory Board and Management Board, I'm Johannes Teyssen, and I'd like to ask you for your support and for your vote as a member of the Supervisory Board. Starting tomorrow, with your support, I'm supposed to follow in the footsteps of Karl-Ludwig Kley, and you should know who you want to give your trust for this time. My wife and I live in Dusseldorf. We are happy. We have 4 adult sons and 3 small grandchildren, our family. And in this country, we have deep roots, and we're happy to live free in a unified Europe. Some of you may know me from my time as the CEO of E.ON, a position I held for many years.

In the past 5 years, I was the President of the Administrative Council of a Swiss energy company, and I was in a global British company and worked in several scientific, cultural and social institutions in Germany and near our home in Dusseldorf.

Lufthansa Group is of great importance beyond Germany's borders for safe and stable connections of people and companies and for the transport of critical goods all over the world. Especially at times of increasing geopolitical threats and tensions, we are here to help people [indiscernible] Frankfurt, Brussels, Zurich and Rome. These people need independence and autonomy and there's no other way we can live safely as Europeans in this new world and holding our own in global competition. For this, Lufthansa needs the support of politicians of society, and we need the respective framework conditions.

Building up on the proud 100-year history of our company, it is incumbent upon the company itself to provide for a safe future of Lufthansa. We need to better and more efficiently govern our business than anybody else could. Every day, we need to win the trust of our customers again and again. And yes, for you, our shareholders, we need to earn the cost of capital. And we need to do this in the way that you expect because this is your company after all. And we, at the Supervisory Board and Management Board know this, and every employee should know that we are only keeping your assets safe in this company. I worked in many capital-intensive industries from energy to steel. I learned about good governance and appreciated good governance, both in Germany and Switzerland and England and I have been able to go through major transformations in companies.

And now I'd like to work for you, Lufthansa company, to make sure that it holds its own in competition, that it satisfies its customers and that the employees are happy and that your interest as investors also addressed. I'm not an aviation or logistics expert. But in the past weeks and months, I really prepared myself. I visited almost all of the units of Lufthansa Group. I talked to people from the Board and lots of executives and experts, and I dealt with the challenges that I have to expect. I have great respect for this task and what Karl-Ludwig Kley did over many years. But now I look forward to this. Please give me your trust and your support so that together with the Management Board and the Supervisory Board and with all of the colleagues, Lufthansiates, I can move along this way in the years to come. Thank you for your attention.

Thank you, dear Johannes. I now move on to the remaining items on the agenda that I will now call. Under agenda item 2, you will decide whether the cash dividend of EUR 0.33 per share should be distributed.

Under agenda items 3 and 4, decision will be made on the approval of the actions of the members of the Executive Board and the Supervisory Board.

Under agenda Item 5, you will vote on the approval of the 2025 remuneration report.

Agenda item 6 is the election of the Supervisory Board members that we just presented.

Agenda item 7 concerns the renewal of authorized capital A with the option to exclude subscription rights.

Agenda item 8 is the authorization to issue financial instruments with the option to exclude subscription rights and the creation of conditional capital.

And agenda item 9 concerns the election of the auditors. The Supervisory Board proposes that EY be reelected as auditors and group auditors. In addition, EY is also to be appointed as the auditors of the sustainability reporting as a precautionary measure should such an audit be required following the transposition of European law into German law.

Details of all agenda items and proposed resolutions are included in the convening notice of this meeting. I will now determine the attendance. Overall, taking into account postal votes, 615,588,821 shares will be represented, corresponding to 51.33% of our share capital. The attendance list can be inspected at any time in the foyer. At this point, the public part of our broadcasting ends.

Shareholders, who have followed this stream up until now without having logged in, I kindly request you to go to the online service log-in page. To all the other spectators, I would like to say thank you for your attention, your interest in Lufthansa. Many thanks.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Good day, and thank you for standing by. Welcome to the Lufthansa Group Q1 2026 Results Analyst Call. [Operator Instructions] Please be advised today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Marc Nettesheim. Please go ahead.

Yes. Thank you very much, and welcome, ladies and gentlemen, also from my side to the presentation of our first quarter results 2026. With me today are our CEO, Carsten Spohr; and our CFO, Till Streichert. Both of them will present our results for the first quarter and discuss the commercial outlook for the remaining 9 months of this year. And afterwards, as always, you will have the opportunity to ask questions and please limit your questions to 2 so that everybody has a chance to participate in the Q&A session. Thank you very much.

And with that, Carsten, now over to you.

Yes, Marc, thank you very much, and a warm welcome from me as well. It's, yes, exactly 2 months since we presented here from this building our full year 2025 results to you. And I think you would agree that the dynamics of recent weeks have once again demonstrated how rapidly the environment for our industry can change and how vital it is in our industry to be ready for crisis management at any given time.

The ongoing crisis in the Middle East, combined with rising fuel costs, obvious operational constraints poses enormous challenges for the world at large for global aviation and surely for our company specifically. Historically, though, the Lufthansa Group has grown through crisis and emerged from them stronger. So we are confident that this will also be no different this time.

For one, we are positioned with greater resilience than many of our competitors to absorb the impact of the Iran war. We are better hedged against fuel prices with more than 80% of the kerosene requirements for our passenger airlines for the current year and more or less 40% for the coming year being hedged as we speak.

Equally important to our crisis resilience is our unique multi-hub and multi-airline structure. It gives us the flexibility to quickly adapt our network to shifting demand by consolidating how destinations are served across our hub system. Routes that become uneconomical, for example, due to rising costs, can be cut without compromising our network quality. This way, we were able to almost fully offset the recent 1% capacity reduction, which was equivalent to 20,000 flights for the whole summer, and we actually only had to remove 4 destinations from our network of 300.

At the same time, this reduces our fuel requirements in the 20% share that remains unhedged even for us. So every ton of fuel we save by cutting capacity is a ton of fuel currently twice the price of last year. This strategic setup also gave us the flexibility to drive forward our fleet modernization in an accelerated fashion. And that obviously was shown in the CityLine, Canada example, where in the light of cost pressure driven by rising fuel prices on the one hand and labor disputes on the other hand, we just decided we had to act. And this included retiring aircraft with the highest operating cost per seat, which was our Canadair fleet, delivering immediate savings through the reduction of an entire sub-fleet.

And finally, our multi-hub and multi-airline structure demonstrated its strength most recently during the strikes of our cabin staff in Lufthansa Classic and Lufthansa CityLine combined with our pilots, where despite significant cancellations at the core brand, more or less 75% to 80% of the group's entire flight program could be maintained in each case and serve our customers to get them to their desired destination.

By the way, the recent grounding of our loss-making Lufthansa CityLine operations has been after the closure of SunExpress Germany and Germanwings, the third and final step in our previously announced strategy to consolidate the number of passenger AOCs in Germany. We have now reached our envisioned structure, our mainline and our feeder airline for Frankfurt and Munich, one airline focused on leisure and a specialist for Point-to-Point traffic bypassing our hubs.

So as you can see, we are responding with a necessary resolve, not only in light of the dynamic developments arising from the Iran war. We hope for the same determination from the regulatory side, both national and European levels when we see necessary changes due to the situation in Iran. In particular, we have 3 requests for action on part of the European Commission. First, we need quickly the authorizing of the import of Jet A fuel from the U.S., which is used there at every airport rather than the Jet A-1 fuel, which is currently required out of Europe. This would require less refinery activity because currently all kerosene imported from the U.S. coming in Jet A quality needs to be refined again to be turned into a one -- Jet A1 quality, which is no need, especially in the summer when the different freezing points don't matter.

Secondly, we believe that it's time to advocate and decide on the temporary suspension of slot regulations at airports in case there is the need to cancel flights due to fuel shortages, which shouldn't have an impact on slots. And last but not least, we need an exception for the European anti-tankering rules, which would then allow us additional operational flexibility in case single airports in our short-haul network are becoming short of fuel.

Overall, we are quite optimistic these rules and adaptions (sic) [ adaptations ] won't be required in case we maintain a certain optimism on the fuel situation, but it's better to be ready, including our regulatory bodies, which sometimes need some time.

Ladies and gentlemen, even in this volatile environment, we achieved what we set out to do. This is why we can look back on the first quarter today in which we significantly exceeded the prior year's financial results. As a result, adjusted EBIT came in EUR 110 million above the prior year figure. This, by the way, without any capacity growth in our Network Airlines. At the same time, Eurowings capacity grew by 5%, Lufthansa Technik delivered double-digit revenue growth numbers and Lufthansa Cargo achieved a 5% increase in revenue over-year as well. Therefore, total revenues reached EUR 8.7 billion in the first quarter, which is up 8% compared to last year. This is the highest we've ever seen for first quarter and shows that demand in our industry remains robust, and that's for sure something we have not always seen in times of geopolitical crisis.

We saw additional momentum building in March with Network Airlines RASK up 12% and airfreight yields increasing by 5% year-over-year. This underlines our ability to flexibly profit from elevated demand levels. Obviously, higher fuel prices had only a marginal impact in the first quarter as most volumes were still priced at precrisis levels.

Our fleet renewal progressed as planned, with the delivery of 7 new aircraft, including 5 widebodies, which, of course, are all equipped with Allegris or Swiss Senses depending on which airline they went to. We not only increased the share of new technology aircraft in our fleet, but we also enhanced the travel experience for our long-range customers.

The strong commercial performance we delivered in the first quarter, as did several of our competitors is, as mentioned, also evidence of a continuous robust market and resilient demand in our industry, which, again, has seen very different behaviors in global crisis in the past.

It's also against this backdrop of optimism that we announced 2 months ago that we would grow our long-haul business, while at the same time, consolidating our European network to become more efficient, and we have delivered on that commitment. In Q1, we expanded our long-haul capacity by 1.4% year-over-year and simultaneously without reducing our feeding capabilities reduced short haul by 3%.

We also, as announced, focus on the Southern Hemisphere as a key growth market. Here also, as Till mentioned, we delivered on our promise. Capacity to South America or Latin America grew by 4% and to Africa by an even stronger 10%. It was sold very well with both seat load factors rising and average yields increasing accordingly.

The situation in the Middle East was particularly challenging. Early March marked a turning point in the quarter as the Iran conflict escalated and required swift adjustments. The disruption-constrained airspace availability led to a reduction in leisure destinations, especially in the Gulf region and also limited connectivity of the hubs located in that region. At the same time, the overall travel demand remained consistently strong. However, the travel behavior of passengers shifted regarding where they fly to and very much how they reach their destinations. We, therefore, reacted fast and adjusted our network accordingly. The cancellations of the Middle East routes freed up 13 aircraft. There are 3 widebodies, which we now use for additional frequencies to serve India and Singapore, especially in total, 13 flights every week on top of our regular network we're currently offering to Asia.

And obviously, we also immediately adjusted our commercial strategy, prioritizing yields over volume. We tightened the availability of lower fare classes wherever appropriate and implemented broad-based pricing measures. March and April validated that focusing on this yield discipline was right. In March, yields increased by 5% and seat load factors improved by 6% year-on-year.

Once again, premium demand showed a very positive development. In the first quarter, yields in our premium cabins rose by almost 2% compared to last year and by 5% in March alone. And don't forget on this that when the Iran war started, of course, a big part of the March seats were already sold. So this is purely driven by the remaining seats being sold at higher fares. And this once again confirms our conviction that investments in premium products are not cyclical but are long-term value drivers for the Lufthansa Group.

Looking ahead, we expect the positive demand trend to continue. Later, Till will walk you through the numbers showing how this translates into our current positive booking outlook. But first, let me quickly take you through the results of our 4 business segments. In the first quarter, our Network Airlines were able to make good progress. Average fuel prices were below the prior year level still, but the demand shifts driven by the Iran war were already having a positive effect in the last month. Commercially, this translated into a stronger performance. Revenue increased year-on-year and adjusted EBIT improved by EUR 135 million.

The main driver of the improvement was Lufthansa Airlines, which contributed EUR 110 million earnings improvement or if you exclude the strikes, even close to EUR 150 million. This demonstrates that the turnaround program is increasingly delivering results. Swiss also reported an improvement of EUR 49 million. And at ITA Airways, the operating result also improved here by EUR 70 million. However, our equity result based on ITA's earning after tax declined by EUR 38 million due to currency effects.

Unit costs increased by 2.5% across Network Airlines, broadly in line with inflation. And this was primarily due to the very low ASK growth of only 1 -- sorry, 0.1% which, of course, doesn't help on reducing unit cost, but this enforces our decision to implement our strategy as quickly as possible in response to current and potential future cost headwinds.

The commercial performance is clearly encouraging. RASK increased by 3.3%, regional RASK even by 4.2% versus prior year. High load factors and increased revenues from flight-related ancillary services supported this encouraging trend. Ancillary revenues were mainly driven by our digital channels and rising advanced seat reservations for our new Lufthansa Allegris and Swiss Senses cabin. We didn't have an easy start here, but our upselling strategy now clearly pays off. And both trends show that we focus on the right topic, namely digitalization and premiumization.

Let me now turn to Eurowings. Operationally and commercially, the first quarter delivered strong top line momentum. As already mentioned, capacity increased by 5% year-on-year despite the ongoing constraints related to the Middle East in the third month, but demand clearly outpaced this growth even. Traffic revenues, therefore, rose 14% and the seat load factor improved to a strong 84.4%. Supported by disciplined pricing, unit revenues increased by almost 7%. And here, as mentioned, a strong intra-European business more than offset the revenue shortfalls in the Middle East in March.

In addition, flight-related ancillary revenues rose by 13% versus last year, also here mainly driven by seating options and upgrades and baggage. On the cost side, however, we faced significant headwinds compared to previous year. As a result, unit costs increased by 5%, mainly driven by EUR 16 million higher impact from winter operations and the Middle East cancellations as well as 29% higher MRO expenses.

Despite these cost pressures, Eurowings delivered an adjusted EBIT broadly stable year-on-year. If you take the whole Point-to-Point Airlines segment, the overall result was EUR 14 million below prior year due to a EUR 10 million below-year delivery of SunExpress. Taking everything into account, this, we believe, is a solid result for our Point-to-Point segment in a challenging environment.

This brings me now to a sector that usually benefits from volatile markets and short-term shifts, especially we're talking about Lufthansa Cargo. They delivered another clear year-on-year earnings improvement in the first quarter with operational momentum strengthening towards the end of the year -- of the quarter, sorry. A tight market supply and ongoing disruptions in global supply chain supported a recovery in airfreight yields compared with recent quarters, driven in particular by continued strong performance in Asia Pacific.

Lufthansa Cargo expanded its capacity by 7%, supported by higher belly capacity, including for the first time, additional marketing of ITA Airways belly spaces, which are equivalent to 3 Boeing 777 freighters alone. At the same time, load factors remained broadly stable year-on-year. Total revenue increased by 5%, while operating expenses rose by 3%. Higher charter costs, primarily due to increased fuel costs, especially as we don't hedge in the cargo segment were a cost driver. Unit costs decreased by 7%, thanks to lower MRO expenses and strict cost management. All in all, profitability improved significantly with adjusted EBIT up 35% year-on-year resulting in an adjusted EBIT margin of 9.5%.

Last, but of course, not least, our success story of Lufthansa Technik, which likewise continues to be characterized by strong resilience with its revenues, providing a sustainable stabilizing effect across our portfolio for quite some time now. Its recurring revenue stream stabilize our portfolio and Lufthansa Technik continues to experience robust demand and take actions to mitigate headwinds, for example, from a weak U.S. dollar, new tariffs and still ongoing supply chain burdens. The completion of Lufthansa Technik's 1,000 Pratt & Whitney GTF engine overhaul marks a significant operational milestone and underscores the industry's structural shift towards next-generation engines.

Strategically, we are advancing our global expansion where it matters most. In the Americas, for example, with progress on the Tulsa, Oklahoma component repair facility or our new engine shop in Calgary, in Asia by strengthening our market position with the signing of our largest maintenance contract to date in China for the CFM56 engine or in the growing defense sector with the first completed maintenance of the German Navy's P-8 Poseidon aircraft marks an important milestone for growth in this segment.

From a revenue perspective, Lufthansa Technik remains structurally strong with around now 80% of first quarter revenues attributable to third-party customers, and these external revenues grew by 19% year-on-year.

On the cost side, Lufthansa Technik was facing increases in material expenses driven by both volume and pricing effect. This resulted in a 12% increase in operating expenses. The adjusted EBIT was broadly in line with the prior year level overall. However, margins were impacted slightly by ramp-up costs. For the coming quarters, we anticipate a meaningful recovery in margins compared to prior year.

After having examined the Q1 results, let me comment on where we stand from a strategic perspective. In the midterm, this means, as you know, '28 to '30, we target our 8% adjusted EBIT margin. And the crisis makes us execute our strategy even faster than originally planned. The good old never waste a good crisis, obviously, applies to Lufthansa Group as well.

In response to sharply increased kerosene prices following the Middle East situation, we decided to push forward several measures to streamline our operations. This includes the immediate removal of Lufthansa's CityLine's 27 operational aircraft from our schedules, leading to a broadly 1% ASK reduction. The phaseout of CityLine's Canadair to harmonize our fleet and reduce -- by reducing another sub-fleet and, therefore, also reduce operational complexity.

The announced early retirement of our not most fuel-efficient long-haul aircraft like the 340-600 by the mid-October time frame and also grounding part of our 747-400 fleet at least for the winter. All of this reduces fuel consumption, lowers exposure to unhedged fuel prices, streamlines the fleet and makes us structurally more competitive. In other words, this crisis has acted as a catalyst, bringing forward decisions that were already strategically planned.

And with having said that, I hand over to Till, who will guide you through the Q1 financials of the group. We'll guide you through our full year guidance and, of course, the underlying rationale. Till, over to you.

Yes. Thank you, Carsten, and good morning, everyone. Let me take you through the financial performance of Lufthansa Group in the first quarter of this year and provide some context on cash flow, the balance sheet and, of course, most importantly, our outlook for the rest of the year.

So let me share some details on our group P&L. In the first quarter, revenues increased by 7.6% year-on-year to EUR 8.7 billion, despite broadly flat capacity with ASK growth of just 0.5% versus prior year. This was primarily driven by higher passenger revenues, continued strength in cargo volumes and a very strong MRO growth where third-party revenues increased at a double-digit rate. In addition, we benefited from structurally higher ancillary revenues, while irregularity-related compensations weighed slightly on revenues, reflecting the Middle East situation and strikes. The 3 days of strike in Q1, which we faced impacted our result by approximately EUR 40 million.

Commercial performance was strong. Premium demand held up well. Cargo yields recovered materially towards the end of the quarter and flight-related ancillary revenues grew by 8%. And as a result, adjusted EBIT improved by EUR 110 million compared to prior year, reaching minus EUR 612 million and the adjusted EBIT margin improved by almost 2 percentage points. This improvement was achieved without capacity growth at our Network Airlines, underpinning the improved -- the improvement in earnings quality. The difference between adjusted EBIT and reported EBIT is largely explained by book gains, particularly EUR 154 million book gain from the sale of 1 Boeing 747-8.

Let me now briefly touch on cash generation. Operating cash flow was strong in the first quarter, driven primarily by working capital effects and the main contribution came from advanced ticket sales of around EUR 2.4 billion, fully in line with the seasonal pattern and reflecting solid demand. This was partly offset by higher trade receivables driven by passenger ticket sales and continued growth in external MRO business.

Turning now to investing activities. We continue to invest into fleet renewal, including final payments for 8 aircraft, advanced payments for future deliveries and capitalized engine overhauls. The outflows for these investments were partly offset by aircraft disposals and sale and leaseback transactions, including the sale of the Boeing 747-8. Overall, net CapEx remained well on track with our plan. As a result, adjusted free cash flow reached EUR 1.38 billion, clearly above the prior year level.

Let me move to balance sheet. We continue to operate with a strong and resilient balance sheet, the strong cash generation, which I described before, further supported this balance sheet strength. We used the cash to repay a EUR 1 billion Eurobond and a EUR 500 million euro hybrid. Liquidity stood at around EUR 10.3 billion at the end of March, comfortably above our target corridor of EUR 8 billion to EUR 10 billion even after debt repayment and ongoing fleet investments.

Net financial debt declined further. As a result, our leverage ratio improved to 1.6x and our investment-grade ratings remain unchanged with a stable outlook. This balance sheet strength gives us sufficient headroom to navigate volatility like the current situation while continuing to invest into fleet renewal and our strategic priorities.

Let me now come back to fuel as this is clearly one of the most important variables this year. Since March, fuel markets have been shaped by geopolitical developments in the Middle East, particularly the escalation of the conflict and the closure of the Strait of Hormuz. What we are seeing is not a classic oil price move. While crude prices have increased materially, jet fuel prices have risen significantly stronger, driven by widening product spreads. Refining capacity, logistics constraints and product availability have become the dominant drivers.

Importantly, these developments were not yet fully visible in our first quarter figures, particularly since 60% of our March fuel consumption was settled at previous months price levels. You will remember that during our full year 2025 earnings call, we had announced an additional cost burden of -- and that was estimated at that time of about 20% to 25% versus prior guidance for the 2 months, March and April combined. And now with hindsight, having these 2 months behind us, I can confirm that we landed within that range, respectively, rather towards the lower end of it.

In fact, for the first quarter in total, and that's now going back to Q1 again, fuel was still a tailwind as higher prices only started to flow into our cost base from April onwards. And the earnings impact is, therefore, clearly backloaded into the last 9 months of the year, particularly into Q2. Based on prices as of last week's Thursday, our fuel bill for 2026 is currently estimated to be around EUR 8.9 billion. Of this amount, approximately EUR 8.7 billion relates to fossil fuel and around EUR 0.2 billion to mandatory SAF. Compared to our previous guidance, this represents an increase of around EUR 1.7 billion, driven almost entirely by the price escalation since the start of the war in Iran. And this clearly makes fuel the single most relevant cost headwind for the remainder of the year.

From a mitigation perspective, we entered this phase well prepared. We are currently around 83% hedged at our passenger airlines for the remainder of the year 2026, which provides meaningful protection against short-term volatility while still allowing us to benefit also if prices normalize. For 2027, we are hedged at around 36%. And in a relative sense, this gives us a significantly more stability than less hedged peers in the current environment. That said, fuel markets remain exceptionally volatile. And given the high uncertainty as well as the elevated price levels for the upcoming months, we have temporarily suspended our regular hedging activities since the beginning of March. And given the exceptional volatility and uncertainty, we've adjusted our hedging approach in recent weeks to seize opportunities created by these market conditions.

Alongside our existing hedge portfolio, we have selectively added short-term instruments to protect against jet fuel price escalation and spread risk when prices were favorable. This helps us to capture market dislocations while retaining flexibility. However, it is important to be transparent. Our expected fuel costs are based on the forward curve because of -- that forward curve is still in backwardation. And this is obviously the best estimate that everyone or the best view that everyone can use. Fuel cost will hence depend on whether this forward curve materializes.

Apart from fuel pricing, let me also comment a few sentences on fuel availability. Currently, we don't have any shortages in the physical supply. And up until June, we are convinced that our fuel supply will be fully secured, particularly in our own hubs. Nevertheless, we are currently making also plans for a scenario if this should change. Measures, again, are various, and they can include also tank stops or other aspects, but we'll come to that later on. This clearly shows that the entire topic of fuel is not an isolated issue. It must be viewed together with network adjustments, cost discipline and also revenue recapture.

Let me now move on. To put the current demand environment into perspective and how it helps to offset fuel headwinds, let me highlight 4 key aspects or 4 data points. First, March was an inflection point. Can we move on with the slide? You are perfect. Brilliant.

So first, March was an inflection point. Yes, this month, March, it benefited from one-off effects, and we captured those opportunities successfully, as demonstrated by unit revenues up 12% versus prior year. More importantly, when we normalize for direct crisis effects or positive effects from the crisis, the year-over-year Easter timing shift that we need to normalize and FX impact, we see an increase of around 5%. We read this as a clear proof point for an intact demand environment and also for our ability to translate it into value through revenue management.

Second, April was a special month for us, 6 strike days weighed on demand at Lufthansa. And as a result, RASK for new bookings for departures in April was "only about 12 percentage points above precrisis levels." And if I exclude -- if we exclude Lufthansa Airlines from this perimeter, the RASK increase for all other airlines was 14 percentage points above precrisis levels. Two things matter here. The demand signal remained positive despite the disruption and the breadth of our group network together with our multi-AOC approach helped buffering or cushioning the impact from the strike. At the same time, let me be very clear, additional strikes do harm or can harm demand further and repeated disruption can certainly intensify that effect.

Let me come to the third point. The key question is, how sustainable is this demand strength? And let me share our current view based on what we see in our booking data. And as you can imagine, we follow here a kind of facts and figures based approach. And looking at the near term, for the second quarter as a whole, we currently see unit revenues around 8 percentage points higher compared to end of February. That suggests that the demand upside at higher yields is not a short-lived spike. It appears to last, showing longevity.

Let me now come to my last, the fourth point. Beyond Q2, we remain appropriately cautious. We certainly cannot predict how things will play out eventually, particularly not how quickly Gulf carrier capacity returns into the market and how rapidly customers regain confidence in using those hubs. But what we can say is this, for the remainder of the year, we have already locked in long-haul bookings at favorable pricing levels with yields around 34 percentage points above precrisis levels.

Even as booking cycles shorten, which is normal in times of volatility, we are already seeing persistently strong demand in our intercontinental booking curve well into year-end. This is exactly why a yield-focused revenue steering approach is the right thing to do for the time being. And going forward, we will not solely rely on demand strengths but also continue to optimize our network.

On the network side, we are actively reducing capacity on structurally weakest routes, particularly where profitability does not compensate current fuel price levels as in the case of CityLine. At the same time, largely as a result of the CityLine measure, we are migrating capacity to more efficient AOCs, which structurally improves our cost base over time. Furthermore, and also, as mentioned a few times, it is an important step in our strategy execution to simplify and harmonize our fleet, and we will make further progress on that through these measures as well.

On the cost side, we complement this with targeted safeguarding measures. This includes a reduction of project spending or temporary external hiring stop, except for operational roles. And this is fully aligned with the Lufthansa Airlines turnaround logic. And all of these measures, we are implementing simultaneously. With that, we are not waiting for the uncertainty to resolve it. You can clearly see we are actively managing it, while the demand environment remains constructive.

Let me now move on to guidance. We guided for adjusted EBIT significantly above prior year. And the underlying reasons for that guidance are still intact. Fleet modernization continues. The revenue environment benefits from commercial initiatives, including ancillaries focus, Lufthansa Airlines turnaround measures are contributing and Lufthansa Technik's earnings trajectory is structurally higher. The first quarter is a proof point that these fundamentals in place. However, it is equally important to put this into perspective. In our wording, significantly above prior year means more than 10% growth.

And when we issued the guidance at the beginning of this year or when we last time spoke on our earnings call, we, of course, had some headroom beyond that threshold. Given the fuel price development and the strikes that we've seen so far, that headroom is now largely gone. So what do you need to believe for us to maintain this guidance? The core assumption is that additional revenues in the Network Airlines can offset the additional fuel cost. And on fuel, we currently see roughly EUR 1.7 billion cost -- we roughly see EUR 1.7 billion more cost than initially expected based on the current forward curve.

On the revenue side, the key drivers are the strong demand situation on Asia and Africa routes, higher-than-expected yields and load factors and the assumption that the yield uplift persists through the year as our yield focus steering continues to work. And as I've shown you, the booking intakes we currently see support this thesis. However, it is equally clear the time will tell to what extent and for how long the demand quality will persist.

And when speaking of timing, let me also say timing matters. Apart from a volatile environment that we have to deal with, all of us, generally, we do not expect the quarterly evolution to be linear. The recapture of fuel cost is expected to be around 60% in Q2, and there, we will weigh on the second quarter more. And the recapture rate for the following quarters, Q3 and Q4, we expect to be well above 100% if demand remains on the elevated level that we currently see in our data.

In other words, as the fuel headwind is front-loaded in the second quarter, the projected recapture rate strengthens sequentially throughout the year. Additionally, we see different parts of the group being impacted differently by the crisis. On the one hand, the Point-to-Point business is facing negative net effects, while generally, leisure demand remains supportive in parts of the network. Some markets, including Turkey via SunExpress are affected and the segment has less ability to offset higher fuel costs through intercontinental yield dynamics.

On the other hand, what adds confidence is that other parts of the portfolio provide counterbalancing effects. Lufthansa Cargo benefits from strong demand in volumes and freight rates. Post crisis, freight rates are up around 31% worldwide and around 90% on routes to Southeast Asia, which helps offset pressure elsewhere. MRO remains broadly unchanged in its outlook and is comparatively less affected by the Middle East situation.

Despite the Middle East crisis and while being fully aware of the high level of complexity and uncertainty that comes with it, we follow the data that we currently see and there we maintain our financial guidance for 2026, adjusted EBIT significantly above 2025 adjusted free cash flow around EUR 0.9 billion and net CapEx around EUR 2.9 billion. And of course, we continue to follow a disciplined capacity growth with a continued focus on intercontinental markets.

So to summarize, headroom has tightened materially, but demand resilience, yield-focused steering, targeted hedging improvements and accelerated network and cost measures drive our confidence that the fuel headwind can be absorbed over the course of the year.

And with that, Carsten and I are happy to take your questions.

[Operator Instructions] We'll now take our first question, and this is from James Hollins, BNP Paribas.

Very interesting, Till, and a lot of that. Maybe Till, I could just follow up on your turnaround program. I didn't hear much mention of the EUR 1.5 billion gross cost benefit in full year '26. Maybe just -- is that still the right number? Are you pushing a lot harder on this?

And I think secondly, second question probably relates to that. Perhaps you could quantify -- I think you've implicitly -- implied strike costs in Q1 of EUR 40 million. What have you seen for the 6 days in Q2? And I think a broader question, maybe for Carsten, is any sign of a resolution across the divisions?

Yes. Thanks, James, for the 2 questions. First, on turnaround. Look, we've had so many topics to cover today. So I save that for the Q&A. We are fully on track with the turnaround and the activities that are happening there. Once again, as a reminder, kind of the 3 big, big blocks that you always need to keep in mind is fleet renewal and the Q1 was, I think, proof point that we are fully on track with the fleet with the aircraft we have received. And again, in total, for the full year, we expect to receive about 45 new aircraft, step 1.

Step 2, we continue to accelerate shifting into our lower cost, higher profitability AOCs. And you can see that what we have announced around CityLine is a step in that.

And the third big bucket is indeed the 700 initiatives that we are following through. So the EUR 1.5 billion of gross contribution stands. And let me add, and you're quite right, are we pushing now harder? Of course. We do some additional EBIT safeguarding, which I mentioned, this is a bit of shorter-term nature, I would say. You can imagine everyone that approaches discretionary spending with a sharp pencil at the moment there which, of course, we keep pressing and pushing towards probably rather a bit more than less. So that's the answer to your first question.

Second, on quantifying strike cost, Q1 EUR 40 million, absolutely. And -- the second quarter, the 6 days are roughly EUR 150 million negative. So you can say, rounded roughly EUR 200 million so far negative weighing on us.

And James, Carsten, just to add because these numbers per day are significantly smaller than what we used to have per strike day, maybe 2 backgrounds on that. First of all, the participation rate is lower. We have a lot more volunteers than in the past. And secondly, with the multi-hub approach, we're able to offer between 75% and 80% of the program for our passengers and reroute them via other hubs. So that's why these numbers fortunately are smaller than what we had seen in the years before.

I want to use your own words, never waste a crisis. Just to follow up, do you think this crisis will potentially lead to a resolution sooner than later?

Well, I think the discussions, negotiations, also individual conversations with crews over the last weeks have shown that the only way we get a resolution is to offer perspectives to our labor groups across the airlines again. And I think also Union has understood that to achieve those perspectives for everybody, costs have to come down. So in that regard, I think in the days of less growth, in days of also being able now to grow our new AOCs as mentioned by Till, this resolution eventually will come about. The other alternative to continuously shrink short haul in the mainline and 1 day have a long-range airline only, I think, is a strategic option. We also have prepared, but I don't see as the most likely outcome.

We'll now take the next question. This is from Stephen Furlong from Davy.

I was wondering, Carsten, do you see any movements in general from your discussions with the EU, obviously, what's everything has happened and the risk with access. I know you talked about some initiatives there. But for example, things like SAF and issues of eSAF and availability and stuff. So I was just wondering whether the competitive disadvantage that European airlines are suffering. Are you seeing any kind of, I guess, realization that Europe wants to have kind of global leaders in aviation like other sectors?

And then just maybe, Till, just on the booking curve, I hear for some kind of LCC airlines that -- or leisure airlines that the booking curve is very short. People are concerned about cancellations and things like that. It sounds to me like maybe a little, but more like long haul is very strong and short haul is just more a question mark at the moment.

Yes, Stephen, this dialogue on this topic between you and me could fill the whole Q&A., but of course, I need to be short, and I summarize it in a way, the higher up the ladder we engage with the EU Commission, the more understanding there is. And I would say this includes our national governments in all our home countries, Italy, Germany, Austria, Switzerland, Belgium.

But when you work your way down on the working level where actually regulatory policies are made and put into writing, it's way too slow. So with all these years of experience, I still would give it a positive twist because we have not seen even on the top, neither in Berlin, nor in Brussels over the last years any indication that they understand the issue you rightly raised, how can there be global champions out of Europe if we disadvantage them that we have been missing for years. It's now there. How we turn this into new regulatory policies, I think we'll take a few more quarterly presentations and discussions with you and mainly with them, of course.

Yes, Stephen, to your second question, we can confirm our booking window, our booking cycles have shortened. But equally, in April, we've seen that the load factor gaps that we were still seeing basically have closed when arriving closer to the departure date. And you're quite right. I think it is more towards the cont side. InterCont is showing there more resiliency in terms of the booking window compression. And I think we can also see that, in particular, in the outer months, we can see actually quite comparable seat load factors in the InterCont than we had a year ago.

And the next question is from Alex Irving, Bernstein.

First one, how confident are you really that Q3 and Q4 yield will be able to more than offset the increase in fuel bills with only minimal capacity reductions? How much visibility do you have? And what do you need to believe around the return of Gulf connecting traffic and passenger willingness to use it for that increase in fuel bills to be more than offset?

Second question, how are you thinking about winter capacity? You're less hedged as the year goes on, I think you've announced some short- and medium-haul reductions, but left long-haul untouched. Why would it be the wrong decision to reduce this potential against macro risk and accelerate fleet simplification into the winter?

Yes. Look, on the -- let me start off on the first one. Just in terms of Q3 and Q4, as I said before, we -- all we can do is we follow a facts and figures based approach and basically start from what we've seen in our numbers, both in March and also now in the second quarter and what we see actually also in terms of yield evolution and particularly in the InterCont side, on full -- on the year to go.

What needs to happen, and this is why I said it also, what you need to believe is that the current booking trends, which again is a yield-based steering, will see the bookings then coming in. And let me add as well, just to put it a bit into perspective, there is obviously a lot of dynamic taking place right now in the market around, obviously, fuel recapturing and also prices, which, of course, are eventually done at market level. But as everyone has started to shrink or take back certain capacity in the market, you've got an environment which currently is conducive to see higher prices being realized.

In terms of recapture, of course, as you go into Q3 and Q4, we are seeing a lesser booking stock, which is totally normal. And a year ago, we would have seen the same because the seat load factor as you move further out is just lower. And therewith, you also benefit from the opportunity to have more of those bookings compared to, let me say, Q2 coming in at yields which are elevated. And that is the element which offsets the fuel bill assumption.

And therewith, let me also say what we said to you here, above 100%, that is, of course, a topic, this should be clearly above 100% in order to have the offset created. Sorry, short term.

The next question was just capacity. Here, we continue -- yes, yes, yes. Here, we continue our strategy as we have basically talked at the beginning of the year. Cont consolidation, we continue. And you can see that literally in everything that we've done in the first quarter and also in April. And on InterCont, we continue to grow. All in all, I do expect -- and this is why we guided also to a slightly lower overall ASK growth instead of the close to 4%. We are now guiding more towards 0% to 2% with InterCont positive and cont slightly shrinking.

We'll now take the next question. This is from Ruairi Cullinane from RBC Capital Markets.

Yes. First question is on your hedge ratio in 2027. Have you actually continued hedging crack spreads into 2027? Could you provide some detail on what degree you're hedged on Brent, gas oil and potentially kerosene?

And then secondly, just to clarify on the recapture rate. Should we consider that just a function of the EBIT change relative to the fuel cost change? Is that how we should think about that?

Sorry, let me start off with the first one. Look, what I said is that we -- when early in the crisis, when there were prices on jet crack still low, we opportunistically added this to increase our protection level at a product level. For 2027, as I said, we are at about 40% or let me say, precise, 36% in terms of overall hedge ratio. Here, we had -- and that was all done precrisis level. Please remember, this is where we had a combination of Brent and gas oil-based hedges placed.

Your second question was the recapture rate or the recapture concept. In essence, it comes down to what we see on the fuel bill. And basically, then you can put it just back to RASK, which eventually yield times what we see as available seat kilometers being taken up, and that's eventually those 2 elements. Of course, what I said, EBIT safeguarding measures, kind of they complement the picture, but the big levers are those 2 fuel versus RASK.

We'll now take the next question. This is from Jarrod Castle, UBS.

Maybe can you give a bit of an update in terms of M&A recap and also the ITA stake, if you're going to be increasing it from the end of June?

And then secondly, North America, you were lagging a bit on yields in 1Q. I don't know if this is currency, but what are you seeing now in terms of point of sale from the U.S. versus point of sale from Europe?

On M&A, Jarrod, not much new to report today. You rightly quoted on ITA, the window to agree on a potential additional share to be invested in is June and then again June next year, not today. And then on TAP, I think it's all been said. As you do know, the 2 -- or 1 competitor and us being in the race have announced their interest. We share our view that it's not only about TAP, but it's about Portugal and Lufthansa Group. There is an aviation strategy behind it. We are about in a few weeks' time to open our new facility in Portugal on Lufthansa Technik.

We're looking at an additional location for flight school in Europe, together with the military, which could well be Portugal. And obviously, we would perfectly fit TAP into the picture by then catching up market share to Latin America to the other 2 large or at least to the second large competitor currently already positioned in that market. So that has not been changed. And as Till said before, strategic decisions, investments, M&A in our company are not withheld by operational or short-term challenges.

Yes, North Atlantic. So point of sale U.S. continues to be pretty strong. That's more than -- clearly more than half of our bookings, 60% to 65%. And you're quite right, what you are pointing out. We had obviously a little bit of FX headwind. Also due to that, FX was less favorable on the revenue side. But I would expect that this starts to phase out as we are in moving through Q2 and Q3, Q4, just dollar based.

Next question is from Harry Gowers from JPMorgan.

First question for me. On Slide 16, you showed those numbers around kind of the bookings level and RASK versus pre-conflict. I was wondering if you could provide your April network year-over-year RASK number. So on the same basis as the March plus 12 number that you gave, and then just any color you could give around transatlantic and Asia pricing in April specifically?

And then second question, your Q1 network ex-fuel costs came in a bit higher than the rate of inflation. So will that just be a one-off given the lack of capacity growth and could that reverse into the coming quarters?

Okay, Harry. So just on April, I mean, obviously, we are not moving into a monthly disclosure on our call. There, you have to bear with me that for March, we did it because that was a bit of an inflection point that was created due to the crisis. For the current quarter, I'll stick to relative pointers to give you an idea of what we see. And again, what matters here really is, and this is where the whole logic goes, you have a certain booking stock, which is precrisis levels, which obviously kind of follow the normal pattern, let me put it like that.

This is why I tried to give you a normalized March figure, solid, let me say, exit point with 5% RASK increase, normalized into April, but then I have to leave it with a relative perspective, and this is why I stick to the 12% higher -- 12 percentage points higher RASK for the post-crisis bookings.

And let me add also, April was a specific month for us because of the 6 strike days. And sometimes you also don't fully capture kind of the negativity in that because there are always certain carryover effects that you've got also in your booking behavior. And this is why I try to give you an ex Lufthansa Airlines perimeter where it was 14 percentage points higher post-crisis bookings versus precrisis.

Your second question, ex fuel costs were higher than inflation. So no. So on cost as such, in the first quarter, we are on track. You always have got in these comparisons a little bit of year-over-year dynamics. Let me say, at the CASK level, of course, the ASK growth plays a bit into it. We had a bit of -- and there was less fixed cost degression. But overall, if I draw a line under the cost review for the first quarter, this is all in line with what I had expected.

And maybe just a very quick follow-up on the April kind of 6 days of strike activity. Did you see any evidence that you started to see any future bookings impact or kind of nervousness for people around traveling just due to the very high number of strike days?

Well, I mean, look, it's not ideal. Nobody wants it. Nobody is happy also with the sentiment effect of it. But normally, these things do come back relatively quickly. And let me just add one point that Carsten has already highlighted, we have managed very well to use our other sister or subsidiary airlines and our hub system to capture and serve for the good of our passengers and guests, most of them or a lot of them. That's not ideal and nobody is happy from an experience point of view, but of course, we were able to help most of them getting through that.

We'll now take the next question. This is from Muneeba Kayani from Bank of America.

Till, I just wanted to follow up a bit on how to understand your guide for this year. So the 2Q fuel recapture of 60%, you've said the fuel bill will increase by 1 point -- based on the forward curve, EUR 1.7 billion for the year. Is it right to think that most of that increase, say, EUR 1 billion is coming in 2Q? And so if you get a 60% recapture, then that's something like a EUR 400 million headwind on Q2 EBIT and then that with more than 100% recapture gets positive in the second half? So that's my first question.

And then secondly, I just wanted to follow up on your comments around jet fuel supply risks. So is that mostly a comment on Asia and Africa post June? Kind of what are you seeing right now in Asia and Africa? And how much of a concern would jet fuel availability in Europe be post June and at your hubs?

Let me start -- Muneeba, let me start off with the second question first. I mean, obviously, we go also here with what our suppliers tell us in terms of visibility, but also was -- what the authorities in the end tell us for the European situation overall. I think it's fair to say that nobody has got complete crystal ball of how things were going to play out. But what you can probably see is that the market is finding a bit its way at a product level. And this is why you also see that actually jet crack has come down again vis-a-vis gas oil crack there, which is basically a bit of an indication.

And we have seen first imports, obviously, from the U.S. coming in. We've seen imports from Africa coming in on jet fuel. And of course, these are elements that keep kind of, let me say, speak to the or depict the fluidity and dynamic within the market eventually. But let me also say it's fair, nobody knows exactly how things were going to play out. And of course, there was one of our core assumptions for the guide or the guidance that I also said is that we will basically continue to have jet fuel available. If that would materially change, then, of course, things -- many things do change, but that's not what we see at the moment.

Let me go to your first question. So just the guide, the guidance, Q2 recapture rate. So yes, so fuel bill up EUR 1.7 billion in total. Just as a reminder, within that, there's also cargo roughly, roughly 10%, you can say, is cargo. Cargo, we follow a different principle where we usually pass on the price increases directly. So that takes you roughly to about EUR 1.5 billion. And now when you think of it very true, very true. So the second quarter will take a very high share, I would say, probably about yes, 50% of that, roughly, roughly, you can see in the second quarter. And this will weigh on the recapture rate because the booking stock that we brought into the second quarter, of course, carries also a sizable portion of pre-Iran war bookings at a lower price level. And then basically, as I said, sequentially, you move through, and you've got the forward curve on the one hand side for fuel and you've got the yield seat load factor translating into RASK in Q3 and Q4 into a recapture rate above 100%.

That breakdown is helpful. So kind of half of the EUR 1.5 billion in 2Q and then we assume the 60%. So the remaining would be an EBIT impact, at least for passenger airlines and cargo and all would have a benefit.

Muneeba, let me just clarify if I wasn't precise enough. So in Q2, almost 50% of the fuel increase that should come in the second quarter. So the largest part of fuel increase is in the second quarter, almost 50%, I would expect. Okay?

That's clear.

We'll now take our next question. This is from Andrew Lobbenberg from Barclays.

Can I come back to these numbers where you're sharing the post-crisis booking revenues compared to the precrisis, you're showing it's 14% for April. I think if I'm not misinterpreting, you're showing it as an 8% improvement for Q2. On a normal booking curve over time, the unit revenues that come in, go up. And when you're on the months coming into the quarter, that booking curve is going to be moving up quite a lot. Therefore, when you're giving us these numbers of 12% for April or 14%, excluding mainline, 8% for Q2. I mean in a normal year or does this industry ever have one, but in a normal circumstance, how much would that booking curve move up? So just want to put that in perspective.

And my second question would come around to premium. So when we look at your premium unit revenues on long haul, they are in Q1 better than economy, but not by much. When we hear the American carriers talk, indeed, when we hear Ben from Air France talk, premium is wonderful. It is a halcyon of joy and huge prices and your gap is quite small. And you also told us that the March premium unit revenues were pretty damn good, suggesting that January and Feb premium revenues were falling. So can you perhaps help me understand why your premium performance looks more calm than your other peers who are talking in the industry?

Andrew, let me take the first question. So I can only revert back to what I said, but let me try to rephrase a bit. I can explain what we see for the second quarter and it is, in essence, a snapshot on booking inventory today versus end of February, which was basically precrisis. And that is the 8 percentage points higher for the entire inventory of the second quarter.

It is true that we do see a change in booking behavior, which is more short term, which I also commented on even more so in the cont area versus InterCont, but we have seen. And this is the element, which I think I also commented on, seat load factor closing nicely in April, which kind of then give you the result of -- well, which I withheld to tell you the April RASK, but which gives you eventually the figure. And this is what we see. And at the same time, this is what we have to live with because the circumstances are the more volatile environment, of course, makes people also book more short term.

Premium. So premium revenue on InterCont, so clearly, we see -- I mean, here, you need to step back and basically see a bit more of the strategic view because we are getting in -- we are transforming the experience with more and more long-haul aircraft coming in with the Allegris cabin or SWISS Senses. In all fairness, that now started, let me say, only or started more in Q1, also driven by the certification of the remaining business class seats where the bulk of it got obviously certified and now available for sale. And there was, I would say, on the yield uptick in the premium classes, I expect that there's a lot more to come in the weeks and months, quarters and years as we continue to roll out Allegris and SWISS Senses.

And our last question today is from Marc Zeck from Kepler Cheuvreux.

Actually, just 2 clarification questions. With the more than 100% recapture rate in H2, would it basically mean that you expect with the forward curve indicating fuel prices to come down somewhat that you kind of keep ticket prices then stable from here on or, let's say, from May on? And therefore, you will have a higher than 100% recapture rate, indicating that you probably won't give back lower fuel price to passengers for now? And I guess we heard from some of your U.S. competitors that were saying that airlines were kind of underpricing generally. So if we look into 2027, assuming at one point, we'll have normal fuel prices again, would you attempt to kind of keep current fixed price levels? Or would you, at some point, fully give back any decline in fuel prices to the end consumer?

And then I guess, second question on the adjusted EBIT guidance. I guess that the EBIT guidance significantly above 2025, 10% includes strike cost. You said there was probably EUR 200 million or so in strike cost, so that's about 10% or so of 2025 EBIT. Does it -- if I look at consensus precrisis, we were looking -- so analysts are looking for 15% to 20% up. Does it mean basically you now see -- you basically see the same EBIT level ex strikes that you saw precrisis and that you're still looking for 10% up, minus 10% from the strike level, matching those 15% to 20% that were expected initially? Is that the right way to look at it? Or am I missing here something?

Yes. Marc, 2 important and great questions. Let me start with the second one first. Just to remind you again, when we moved into our outlook at the beginning of the year, you can imagine, and it gives you also a bit of a perspective on how we think about outlook, we came in with headroom. We picked the significantly above to give you a good guide of how you can think about everything, and we had headroom. With everything that has happened now around us, including also the EUR 200 million -- roughly EUR 200 million of strike costs so far, the headroom has largely gone. And this gives you an idea where we stand roughly, roughly. And that is how to think about kind of the strike positioning as such.

Underneath, you've got obviously big moving items with fuel to start off with, the whole revenue steering and yield evolution on the other hand side. So these are the 2 big factors I, I think, explained extensively. Furthermore, at P2P segment, so Eurowings, you saw also that we take a slight step back in terms of what we expect from them in the year. But of course, we see cargo performing stronger, and that goes also into the year to go with MRO largely being unaffected. And that gives you the big moving parts at the segment level for our guide or the expectation for the rest of the year.

When you now think about your first question, the forward curve, of course, I mean, there's nothing more intelligent than the forward curve in the market to determine what price levels for fuel should be. That forward curve is in backwardation. That is a core assumption. And when you now think of relative to others, indeed, we benefit from being hedged. But let me say also to your question, how do you think about pricing? Prices are done at market level eventually. Of course, we've got a view on this, and we've got a dedicated yield-based strategy that we pursue with the goal to make sure that we achieve an offsetting of the fuel bill over time. And I think that is shared also what the -- our U.S. peers highlighting and they have got -- and it's not a secret, they've got a higher fuel bill to stem. And that creates overall in the market, while everyone is also reducing capacity a bit, it creates an environment, which I believe is also allowing these yields to realize. But time will tell.

But maybe, Marc, just one quick addition to your view of the industry or your question towards the view. Remember, we have been saying for some time, and I now talk also from my counterpart in United because, obviously, we're legally allowed to talk on capacity and price. We have been saying for some time with demand being somewhat limited for maybe years to come -- sorry, supply being limited for probably years to come due to the ongoing issues with the engine manufacturers, airframers and let's be honest, more even with the supply chain below.

On the one hand, a healthy demand around the world, we should see good years ahead. And now it's proven that if you raise prices, customers go along. So I think that's a proof of our idea that this indeed industry probably has been underpricing its products. In the end, the market sets prices, as Till said, but there is room to get more for the limited amount of supply we can due to lack of equipment offer.

So I think one day, maybe we might look back at this time after the Iran war as a turning point where the industry was starting to show what its products are really worth and maybe also consolidation on top, the healthy ones becoming stronger and larger, obviously, in the U.S., a little less obvious in Europe, but I'm sure similar trends. One day might be looked at it as an important part of the industry's recovery to higher profits.

And there are no further questions. So I will now hand back to Marc Nettesheim for closing remarks. Thank you.

Yes. Thanks to all of you for the good discussion, for the lovely interaction and questions. We, from Investor Relations, look forward to staying in touch with you and talk to you on the latest conference or next quarter. Bye-bye.

Thank you. This concludes today's conference call. Thank you for participating, and you may now disconnect.

Ladies and gentlemen, welcome to the Lufthansa Group Q4 2025 Results Conference Call and Live Webcast. I'm Moritz, the Chorus Call operator.

[Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Marc-Dominic Nettesheim, Head of Investor Relations. Please go ahead, sir.

Yes. Thank you very much. And also from my end, a very warm welcome, ladies and gentlemen, to the presentation of our full year results 2025. With me on the call today are our CEO, Carsten Spohr; and our CFO, Till Streichert. Both of them will present the results for the past year and discuss our commercial outlook for 2026, and afterwards, as always, you will have the opportunity to ask questions. [Operator Instructions]

Thank you very much. And with that, Carsten, over to you.

Yes. Thank you, Marc, and a warm welcome from me as well to this full year '25 conference, which I think will start in a little bit of a different tone, not because it's our famous 100-year celebration this year, which makes it a special year for us anyway. But while we were focusing on this to a certain degree, obviously last weekend when everything was changed again. So maybe I'll share with you a few thoughts on where we are when it comes to the situation at the Gulf first, which is, as you know, very dynamic. And of course, with a few thoughts on the whole year before I hand over to Till for more details and expected by you feedback on our numbers. And of course, also, we'd like to give you a view ahead as much as possible in such a dynamic environment.

On the Gulf situation, like many of us, I would assume, we're a little bit surprised by the various dynamic turns this takes. In the end, our crisis management always asks us for safety first, which, in our case, meant we stopped flying a day early to the region, which also allowed us to have hardly any aircraft on location because we brought them home before. We then brought our crews home and then went into the next phase of our management of the situation by deciding to close 10 destinations initially, which included Larnaca. We are opening this next -- this Saturday, again, we'll keep the others closed for probably a few more days at least to remain. I think there's more and more now doubts. This is a question of days of reopening or was it weeks, we prepare for both, and we'll take you through this in the Q&A session, if required.

Second, of course, big impact spike on fuel prices. Till will come back to that. We actually believe, due to the fact that we are hedged higher towards our main competitors, actually only other airline hedged the way we are is Ryanair with which who, as you know, hardly overlap, should give us a relative advantage where now prices in the markets need to go up to cover for higher fuel prices, especially, of course, for our American competitors and partners to more or less are not hedged at all.

Third, extension or extra sections to be flown to markets beyond the Gulf. We have seen huge demand since day 1 for bookings coming in from Asia, to Asia, also South Africa, also very much in China towards Beijing and Shanghai. So we now decided to put extra sections into the air with spare aircraft we have due to the cancellations, spare crews we have and also by the fact that we're still in the winter schedule which doesn't put our fleet to the max. So we already announced quite a few extra flights to Bangkok. There will be more coming to Singapore, to Shanghai, to Cape Town, and to India, which will probably confirm the course of the last day from our revenue management teams that we have record inbound bookings, especially to those regions I mentioned. And that will allow us probably give also later on to a more positive outlook on the commercial output, at least of this initial phase of this crisis than we otherwise would have been able to do.

Last but not least, the mother of all questions probably for European airlines. How much is the situation changing the view and the behavior of travelers, customers on this obvious Achilles' heel of geopolitical topics beyond aviation but surely in aviation. So we all -- I think we, the Gulf carriers will reopen eventually but how our traffic flows, how are cargo flows being directed in the future based on this terrible experience locally, I think is the mother of our questions for our industries, and we're sure we'll be discussing that later on.

With that, let me, nevertheless, take you, of course, now back to '25, which, as you might recall, we have called a transition year from the very beginning. Various topics in the pipeline, we have addressed to you before, and of course, happy to also discuss today. Overall, the turnaround of the Lufthansa Airline remains our utmost priority. As also mentioned in the former quarterly result sessions, starting from operations. We have seen significant improvements, which also allowed us to reduce our flight irregularity costs by 43%, equivalent of EUR 362 million, significant input into our improved numbers of '25. And overall, also, we were quite cautious with our capacity increase, which only resulted a 4% or a little less, even 3.8% growth by lifting our revenues to a new record of EUR 39.6 billion. Nevertheless, of course, we're able to improve our profits, as you know, to at least by 19% compared to '24.

This is a delta of EUR 350 million, far away from where Till and I want to take the company, talk about the 8% to 10% margins, but at least a step in the right direction and especially when it comes to the core airline operational stabilization was the basis for everything to come. We once again saw strong earnings contribution from MRO and Logistics. But for us, important that also in the core of the core, we are moving forward.

We also have seen the first but only the first positive impacts of our fleet modernization and the associated product improvements. As you know, we finally were able to certify our Allegris seats also the 787, which is a big part of the 23 new aircraft deliveries we received. As a matter of fact, 7 of these 23 were 787 with now more or less all certified seats across all classes. That fleet alone, Boeing 787 will grow to 32 aircraft by the end of the year, '27 will have a significant impact on our modernization.

Allegris, our new product in Lufthansa and SWISS Senses are now underway out of 3 hubs: Munich, Zurich and Frankfurt. Not only we are receiving very positive feedback but maybe more important for you in numbers, we have been able to achieve 12% higher yields for Allegris than for the former business class. To give you an example on business class, that's a big element of bringing up our ancillary revenues, which already went up 15% last year. And I'm pretty sure we'll show you some good numbers for '26 a year from today.

Overall, that, of course, forced us to discuss how much we want to make sure that shareholders already participate from this improvement. We decided to increase the dividend by 10% to EUR 0.33 per share, which is a 10% increase, resulting in a dividend yield of 4% and a payout ratio of 30%.

With that, let me turn to the traffic regions. I think we all remember Liberation Day last spring, when there were doubts about the development of the North Atlantic, it turned out as expected that the North Atlantic remained strong. And by the way, continues to do so. We'll come back to that later. And we managed to expand and sell capacity on this most profitable market segment of ours by 5%.

In the fourth quarter, with an overall capacity growth of roughly 4%, we even managed to slightly increase unit revenues on a currency adjusted basis, which was clearly a trend reversal to the demand situation we saw in Q3. Going forward, I think the backbone of North Atlantic will remain but I think it's already fair to say we will see an increased shift of point of sales to the U.S. This stage where American customers tend to book earlier than European customers in Q3, in Q2, we are almost at a 60% above share of point-of-sale U.S. and obviously below 40% in Europe.

Again, due to the later booking patterns of Europeans this will shift a little bit. But again, I'm convinced the trend of last year where we grew our American passengers by 10%, and our European passengers only by 1%, will probably result in even stronger dynamics this summer.

Second largest intercontinental area for Lufthansa is not anymore China but by now India, which is also obviously one of the fastest-growing aviation markets in the world. We signed a partnership agreement with our long-term partner, Air India, following just a few weeks after the EU and India had concluded a new trade agreement. We, in this case, includes not only Lufthansa but the German economy, the German business environment, are quite positive and bullish on India. And of course, Lufthansa Group wants to be part of it.

But also in South Korea and Japan, where we slightly increased capacity, along with demand, we were able to bring up profitability. And that is also true for South America, which, as you know, becomes more important for us also due to the fact that with IATA, we were able to double our capacities to Argentina and Brazil.

The idea for '26 is to grow 6% on intercont and more or less stay flat on cont. And as I said, this, of course, does not include our recent extra sections, we are now in the process of offering. So these numbers, of course, are based on the regular flight pattern, which probably will change due to the short-term demand we are trying to take advantage of. Nevertheless, focused growth will remain our fundamental principle. We've seen the upside of this '25 and we'll probably see more of this in '26.

Coming to the next slide. Let me talk a little bit about our obviously unique business model based on the fact of not having the same home market as our main competitors in Paris and London. We will be even more focused on the 4 business segments, and we'll also show them now also in our financial reporting with the 4 strategic pillars we know. Network Airlines will continue to be our core of the core by 70% turnover share. Of course, with Lufthansa Airlines being the biggest part of it. But we will also now be more transparent on our success in the point-to-point business where Eurowings is continuous, not only going strong to defend our non-hub home markets. You all know this is the utmost priority for Eurowings historically, we also see due to the fact that other airlines have been leaving Germany due to the high cost structure, additional market opportunities on the leisure side, we are continuously exploring.

Third pillar, Logistics. Not surprisingly, the more unplannable the global economy is, the better for cargo. We've seen a good year in '25. Till will give you more numbers on in a minute. And already, the way things are starting now after the Chinese lunar year with a complete mix up of traffic lanes and supply chains due to the situation at the Gulf, we're probably looking at a good year here as well. And on top of that, new consumer behavior when it comes to e-commerce, I think combined, will make this big. This is a strong part of our company to come.

That's even more true for Technik. We all have discussed with you before that '25 due to tariffs, there has been a little bit of a slowdown of our increase of margin and profits, which we don't expect to see again in '26. And obviously, the more or less new part of the Technik business being defense will probably also get more headwinds -- sorry, tailwinds, tailwinds from the unfortunate military developments in Iran over the last days and more to come. So I'm sure we'll be talking this -- we will be talking about this rather more than less in the future.

Till with that little call it, 360 and almost hourly dynamic situation where we are, I hand over to you and talk to you in a few more minutes with some outlooks on my side on the strategic path before we are ready for your questions.

Yes. Thank you, Carsten, and also a warm welcome from my side. Exactly as Carsten said, I'll deal with the 2025 looking backwards. And then, of course, looking into 2026 and commenting on our outlook and then Carsten and I will try to answer your questions, in particular, to 2026 as much as we can in the best possible way.

But let's first get 2025 out of the way. So 2025, as you've seen, revenue increased by 5.4% to EUR 39.6 billion, enabled by disciplined capacity growth of 3.8% of our Passenger Airlines, strong third-party revenue growth at Lufthansa Technik and as well continued strong demand for air cargo. And while costs developed in line with expectations last year, the cost increases continued to weigh on our P&L, such as a 10% increase in fees and charges or also a 40% increase for emission certificates last year.

On the positive side, we did benefit from a lower fuel bill in 2025 and that was EUR 514 million lower than the year before. Overall, adjusted EBIT increased by EUR 350 million to EUR 1.96 billion and our adjusted EBIT margin improved to 4.9%. Please note, due to a one-off tax valuation effect, our positive EBIT development did not translate into a higher net income. Adjusted free cash flow amounts to EUR 1.2 billion, and this is a significant improvement, and this significant improvement was driven by the stronger adjusted EBIT, tax reimbursements and a slightly lower net CapEx.

Turning now to our Passenger Airlines. The segment surpassed last year's results despite a challenging environment. Adjusted EBIT increased by EUR 41 million, supported by favorable fuel prices, a significantly lower irregularity impact and a positive earnings contribution from IATA. We are especially happy about Lufthansa Airlines adjusted EBIT improvement of around EUR 250 million. And this reflects the positive impact of the turnaround program. And across all our airlines, capacity grew, as mentioned before, 3.8%, with growth being primarily deployed to the North Atlantic and Continental routes, reflecting the strategic importance of both markets.

In the second half of the year, we shifted capacity growth towards intercont markets while streamlining cont traffic. Seat load factor was at 83.2%, slightly higher than 2024 and with a clear momentum towards year-end. As anticipated, yields came under pressure, particularly on short haul and parts of long haul. However, I want to highlight that in our important North Atlantic traffic, unit revenue increased in the fourth quarter by 2.1% on a currency-adjusted basis, confirming the resilience of the demand. Moreover, yield weakness was, to a large extent, compensated by strong growth in ancillary revenues, up 15% for the full year as well as significantly lower irregularity related compensation cost.

On the cost side, we have improved our performance throughout the year, while ex fuel CASK still increased by 3.6% in the first half of the year. The increase in Q3 was only 0.5% and the Q4 CASK was almost flat to prior year. This impact of our turnaround measures is important given the ongoing substantial cost inflation in fees, charges and personnel costs.

As mentioned before, Lufthansa Airlines is of fundamental importance to us. So I'm happy to report progress. In its turnaround program, we achieved measures with a gross earnings impact of more than EUR 500 million, a clear confirmation that the turnaround is gaining traction. Looking ahead, we expect to measure volume to increase to EUR 1.5 billion by the end of 2026 and to EUR 2.5 billion by 2028. As communicated in our -- on our Capital Markets Day, we are targeting a high single-digit adjusted EBIT margin by 2028 to 2030 for Lufthansa Airlines.

The key building blocks of this trajectory are clear: The continued renewal of our fleet, productivity improvements and the combined power of many other initiatives of the turnaround program. On fleet, we expect the Allegris share of the Lufthansa Airlines wide-body fleet to reach as much as 50% by the end of the year. This goes hand-in-hand with an improved yield level, we currently see a 12% RASK uplift from Allegris.

On productivity, we will shift further 14 aircraft into our more cost-efficient AOCs, Discover Airlines and City Airlines, City Airlines has recently taken up operations out of Frankfurt and will operate 18 aircraft by the end of the year in total. Discover will operate 32 aircraft, including four A350s. Combined with further measures to improve cockpit and cabin staffing, this is expected to increase crew productivity by about 7% in 2026 compared to prior year.

On our 700 turnaround initiatives, let me just comment on some of them. One example is ancillary revenues where we expect a further push driven by the prominent placement of additional services as well as the consistent monetization of the Allegris seating options. Our new cont fare structure will lead to a more personalized offer with the aim to increase customers' willingness to pay. And on the cost side, we will increase operational efficiency and hence, achieve a further reduction as well in fuel consumption. All of this improves financial performance. And in 2026, we expect that we can limit the increase of the Lufthansa Airlines ex fuel CASK to a maximum of half the annual rate of inflation. Moreover, it is noteworthy that this unit cost increase is fully driven by premiumization, hence an investment into value creation for both our customers and ultimately, our shareholders.

Ladies and gentlemen, structural improvements do not only apply to our mainline, we also focus on digital transformation on a group level. Let me briefly touch on the progress of our One IT program. One IT is a group-wide transformation program and its aim -- its aim is to move toward a completely unified IT backbone, a common data and AI foundation and an integrated operating model under the recently founded legal entity Lufthansa Group .IO.

The objective is clear, structurally lower IT costs while unlocking digital business value. And I'm pleased that already in 2025, the launch year of the program, One IT delivered its first tangible financial contribution. We realized more than EUR 50 million of IT cost savings through quick wins such as contract renegotiations, sourcing optimization and application rationalization. In 2026, One IT will focus on the implementation of structural changes followed by scaling on in 2027. The program targets in total about EUR 200 million of sustainable annual cost savings by 2030. This IT transformation will also enable significant additional business, value for example, ancillary revenues, personalized advertising or cost improvements and customer servicing. And this is why One IT is not only a cost program, but a core enabler of value creation across the entire group.

Let me now turn to our Logistics segment. Lufthansa Cargo once again delivered a strong performance in 2025, demonstrating that the business is well positioned in the post-pandemic air freight environment. The revenue growth of 4% was driven by a 5% capacity increase as a result of one additional freighter and increased belly capacity. Strong demand was driven by Asian e-commerce, semiconductors, aviation components and pharmaceuticals, all of them high-margin verticals and therewith putting them into the focus of Lufthansa Cargo.

Lufthansa Cargo delivered an adjusted EBIT of EUR 324 million, representing a 29% improvement driven by higher volumes and improved load factors more than compensating a decline in yields. On the cost side, Lufthansa Cargo showed a strong performance, ex-fuel unit cost decreased by around 6% and main drivers were here, lower charter expenses, IT cost reductions and improved crew productivity through optimizing network planning. Looking ahead, we expect for Lufthansa Cargo a clear earnings increase in 2026, building on a disciplined execution of its strategy and the strong market position in special cargo and premium products.

Turning to our MRO segment. Lufthansa Technik achieved a 12% revenue growth, with total revenue exceeding EUR 8 billion for the first time, driven by a 23% increase in third-party business. While this was an exceptional top line development, adjusted EBIT amounted to EUR 603 million, broadly in line with the previous year. And this result was achieved despite sizable external headwinds. One of those headwinds came from foreign exchange developments, while the weak U.S. dollar had a net positive effect for our airlines, Lufthansa Technik was impacted negatively with a mid-double-digit million euro earnings effect.

Lufthansa Technik was also affected by the U.S. tariffs on aluminum and steel impacting the results by roughly EUR 30 million. But please note that this was already significantly lower than originally assumed due to the swift and successful implementation of mitigation measures. These measures included adjustment to the production flows, renegotiations with customers and optimizing customs processes. These steps contributed to an earnings recovery in the fourth quarter and we expect that the negative effects will diminish further in 2026.

In parallel, Lufthansa Technik continued to expand its global footprint. New or growing facilities in Portugal, Tulsa, Calgary and Malta will contribute to substantial capacity additions, particularly in the engine segment. And in 2026, we expect earnings at Lufthansa Technik to increase significantly, supported by normalization of tariff impact, continued growth in the engine segment and the benefits of the commercial initiatives already underway.

Turning now to cash flow. 2025 was a year of significant improvement for the group, both in terms of cash flow profile and resilience of our balance sheet. Operating cash flow increased to EUR 4 billion, driven by higher earnings as well as a tax repayment from a German tax audit. CapEx includes the final payments for 23 new aircraft, of which 9 were wide-body aircraft. This was partially offset by 19 sale and leaseback transactions and net CapEx stands at EUR 2.5 billion and is therefore slightly below previous year's level and also below our expectation at the end of Q3 due to a delivery shift of 4 wide-body aircraft into the first half of 2026. And adjusted free cash flow reached close to EUR 1.2 billion, which represents a meaningful increase of EUR 350 million.

Looking at our balance sheet. The combination of strong operating cash flow and disciplined investment led to a significant strengthening of our liquidity position, and we ended the year with liquidity of around EUR 10.7 billion, above our target corridor of EUR 8 billion to EUR 10 billion. And we expect this liquidity position to return to the target corridor -- into the target corridor by year-end 2026 as we use these available funds for aircraft, invest and payments. Financial net debt increased to EUR 6.4 billion, mainly driven by the capitalization of leases. And when including our net pension position, total net debt remained stable year-over-year. And as our profitability increased, our leverage ratio improved to 1.8x. We continue to be solidly positioned with an investment grade credit rating and ample financial flexibility to support our fleet renewal and growth plans.

Now let's talk about fuel prices, which is, of course, on top of everyone's mind right now. So fuel costs developed favorably throughout 2025 and amounted to EUR 7.3 billion in line with guidance. For 2026, our fossil fuel bill estimate is around EUR 7.2 billion, thereof EUR 7 billion for fossil fuel and EUR 0.2 billion for mandatory SAF. All figures as of last week Friday. These numbers represent a tailwind of approximately EUR 100 million versus 2025, predominantly driven by the weaker U.S. dollar.

And as you know, our hedging strategy continues to provide protection against volatility while also allowing us to benefit from price declines. And for the Passenger Airlines, we have already hedged around 82% of our fuel needs for the remainder of 2026. Since last Friday, we have, of course, seen a substantial increase in the jet fuel price, resulting from both higher crude oil price as well as higher jet crack. I will comment on this in more detail in a minute when we talk about our full year earnings outlook.

So let's go there. And speaking now about our outlook for the current financial year. This is obviously not easy given the events in the Middle East. On the one hand side, I see the strength of our group and the progress we make in executing our strategy in all the dimensions and also in all the dimensions that we can control. On the other hand, I see what's happening around us and this does have an impact as well on our financials. The bottom line impact will depend on which effects are outweighing the others and also on whether those effects will change subject to the duration of the current situation.

Being in this situation for only 6 days by now, obviously, does not provide us with sufficient hard data points to draw final conclusions for the rest of the year. But of course, we have data points from the first couple of days, which we were going to talk -- which we are going to talk about in a minute.

Let's go through the building blocks of our outlook. We plan to increase capacity by around 4% and here also in a disciplined way. Clear focus will be on intercont routes where we expect to grow in mid- to high single-digit range while cont capacity will be broadly unchanged. I do expect cost inflation to persist but it will be partly offset by our transformation programs and the ongoing fleet modernization. And on this basis, we expect adjusted EBIT for 2026 to be significantly above the 2025 level, consistent with our commitment to delivering sustainable profitability improvements.

Now let me put this into perspective of the Middle East crisis, and let me describe to you what we are currently seeing. One slide before, we've shown you a fuel price forecast based on last week's Friday, and that is the way we always presented to you each quarter, including also the fuel sensitivity, the fuel matrix where you can go along the axis and get an idea how things can move. Now since then, fuel prices have increased and taking a short-term perspective, just for the next 2 months, current fuel price levels mean about a 20% to 25% higher fuel cost for March and April compared to the underlying figures reflected in our EUR 7 billion forecast for the full year.

However, for March, the impact -- and again, that's normal, for March, the impact will be further limited as about 60% of our physical settlements for fuel are priced at the prior month level. This does give us additional time to also adjust our revenue management approach. Having said that, broadly, in terms of fuel dynamics, we don't believe that fuel price levels remain in the long run where they are right now. Then we also have impacts from flight cancellations. Since 28th of February, we, of course, have stopped flying into the region. These are 10 destinations. And overall, to give you an idea, Middle East traffic would have represented about 3% of our capacity in the first quarter. For comparison in 2025, it was just about 2%. So you can see that the overall impact is somewhat limited. We estimate about a EUR 5 million earnings impact per week from those cancellations based on lost business and cost of care.

On the other hand, we are also observing positive earnings effect. And firstly, since last weekend, more people have been flying with the Lufthansa Group Airlines instead of connecting via the Gulf hubs. Since the weekend, additional bookings on our Asia and Africa routes have by far overcompensated the cancellations we've seen on our Middle East routes. Over the past days, revenue intake for departures in March was about 60% higher than last year. Global net revenue intake for the full year during those days, was more than 20% higher than last year, indicating a positive impact in booking intakes also beyond March. We expect this situation to persist as long as the hubs in the Middle East cannot be fully serviced.

Secondly, many people are currently changing their travel plans in the short term. And on this topic, we see the possibility that travel patterns might also change for longer. Potentially persisting -- potentially persisting security concerns around the Gulf region might also lead to more traffic within Europe or through European hubs or U.S. destinations.

Thirdly, with more than 80% hedge ratio, we are hedged to a higher degree than many others. This provides us with a relative advantage, especially compared to those who are not hedged at all. And fourthly, a large part of the airfreight capacity in the Middle East is currently affected, about around 18% of global capacity is not available at the moment. This means that also cargo streams are shifting. And Lufthansa Cargo has observed an increase in demand over the past few days. Moreover, we've seen rise in cargo yields of 5% worldwide and plus 35% in the Middle East and Asia over the past few days, even a further yield uplift from these markets is conceivable.

More longer term, we might also see more shift from seafreight to airfreight when things are time critical. Therefore, for me, the conclusion or the message is kind of clear. We do control what we can control, and we are obviously closely monitoring what's going on in the world right now. And even in the light of the current situation, we are convinced that we can significantly increase our adjusted EBIT in 2026. However, let me also be clear, the range of uncertainty has increased and there was also the range of possible outcomes.

Let's now go back to what we control, that's our CapEx. Our CapEx outlook. Net CapEx is expected to amount to around EUR 2.9 billion, reflecting the planned delivery of up to 45 new aircraft. That's the largest single year fleet expansion in our company's history. And adjusted free cash flow is expected to be around EUR 0.9 billion slightly below last year due to the higher investment volume.

We expect 2026 overall, to be a year of continued progress for the group on our path towards our midterm targets and our businesses are well positioned and on a clear trajectory towards long-term value creation.

And on that note, knowing that, of course, 2026 will be at the center of our discussion, I believe. I'd like to hand back to Carsten for further remarks on the strategic outlook.

Yes. Thanks, Till. And just a few words on, indeed, how do we look into the future, of course, based on what Till and I communicated at the Capital Markets Day back in September, where we announced our medium-term financial targets, you are well aware of by now, centering around 8% to 10% adjusted EBIT margins.

First, lever of -- the 4 key levers I'd like to address is obviously airline growth in a profitable way, which means for us more long haul than short haul. We actually want to grow the intercont fleet to 200 aircraft while we keep the short-haul fleet more or less flat. The additional required feed will be provided by coordinating our hub traffic in the future, centrally over all 6 hubs, which will give us a higher share of feed passengers to intercont destinations rather than short-haul to short-haul. At the same time, we're, of course, leveraging the One Group approach beyond this example. We do see a 3% margin uplift from fleet and new premium alone but there's also elements of the loyalty ecosystem and the ancillary push, which will pay into our midterm targets.

Last but not least, the so-called One IT, where we're harmonizing the IT network, at least across the 6 hubs in many regards, even beyond our hub and Network Airlines is another example of this second lever. Third, airline cost transformation. Operational excellence focus in '25 has provided the stability I quoted was -- mentioned to you before. Now starting in '26, efficiency will be higher on the priority list. And we do believe, including more modern aircraft, including, of course, lessons learned, and finally, enough staffing at the European and especially German hub airports, we will be able to show that we keep our unit cost despite cost inflation flat in '26 as we already did in the fourth and last quarter of last year.

Another element of this will be the fact that we grow fastest in those airlines with the best cost competitiveness, thinking about Discover, for example, and Lufthansa City Airlines. Yes, and last but not least, the so-called fourth lever is the additional focus on MRO and cargo. You know our Ambition 2030 program in Cargo, by which we want to achieve EUR 10 billion of revenue with the 10% EBIT margin by the end of the decade. And also in Lufthansa Cargo probably supported by the recent developments in the Gulf, we are looking to claim the top 3 position globally, again, coming out of top 5. Last but not least, defense was already mentioned, and we strongly believe, again, with current affairs probably creating a tailwind here that defense will be a very stable and highly profitable part of Lufthansa Technik to a higher degree.

Last but not least, let's talk about a little bit more about maybe the single most important lever and most impactful lever we have, our fleet renewal. You're aware we're taking -- we're in the middle or at the beginning, if you might say, of the largest ever step towards a more modern and productive fleet. We expect 45 new aircraft this year alone, more or less 1 per week, and there is an unheard number of 27 widebodies among them. That will bring us to a new tech quota across the whole group of 1/3 with obviously resulting cost advantages and productivity gains. Also, we see some light at the end of the tunnel of the Pratt & Whitney engine issue. As far as it looks now, we'll be able to bring down the number of grounded aircraft to less than 10, which is 30% less than last year.

Coming to an end, getting ready for your questions, you might share my view that the Lufthansa brand is an iconic brand in our industry for many, many years now, celebrating our 100 anniversary today. No doubt, we intend to maintain this in the future. And part of that must be the further improvement of the customer experience and be an example of Starlink, which we are looking to offer to our customers as of Q2, be it new lounges in almost all of our hubs and flagship lounge to be opened soon in JFK, where all of our group airlines or more or less all of our long-range group airlines are serving the airport at least once a day, where overall, the further integration of IATA creating more synergies is a step towards that product improvement for our customers.

So overall, again, with all the uncertainties existing, we're looking optimistically into '26, and now -- look forward to your questions and comments. Thank you very much.

[Operator Instructions] And the first question comes from Jaime Rowbotham from Deutsche Bank.

Two questions from me. Firstly, Carsten, I wanted to ask about these puts and takes, pros and cons of the current unfortunate situation. Till did a great job of running through some of them. Interesting to hear bookings to Asia Africa over compensated for cancellations to the Middle East. I just wanted to focus it maybe on the transatlantic, given it's so important for you, your U.S. competitors aren't hedged, so they are likely raising fares and hopefully, you can follow that a bit. At the same time, though, I wonder if fares are going up at just the wrong time in the sense that some people might be nervous to travel at all, which could have a downward impact on demand. Maybe you could just flesh out either what you've seen so far or what you think happens next insofar as that's possible.

Second one for Till. Thanks a lot, for clarifying what might happen to fuel for March and April. I just wanted to ask, if possible, about the full year. So on the fuel slide, you tell us you as of last Friday, $71 for Brent, $26 for the crack spread to get to EUR 7.2 billion. Obviously, Brent now $88 and the crack spread about $100 a barrel. So it's costing more to refine than to buy the oil. Hopefully, that won't last. But the forward curves are pointing to a scenario that's not even covered by your sensitivity table where the jet crack part on the x-axis could double or triple versus what you show. You also mentioned in the footnote, the hedging you've got is part on gas oil and part on Brent, so you don't actually have the crack spread hedged. With that in mind, have you had a chance to do any scenario analysis on what a mark-to-market type fuel bill might look like for all of 2026?

I'll go second first and then maybe on the puts and takes, Carsten, if you want to add a little bit. So Jaime, absolutely. I mean, this is top of mind question how this is going to evolve. And you are quite right in terms of hedging. We've got a split and you know that we usually hedge blend with about 35% and gas oil as a proxy for jet crack with about 50%. And it's true that, obviously, jet crack has moved up. You can almost say off the chart of our fuel matrix on the right-hand side. So here, I would just highlight, and again, mathematically, you can calculate all of that, and we have done that. And the impact, obviously, if you would imagine that it stays for the full year is of size.

On the other hand side, I also don't believe that this situation will going to stay there for a long time. And you can see also, and I'm sure you've looked at the volumes that have been traded driving ultimately the crack price, the crack spread. It's on very low liquidity. And therefore, there was -- I would also say a bit on the back of what President Trump yesterday evening said to possibly also escort tankers through the Strait of Hormuz. Ultimately, I do believe that this is not going to stay for long at these levels. And of course, leading now into the other side of the equation, it's true that the hedge levels do we have give us a solid upward protection. And of course, this differentiates us versus others that follow a non-hedging policy. And therewith, I do expect that also yields also or in particular, on the North Atlantic have got the potential to go up and increase.

Yes, Jaime, Carsten here. I think you already kind of put it in your question. There are pros and cons, and I think it's very difficult right now to quantify them exactly after just a few days. Again, cost of cancellations exist, probably like EUR 5 million per week is our best estimate. But at the same time, as you pointed out, we have a relative advantage on the fuel cost on the one hand. I think there's also historically a certain move of bookings towards highly trusted brands in times of crisis, we are definitely SWISS as the [indiscernible] Switzerland and Lufthansa to a certain degree, we probably benefit from.

Then, of course, the question is, is the overall potential softness in travel for us, European carriers overcompensated by the shift of travel from carriers in parts of the world where people don't want to go now towards us. Hard to quantify at this point but not completely probably unexpected that will happen to a certain degree. And as I said before, there will be flexibility in our network as we are now within days putting capacity into China, into South Africa into Southeast Asia, of course, we're happy to also reallocate capacity throughout the whole summer if needed. If, for example, the demand tool from Asia become so strong that the next best route tool from Asia is more profitable then the weakest route on the North Atlantic, we would move the airplane. But I think it's way too early to discuss that now.

Let me add maybe just 1 additional point, if I may, just to give you a bit of a holding line as well on the RASK side. If we would have spoken 10 days ago and talked about RASK expectation for the first quarter, I would have said currency adjusted, so ex-X positive but including FX, slightly negative. Now as we speak today, with the net booking intake that we've seen over the past few days, this has shifted clearly to the positive side. And I expect that the RASK for the first quarter should reach a positive territory, even including the unfavorable FX headwind in comparison to prior year because remember, obviously, the U.S. dollar started to depreciate just in the second quarter last year.

And the next question comes from Stephen Furlong from Davy.

Carsten, Till and Marc, congratulations on the results. Carsten, in the prepared remarks, I mean, you talked about the industry being more resilient to crisis than it used to be. Could you just amplify that? And then maybe just talk about the Allegris products and talk again about the kind of rollout of that product. I know there's been a lot of kind of news, comments and reports about some delays and then not delays and what the revenue kicker you're getting from that excellent product?

Yes, Stephen, thanks. I think has said this numerous times about the industry being more resilient before the unfortunate events that the Gulf started a few days ago. Because, unfortunately, already before that, we have more military conflict in the world than ever before since 1945. And whereas usually, when there's a conflict somewhere, bookings usually collapse because people are afraid to fly and want to stay home, this hasn't happened, not only not the last days, let's even go beyond that. We have seen, as you well know, record demand in the industry basically since COVID. And what is the background of this. I share the view of some of my American counterparts that for consumers, traveling has been higher prioritized since COVID as before. That's 1 element.

We definitely don't have a period of overcapacity due to the shortage of engine and plane productions at the OEM level. And I think last but not least, you see more wealth around the world, not only in the saturated markets but also in other parts of the world, which airlines serve. I think all that combined -- by the way, the last one is why especially the premium classes, as you know, are booming now for many years. So I think all that combined shows that even though the world has not become more stable, our industry has. And now to also the last days might add to this because imagine this would have happened 20 years ago, I think you would see a very different booking environment than what we are seeing since last weekend.

Allegris, yes, we had significant delays in certifying the Boeing aircraft with our Allegris seats who have a different manufacturer than the seats in our Airbus wide-bodies are manufactured by. We wanted to split the risk many years ago and also the capacity of none of the seat manufacturers was big enough to provide all of our wide bodies. But now these airplanes are coming in quick time, as I mentioned, 9 are here already. By the end of the year, we have 36, I think, as I said in my opening remarks, we have 28 seats in the 787, of which 25 are now certified as the end of March. And there is now only 3 seats, which will not be able to be sold by the end of March. And we even now decided to pull that 1 week forward giving us additional revenue opportunities by already having the seats open for a flight a few days before the end of the winter schedule. But that's only the 787 topic. And as mentioned also by the end of the year, in the Lufthansa Airline, 50% of our seats will either be Allegris or in case of the 380 aisle access seats. So we're another manufacturer.

So this is now in full swing. We mentioned before, we have 12% to 13%, 14% higher yields on these seats than on our regular business class seats. So that's big and also the ancillary revenue increase, which we're expecting for '26 to a high degree, will come from Allegris versus the first time we actually charge for different seat types in business class, so that will also be, I think, tailwind for '26 and beyond. I hope that answers your question.

And the next question comes from Alex Irving from Bernstein.

I'll ask 2, please, both around technology. First of all, on IT, you signed in the last quarter for a new IT platform to implement across 9 of your group airlines. There's an IATA paper that's been around for a while that talks about a 2% to 3% improvement to RASK platforming like this. Is that the right way to think about the upside for Lufthansa Group? Or is the incremental gain less given your work to date in areas like continuous pricing, for example?

Second question is on the distribution side of things, specifically, how are you approaching decision about whether and how to sell in large language models? Are you planning to engage directly through an API or to rely on existing infrastructure GDSs, travel agents and continue to pay commissions? Do you have a view on when you're likely to sell your first trip through an LLM?

Okay. I'll make a start on the first one, and then I'll see how far I get on the large language model based selling. Look, I mean, as you know, quite right, we want to embark on the journey of implementing on the one order path, it will be a long-term journey for the industry and also us but it is important to be amongst those ones that joined the pack at the beginning. And we do believe that there are clear benefits on the IT infrastructure on the one hand side because, I mean, as you know, the P&R standard, e-ticket standard and the miscellaneous data standard gets basically consolidated into a single order that is more efficient and drives back office efficiency on the other hand side, quite right.

Once you've got this type of let me say, Amazon order type model, marketing and retailing obviously benefits as well. I am aware that IATA quotes these figures of 2% to 3% RASK benefit. To be honest, I find it quite early to take a view on this. But I do believe that principally, there are benefits also on the revenue side from better retailing. I think particularly for us, what I believe is good. We obviously come with scale when you think of passengers that we've got. And whenever you touch these large-scale transformations, when you get it for done at scale, it does give you normally a greater benefit.

Look on the distribution, to be honest here, and large language models, I have to admit I'm not that deep into the status where we are. What I can tell you is that, clearly, we are advancing on many fronts in the digital arena to improve customer servicing, through large language model-based trainings, bots. And I don't know what the digital adoption right now is, but we are making progress on that front. But happy to come back and have a dedicated conversation on this.

And the next question comes from James Hollins from BNB Paribas.

So Till, on the turnaround update, maybe I always see a slightly in charge of this, so maybe I'm wrong. But as you see it, where have you outperformed, underperformed so far on the turnaround program? And you may not choose to answer this but if I take the Lufthansa Airline EBIT growth of EUR 250 million, which was a gross benefit of EUR 500 million. Is that 50% net versus gross benefit, a good indicator for the full year '26 EUR 1.5 billion?

And then probably for Carsten and I know there's lots going on but I thought I'd better mention the strike you had in Q1. Maybe you could update on the cost of that where we are on some of the open CLAs and whether this current situation tends to lead to a bit of a backtrack from some of the union aggression?

Yes. So I mean turnaround, first, to give you my kind of assessment, I am happy with what we have achieved last year. Again, it's not easy to get such a large-scale program off the ground. And the EUR 500 million gross figure, as you know, has come from several initiatives. We've got EUR 700 million in the entire funnel. Several of them obviously have gained traction and delivered in 2025. Let me say, where were we strong and where maybe things will be moving in the future towards. Point where we were clearly strong and successfully executed was operational stability.

You remember that was one of our big topics at the beginning of 2025. Get stability back into the production, into the system. That is good for our customers, was good for our customers. You can see that in NPS, customer satisfaction everywhere. And also in the significant benefits on the so-called IRREG cost charges and foregone revenue that is sizable. And that's a clear proof point but also on many other smaller initiatives. And again, I wouldn't speak about EUR 700 million initiatives if it wouldn't be quite granular. We've made good progress.

What's ahead of us is clearly the focus on productivity. And this is why I made it also a point on my chart on my slide. And there, we will continue to move capacity into our lower-cost AOCs, Discover Airlines, City Airlines. You can see the aircraft that we are moving and also starting operations for City Airlines from Frankfurt and there with big focus for 2026 and beyond is productivity.

Now to your question, gross versus net. Look, it's hard to say. To isolate it on a program level because we do have, obviously, underlying cost inflation drivers from a salary point of view, from a fees and charges point of view, and therefore, it's a bit of a harder ask to say how this -- how the gross is directly translated into a net. But I do see us on track to get the EUR 1.5 billion in 2026 delivered.

Yes. On the strikes, the number you're asking for day of strike like the 1 we just had, we probably estimated to be around [ EUR 50 million. ] You might see that's a lot less than what we had before. Why is that? Well, there's less support this time for the units going on strike, which results in more volunteers to continue operation. So therefore, we don't ground the whole fleet as we were forced to in the past but keep our most profitable routes in the area that's reducing the cost.

Looking ahead, we are in constructive talks both with our cabin union, as a matter of fact happening today, and Verdi, our ground staff union and also for the cockpit union, actually, we have now 2 corporate units in Germany but for the 1 which is affected here for Unabhangige cockpit, we have offered even in a moderated fashion to talk about the bigger scheme of things, which right now has not been agreed to yet but the individual pilots very much want to stop the shrinking of the main airline, which becomes more and more obvious, as Till just pointed out with our shift of airplanes. So I'm quite optimistic that eventually, that shrinking on behalf of the pilots should come to an end, which will require us to talk on the bigger scheme of things.

So I don't see any strike action like the one we saw in 2012 to 2016 or anything because there, we just now too much what the members want and believe that the answers, of course, can only be a reduction of the cost disadvantage of the main airline to the other AOCs in Lufthansa, whereas a strike itself and even the things they're asking for in the strike, and we are not willing to give in the airline with the lowest profit would increase the distance and the disadvantage on the cost side. So this will not be a long-lasting, I think, exercise.

The next question comes from Harry Gowers from JPMorgan.

First question, maybe just related to Jamie's question on the fuel hedging. Can you just confirm, do you fully hedge the crack component and that's all included within your comments on the March to April monthly impact? I think you said that gas oil hedging is a proxy for jet crack, and so does that type of hedging basically fully cover the price increases we're seeing in the crack spread market at the moment? That's the first one.

And then second one, just on the ex-fuel unit costs. You have this comment around 2026 ex-fuel CASK is expected to be half of inflation for Lufthansa Airlines? Can we extrapolate that for the entirety, I guess, of the kind of new network airline segment? Is there any reason why those other airline businesses won't be reporting a similar cost results? And maybe just related to that, if I can squeeze 1 in, what are you assuming for the union agreements? And staff cost inflation in your overall kind of cost and EBIT guidance for the year?

Okay. Maybe a comment on just union agreements. I'll leave to you, Carsten, and I'll go on the first question -- on the second question first, ex-fuel unit cost. So let me be clear what I said is indeed for Lufthansa Airlines, half of inflation is our target. Now overall, as you will remember, we stayed away from giving a group guidance on CASK overall. So we limited it to a specification just for Lufthansa Airlines. Of course, all of the other airlines, our business units have got CASK saving programs in place but I don't want to give an overall cost guidance for the entire group.

Going back to the first question, which is a fuel hedging, once again, we hedged gas oil 50%. So 50% is the element of our hedge. Our hedging composition included 35%. And gas oil as a proxy that is strongly correlated to jet crack but it's true currently, Jet crack is very high. We believe that the spread between jet and gas oil will come back to normal levels. And I think the spread currently is inflated mainly because of the illiquidity in the market.

Yes. Harry, if I got your question right, you wonder how union agreements would impact our guidance. So I think it's fair to say they will not impact our guidance. Where we have talks, we kind of know what we are willing to offer and how that would result in financial outputs. Of course, it's in our planning. And in the last strike we had for the pilots on the mainline, we told them that as long as the main line is not reaching its targets in terms of profitability. And that actually is the lowest profitability airline in the group. There is no any financial room for maneuver to pay even higher pension benefits, which are already higher than the ones in the other airlines. So there's also no room for additional costs here.

That remains is, of course, the cost of strikes. But at the same time, the more strikes there are, the less airplane will be in that airline. So I think there's almost like a natural hedge if you want to use the term from our fuel environment. So the answer again, to your question is that there is no impact on the guidance to be expected from the current labor conflicts.

And the next question comes from Axel Stasse from Morgan Stanley.

I have two from me. On the first one, coming back on fuel, apologies. How much of that fuel inflation can be passed on? Obviously, you mentioned your exposure to jet and gas oil crack. But obviously, the U.S. guys are not hard at all. So if fuel goes up by 10% approximately, how much of that can be passed on? Can we assume half of it? The reason why I'm asking is because I'm slightly surprised to see you we're comfortable of providing an EBIT guidance without a lot of visibility in the near term on fuel. And I therefore assume you guys feel comfortable passing that on. So just trying to understand the extent of it.

And then the second question is can you provide maybe an update on TAP, what are the latest news here? And how comfortable are you on TAP?

I'll take the first one, just on fuel once again. Two comments I would add in addition to what I already explained. I mean, first of all, ticket prices are made at the market level but we do see already increased yields also on the North Atlantic and the fuel price surcharges are being implemented. Now how much of that exactly I can't tell you but the situation is dynamic, and therefore, I think it is just not prudent to give you a statement on that.

I think if in the future, fuel prices remain elevated, clearly, everyone and in particular, those ones that follow a no-hedge strategy or have got less hedge protection will need to pass on fuel prices. And that, in my view, provides an opportunity and allows for equally pass-through from our end of additional fuel cost. We have done first price increases already through the fuel price surcharge and have implemented them.

And sorry, and just 1 more thing, Cargo. I wanted to speak about both segments. Cargo obviously works on a pass-through model as well. And there -- there is literally -- it's not on a daily basis but within a week, prices get adjusted for the input cost of fuel.

Yes. Actually, there's nothing really new on TAP. As you know, we are in the process because we believe there would be a perfect addition to our multi-hub network, also due to the fact that we are currently the weakest on the Latin American market. The overlaps are less than they would be for others, which probably has an impact on the antitrust approvals to be obtained. At the same time, there are so many open questions about the process and the outcome that it's impossible at this point to answer is creating value for our shareholders or not. If it doesn't create shareholder value, we will not do it. We don't need it. If it ends up to be a win-win of Portugal TAP and us, we will maybe see more progress here. Nothing else to add.

And the next question comes from Muneeba Kayani from Bank of America.

Firstly, Till, if I can just clarify your comments around the impact from the Middle East on kind of near-term March, April. Did you say that the higher bookings demand that you're seeing for Asia, Africa and all is compensating just the cancellation costs? Or is it compensating cancellation costs and the jet fuel higher costs on the unhedged portion? So that's my first question.

And then secondly, just going back to the transatlantic and Carsten, in your experience, how long does it take for kind of U.S. airlines to adjust the capacity in such shocks on the oil price, given their lack of hedging?

Mona, let me take the first question, albeit I might not give you a totally conclusive answer on that. But yes, first of all, and let me go on the net booking intake and just to run you through that. And I've really taken the view on kind of what numbers do we see right now. And since last Saturday, our net booking intake has developed strongly, exactly as I said. And when we compare these net bookings which we have received between Saturday and Wednesday, end of day, for the month of March, this figure is about 60% higher than 1 year ago. And my second statement on the inflow side was, if I compare same period, those few days, net bookings for the rest of 2026, this figure is 20% higher than 1 year ago. So clearly, what I said on the negative side, the cost of the cancellations of the Middle East, we have comfortably covered.

To your question now, does that cover as well the fuel cost. Look, it really depends on how long the fuel prices remain elevated because I've equally given you a view on March and March as such, while I said, nominally 20%, 25% higher fuel bill as we obviously settle the physical fuel bill with a month's delay, you can actually knock half of it off for a month, okay? So it's not that straightforward to say how all-in looks like but there are puts and takes. And I think we should clearly see both of them, albeit I'm not giving you a net figure right now because I can't.

Yes. Muneeba, Carsten, you asked for my experience, and I think the things I experience is twofold. First of all, the speed of reaction is a function of the impact of -- on the traffic. Think about 9/11, it took us all only days to come up with a different schedule when the skies reopened than the schedule we had before because it was so obvious impact was huge. I think this is a different situation here. But none of us knows how long the war will last, how long the impact will last, at which degree but I think it's worth to say that all of us have become much better in reallocating capacity to demand, also due to the lack of aircraft in general.

What does that mean? When you have a route which is not performing well anymore, you can more easily find another route to provide profitability and value for your shareholders than in the past where maybe you already had loss-making routes and couldn't find something else because otherwise, we would have done it before. So I think with the profitability where it is also for the international business of the U.S. carriers, we're going to see a very market-focused reaction on both sides of the Atlantic, which fuses our optimism -- fuels our optimism, sorry, for my language.

And the next question comes from Andrew Lobbenberg from Barclays.

Can I ask about IATA, we haven't spoken about that beautiful pretty picture on the slide of the planes? How are you thinking about the decision to take majority in general? And then how are you thinking about it in the context of the unsettling events in the Gulf?

And then can I just come back to the scale of current bookings? You've given us really precise figures on how bookings have come in for those destinations in the range of the Gulf that have gained. What has happened to booking inflows for short-haul Europe? What has happened to booking inflows on the North Atlantic in that short time period?

So look, first of all IATA, on it, maybe I'll just divert the sac, and just IATA has done a good 2025. Organically, they've reached breakeven on adjusted EBIT, which is positive, which is great. And you can actually back-calculate what also their overall net income was. Our 41% contributed with EUR 90 million. On our side, I do see many benefits of calling and integrate -- calling early and integrating IATA faster. We've made very good progress throughout last year. But as you can imagine, with the call option being open to be decided in June, we will keep our options open, and we continue to assess and then take a decision nearer by the time and will communicate.

Secondly, on the different travel on the -- sorry, your second question was on Europe and North Atlantic in terms of sentiment, travel sentiment. We actually have so far not observed worsening of travel sentiment or also bookings in intra-Europe or North Atlantic but of course, it's to be seen.

And the next question comes from Ruairi Cullinane from RBC Capital.

What have you done to Middle East capacity this summer? And linked to that, should we expect the EUR 5 million per week cost of cancellations to tail off even if the conflict doesn't come to an end soon? And then secondly, are you any less comfortable hedging fuel through Brent and the gas oil and leaving spread to jet fuel unhedged? Could you consider that in the future?

First of all, Middle East, I've given you an idea of the sizing. Last year, it was about 2% of our capacity. In Q1 normally that would have been 3%. Remember, last year, there was also a bit of on and off of flying into the Middle East, and this is why it was 2%, and we had it increased it a little bit. So I think what I've given you now is a EUR 5 million negative impact while we are not flying will rather go down because it does include, of course, a view on the cost of care. We took a view now of also those additional costs that is just on the ones where we actually need to care -- where we need to support, while also passengers guests are staying still need to be repatriated or flown back. If it stays long, we will clearly reallocate capacity. And then even this element of what I called negative impact or lost business from Middle East will obviously go away. And therewith, I would say this is not so much of an impact medium term.

In terms of strategy of hedging, look, I think I've described it probably to the fullest extent I can do on this call. And we -- our hedging strategy is clearly designed through options and that's different to swaps where we want to participate, also in the downwards movement and therefore, I'm comfortable with the strategy that we have so far in place.

And the next question then comes from Antonio Duarte from Goodbody.

The first one is on ancillaries. So 15% growth year-on-year, clearly doing very well, namely with Allegris rollout. Could you give us some color here where you see these terms of ranges going forward?

And my second question is turning to the MRO. As you said, a bit of a margin compression seen in '25, a bit of recovery expected from your defense, et cetera. Would you be comfortable with the full recovery from the margin seen in '24? And any color on that would be great.

Okay. Let me make a start just on ancillaries. We have explained what we've seen on Allegris. And the additional seat options and also ancillary sales overall. If I split that, I do believe that the ancillary sales as such has got substance to continue. But of course, it's hard to be at a double-digit rate going forward, just a law of big numbers at one point in time. Therewith, I would like to go back to the Allegris element within the ancillaries. And here, we clearly see the benefit of selling the different seat options. And the main driver of that is obviously the number of aircraft coming with the Allegris cabin into it, and that has got runway and gives us longevity to continue to grow the ancillary sales category.

We always call it the big 3, Antonio, baggage, seating upgrades. And that, I think, will continue to drive ancillaries up as Till explained, with Allegris, of course, a special push. MRO, you know that in '25, MRO was suffering almost -- as the only part of the Lufthansa Group under tariffs, which, as you well know, for airplanes and engines don't apply. These tariffs, as we all know, have been ruled illegal by the Supreme Court. So at least they don't go forward. Probably there will also be reimbursements as we all know. So that will be definitely 1 of the reasons why we believe we can not only get back to '25 -- sorry, '24 margins in MRO, but we will continue to go towards the 10% we have planned for the end of the decade.

And I'll leave that defense element out, which as I mentioned before, we'll see, I think, another support for the strategic development of Lufthansa Technik, even though it doesn't necessarily monetize short term. But again, we are committed to our 10% margin in '23. And some of the ramp-up costs we had in for Canada, for Portugal also won't repeat themselves. So overall, my optimism continues.

Ladies and gentlemen, this was the last question. I would now like to turn the conference back over to Marc-Dominic Nettesheim for any closing remarks.

Thank you very much for your questions, for your interest and for the lovely discussion. We are happy to continue this from the Investor Relations side. We wish you a lovely afternoon and talk to you soon. Bye-bye.

Ladies and gentlemen, the conference has now concluded, and you may disconnect. Thank you for joining, and have a pleasant day. Goodbye.

Hello, and welcome to the Deutsche Bank Virtual Investor Conference, dbVIC. This is Zafar Aziz from the Deutsche Bank team. I'm pleased to welcome our next presentation by Lufthansa from Germany. Before I introduce our speaker, a few points to note. Please click on the questions box to ask a question. All of today's presentations are recorded and can be accessed by the Deutsche Bank website, www.adr.db.com.

I'm happy now to hand over to Lufthansa.

Yes. Thanks for your interest ,a very, very warm welcome from my side. My name is Marc Nettesheim, I'm heading Investor Relations at Lufthansa Group, the European Airline Group, which I want to present today to you. I think -- I want to give you a quick run through three topics. Number one, Lufthansa at a glance, who are we? What differentiates us from our competitors and what are the main value leaders to create shareholder values over the next years; number two, then talk a little bit about the current trading and Q3 results, which we just published last week and also the full year outlook for 2025; and finally, give a glimpse on our midterm targets, which we communicated in our Capital Markets Day by end of September, that will be the agenda for today.

And to start with. So who are we and maybe you're not too familiar with us. We are by capacity, the largest airline group in Europe, #4 in the world after the big U.S. carriers. Every 20 seconds, a Lufthansa aircraft is taking off somewhere in the world. And we are transporting 130 million passengers at 16x the whole city of New York. We do that with the help of 100,000 employees. And with that, we generated EUR 38 billion of revenue.

We do have different brands. They're usually in their home markets, the #1 brand and you might know that in Europe, there is a strong brand attachment also in the different countries with the national carriers. So that's an important asset that we have.

Allow me to dig one level deeper and to see how the group is structured. So it's basically resting on four pillars. So the ones that you see here on the left-hand side, the two Hub airlines and point-to-point airlines, those are the two pillars, including traditional passenger airlines, and they make up roughly 70% to 80% of the total group revenue so it's the largest part. From the very left-hand side, the hub airlines, they are different brands, Lufthansa Airlines, Swiss, Austrian, Brussels Airlines and then also since this year, ITA, in Italy and out of those Lufthansa Airlines, which is also probably to you the most known one is making up 40% of our production capacity in terms of available seat capacity.

So you can see already from that slide that our strategy is generally to be an airline group with a focus on that core passenger airline business. And aside from that, we only own business units with a clear synergy proposition. So a couple of years ago, that slide looked quite differently. We used to own a big catering division, we used to own a credit card business. We divested all of those in order to reduce complexity and focus on, as I said, airlines and clearly synergistic business units. And those are the two ones on the right-hand side, it's logistics. That means air freight and it's MRO, maintenance, Repair and Overhaul. That's our division called Lufthansa Technik.

And by now going one level deeper into those four pillars, I will start on the right-hand side with our MRO division. So Lufthansa Technik is a EUR 7 billion company. It's a market leader in a growing market. It's the biggest independent MRO player ahead of MTU and StandardAero. And out of this EUR 7 billion of revenue, 2/3 is external third-party revenue that means much for Lufthansa Group aircraft.

So the market as a whole has EUR 100 billion of volume, and that's the same amount that's being spent each year on aircraft purchases. So the aircraft OEM market is as big as the aircraft MRO market. And in this market, Lufthansa Technik has 5,000 aircraft under contract, and that's roughly 20% of our commercial aircraft in the world.

So from a group perspective, Lufthansa Technik brings us, well, stability because it relies on long-term contracts. They have a strong order book, which is locked in for a long period into the future. And it provides us with a decent margin, roughly 8.5% right now. But Lufthansa Technik is not only good for stability, but it's also good for growth.

So they had embarked on a growth program, it's called Ambition 2030, and that will bring them up to EUR 10 billion volume of revenue and a 10% EBIT margin by 2030. And they will achieve this by three pillars. Number one is geographic expansion. So they are expanding in Portugal and in Canada where they are building new facilities right now. They are digitizing the core business. So there are new business opportunities in the digitalization; and number three, they are diversifying into other segments and the main one is here, defense. So they are very promising contracts with the German Air Force already today.

Now for this very stable business coming to the second pillar, that's Lufthansa Cargo, our air freight division. And as I said, Technik is stability and air cargo and air freight is a very dynamic and short-term business, highly cyclical, but right now also quite profitable. You should take away three things from Lufthansa Cargo, number one, what the big passenger airline hubs are like Dallas and Atlanta in the U.S. This is Frankfurt basically for air freight in Europe. So we are really sitting out of Europe in a unique position that helps them a lot.

Number two, Lufthansa Cargo has a very high number of freighter aircraft that gives us flexibility and independence, 22 freighters. For example, last year, passenger business to China was horrible, but airfreight business in China was booming so they could devote the whole freighter fleet, send to China and bring goods to Europe. So that gives them a competitive advantage over other players.

And number three, they -- even though I said it's a dynamic and short-term business, they are now entering into relatively long-term contracts, mainly with Chinese e-commerce players that gives them also stability more than in the past. Right now, we are sending 10 weekly freighters to China based on that long-term contract.

And with that, you see on the right-hand side the had come a long way already. They moved from #8 position in the market now to #4, and it's their objective to become #3 in the years to come.

Point-to-point business. I mentioned it before, it was the third color, the purple one on the first picture, maybe to look at key takeaways also on this side. So it's not a low-cost player like Ryanair, there are ways that you would know in Europe, we are not competing on the cost side, but we are a value carrier. So the objective here really is to maintain market leadership in our home market in Germany, also outside our hubs. Our Frankfurt and Munich. You can see on the right-hand side, they are not leading the other cities, Cologne, Hamburg, Dusseldorf, Stuttgart. So that's the objective of the airlines.

Number two, key takeaway for you is they have a very strong market position, Leisure. Leisure is a very booming market now in aviation. So this is where they have a strong foothold, and they even want to expand that. They founded a new company going into the tour operator business. They want to become one of the top 10 players in Germany in that segment. So that's number 2 message.

And number three, within our group. Eurowings is the role model for flexibility and also for successful turnaround. You can see on the right-hand side, they managed to come from a minus 5% margin to plus 7%. And this is something many in the group can learn a lot from this is what we also do.

Now coming to the Passenger Airlines business, which is, as I described, the main pillar in the hub airlines that I talked about. And maybe to start out with what's different between us and other European players like IAG and Air France. And I think the difference here is really the geographic condition that you find in our home market. We do not own any mega hub like London or Paris and Madrid. We never did. So while it's easy to fill an aircraft in London with people flying from London to New York, that's not so easy in Frankfurt. In Frankfurt, we have 70%, 7-0, 70% of connecting passengers in our long-haul aircraft. So there's a lot of coordination required integration to get the system up and running.

So number 2 difference is our hubs are close to each other. I mean, there's not a passenger would be competed for in London or in Madrid at the same time, but maybe with Brussels and Frankfurt both for the passenger in the middle in Dusseldorf. So that means we have a lot of integration and coordination necessary. That's our strategic answer to this different geographic outset. And that's also, to be honest, a very big source of synergies.

And you can see on that picture, what that means because we are doing things out of one hand. There's one person sitting in Frankfurt who is doing the network planning for the whole intercont network of the group. That means that you don't have the biggest hubs but we do have the strongest connectivity. And we take the essence passenger, for example, he can travel to New York 14 times a day. And every time it's through our hubs, through our own airlines and spread across the whole day. So we have a huge connectivity advantage through that multi-hub system that we created and coming out the necessity that we have a different geographic condition. We did develop this into proficiency that now gives us a competitive edge.

And the network planning is just one example out of several and that applies to many different functions. And here, you can see already today, we are more integrated, more unified than most European network airline peers. I just said that for network planning. We are now moving into that direction even further on the right-hand side. Already today, we have for all the airlines in the group, only one sales function, only one revenue management, of course, only one fleet purchasing. We have one app for all the different airlines. And now we are moving even more integrated position. We are now integrating continental network steering that's also out of one hand in the future. We have one IT platform in the future. We have -- we're integrating further service functions. And by that, also achieving further synergies.

So the balance here is really to use the power of being one big group, combined with the local champions with strong brands. If the customer pays for it, we do things differently. A Swiss person would love to see the Swiss cross at the tail sign. where you have a different Swiss product, but on the things that the customer doesn't pay for it, we'll do things the same way across the whole group and thereby increase synergies and earnings.

Talking about earnings levers. What's another big earnings lever? That's fleet. On fleet, we have to say that we are lagging behind our peers. We are at roughly 20% of new generation aircraft. Many of our peers are at 40% already. We wanted to be at 40% as well, but you have read about the delivery delays at Boeing and Airbus at certain suppliers in the past and that's massively impacting us or it has impacted us in the past years that is changing right now. So since this year, we keep receiving new generation aircraft. And by this, we are completing the most fundamental fleet renewal project in our history, 240 new aircraft on order book. And by 2030, we will have a next-generation share of 60% to 65% in the group. So that will be a significant increase, and it's not only about having modern aircraft, but it's also about being less complex, you see that here, we have 13 different aircraft types in long haul that will be reduced down to 6. So it's roughly half of it. That will, of course, also drive further efficiency gains and cost improvements on the airline side.

Why is that so important? Shown here new aircraft, what does it mean? Every new aircraft means for us, up to 30% less fuel consumption compared to the old aircraft. It means 20% to 30% less maintenance cost. It means a higher crew productivity. It means also bigger bellies, bellies meaning more cargo revenues, I described it before. And one thing that's not on that slide here. Of course, you also have a new onboard product in terms of seats in all booking classes, first business, premium eco and economy. That means a clearly higher revenue potential because it has a higher quality. And here, we talk about 15% higher yields that we expect to achieve.

Now what about further earning levers? Fleet is one of them and then achieving efficiencies and the turnaround in our mainline business is another. Our Mainland business, Lufthansa Airlines was mostly affected by aircraft deliveries that we have seen by a lagging Asian business because they had a large Asia exposure. Now we have to fly around Russia, and that costs us money and time. They were mostly affected by lacking crew and aircraft productivity, and this is something we are tackling by a massive turnaround program that you see here on this slide, we're looking at the gross earnings impact of EUR 2.5 billion by 2028 by next year and EUR 500 million by this year. And I can tell you that for this year, we are well on track. So we have filled all the 700 measures with lights and necessary to achieve the earnings improvement and overall, we talk about 1/3 revenue measures. I talked to you about the new product and the higher yield and higher ancillary revenues and 2/3 of cost reduction, we mainly talk about increased productivity and improved stability.

So where do we see that in the numbers? We see it mainly in one or I must say on this slide here in one figure, and that's irregularity cost. You see on that slide in the middle, the word, operation stability. Last year, we had massive issues on EUR 840 million of irregularity costs due to air flight cancellations due to a system that was too much under pressure, and we build buffers into the system and have to stabilize it. And the stabilization that is really already to be seen in the numbers. We could reduce irregularity cost by 1/3 already in the first nine months of this year. Also in the third quarter, we are confident that we will see a similar number in the fourth quarter. And here you see our Q3 figures and out of the -- apart from this EUR 100 million savings in irregularity cost, you can see that we achieved EBIT roughly on last year's levels.

Let me highlight that there is still ongoing cost inflation. You see the plus level on the right-hand side. It's an increase in material cost ex fuel. That's also driven by location costs here in Germany. Fees and charges is in there. So those are cost inflation that we are facing. But we were quite happy with our Q3 results and maybe to dig one level deeper into this one. On the bottom of that page on the left-hand side, you see the plus 0.5%. That was the unit cost increase in the third quarter. That's a really low figure, and that's partly the success of our turnaround program. So that compares to a plus 3% and plus 4% in quarter 1 and 2. Now it's down to 0.5%. It was a very good message.

And the not so good message of the third quarter was the demand environment. You can see up there the yield, minus 5.4%. We saw a demand weakness on the transatlantic in our European continental business, you had over the Atlantic, a 9.5% yield decrease in the third quarter. It was partly offset by a stable Asian business but still it couldn't fully compensate. So that was the good and the bad for Q3. But also here, there is a good message to the demand environment. The softness that we saw in demand looks like it was only temporary. So the outlook for the fourth quarter is much better. You see stable load factors. It's in the bubbles on that slide for the months to come. You see higher bookings, and you see yields still a bit below last year, but to a far lesser degree than in Q3.

And putting all that together, if you look at the full year '25, we could confirm our full year guidance. We expect to see an adjusted EBIT significantly above last year for a group. That means more than 10% up so we are confident for the fourth quarter to see flat yields versus prior year and also a rather low increase in unit cost. And we also gave a glimpse into next year. So also for '26, we envisaged a disciplined capacity growth of roughly 4% with a clear focus on intercontinental routes and low growth on the Continental business because intercont, that's where we make the money.

And overall, as I said, we are delivering on what we promised so far, and we are confident to achieve the guidance for the full year. Even though we highlighted 2025 as a year of transition. And the same holds true for 2026. That will also still be your transition. Main reason here is the fleet delivery. The good news is we start getting new aircraft, but this will continue also through next year. So both years are transition years. But then looking ahead we gave out the guidance for midterm targets, 2028 through 2030.

So we intend to achieve a margin of 8% to 10% adjusted EBIT coming for a 4% to 5% region right now. we are envisaging a 15% to 20% adjusted ROCE. That's a pretax figure and EUR 2.5 billion of adjusted free cash flow, we have a framework. We have a very stable balance sheet already today. Very low indebtedness. So we intend to achieve a solid investment grade rating and the liquidity buffer of EUR 8 billion to EUR 10 billion. Right now, we are above that at almost EUR 12 billion partly because we shifted some CapEx. The dividend, we have a policy of 20% to 40% payout ratio out of our net income and the value levers, how to achieve this are put on the left-hand side. As I said, it's partly growth, but it's really about realizing synergies across the group. It's about our transformation program, mainly in the main airline and about the cargo and MRO business so that's the value bridge, how to get up to that margin targets.

And with that, I pause, I think, 20 minutes up. We have 10 minutes left for questions, and I'm looking forward to those.

So then let me check, I saw there were questions coming in. Already. Okay. Maybe I'll start with the one on IT. ITA is our youngest acquisition in Italy. It's a hub carrier as well. The question is, can you discuss the plans for ITA, what synergies have been identified and the timing of expected tangible impact? Are there plans for a further increase in the stake?

So maybe to start with plans for a further increase in the stake. Yes, there are plans. We currently own a 41% stake. We do have core options to increase that stake first to 90% and then 200%. We can do so once a year up until 2033. So we can take our time and see and wait, but we can also exercise them as early as next year in June, and we will do so depending on synergies and also on the financial KPIs that are underlying right now, we are quite happy with the earnings contribution. So ITA is providing a positive earnings impact. And right now, we are still waiting for antitrust approval in the U.S. for inclusion in our Transatlantic joint venture. And this is where the government in Italy is still helping us, our core shareholder once we achieve that, that might be a good time to exercise the call option, but that will -- it remains to be seen.

In terms of synergies, there are, manyfold, different categories and we are working to achieve them since the closing of the transaction, which happened this year in January. We're looking at 10% to 15% of ITA revenues as synergies. And also so that's a number, 10% to 15% of 2024 ITA revenues. And the good news is that we can achieve a large part of those already now that we are a minority shareholder because a large part is really network optimization. We integrate both loyalty programs. We are marketing big cargo bellies, belly capacity of Lufthansa Cargo. We have moved into terminals to make it easy to connect. We have co-chairs. So there is a large part, 70% to 80% of those synergies that we can realize before owning the company in full.

So further question. Again, an M&A topic, it's on Air Baltic. Here own a small stake, a minority share of 10%. And here the question is for full control, we want to be a majority shareholder to read correctly, so here the clear answer is no. Air Baltic is a wet lease provided to us, a very close cooperation partner, and we wanted to strengthen that partnership by acquiring that small equity stake. We have a board seat there, but it's only a financial invest and also to make the partnership closer. That was the idea. We will not increase that share.

For the question here, on premiumization initiatives such as cabin upgrades and digital experience translating to higher margins or market share, what KPIs do you monitor most closely? I so think the KPIs that we monitor is the Net Promoter Score, NPS, where we have seen significant improvements over the past or through of this year, I have to say. On the one hand, due to more stable operations, on the other hand, due to the progress we make on more modern fleet and more modern progress. And that's translating to higher margins. Yes, it does. As I said before, due to a new product and the newer products called Allegris, we have up to 15% higher yield that we can achieve, and we also do have significantly higher ancillary revenues because in that new product, in the normal new premium product you have in the business class, five different seat configurations. If you are a very tall person, if you're a person who wants to look -- is looking for more privacy in the business class. If you're looking for a seat together with your partner, you can deliberately pick and choose those seats when booking your -- making your booking and then checking in, this is where you, again, generate ancillary revenues. And this is something that's being boosted by the premiumization initiatives such as cabin upgrades.

And also in digital experiences, yes, there has been a double-digit increase in the, I think, the first quarter this year just because we switched something around in the app and made it more convenient and easier to book ancillaries that we could see a variable impact on ancillary revenues.

What are your priorities for cash deployment in 2026?

Yes. Look, so I mean, that's an easy one. I said 240 aircraft that are -- include our new fleet delivery program. We are in the middle of it. So the most of the CapEx will clearly go to your fleet. And bear in mind, we cashed out. It also means increase in margin because I told you what the impact of new fleet on our earnings. So that's an important step in our margin walk.

And also, if you think about free cash flow, yes, there will be the CapEx peak in the two years to come. So in that sense, there will be -- the cash flow will be impacted negatively. But we will also increase our share in lease fleet. So that means we will also do sale leaseback transactions. And by that, we will buffer that cash out by getting cash back in by selling aircraft and leasing it back over the next two years.

Next question, could you shed a light on the demand we see in Q4, especially Christmas also in due to 2026, a little of intra-Europe and APAC being quite solid. What could be the drivers for that?

Yes. Look, so in Q4, I think I highlighted it before, we see a clearly more positive demand environment than in Q3. We see a recovery in all traffic regions. That's not only in Europe, but it's across the board. It's a much more stable environment. So that makes us confident with regard to Q4 and also to January. I think Christmas, it's similar to last year. And also in 2026 was a question. We think -- what we can tell is what I shared on the slide where we showed the January perspectives that is promising and further out into the year, we don't have any very limited visibility, obviously, because as you know, when you book a flight, not one year ago, or half year ago, but usually a couple of weeks before the start of the flight. So therefore, there's limited visibility further down the road.

Next question, any labor concerns for 2026? So I start with this one and then there's a question on fuel hedging. On the labor front, so look, one of the main levers of the turnaround program that I described before is that we want to shift capacity in aircraft internally from one AOC, from one group airline to the other. We do have two airlines in Frankfurt and Munich operating, they are called City Airlines and Discover, and they are operating on a much lower and more cost-effective base than Lufthansa Classic, which is operating in a higher cost base. We are shifting and we're growing those cost-efficient AOCs. And this is something unions don't like.

We are having discussions on that with the unions. They are not too -- not allowed to go and strike against this growth for legal reasons, it could go on strike for open tariff agreements or with CLAs. So there are ongoing labor discussions that we see. Can I rule out any strikes this year or next year? No I can't. [indiscernible] likelihood to that? No neither. But all we can say is that we are confident to be on the right path to growing these more cost-efficient AOCs. And in that sense, we're having constructive discussions with the union and also hoping to find a constructive solution for this. And I think that's what we can comment today.

And then also on fuel hedging, that's the next question. So yes, we do have a fuel hedging strategy in place. That means to provide protection against increasing feed prices. At the same time, it leaves the opportunity to take advantage of decreasing fuel price. So we do that by hedging through options and no other contracts which gives us the flexibility to also leave options on the table, not exercise and a few parts are decreasing them. The target hedge ratio is 85% and that relates to a flight, which is taking off six months from now. We hedge 50% of gas, oil and 35% of brand and it only applies to the passenger airline business because of the cargo business, we can pass through our fuel cast, in the cost and there is no matching needed.

Further questions. I think there's one left on engine negotiations. I think I quoted that before, mainline pilots are asking for pension increases. These are ongoing discussions. I think pensions are already at a very high level. So it's difficult to go on strike and there also have limited support in the workforce at the contract for this one. So again, also here, we're not commenting from a content point of view where negotiations stand, I think it will be difficult for them to go on strike. And there's no timeliness for the ongoing pension negotiations, we just have to wait and see what the results are bringing.

And with that, we are at 5:30 here in Frankfurt. So half an hour is over. I think the questions that remarked as prioritized, I've answered all of them. Thank you very much for your attention. I hope convey some key messages and building blocks of our strategy. And if not, we are always here to help. Investor Relations team is always available to jump on phone or also answer your questions after the call also via e-mail. Thanks a lot.

Ladies and gentlemen, welcome to the Lufthansa Group Q3 2025 Results Conference Call. I'm Moritz, your Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Marc-Dominic Nettesheim, Head of Investor Relations. Please go ahead, sir.

Thank you, and welcome, ladies and gentlemen, from our side to the presentation of our third quarter results 2025. With me on the call today are our CEO, Carsten Spohr; and our CFO, Till Streichert, and both will present our results for this third quarter and discuss the commercial outlook for the remaining 3 months of the year. Afterwards, you will have the opportunity to ask questions. And as always please limit yourself to 2 questions so that everybody else has a chance to participate in Q&A. Thank you very much. And with that, Carsten, now over to you.

Yes. Thank you, Marc. And to all of you, a warm welcome also from my side. It's just a few weeks since we met many of you at our Capital Markets Day in September. And today, then following this, I'm pleased to share our third quarter figures with you together, of course, with Till Streichert on my right here. As you have read from the figures published this morning, we can report rather positive developments for the quarter with quite a few aspects and KPIs showing improvements. The most important one for sure, we are well on track in terms of regularity and punctuality of our flight operations, which serves in the end as the basis for all other improvements we'll be talking about later today.

So let me nevertheless, start with a macro view of the whole industry. The global aviation sector continues to boom. And over the next 20 years, at least according to IATA forecast, the global passenger numbers will once again double. I think there are very few industries in the world, at least in the real economy that can count on such a reliable and long-term upward trend in demand. And in the current aviation landscape, strong demand growth meets limited supply very likely for many years to come. And this combination obviously generally works in our favor, even though, of course, there are downsides on the operational side with delayed aircraft. We'll also be touching on this in a minute.

But overall, as by now the fourth largest airline group in the world and as #1 in Europe, our passenger airlines are globally well positioned to benefit from this global high demand, especially premium classes. We'll come to that as well. And on top of that, the supply constraints also provide enormous momentum for the MRO sector, worldwide aging fleets ultimately drive higher maintenance demand and that ensures stable and recurring revenues for Lufthansa Technik even though we had some setbacks this quarter due to tariffs, Till will elaborate on that.

And this balanced portfolio provides stability in macroeconomic turbulence times. And on top of it, of course, we have Lufthansa Cargo, where we also own a business that can benefit from these current global uncertainties. Our industry has become more resilient and so have we in the Lufthansa Group. Through collective efforts and focus, we have regained network stability that sets the foundation for our future profitable growth. The core, as mentioned before, of our whole business model remains a stable flight operation. In this regard, the summer '25 clearly marked a turning point, especially if you compare it to the 3 summers before.

And this came not for free. We had massively invested into stabilizing the system. We have, for example, extended scheduled flight times. We have brought up the share of aircraft reserves. We have increased connecting times in our hubs, but all this was well worth it. Stabilization came. And on top, of course, significant reduction in IRREG cost allowed us to also have a positive impact on our financial numbers. And now, of course, looking into the future, starting in '26, there will be efficiency enhancements that we will have on the top of our agenda. This fortunately goes hand-in-hand with the biggest fleet renewal of our company's history.

Just 3 weeks ago, our first Dreamliner with a new Allegris Cabin on board took off to Toronto, and we will get further 787s almost by the week, actually more than by the week, we get 2 this week alone and will bring the number up to 34 total very soon. Until the end of the year, we will have received at least 8 brand-new Dreamliners, at least according to the updated information from Boeing. And on top of that, on behalf of Airbus, we were able to get and receive the first 350-900 for Swiss with a new product SWISS Senses on board also just 2 weeks ago. So now our premium long-haul product, Allegris is not only available in Munich, but also in Frankfurt and in Zurich.

Ladies and gentlemen, let me take a look at the numbers. In Q3, we were able to further expand our capacities and that particularly on the North Atlantic. And despite the somewhat cautious booking situation in spring caused by the tariff announcement around Easter, we, in the end, experienced a well-booked summer. Globally, we have seen moderate capacity growth of 3.2% compared to the previous year. By that -- or partly by this, total revenue has increased by almost EUR 300 million to EUR 11.2 billion -- sorry, by EUR 500 million, reaching EUR 11.2 billion. Our adjusted EBIT for the third quarter remained stable at EUR 1.3 billion, more or less on par with last year.

And year-to-date, though, we can report an improvement of already EUR 300 million versus '24, showing some nice progress on this promise of significantly improved results for the whole year. Key driver of our financial success, again, is and has been the stabilization of our flight operations. Regularity in Q3 was at 99%. Departure punctuality improved by more than 10 percentage points compared to last year. This brings me to our capacity allocation. Year-to-date, we have mainly grown on our European -- domestic European routes and on our North Atlantic routes. And while the third quarter indeed showed some but anticipated yield softness in these regions, the North Atlantic was still our most important profit pool. Of course, as you well know, supported by our successful joint venture with United and Air Canada.

But it's worth to note that the yield softness is, of course, also partly currency driven. Excluding currency effects, our RASK actually remained stable versus the prior year. Looking ahead, we plan continued growth on the North Atlantic, in line with the market and also given that capacity-wise, we are still somewhat lagging behind our peers compared to pre-pandemic levels. Growth on the continental network, nevertheless, will be more limited, more or less stable, less than 2% with capacity discipline translating for sure into improved booking outlooks in terms of load factor and yields.

In Asia, we remain cautious regarding growth given our unfortunately continued structural disadvantage due to the closure of the Russian airspace. However, increased demand to Japan, South Korea and India give us confidence. In the winter schedule this year, we offer 43 weekly flights to Japan and South Korea and even 64 weekly flights to India. As a matter of fact, Frankfurt, Tokyo has become our best-selling route in terms of revenue. Going forward, we are also optimistic again for the Middle East. Already now, we are seeing a significant recovery on our important route to Tel Aviv. We're also happy to reopen [ Tehran ] again, which is also contributing to our commercial success in this part of the world.

But not only the Middle East services are picking up, bookings across all traffic regions reflect a positive trend not only for the coming months in '25, but also for the first visible weeks in '26. Up until January, the booked load factor is consistently above last year's level and balanced capacity growth is helping, as mentioned, to stabilize yields. Compared to the third quarter, yield decline clearly slows down in the months ahead despite ongoing headwinds from a weaker U.S. dollar. So combined with a favorable seat load factor development, that means our revenue -- revenue -- sorry, unit revenues are stabilizing also on the North Atlantic again.

And we, like others and our American peers already communicated on this as well, we are benefiting in our industry from an extending and extending and extending summer season. I recall that a few years ago, I called it the endless summer, but even then, I didn't realize that one day summer will last until Christmas. That's more or less what we see right now, very nice bookings to leisure destinations all the way through the late fall. But even more important, especially for Lufthansa and our business model is the fact that premium bookings remain above last year's levels. And also finally, corporate sales are gaining some further traction.

Summarizing, our booking outlook is robust, and we are well positioned to capture further upside as demand continues to recover more and more. And with that, I hand over to Till, who will now guide you through the detailed figures of the third quarter. Thank you. Till, over to you.

Yes. Thank you, Carsten, and a warm welcome also from my side. Thank you for joining us today to discuss our Q3 results and also the financial outlook for the rest of the year. So let me get started. In the third quarter, revenues increased by 4% compared to prior year, driven by a 3% capacity increase as well as robust growth in both our cargo and MRO division. This reflects the resilience of our core business, and you can see also the ongoing high demand for air travel, air cargo and MRO services.

In the passenger airline business, notably, ancillary revenues rose by an impressive 13% compared to the previous year. And this growth is a strong proof point of the effectiveness of our evolving offering structure and you can see also the success of our digital initiatives across the airlines, which continue to drive new revenue potential on top of the classic ticket sales. On the cost side, we benefited from lower fuel costs with a positive impact of EUR 170 million in the third quarter compared to prior year.

At the same time, we continue to observe rising costs in other line items, many of which affect the sector, the entire industry as a whole. Fees and charges increased by 9% year-over-year with ATC costs alone rising by 17%. Airport-related passenger charges and handling charges also saw double-digit increases, mainly in our home market in Germany. In the end, the anticipated head and tailwinds offset each other, and that resulted into a third quarter adjusted EBIT of EUR 1.3 billion, pretty much on par with last year. The adjusted EBIT margin is 11.9%, which is slightly 0.6 percentage points below the previous year's level.

Now when looking at EBIT, the Q3 development included a substantial one-off effect on the tax side, where we recorded an increase by EUR 121 million net. This increase is largely driven by the so-called German tax booster announced earlier this year. And while the initiative to gradually reduce German corporate tax rates in the future will eventually have a positive impact, it initially led to a revaluation of our deferred tax assets, resulting in a higher tax burden in the quarter. At the same time, our financial result increased by around EUR 128 million compared to the previous year, and that's mainly due to currency translation and market valuation effects. And as a result, net income decreased by approximately EUR 130 million.

Let's now take a closer look at the results of our Passenger Airline business. Revenues rose by 1% to EUR 8.9 billion in the third quarter, and the adjusted EBIT amounted to EUR 1.2 billion, which is in line with last year's result, which is a solid achievement given the market environment in the third quarter. We increased capacity by 3.2% compared to prior year with a strategic focus on our key markets. And as anticipated, unit revenues declined by 2.2% during the quarter and the positive revenue effect from higher seat load factors, increasing ancillary revenues and less IRREG events mitigated but did not fully compensate the negative effect from lower yields.

There were 2 primary drivers behind the yield softness, a highly competitive environment in the [indiscernible] business and the anticipated temporary slowdown in North Atlantic demand, which was intensified by a weak U.S. dollar exchange rate. Adjusted for the currency effects, unit revenues were largely on par with previous year's level. While unit revenues in the third quarter showed the expected dip, we kept our unit cost position firmly under control. As a result, ex-fuel unit cost only increased by 0.5% despite the previously mentioned cost pressures.

A flat ASK at Lufthansa Airlines contributed significantly. And that is, for me, a reflection of early proof points of our transformation success, resulting in an improved operating result for Lufthansa Airlines despite the challenging trading environment. And this underscores as well our unwavering focus on executing on the turnaround program, and that remains a crucial catalyst for driving as well profitability in the quarters and years to come. So let's have a closer look at the positive effects of the turnaround program on our 2025 results. And here, it is worth highlighting the progress that we've made.

The program is delivering tangible and measurable results with a positive effect on adjusted EBIT of around EUR 500 million until year-end. So that's the full year figure. And that is also delivering on our target that we've set for ourselves. As mentioned before, this rapid progress already had a positive effect on our unit cost, resulting in year-to-date unit cost reduction of 1.4 percentage points at Lufthansa Airlines. For Q3, unit cost of Lufthansa Airlines increased by just 0.1%, so almost flat. This shows that the effect from the turnaround program materialized in the second half of the year as expected.

Key drivers for the cost improvement revolve around reestablished operational stability, laying the foundation also for further -- for future optimization. And in addition, structural adjustments such as the successful renegotiation of several MRO contracts as well as our commitment to focus growth on more cost-efficient AOCs are starting to pay off. City Airlines has grown to 11 aircraft by the end of September, and we recently announced the allocation of 4 of our A350s to Discover.

In addition to the cost benefits already realized, the program has also achieved meaningful progress on the revenue side. Measures include the realization of pricing uplifts through new tools and the continuous rollout of our new cabin product, Allegris, clearly one of the key drivers of the increase in ancillary revenues per passenger. And with many additional measures in implementation for the years to come, the effects of our turnaround will enable profitable growth for Lufthansa Airlines in the years to come.

Let us now move to one of our other strong pillars, Lufthansa Cargo. And this year's positive trend remains unabated. The adjusted EBIT reached EUR 49 million in the third quarter, an increase of EUR 11 million compared to the previous year. With that, our year-to-date operating result stands at EUR 184 million, which is an impressive increase of EUR 132 million or 250% compared to last year. So a very strong first 9 months in comparison to last year. This result was primarily volume-driven with chargeable weight up by 11% in Q3 compared to the previous year, compensating for slightly softer base yields.

And the volume increase was a result of -- or was also a result of higher capacity due to additional new 777 freighter and the marketing of IATA belly capacities, which started during summer this year. Our points of sale in Europe and the Asia Pacific region have shown particular strength. The Asian e-commerce business remains our most important growth driver here and frequent charter flights to and from China built at preset rates ensure regular revenue streams and provide also a degree of predictability in what is normally a business model that is known for its high short-term dynamics.

Proactive cost management also shown positive results at Lufthansa Cargo. Ex-fuel unit cost decreased by 6% versus prior year, and that was driven by a reduction in mainly IT cost and also higher crew productivity. Looking ahead, the fourth quarter is expected to deliver this year's strongest result, in line with the usual seasonality of airfreight. And all in all, Lufthansa Cargo, there remains well on track to deliver a full year result significantly above last year's level.

Let me now provide you with an update on our MRO segment's performance and outlook as well. Lufthansa Technik's positive top line outlook was once again confirmed by a growing market and a strong customer order book. Revenue grew by 10% in the third quarter, driven by a strong 28% growth of third-party business, which is particularly encouraging. At the same time, adjusted EBIT amounted to EUR 130 million, a decline of EUR 31 million compared to the previous year. This negative result and this margin development was driven by ramp-up efforts in new facilities such as Portugal and Calgary and substantial external headwinds, including supply chain disruptions, currency effects and mainly tariffs.

At EUR 13 million, this impact of tariffs alone makes up more than 40% of the adjusted EBIT decline in the third quarter. So that is just for the third quarter. Lufthansa Technik has already started implementing countermeasures to limit the impact of tariffs on their results going forward, for example, through the redirection of production flows. And as an example, material from customer locations in Canada or South America is no longer shipped via our logistics hub in the U.S. And including these measures, we expect to limit the full year net effect of the tariffs to about EUR 50 million and to mitigate the impact in the upcoming years as well.

Looking ahead, we expect a more positive development for Q4, particular, the output growth in the Engine segment is encouraging, which will be a key driver for future profitable growth. And please keep in mind here, despite the tariffs that we are facing this year, keep in mind that the MRO business is a marathon, not a sprint. And what matters is that the demand environment overall is healthy and intact and our Ambition 2030 strategy remains firmly on track.

Let's now turn back to the group level, and let's have a look at our cash flow. In the first 9 months of the year, the operating cash flow amounted to EUR 3.9 billion, an increase of EUR 600 million compared to the previous year, and the improvement was primarily driven by a stronger operating result as well as tax repayments with each of these 2 items contributing roughly EUR 300 million. Moreover, net capital expenditure were EUR 200 million lower than last year. And one of the reasons was a decrease in gross CapEx of EUR 100 million due to the delays of our Dreamliner deliveries.

All of these effects improved our adjusted free cash flow, which amounted to EUR 1.8 billion at the end of September. And until year-end, we still expect to take delivery of between 7 to 10 Dreamliners, some of which were delayed from previous quarters and resulted there was also in the shift of CapEx and some of it will come through -- this will come through, obviously, in the fourth quarter. For the full year 2025, we therewith stick to our guidance and expect adjusted free cash flow to be broadly stable versus 2024. Our balance sheet strengthened further. Our strong liquidity position currently at EUR 11.9 billion ensures that we are well positioned for the upcoming aircraft deliveries and debt maturities as well.

And at the end of September, net debt amounted to EUR 5.1 billion, which represents a decline of EUR 600 million compared to prior year, and this improvement is mainly attributable to the strong cash flow generation. The key highlight in September was the successful issuance of a new EUR 600 million convertible bond at an annual 0% coupon rate. And at the same time, as you know, we took the opportunity to buy back half of our existing convertible bond. And these actions further optimized our capital structure and also demonstrate our proactive approach to financial management. Net pension obligations decreased by roughly EUR 500 million to EUR 2.1 billion, primarily driven by an increase in the discount rate.

And our leverage ratio at the end of the third quarter was 1.6x, reflecting a continuous downward trend since the end of last year. Now moving over to fuel cost. Since the start of this year, our fuel costs have developed in a highly favorable way, and I'm pleased to confirm that this positive trend persists. And our Q3 fuel bill of EUR 1.7 billion was in line with our expectations, and there was also substantially below prior year. And for the full year 2025, we expect fuel cost to amount to about EUR 7.3 billion, roughly in line with our previous guidance. And thereof EUR 7.1 billion relate to fossil fuel only representing a reduction of EUR 700 million compared to last year, and the remaining EUR 200 million relate to additional cost for sustainable aviation fuel.

Given the favorable fuel price during the first half of October, we also decided to execute additional hedges for the remainder of 2025, even going beyond our regular target hedge ratio of 85%. For 2026, we have already hedged our Passenger Airlines business at a rate of 71%, ensuring continued protection against fuel price volatility next year.

Let me now close by commenting on our financial outlook. Taking into consideration our year-to-date result improvement of EUR 300 million and our positive outlook for the rest of the year, we again confirm our 2025 adjusted EBIT guidance for the group achieving a result significantly above prior year's level. Let me give you some more details on our outlook for Q4 to underline our positive expectations for the rest of the year. On capacity, we will continue our focused and disciplined growth path with an envisaged ASK growth of about 4%.

On unit revenues, we see a more positive demand environment in Q4 than the one we experienced in Q3, and we do expect RASK to be flat compared to last year's level. On unit cost, I mentioned before that the Lufthansa Airlines turnaround program is proving successful. And for the first 9 months of this year, we've seen a unit cost increase across the group of 2.5%. So that's for the entire passenger airlines. And for the last quarter, we expect the CASK increase to be below this figure, so to be below what we had year-to-date incurred. For Lufthansa Technik, we expect a stable Q4 adjusted EBIT compared to last year.

And given the negative external factors, mainly tariffs and currency movements, this means that Lufthansa Technik will most likely not be able to achieve a clear increase in profits this year. And as described before, we've taken action to mitigate those effects going forward, and we stick to our midterm outlook of EUR 1 billion adjusted EBIT in 2030. As every year, we will provide you with guidance on 2026 alongside our full year 2025 communication in March next year. However, I can already provide you with a direction of what we plan for next year.

Regarding capacity growth, we will focus on long haul as described during our Capital Markets Day. And next year, we are planning long-haul growth in the mid- to high single-digit region, while we expect almost no short-haul growth. And in total, we want to continue this year's disciplined growth with about a 4% year-over-year increase in ASK. Also, I expect to see progress in the modernization of our fleet. We expect that this will lead to a reduction of reserve aircraft on the ground, which will improve aircraft productivity, our clear goal of asset utilization -- improved asset utilization and hence, also our profitability next year.

This will be enabled by new aircraft delivery, which Carsten will comment on in more detail in a few minutes. However, I can already tell you that we expect the delivery of twice as much long-haul aircraft in 2026 and this year. And finally, let me reiterate that for 2026, we continue to believe that the Lufthansa Airlines turnaround program will achieve a gross EBIT impact of EUR 1.5 billion, and we will achieve an adjusted free cash flow. This is now for the group of broadly on the same level as 2025.

To summarize, we keep delivering with a confirmed and a refined full year guidance for this year. And we deliver -- we have delivered there with tangible proof points also on the main value levers mentioned at our Capital Markets Day. And for the upcoming months, we do see a more positive demand environment, which already today gives us reason to also believe in a good start into 2026. And with that, let me hand back to Carsten, who will provide you with some more thoughts on the strategic outlook, including insights on fleet and customer development.

Yes, Till, thank you very much. And indeed, part of the optimism we are portraying here today and one of the facts why we are convinced to be in a good path today is driven by our comprehensive fleet modernization and harmonization. After years of waiting was added on by COVID, we have finally reached a point where we take delivery of a new aircraft more or less every week. Out of the total 230 next-generation aircraft in our order book, we anticipate more than 50 deliveries until the end of next year.

And obviously, all these aircraft freighters aside are equipped with our premium products, which delights customers, which also excites our flight crews and obviously will also add to the excitement of our shareholders when it turns into additional profits. Flights with the premium cabin, Allegris and SWISS Senses, now, as mentioned before, in my opening takeoff from our biggest hubs, Munich, Frankfurt and Zurich. And on the high-yield routes or the highest yield routes, these include selling our exclusive new first-class suites.

When you talk about business class, we don't only receive outstanding passenger feedback, but we also see above expectations, I must say, a high willingness to pay extra for the first-time individualized seating options we offer. Our most profitable compartment continues to be premium economy. This will grow by 50% by the end of the decade.

And as you also know, we will also equip existing Lufthansa and Swiss subfleets, including our flagship 748, 747-8 and the 777 at SWISS with the new products. In total, the new product will already be available on 1/3 of the wide-body fleet by the end of the coming year. By '27, this applies to roughly 70%. And then by the end of the decade, every long-haul aircraft of Lufthansa and Swiss will fly with our new premium products.

On the Capital Markets Day, we presented how we enhance and harmonize our offers and products. And our aim is, as expressed there, to further integrate all activities across our group and realize even more synergies. For example, our increasingly popular airline app, which already serves all group airlines or at least group hub airlines and is hosted to one single group-wide -- by one single group-wide IT platform.

To further enhance the physical travel experience, we have invested EUR 70 million in onboard improvements just at our core brand, Lufthansa alone. For our loyal Miles & More customers, we are offering new opportunities to earn and redeem. And together, for example, with the Marriott Group or also in partnership with Deutsche Bank, where we're just launching a new credit card.

If you put all these initiatives together, they contribute to significantly improved customer satisfaction, which has increased by an unheard of 8 percentage points in the third quarter compared to the year before, but not only on customer satisfaction, but in all dimensions, we want to continue, obviously, our successful development. So looking ahead, we want and must make our group, especially our core airline, also more profitable again.

The fundamentals of our business for this have never been stronger. We are also, as mentioned in the opening, operating in a favorable market environment characterized by resilient and rising travel demand on the one hand and supply constraints persisting on the other hand. This supports a continuing capacity discipline across the industry and therefore, supports strong yields across all our markets.

Over the past decades, we have transformed from a national flag carrier of Germany into Europe's leading multi-hub airline network. And this group, as you know, is built on 4 strong strategic pillars, integrated network airlines with now 6 hubs, complemented by a strong point-to-point carrier, world-leading MRO business and very flexible cargo operations, each of them contributing to our resilience and value creation.

We're, therefore, confident to achieve a full year '25 result significantly above prior year's levels, the targets which we are reaffirming today. Also midterm, we will significantly further increase our profitability level, targeting an adjusted EBIT margin of 8% to 10% between '28 and 2030. We're proud to say that we deliver on our promises, and we look forward to providing you with further and tangible proof points soon.

For now, though, we're looking forward to your questions. Thank you.

[Operator Instructions] And the first question comes from Jaime Rowbotham from Deutsche Bank.

Two areas I wanted to explore. The first is on the Q4 unit revenue comment. Perhaps you clarify if the flat RASK guide for Q4 includes what you currently see on currency, i.e., we should compare it to the 2.2% decline in Q3 as opposed to the 0.4% decline, which excluded FX. And in terms of the stabilization of the intra-European trend coming from growing ASKs at less than 1% compared to 5.5% in Q3. I can understand how this helps the yields, but it must hamper a bit the narrow-body aircraft utilization, which we saw at the CMD was running low. So just keen to understand how you balance that.

Second area was cargo. Till, you mentioned visibility is low in cargo given the short-cycle nature of the business. I just wondered if you'd be willing to say what might be a sensible range of profit outcomes for Q4 relative to the circa EUR 200 million of operating profit delivered last year. I'm just conscious that, that figure could half and you'd still have about 30% year-on-year growth, so significant growth in full year EBIT.

Jamie, let me start with the second question first, just on cargo. So you're quite right. We had last year an exceptionally strong year where actually out of the EUR 250 million profit, we made EUR 200 million just in the last quarter. So we don't even need that in this quarter to already achieve comfortably our target of significantly above.

Look, can I be more specific in terms of what I do expect for cargo? Difficult to say without now kind of specifying really our guidance, which we stayed away from. But just leave -- I'd like to leave it with that. We have seen, obviously, year-to-date very good performance. And you can see also in the third quarter, the strong volume demand, which we are quite positive about even after airfreight traffic streams or air freight streams have kind of reorganized a bit globally post the so-called Liberation Day, and we are participating in that.

And drivers of this volume is really the belly capacity, the added ETA commercialization of belly capacity and the freighter added capacity. So this makes me positive. But of course, we now need to see how the last 2 months we're going to come out. But all in all, clear and I would say, optimistic confirmation of our significantly above 4 cargo.

RASK guidance, your first question in terms of FX. So you're quite right. The comment in terms of improving RASK guidance and stabilization there in terms of year-over-year is basically a like-for-like. So there's no FX assumption that changes that changes in there. And let me remind you as well that we have seen already during the third quarter between July, August and into September, September was already a month that was notably better in terms of RASK evolution.

And the next question would come from James Hollins from BNP Paribas.

First of all, probably for Carsten. Just on that corporate strength, it's not something we've seen for a while. It's certainly something the U.S. names were flagging. I was wondering if you could sort of run us through if that's sort of a big acceleration as we've come into the autumn, where it's particularly strong? Is it U.S. inbound to Europe? Is it maybe in Germany, first time in a long time, maybe signs of this fiscal stimulus working. So just run us through on the corporate side there.

And then secondly, I hate to be that person in the room, but maybe get your view on the likelihood of a strike sort of take us behind the scenes of weather. Obviously, the media have got their views on what's going on, but just get your views on likelihood of strike, would be great.

Yes. James, I think we've missed one question from before utilization of our [indiscernible] fleet, if it would go down further, it's the opposite, we are probably looking at 2% growth on [indiscernible] with the same fleet size. So take that as a thumb rules, you see an increase in productivity by at least 2% more production of the same fleet.

James, proper strength, indeed, the U.S. carriers and also our people, of course, leaving the shutdown aside. Don't forget our largest customer is the U.S. government. So recent weeks put aside, we see some development from the U.S. Also, Germany is at least not aggressively growing, but somewhat growing on volumes. Tech industry is strong. For example, consulting is strong. Finance industry is strong. So it's not crazy the growth, but compared to what we have seen now for quite a few years, it was worth mentioning it.

Likelihood of the strike by the pilots in the end, the union has to answer. But as we already said before, we have done our yearly staff survey and the biggest improvement in satisfaction comes from the pilots. And the pilots also expressed not worries about their pensions, which are already quite high, but rather expressed worries about their future and future growth and future careers.

As we always allocate strike cost is personnel cost, of course, any strike would increase the cost disadvantage of the mainline and decrease perspectives and careers even further. So putting all that together, I think there's room as our Head of HR offered to talk about future perspectives rather than additional pensions. We just cannot afford and not willing to raise further also in terms of fairness to the pilots in the other airlines. I think that's about what I can say about that today.

Can I just come back on the U.S. government shutdown? Maybe just give us your thoughts on what you're seeing very near term? I assume U.S. inbound corporate, given that your largest customer has taken a hit and maybe whether you sense there's a feeling that there's a bit of reticence from some Europeans going to the U.S. because there might be delays or whatever. Just it would be great.

Well, I think there was a very special event -- not event, effect, sorry, from my language. Coming out of the Easter tariff announcement, the so-called Liberation Day Till referred to, that was the time around Easter when German booked their late summer holidays. And surely, we saw some softness out of Europe, especially Germany, Austria, Switzerland and Denmark [ flying off ] to the U.S. We never saw that coming out of the U.S. There, of course, the yield was impacted by the currency.

So I think that what people have been seeing a little bit in Q3, and we forecasted that in Q1 and Q2, if you recall, is already softening and/or the effect is softening. So we will see a more positive outlook on Q4 and also in the first weeks of '26. The shutdown in general is, of course, affecting U.S. carriers a lot more than it affects us because the main travel from the U.S. government is domestic U.S., but also us with our joint venture partner, United, enjoying some nice business from the U.S. government, which, of course, is slow now. But I don't think the shutdown will eventually last too much longer either.

And the next question comes from Harry Gowers from JPMorgan.

First question, can I just ask on your -- you've got this slide, I think, Slide 6, which kind of shows the bookings outlook and kind of the RASK development into Q4. So first question, I think October is missing from that chart. So could you give any commentary on what you've seen in the bookings for October?

And then is your flat RASK guide for Q4, is that just what you see in the books at the moment? Or have you made any further assumptions on how bookings and pricing will actually evolve over November and December?

And then Till, maybe one for you. Could you just clarify or kind of narrow down the range a little bit on ex-fuel CASK for Q4? Because I think you said the guidance would be below the 2.5% you've seen year-to-date. But are you going to see an ex-fuel CASK, which is higher than the 0.5% that you saw in Q3? And what exactly would be driving that?

Thanks, Harry. I'll start with the second question, and then we'll work backwards to the first one. On CASK, so as I said, we've got year-to-date 2.5% CASK growth. Remember, the quarterly trajectory was basically we had 3% and 4% CASK growth in the first and second quarter, now 3.5%. Pretty pleased with that. And for the fourth quarter, I expect something which is below the 2.5%.

Now being even more specific, look, hard to say what's the driver of the movement from the 0.5% in the third quarter up to something which is below the 2.5%. It's -- I expect that MRO will going to be one of the drivers, which goes up in the last quarter a bit. And then we've got the usual drivers as well on additional cost evolution from ATC, from fees and charges, et cetera, et cetera.

But again, with that for me, what we said at the -- throughout the year, this half 1 versus half 2 is starting to materialize where CASK is coming down. And that for me, if you just say I look at half 1 and half 2, clearly an effect of the materialization of the Lufthansa Airlines turnaround and look in the same way also for the other airlines that are all running their efficiency drives. So that's on CASK. On RASK, so what we've shown there is basically Page 6 is really what we've got on the books. So there are no -- that's what we see in terms of seats sold at the seat load factor that we've got right now. Your question, October, October was with -- I mean, we've almost closed, it was good. And there was for the third quarter, what we said is clearly better trading environment and resulting into this positive evolution from the third quarter where we obviously saw that as a dip. And here again, the comment that throughout the quarter, September was already notably better than July and August.

And the next question comes from Jarrod from UBS.

You're still talking about a material increase in adjusted EBIT. Consensus is EUR 1.9 billion, give or take, versus the EUR 1.6 billion, give or take, last year. From where you stand today, do you see risk on the upside or the downside? Or are you comfortable with kind of where consensus is? Just any broad color. I know you've still got 2 months left of the year.

And then secondly, the balance sheet continues to degear. So just thinking about the dividend payout ratio. Are you or the Board thinking more towards the top end of the 20% to 40% of net income guidance for this year? Or again, is it a little bit too soon?

Look, in terms of -- let me not comment specifically on the consensus. We've given a bit of color, of course, on the fourth quarter with RASK, CASK, also a bit of explanation on what I expect to happen on Lufthansa Technik and Cargo. So I don't want to be specific on that. We've given the elements. I think you get to a good picture with that. And I would probably leave it more or less with that element or with that answer. But if you would see us uncomfortable, obviously, then we would have said something. Let me put it like that.

And finally, on the dividend policy, which we did reconfirm at the Capital Markets Day of 20% to 40% in place, this is a healthy dividend and the exact payout ratio within that range. We will obviously detail further down the line when we've got the full year results. But you can imagine, and that is what I also highlighted at the CMD. Of course, I want that our dividend per share continues to grow, driven by the improving operating performance as a key driver of it, okay?

And the strength of the balance sheet as a backdrop and the lower leverage is helpful. I'm very happy with that. But also here, let me just highlight the fourth quarter, I do expect still to have aircraft deliveries and CapEx outflow. And with that, I did reconfirm that I expect free cash flow to be broadly stable versus prior year. And with that, you've got the key elements put together.

Then the next question comes from Muneeba Kayani from Bank of America.

Just going back to Slide 6, and thank you for that. It's very helpful. The bookings number, just to clarify the dark blue in there, is that kind of comparing to bookings at the same time last year in terms of the year-on-year increase? And then just kind of when you're seeing that yield improvement, is there any specific region that is driving that? Or is it across the board?

You point out premium yields above previous year for every month. What are you seeing on the main cabin, please? And then on the unit cost side, so in your 2026 guidance, you're talking about fleet productivity. Till, you've talked about unit costs getting -- trends getting better in the second half of the year. I know you're not giving guidance specifically on next year. But broadly, how are you thinking about unit costs on a passenger airline in '26?

So that was 3 questions. So the first one, just quickly, yes, you are right. That's a year-over-year comparison. So nothing else, the dark blue bookings number on Slide 6. The second question on yield evolution. So we have, in fact, seen an improvement in all traffic regions, albeit I would actually also highlight that intercont is probably -- is improving more. I expect it to improve more than cont.

And in terms of cabin class, premium, so this is the same theme that we've seen also before. Premium continues to be doing better than basically economy class.

And your third question in terms of CASK evolution, I'll answer it from 2 angles. One is what I said also at the CMD, longer term, I do expect that our CASK growth, we are able to clearly beat inflation on CASK. And when we now talk about 2026 specifically, please bear in mind that we will be giving guidance and further details closer to the time beginning of March. But for now, all of the drivers that you highlighted, asset utilization, productivity gains, turnaround improvement playing into it, you can almost roll forward a bit also from what we've started to do and seen in 2025 as proof points.

So -- and again, the flat CASK at Lufthansa Airlines in the third quarter, and again, bear with me, I'm not saying that this will be now flat for the next quarters to come. There will always be a bit of volatility, but a 0.1% CASK increase at Lufthansa Airlines only in Q3 is a big success.

And the next question comes from Conor Dwyer from Citi.

The first was on basically your comments around next year on long haul. You talked about mid- to high single-digit capacity growth. And I said that obviously, that will have good implications on the unit cost side. But how are you thinking about the risks there from a unit revenue perspective that a lot of that just gets eaten up by some of the pricing pressure that, that may bring?

And then secondly is on Technik. So as you said, very strong revenue growth with third parties, but quite a bit of a pullback on the internal revenue side. So I'm just wondering what exactly is that reflecting? Is that basically the need to fly planes because you're tied on capacity slow deliveries or anything else that might not have thought of?

Conor, it was a little hard to really understand. I'll start and you please just repeat where we don't answer your question fully, okay? I'll go with Technik first because there, I think I got it. So to repeat, 10% revenue growth, that was good. Indeed, the third-party business over-indexed, 28% growth, which for me is actually extremely good because there [indiscernible] obviously take it from the market.

In terms of internal business, I think you were questioning, is that a problem that we are scaling back there? I'm not aware. I mean, obviously, mathematically, there's a little bit of a shift. But again, what matters is the external revenue because that's where you are usually in long-term contracts -- going into long-term contracts and building basically business. I hope that answers the Technik question.

I was really just wondering, basically, is that weaker internal revenue reflecting basically the need to fly the planes and that some maintenance actually internally is going to be coming more so through the winter in that regard.

Sorry, I struggled. Can you just repeat it again?

Yes. So the question was more so around with the internal revenue being a bit, let's say, less in the peak summer, is that reflecting the need to fly the planes currently and do the work through the winter because you're kind of tight on capacity at the moment?

The need to fly...

So you're basically charging less internal revenue on the maintenance business. Is that basically reflecting the fact that at the moment, you basically need the planes flying and more work is to come, i.e., on the internal revenue side through winter?

Look, this is math -- I would actually think this is more mathematical what's happening here. I wouldn't read too much into the internal revenue generation or whether there are shifts in terms of business. I mean, obviously, this is also driven by just what's happened in terms of MRO that we use internally with Lufthansa Technik.

That's fine. Then the other question was simply basically around the risk of medium to high capacity digit capacity growth into next year in long haul. What the risks are basically around unit revenue there, even though there is obviously some unit cost benefits from doing that?

Well, I think the major effect on long-haul growth next year is North Atlantic. And there, we are still lagging behind our peers compared to pre-COVID. So if you draw a line from 2019 to where we are in North Atlantic capacity, we have a little catch-up to do, and '26 is going to be another catch-up year. So we don't see a risk on the yield side because we're basically catching up to demand overhead. They can also get new airplanes. Don't forget the new airplanes we'll be using to a large degree on the North Atlantic as well.

And the next question comes from Antoine Madre from Bernstein.

Two questions, please. First is that the free cash flow guide for 2026 more on the safe side with the current turnaround and the current fuel price level. So maybe you could give some color on the '26 CapEx? And second, we saw that the 777X is now expected for 2027. Does that further delay fleet simplification initiative?

Antoine, let me start with the free cash flow guide. Look, I mean, we'll technically speak about that when we speak in March next year. But let me say -- let me reiterate what I also guided at the Capital Markets Day. I do expect that 2026 free cash flow should be broadly on the same level as 2025 and there was also 2024. And as a reminder, I do expect progression in terms of earnings improvement. This will improve as well operating cash flow. But we do have, and we've given you also the schedule on the fleet renewal.

The next 2 to 3 years will be the years where we've got elevated fleet renewal and there was also elevated gross CapEx. And there with -- in combination with utilizing also more sale and leasebacks, we have arrived at the conclusion of a broad free cash flow target -- broadly stable free cash flow target for 2026, but further details to come when we speak in March.

Yes. On the delays or additional delays on the 777X, we never expected the airplane to be in operation commercially in '26. So we are scheduling the aircraft earliest summer '27. So there's no need yet to make any changes to our plans so far, and we'll see where it goes from here.

Then the next question comes from Andrew Lobbenberg from Barclays.

Can I just carry on from the 777 question and go to the 78 question. I think there have been stuff in the press about how the approval of the seats might be challenged by the U.S. government slowdown. So how confident are you on the timing of the approval of the Allegris seats other than the front row in the 787? And does that impact your willingness or enthusiasm to take delivery of the 7 or 8 aircraft to come in the balance of Q4?

And then my second question would come down to the RASK because obviously, we've been dancing between the flat RASK, excluding FX and the 2% negative RASK, which I think is your headline number. But in your regional RASK, down in the appendix, which I think is just the pure airline tickets, that number is negative 5% for Q3. So could you perhaps explain to us a little bit about the difference between the regional RASK number and the headline RASK number? And how should we think about that -- the differences and how those differences evolve in terms of irregularity or ancillaries or whatever?

Andrew, I'll start with the first one. So far, the shutdown has an impact on some delays by days of the deliveries of the aircraft. I'll come to the certification in a minute. So therefore, we don't expect 10 aircraft anymore this year, but rather probably around 8; 6, we have scheduled to fly. That's a minimum which we would need to achieve to not have any changes in our published schedules, and we're pretty optimistic to be above 6. As I said, 8 probably the most likely shot as of today.

We do not yet see delays due to the shutdown in the certification part. This is basically all paperwork, which has to be done. So we're still confident to get that done by the end of the year. But we all have learned there's always question marks when it comes to the triangle between Boeing, Collins and the FAA. So I can only say what we know as of today. And again, that the confidence of my team on the ground in the U.S. still tells us end of the year is feasible. And then maybe even the last aircraft would already arrive with unblocked seats, but also quickly afterwards, we can unblock the seats of the aircraft, which are already across the pond in Europe.

Andrew, I'll take the question on RASK. So the figure of minus 2% that we are referring to here for the third quarter in terms of RASK evolution includes ancillaries, cargo revenues and also the revenue benefit from less Iraq events. And what you are referring to in terms of the regional RASK in the appendix is excluding exactly those 3 line items. So there's no ancillaries in, no cargo belly, no benefit from irregularities.

And therewith, in terms of dynamics going forward, look, I still do expect that we will going to improve further on [indiscernible]. So you should see that basically helping. I do expect that on the cargo belly over time, also contribution continues to evolve positively. And ancillaries, as you can see right now, is growing strongly.

And with Allegris, rolling -- with Allegris rollout taking pace, gaining pace, you should see actually even on that one, a stronger contribution. It's just important to distinguish between what we show as a regional RASK, which is RASK 1A and the one that is basically RASK 3, including everything.

So when we think of the numbers in compute and do our modeling, is there some double count of your RASK with the belly compared to what's in the cargo business?

No, there's no double counting. So this you see -- this is strictly or this is kind of mutually exclusive and collectively exhaustive allocated in the reporting.

And the next question comes from Stephen Furlong from Davy.

You talked about Boeing. Can you just ask about Airbus? They announced a slowdown in the production rate of the A220. Is that something that worries you or not? I think it's gone from 14 to 12. And then the other question, I just want to ask about cargo, which is performing very well. In general, it tends to be, I guess, a division or product that is very -- even more volatile, let's say, than the passenger business. But maybe you could just talk about some of the structural things that are happening that maybe would suggest that the cargo business and profitability be more enduring than perhaps the volatility in the past, not just with Lufthansa, but the industry.

Stephen, no, so far on the 220, we don't expect any delays. Actually, we just met with the Airbus management last week. So we're still confident that our 40 220s we have ordered for Lufthansa City Airlines will be starting to be delivered end of next year and will come on time.

On cargo, 2 thoughts. First of all, it's still a volatile business. But one wave seems to more or less compensate the other. So there are so many trends now in the industry compared to the old days when there was only 1 or 2 mega trends that I think you see one wave on top of the other. And like I know if you're a sailer, that happens in the harbor in the end, then there is kind of...

I [ know ]...

Then you know, it's kind of zeroing out. That's one element. But I think more important is another one. As you well know, Stephen, we talked about this before, cargo has 2 elements. There's the so-called planned air cargo, Think about pharmaceuticals, think about valuables, think about consumer e-commerce. And then there is an unplanned cargo, which is mainly B2B spare parts to keep factories around the world going and so on. And you see clearly a shift at least in Lufthansa cargo, which tends to be more high-end cargo, we see more and more shift towards the valuables, pharmaceuticals and especially to e-commerce.

And e-commerce is always what you call planned air cargo. You always send your fashion products from China by cargo and not only when something goes wrong in the supply chain, which happens on the more B2B-driven cargo providing factory. So I think that could be a reason why things become a little bit less volatile. But I would still call cargo volatile, but it just, as I said before, has worked in our favor over the last years because the predictability of supply chains has come down. And therefore, even the unpredictable high volatile cargo has helped us to support our profitability.

So that's -- I wouldn't want to be a forecaster here on this, but this is where how we look at things, and that's why the optimism for cargo is going on.

And an argument which is not new, but which proves to be right even more, remember, I always -- when I see you in London, I say, I wish I had a home base of London, how nice must it be to run an airline in Heathrow. But that's true for passengers. When it comes to cargo, Frankfurt is, I think, for cargo, what London is for passengers. Amazon has just announced to shift additional cargo streams via Frankfurt. So here, surely, our biggest hub is a major advantage why on the passenger side, things probably look more fun in Paris or London.

Then the next question comes from Antonio Duarte from Goodbody.

As you have seen the reallocation of assets to more efficient routes talking about summer next year and into the future, could you give us some colors on which airlines you're planning to expand the most considering different EBIT margins between these? And following on this topic as well, we have seen a year-on-year improvement in your Lufthansa Airlines EBIT margin this quarter. Could you also talk us a bit about any targets you have going into Q4 and maybe into next year?

Antonio, I hope I got your first question right. But since some time, and I would definitely say since coming out of COVID, beyond operational requirements, we really allocate aircraft and growth according to ROCE principle. So where do we return investments highest? And that means currently, those airlines which have a favorable cost position, think about Discover, think about Edelweiss, think about Lufthansa City Airlines, but also ITA, we're looking at additional growth due to their cost position and due to their market opportunities to somewhat underserved home market roam. So that's what we do. That ROCE principle also internally clearly communicated to unions, to our staff, I think will help us to make sure that the right airlines grow.

And I think on Lufthansa Airlines, I want to repeat what I said. First, we had to stabilize operations. We did. Now customer satisfaction had to be stabilized. It is going on while we speak. Allegris plays a role, also [indiscernible] plays a role, also the EUR 70 million of improvements we invested on board. And therefore, I think as Till pointed out, we are optimistic to perform on track with our Lufthansa Airlines turnaround program.

Ladies and gentlemen, this was the last question. I would now like to turn the conference back over to Marc-Dominic Nettesheim for any closing remarks.

Thanks to all of you. Thanks to you, Carsten and Till, for your answers, and thanks to all of the interested participants for your questions. We're looking forward from the Investor Relations team to continue our dialogue. And for now, we wish you a great afternoon. Talk to you soon. Bye-bye from Frankfurt.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your line. Goodbye.

Yes. Thanks a lot also from my end. Welcome, ladies and gentlemen, to the presentation of our second quarter results for 2025.

With me sitting here today are our CEO, Carsten Spohr, and our CFO, Till Streichert. They will present our results for the second quarter and discuss our commercial outlook for the remaining 6 months of the year. And at the end, you will have the opportunity to ask your questions.

Like always, I want to ask you to limit your questions so that everybody has a chance to participate. Thank you very much. And Carsten, now with that, I hand over to you.

Yes, Marc, thank you very much, and a warm welcome also from my side to all of you for this year's half-year analyst conference.

By nature, it's a quarter away from us 3 months ago that we were speaking about the summer, and Till and I announced that we are convinced that the Lufthansa Group is heading for a positive summer in various regards.

And I think it's fair to say in the summary that now, at the end of July, Till and I can confirm this despite, and you're all aware of this, a continuously challenging environment due to the geopolitical crisis, global trade conflicts.

Nevertheless, we are operationally very stable, economically on track, and maybe most importantly, in terms of sustainability and long-term value creation for our shareholders, we are making solid progress on our key strategic initiatives.

This is particularly remarkable given that in addition to these global challenges, we as an industry and even more we as Lufthansa are still facing the specific issues of delayed aircraft deliveries, although I'm happy to say that there is now light at the end of the tunnel and signs of improvement in this area are visible.

The industry as a whole, but also we as a company, have become much more resilient. And if I think about the geopolitical situation as of today, a few years ago, I'm pretty sure not only us but also our competitors would give very different outlooks than what we are doing today.

The resilience is also reflected, though, not only in financials, but also in our high operational stability. Network reliability has significantly improved by 1 percentage point to more than 99%.

Our punctuality increased by an impressive 8 percentage points. This shows that our investments and measures, especially those under the Lufthansa turnaround program, are delivering results, operational results, but also financial results. Till and I will come to that in a minute.

Our customers once again now can rely on us to get them to their holiday destination or to their business destination on time, with talking about Europe, top Mediterranean destinations once again leading the pack, and basically being fully booked this year.

On long haul, it's Japan and Argentina, which are standing out interesting enough, as much more popular than in the past. But we're also on track with the integration of ITA Airways. Besides the turnaround of our core business, this is next to the fleet modernization, our most important strategic project. And we have already expanded the joint culture offering to include our long-haul flights and, of course, our short-haul flights already a few months ago.

We have now harmonized the 2 frequent flyer programs, Miles & More and Villata. And therefore, also due to these measures, earlier than expected, we see positive financial effects from our investment in ITA already in the second quarter.

The success of the overall engagement has exceeded expectations after only a few months already. And while I remain optimistic about a strong summer '25, my outlook is somewhat clouded by the development of our location costs.

Especially in Germany, but also in Europe in general, the competitive disadvantage tied to location cost in our European home markets is becoming increasingly evident. And on top of this, we face constantly rising taxes and fees, and a very one-sided regulation from the European Union that puts an additional burden on us as a European operator.

But let's return to the positive side of things. In the second quarter, our airlines benefited from high demand for tickets and travel. In the first half of this year, we welcomed a total of 61 million passengers on board our aircraft.

And if you compare that to the previous year, we see an increased capacity of 3.8%, and we were able to successfully place this in the market. Thanks to the improved operational performance, we also reduced the financial impact of irregularities by 28%, which is significant compared to last year.

We're also making progress, even though slower than we were hoping for in our fleet modernization. In June, we put the 10th Airbus 350-900 with the Allegris premium product into service. And it's not only the very positive customer feedback that is coming back from this, but it's also showing a significant yield uplift.

Additionally, we're seeing a high willingness to pay for the various different seating options in the new business class that confirms and outperforms our expectations for additional ancillary revenues due to Allegris.

Nevertheless, this year remains a transition year, again, due to the delayed aircraft, for example. Nevertheless, we were able to achieve a 1/3 increase in our adjusted EBIT in the second quarter compared to the year before. We went up from EUR 185 million to EUR 871 million.

But apart from the improvement we see in our Passenger Airlines segment, we also benefit from the continued strong performance of Lufthansa Cargo, which doubled its result of EUR 73 million compared to last year.

And even more important in terms of impact and volume, financially, Lufthansa Technik is also on track, delivering once again a record level, not quite a rocket, but record level adjusted EBIT in the first half of this year.

And it's these developments that highlight, on the one hand, the improvement in our group's operational profitability and, on the other hand, confirm the effectiveness of our especially Lufthansa Airline-focused turnaround measures, which we have implemented for our core brand.

So let's have a brief look at the traffic regions before I hand over to Till for more details on the numbers. As you all know, commercially, the North Atlantic remains our by far most important traffic area.

We're now at more than 400 flights every week to and from the U.S., and they were, as we also promised you in the Q1 call, well booked in the second quarter. We have significantly grown on the North Atlantic throughout the past half year, more than our competitors, and we were, at the same time, able to keep yields up versus the prior year.

The strong demand continues to be driven primarily by the premium classes, and in top or connected with that, we are seeing an increase in ticket sales at the point-of-sale U.S. But on the other side, and we already pointed that out in the Q1 call, we see that demand for flights to the U.S. from our home market, Germany, is growing with some softness and is growing less than the demand for other parts of the world.

In the second half, corresponding to that of the year, we are still expanding our capacity on the North Atlantic by about 5%, a little less than the first half, but this will still be above the market average. And maybe more importantly, we remain flexible regarding our capacity growth.

This is important, as I said, since our bookings for the coming months show somewhat of a mixed picture between premium and non-premium, and the yields are slightly below last year.

So we will not only take into consideration, but we will execute on reducing our growth for the fourth quarter, and details to be seen. We also remain flexible on our Asian routes. As you know, last year, we saw significant revenue declines, mainly due to the competitive disadvantage of the closure of the Russian airspace.

So, consequently, we have reduced our capacity towards Asia, and that has succeeded in terms of stabilizing our yields. And nevertheless, we now see very promising developments, particularly to and from South Korea and Japan. And we will look at that it seems of additional opportunities.

But the bigger picture of things, it's the geopolitical circumstances, which need to enable a level playing field again, which will only happen when the Russian airspace reopens. And of course, once that happens, we are prepared to act swiftly and accelerate our promising recovery in Asia.

Overall, talking about the intercontinental business, I think we are quite satisfied with developments in the second quarter. When we now turn to the European traffic, it's a more mixed picture.

We surely see some spillover effects from the softer growth and the softer demand on the North Atlantic, which also results in a little bit softer growth and demand for connecting traffic on short-haul.

We definitely, in some of our markets, see more intense competition and the already mentioned high location costs in our home market, especially Germany. All that has not only put yields under pressure, but also our results in the second quarter. And we do see a similar market development in the coming months.

As one answer out of many to this challenge, we will focus the way in how we steer our continental network. We will introduce soon a more centralized management of our continental network steering across all hub airlines, also for Condor and short-haul, as we have done now for quite some years on long-haul. This will further reduce complexity and increase the efficiency of our short-haul capacity in the way we deploy it among our 6 hubs.

So let's shift our focus to a business segment that continuously withstands macroeconomic turbulences. As a matter of fact, it actually benefits from macroeconomic and geopolitical tensions. It's Lufthansa Cargo.

In the Lufthansa Logistics segment, the positive trend in financial performance, which was already evident in the first quarter of the year, could successfully be carried forward to the second quarter.

We achieved an adjusted EBIT in Lufthansa Cargo of EUR 73 million, which is an increase of EUR 37 million or more than doubling compared to its result in '24. This growth was mainly driven by volume, while the base yield was stable versus the prior year. And despite increasing capacity by 3%, the load factor was able to be increased by 2 percentage points versus the previous year.

I think that demonstrates that Lufthansa Cargo was able to profitably utilize its increased capacity based on both the expansion of its freighter network but also of the expansion of its belly capacity of the passenger airline business aircraft.

The high demand from Asian e-commerce players and semiconductor producers, as well as capacity constraints in sea freight, led to an underlying increase in demand for Lufthansa Cargo. And it's obvious that some of the cargo, which was supposed to go from Asia to the U.S., is now due to the tariffs redirected towards Europe.

As you all know, we are not active very much between China and the U.S., but we are very active between China and Europe, and therefore, this played to our advantage at Lufthansa Cargo. On top, since June, Lufthansa Cargo has been able to market the ITA Airways Berlin capacities, starting with the South American routes through its hub in Rome.

And on top of this, we plan to gradually now extend the use of ITA's Berlin capacities to all continental and intercontinental routes of our new partner airline, ITA, and basically copy and paste the success model of Lufthansa Cargo with the other Berlin airlines in the group, Berlin Cargo Airlines.

As I mentioned, the prevailing global uncertainties present both opportunities but also risks to the airfreight industry. And I think the Lufthansa Cargo also available freighter fleet that ensures the necessary flexibility needed to adapt swiftly and effectively to those potential shifts in demand patterns.

And that's also seen by the fact that the recent approach to reestablish more charter contracts, as well as our expertise in handling special goods, leaves cargo well prepared for what we believe is a positive outlook for cargo in the next years.

That turns me to an even more strategic and more long-term optimization of another business segment, Technik, which demonstrated Lufthansa Technik once again its strength in the first 6 months of the year.

We achieved another record with an adjusted EBIT of EUR 310 million. And the total revenue in the second quarter alone increased by 8% compared to '24, which is I think reflecting the sustained high demand in this industry.

The adjusted EBIT for Q2 stands at EUR 149 million, which is below the prior year, but it's important to note that last year's second quarter was somewhat inflated by catch-up effects following the strike impact in Q1 and therefore, the release not therefore, and on top, the release of variable compensation provisions.

So, despite challenges such as tariffs, cost inflation, and ramp-up costs for new international locations, Lufthansa Technik has strengthened its competitiveness through strategic measures, including renegotiations of maintenance contracts to include improved inflation adjustment clauses.

These initiatives not only enable the effective passing on of cost increases to customers but also secure long-term recurring revenue streams. The growth strategy of Lufthansa Technik Ambition 2030 is on track, and Lufthansa Technik is successfully focusing on further international expansion and digitalization, and expanding more and more into the defense sector.

So now let me hand over to Till for the financial details and further insights. And then with a few thoughts on the strategic outlook, we will go to questions and answers later on. Thank you.

Thank you, Carsten, and a warm welcome also from my side. Thank you for joining us today to elaborate on our second quarter 2025 results and the financial outlook for the rest of the year.

So first of all, I'd like to walk you through our Q2 financial performance in a bit more detail. With an operating result of EUR 871 million, we've clearly exceeded the prior year's level, and we are on track to deliver an adjusted EBIT significantly above the prior year's level by the end of this year.

Let's start at the top. Our total revenues grew by 3% compared to the prior year, broadly in line with our capacity increase of 3.8% in available seat kilometers. But most importantly, this top-line growth translated into the bottom line.

In the second quarter, the adjusted EBIT reached EUR 871 million, a strong 27% increase, leading to an operating margin of 8.4%, which is a gain of 1.5 percentage points versus last year.

This year-over-year adjusted EBIT improvement of EUR 185 million was mostly supported by 4 factors. Of course, revenue growth at our passenger airlines, favorable fuel costs, which decreased by EUR 290 million versus 2024 despite the higher production level or including the higher production level and the growth of ancillary revenues, which contributed an additional EUR 71 million compared to last year.

And lastly, our cargo business, which increased its operating result by EUR 38 million versus last year. However, one thing is clear: cost pressures are not easing. They are there, albeit as expected. And let me highlight a few areas of continued challenges.

Material cost ex fuel rose by more than 9% versus the prior year. Fees and charges increased by 11%, especially driven by 18% higher air traffic control costs and 13% higher airport charges.

As Carsten has highlighted, this is a serious concern for Germany as a location. And if location cost stays at this level, it will continue to slow down growth and the recovery of flight activities, which is still below 2019 and below our European peers.

And lastly, the cost for third-party MRO expenses, which went up by about 19% versus 2024.

Going to personnel expenses, they were up by 10%, largely due to the timing of tariff increases from the collective bargaining agreements concluded a year ago, higher variable compensation, and a small increase in workforce, all resulting in a step-up effect, which we already highlighted in our Q1 call.

While all of the mentioned cost increases were factored into our plan, they remain out of proportion, and we need to continue tackling them by unlocking productivity gains. That is why the Lufthansa Airlines turnaround remains our #1 priority.

Apart from the Passenger Airlines segment, Lufthansa Cargo and Lufthansa Technik have also contributed significantly to our operating result. And as Carsten has already mentioned, combined, they delivered an EBIT contribution of more than EUR 220 million and have, therefore, contributed more than 1/4 of our operating result in the second quarter.

In doing so, they have successfully mastered the current macro challenges. While Lufthansa Technik has also dealt with a headwind of EUR 20 million due to tariffs, Lufthansa Cargo could keep its base yield stable despite the tariff-related burden on global trade.

In Q2, both segments, Lufthansa Cargo and Lufthansa Technik, have proven once again their strategic and commercial value as they stabilize our portfolio and profit streams even in times of volatility.

Now let's look at the adjusted EBIT line below. Compared to last year, we've seen significant improvement in our financial results. which has helped us to more than double our net income, which is ultimately the figure most relevant for our shareholders.

Key drivers include lower income tax expenses due to beneficial audit outcomes for prior periods, resulting in tax repayments and positive valuation effects, particularly from unhedged FX financial debt.

On the cash flow side, adjusted free cash flow amounted to EUR 138 million, which is a solid second-quarter result. Now let's have a look at the result of our Passenger Airline business.

In total, the Passenger Airlines operating result amounted to EUR 690 million in the second quarter, which is EUR 109 million above the previous year's level. And the overall operating performance reflects the impact of various factors.

In the second quarter, we grew our capacity moderately by 3.8%, which translates into a 95% recovery of 2019 levels in terms of ASK. While the seat load factor remained roughly stable versus the previous year, overall yields were slightly down, mostly driven by the short-haul business within Europe.

Meanwhile, intercontinental yields remained on par with prior year and were driven by stable yields on an FX-adjusted basis in our most significant intercontinental traffic region, the North Atlantic, while in euro terms, it was slightly negative by 0.8% and positively strong yields in South America traffic with an almost 5% increase versus last year.

Because of the yield softness, RASK also declined versus the prior year, and the decline was mitigated to some extent by the positive development of ancillary revenues since flight-related ancillaries rose by 18% versus the prior year.

Also, we achieved around EUR 30 million less revenue deductions as compensation payments, thanks to the improved regularity of our flights. These 2 positive effects are proof points of the success of our turnaround program, which I'll come to in more detail in a second.

As mentioned before, cost pressure remains a challenge. As a result, unit cost increased by 4.1%. However, FX-adjusted unit cost increased only by 3.5%.

Lastly, we are pleased with ITA's contribution to our Q2 results. 41% of ITA's earnings after tax are included in our adjusted EBIT. In Q2, this contribution amounted to EUR 91 million, largely driven by FX effects and improving operating results.

Let me now turn to the Lufthansa Airlines turnaround program, our most critical lever for restoring long-term sustainability, sustainable profitability in the core of our group.

The first half of 2025 has delivered tangible proof points that our efforts are bearing fruit. As Carsten mentioned, operational stability has reached its highest level since 2017.

Punctuality improved by 11 percentage points year-on-year, averaging 77% across the first 6 months. And beyond these numbers, this performance also sends a very clear message.

Lufthansa is regaining the trust of its passengers, and this operational progress has translated into financial impact. Irregularity costs were reduced by 35% compared to the first half of 2024, and this is a direct result of fewer disruptions and a better operational delivery.

At the same time, we are taking difficult but necessary structural decisions, including streamlining our support functions while maintaining service quality through digitalization and automation.

Additionally, we make progress on several measures, all targeting higher efficiency levels. One key initiative, for example, is the implementation of new crew planning rules and systems, which we expect to lead to a 5% increase in crew productivity next year, which is a considerable leap forward.

On the commercial side, we are beginning to see the first monetization effects from Allegris. We have achieved yield uplifts of up to 15%. This is a strong validation of our strategy to personalize and differentiate our offer.

Ancillary revenues have also seen a significant boost, up more than 25% versus the first half of 2024, and this is driven by a more innovative and targeted approach to upselling, particularly in flight-related services.

To sum up, the Lufthansa Airlines turnaround is progressing on all fronts, operationally, structurally, and commercially. And the first half of 2025 has laid a solid foundation. And our focus now is to maintain this momentum and deliver further improvements in the second half of the year and the years to come.

Let's now turn to the cash flow development in the first 6 months of the year. The operating cash flow was EUR 2.8 billion, surpassing last year's EUR 2.7 billion, supported by seasonally strong ticket prepayments.

Compared to last year, changes in trade working capital were around EUR 180 million below the previous year's level. The main reason for the lower trade working capital in 2025 compared to 2024 is a smaller increase in unflown ticket liabilities combined with higher payouts for other payables.

In addition, there was an increase in prepaid expenses relating to more wet leases and IT maintenance services. Net CapEx in the first half of the year amounted to EUR 1.6 billion. The number was mainly driven by 10 aircraft deliveries, including 1 A350, as well as investments in the cargo hub in Frankfurt and Lufthansa Technik's new facility in Portugal.

In total, the adjusted free cash flow amounted to around EUR 1 billion, marking an approximately EUR 150 million improvement versus the first half-year result in 2024.

Our balance sheet was further strengthened in the first half of 2025. Net debt as of June 30, 2025, was EUR 5.5 billion, down EUR 289 million from the end of 2024. And this decrease, of course, is also related to the weaker U.S. dollar.

Our strong liquidity position ensures that we are well-positioned for the upcoming aircraft deliveries and debt maturities. Net pension obligations reduced primarily due to the increase in the discount rate by roughly EUR 340 million, down to EUR 2.2 billion.

The leverage ratio for the last 12 months was 1.7x as of the end of June, which was below the level at the end of 2024 and stable versus the first quarter. This underscores the continued robustness of our balance sheet as evidenced by holding full investment-grade ratings by all our 4 rating agencies.

Since the beginning of the year, we've seen encouraging developments regarding our fuel cost, and I'm pleased to report that this trend still holds true. As of July 25, which you can see there on the slide, our projected fuel bill for the full year stands at EUR 7.2 billion, which is another EUR 100 million lower than our previous guidance based on April '24 calculations.

Remarkably, this figure is also EUR 600 million below last year's fuel costs despite increased capacity and the additional expenses associated with sustainable aviation fuel. This positive development reflects the effectiveness of our option-based hedging strategy. It allows us to benefit from falling fuel prices while maintaining a high level of protection against price increases.

As of now, 81% of our total fuel requirements for 2025 are hedged, with the Passenger Airline segment well covered at 86%, providing a solid safeguard against fuel price volatility and enhancing there with our financial stability. For 2026, we have already hedged our passenger airline business at about 60%.

Finally, the expected cost of SAF remains stable with an additional expense of EUR 200 million included in our total full year fuel bill. Of course, the projected fuel cost savings will fully materialize only if fuel prices and exchange rates remain at the current level throughout the remainder of the year.

Let me now comment on the financial outlook. We are confirming our full year 2025 guidance, which we communicated earlier this year, and the underlying rationale does not differ much from what the one presented end of April, also due to the fact that the global uncertainties still persist.

And those uncertainties still bring both risks and opportunities. Let me share my thoughts on these while reflecting on the progress we've made and also, of course, on the challenges ahead of us.

Starting with the broader environment, the demand situation continues to be affected by overall volatility resulting in current demand softness on the North Atlantic. On the positive side, favorable fuel price developments and FX trends appear to persist for the time being and have already materialized in our half 1 numbers, as you can see.

Taken together, risks and opportunities appear to be broadly balanced. We are working on what we can control, and we've made good progress so far. The turnaround at Lufthansa Airlines is well on track and has already made meaningful contribution in the first half. We are making progress on fleet modernization.

The ITA Airways integration is advancing as planned, and the market for MRO is structurally a growth market. We are ramping up operations in Portugal and Calgary, and Lufthansa Technik continues to be well on track to deliver the Ambition 2030 plan. And Lufthansa Cargo continues to demonstrate its agility in a dynamic market with a strong start into the year.

For me, these are proof points that we are capable of delivering against our financial targets even in a more complex macro environment. Finally, I want to remind you again that 2025 remains a transition year, but an important one for us to lay the foundation for the successful turnaround of our mainline Lufthansa Airlines.

To summarize, the environment is challenging and remains challenging overall. But in total, we have delivered on our half 1 plan, and our full year guidance remains in place, and we are actively managing the moving pieces with a clear view toward long-term value creation for our shareholders.

And with that, let me hand back to Carsten, who will provide you with some thoughts on the strategic outlook.

Till, thank you. In just a few minutes, indeed on how we jointly believe that we can further strengthen our group for the years to come. An obvious pillar is the modernization of our fleet. And that's on top of that, of course, also commitment to innovation, to sustainability, but also to premium customer experience as we now saw in the recent months.

As you probably know, we have by now introduced 10 aircraft offering the Allegris product, being 10 350s operated out of Munich, and we expect to welcome the first Boeing 787 with the Allegris cabin late this summer, operating out of Frankfurt with up to 9 more to come by the end of the year.

In between, we will also welcome the first Airbus 350 in Zurich with the new Swiss Sensors product on board, hopefully just in a couple of weeks. And that means that next year alone, we anticipate new aircraft almost on a weekly basis.

As a matter of fact, by the end of '26, we expect another 63 next-generation aircraft to join our fleet. Looking now at '28, that means that on wide-bodies now only, that number, of course, before was including narrow-bodies, on widebodies only by end of '28, we will operate 41 Boeing 787s, 16 Boeing 777-9s, 44 Airbus 350-900s and another 12 350-1000 in our long-haul fleets.

And these investments deliver benefits on multiple levels. Of course, the financial impact of our fleet modernization will become clearly visible at our bottom line starting in '26, full swing '27 and '28.

But also in terms of customer satisfaction, we have made significant progress compared to last year's levels with Allegris and soon then Swiss Senses on top, we believe these further premium investments, we are now back to redefining standards in every compartment of our airplanes.

On top of that, we're making progress in integrating ITA Airways into our services, including our digital services. One milestone in this harmonization process, for example, will be the availability of the Lufthansa Travel ID starting September 1, which will give ITA Airways passengers full access to Lufthansa Group's digital services.

And that also brings us another step forward strategically and maybe one of our most important targets, the ongoing internationalization of the Lufthansa Group. To this end, we are continuing to build international partnerships and collaborations such as the expansion of the Lufthansa Cargo United Cargo joint venture, which will now include Swiss Cargo as of tomorrow, actually.

And already today, we are seeing the benefits of the highly integrated business units across the group, the consistency in operations throughout the customer journey or when it comes also, of course, to our financial performance.

We will, however, further intensify integration across the company, and thus, further improved customer experiences will generate value for our shareholders. And of course, it also will create value for us in the management team in terms of leaner processes, allowing for quicker decision-making.

So let me conclude with an outlook on the future development of the group. At Lufthansa Group, we want to increase the level of integration across the group as a driver of value creation for our stakeholders.

And at the same time, we are very deliberate about our brands, about our products, and the process variety. And in general, when it comes to brands and products, we definitely believe in the diversity in the fee fight for the group, which in a way also reflects the USP of Europe.

But when it comes to varieties in processes or in structures, then we will only allow that in the future when it either drives commercial value because customers are willing to pay for it. Think about the different style in Swiss first class, whether it's a Lufthansa first class or it contributes to cost saving, think about different CRAs or, of course, when there are regulatory legal requirements, think about, again, different AOCs in different countries due to traffic rights reasons.

So these will be exceptions to streamlining processes and organizations. Everything else, we will try to act as one. And of course, at the same time, as mentioned, maintain the fee file where the customers enjoy it.

Going forward, I think that's a big step to further optimize the way we work, and we will share more of this with you soon in September when we all welcome you, hopefully, here in what we will have as our first Capital Markets Day in many years.

September 29, Till and I would like to invite you to join us, most likely in Munich. That's the idea to share with you where we are moving forward in our organization, where we are moving forward with our Lufthansa Technik, Lufthansa Cargo pillars.

I'll also share with you how we use digital and artificial intelligence to further lean processes and reduce costs in the group. So we look forward to that and the invitation will go out for market later time soon.

And with that, of course, we will also talk about mid-term financial targets and how we believe that we will drive sustainable shareholder returns over the next years. I think today's results mark a solid step towards that, but I think it's also obvious, thinking about the airplane deliveries, that what lies ahead is even more compelling.

But with that, let me leave it for now and open the floor together with Till for your questions.

[Operator Instructions]

And the first question comes from Jarrod Castle from UBS.

Just a little bit more on ITA. You included it in your adjusted EBIT number. And I guess if you strip that out, the underlying operating performance is not as good.

But at the same time, I imagine that you're moving things around across your hub network. So maybe that's the right place to put it. But just to get some color in terms of how you're moving things around and why, with the current stake, you think it's right to put it there.

Secondly, it looks like the TAP sale process that kicked off, and obviously, relative to Air France and IAG, South America, LatAm is a lower part of your mix, and I guess it's something you want to tap into. Do you have any idea of how long the process will be and where things stand there?

And then a question I asked also on the Air France call is just about cargo. I know it's very short term, but just to get your color in terms of comps in Q3, Q4, and how you feel about air freight at the moment.

Yes, Jarrod, let me start with your second and third questions. I think on TAP, first of all, we have all seen back and forth on this process in the past. And I think also in this, what is the last quarterly call where I said this will take longer than people think?

So I would think the latest developments have confirmed that. It's still no surprise that all major European players being based in London, Paris, or Frankfurt are looking at this. And for right now, we are quite happy to focus on ITA.

So, no rush on our side, but we will then talk about things on M&A when things happen, and not only when we forecast them.

Cargo, as you rightly said, it's the shortest-term business of everything we operate. But I think the logic which I mentioned that the more geopolitical tensions exist, the more unpredictable the world is, the less predictable our supply chains, which usually play to our favor.

So I would think that, and on top of the fact that Q3 and Q4 are the strong cargo results, would make me optimistic for cargo for the rest of the year.

On ITA and how we put that into our numbers, I hand over to Till.

So, Jarrod, so the way we account for ITA is obviously at equity, and it's a 41% that we are putting into our adjusted EBIT. That's the way also in the segment, indeed, this is the way we handle the minority shareholdings, quite comparable also to Sun Express within the Eurowings accounts, and equally the joint ventures from Lufthansa Technik, for example, that sit in there.

And of course, when you think of ITA and rightfully, you alluded to the fact that further and deeper integration, which forms part of our synergy case, of course, it is the segment performance, which is where it belongs.

Then the next question comes from Stephen Furlong from Davy.

Yes, 2 for me. Just maybe, can I just ask about the weakening U.S. dollar? How do you think about that? Obviously, it's going to help fuel, maybe you look at it from an aircraft purchases perspective, or even the way the network is shaped into next summer, I mean, maybe the West to East could be weaker, particularly in the economy. I don't know how you think about that overall.

And then, since I'm talking about aircraft purchases, I think it's very important for your long-term strategic plan. Are the manufacturers telling you, whether it's Boeing or Airbus, that the delivery profile, it's looking more certain now when you'll get deliveries, and you can be pretty confident as you put those plans out to '28 beyond that they won't be delayed by the OEMs.

Let me make a start, just a little bit on the FX side. Maybe just a short comment only. On the operational cost side, of course, you know that we are U.S. dollar short as a group, which is impacting the FX impact; we've got a slight benefit from that. It helps the airline business generally.

On Lufthansa Technik, on the upside, it's slightly negative because that's where we've got more contracts, more revenue in U.S. dollar. To your point, taking a view on embedding a dollar rate in 2026 into the flight planning, look, I'm a bit cautious. We need to see a bit. We'll first focus on where we've got visibility on.

On the aircraft purchases, as a matter of fact, that's where, obviously, the largest part of it is indeed U.S. dollar-based. We've got a hedging strategy. So we hedge the result at the point of purchase with about half of it. And then we'll build up a layered strategy. And that's basically on the aircraft side. That's the way I would describe the situation.

Stephen, it's Carsten. On the aircraft manufacturing side, I would like to repeat what I said before on numerous occasions. We believe that until the end of the decade, we will see bottlenecks in the supply chains of the OEMs and airframe manufacturers, obviously resulting in then delays towards the end customer like us.

Nevertheless, of course, we have a plan for '28. And if I might say that the bad luck of Lufthansa had that we were hit at the worst of all times with COVID and those delays, I think, is being reduced now every year starting in '26.

So I think '25, we call it a transition year, we definitely, for the last time, on the complete darkness of these delays. And now the number I gave you, 63 new aircraft by the end of next year. And of course, I don't know if all 63 will come on time, but just the sheer number shows you that we are now really seeing customer benefits and also financial benefits starting next year of the catch-up of our airplane deliveries, including the doubts if everything will do as promised until the end of the decade.

Can I maybe just add one more point, Jarrod, just on the yields? I just want to highlight one more time that in the U.S., on an ex-FX base or it's only negative right now due to the U.S. dollar, actually, if you would do an ex-FX view, we would have a stable yield realized on the North Atlantic.

So you can also see the effect there.

Then the next question comes from Harry Gowers from JPMorgan.

First question, Till, just on the costs. I mean, you talked about the consistent cost pressures. So maybe you could talk about your ex-fuel CASK expectations over H2. And if you're able to walk us through the gross kind of inflationary pressure you still expect to see across those key cost lines?

And then maybe how much -- if you can give the color, how much absolute or percentage benefit you expect from your various initiatives, restructuring programs, et cetera, over the second half?

And then just on the demand outlook, I wanted to ask, in terms of Q3 RASK or early bookings for Q4, has the pricing or the RASK backdrop gotten worse, do you think, since you last spoke to us a few months ago? And in particular, Germany's point-of-sale demand has gotten worse or has decelerated versus earlier this year?

So let me start off on the CASK side. So look, technically, we are not giving kind of specific CASK guidance for the year or for the specific quarters.

Just as a reminder, Q2, obviously, 4.1% CASK increase. Here also, I'd like to add again, excluding FX, it was about 3.5%. In the first quarter, we have achieved a 3% CASK. And if you now think of the second half, I would describe it in a way that you shouldn't expect any surprises on CASK evolution.

We are benefiting from the ramp-up of the Lufthansa Airlines turnaround plan as we progress throughout the year. And of course, then a question of ASK growth, of course, in terms of fixed cost, the digression plays a role in what ultimately the CASK figure we're going to look like.

But let me be a bit more extensive on the turnaround plan and the progress. We've started, obviously, some months ago. We've got more than 700 measures. 3/4 of those measures are fully defined, and we've got more than 300 measures now indeed in flight. It's a very big program. But obviously, it is quite impactful already for this year.

And you can see, and this is a point which I'd like to highlight one more time, is the focus on operational stability, which you can see in punctuality, regularity, has had already a substantial impact on the so-called Iraq effect, which we were basically able to substantially reduce.

So this is big progress. And equally, it's not only cost, and you can see many of the examples on the slide of what we are working on. Also on the revenue side, good progression on ancillaries, higher ancillaries, good progression on what we see on Allegris in terms of yield evolution.

So these are things that set us up for 2026 and beyond as we ramp up to improve and ramp up the growth of the Lufthansa Airlines turnaround program.

Then the next question comes from Jamie Rowbotham from Deutsche Bank.

I noticed there wasn't time for management to answer Harry's question about RASK and bookings for Q4 and whether the backdrop has gotten worse or not, so I might let you revisit that.

The 2 topics I'd like to explore. First is for Carsten. In Europe, where you've talked about intensifying competition, you're just alluding to Condor adding low-cost services to feed the long haul? Or is this also competition from other low-cost?

And in terms of your lobbying of the government on the high German location costs, do you see any evidence at all of openness to potential change, perhaps through lower aviation taxes?

My second topic is for Till. I wanted to come back to the strong ITA results. I think I've understood that the nonoperating one-off there meant the contribution was about 4x bigger than it would otherwise have been. So EUR 91 million might have been more like EUR 21 million. Perhaps you could confirm that.

And then looking at what you've said on Slide 10, it sounds like ITA doesn't have any balance sheet hedging for ForEx. Hence, moves in dollar-euro can mean material unrealized FX gains and losses through the P&L from marking to market release liabilities. I presume that's what happened in Q2.

Perhaps it's a bit soon, Till, but is there anything you might do there, either putting hedging in place or stripping out the unrealized FX moves so that we get a less volatile contribution from ITA within the Lufthansa results?

Jamie, it's Carsten, yes. Well, when it comes to competition in Germany, the biggest competition we actually feel on domestic routes is Deutsche Bahn, the German cost-subsidized railway system, which is very aggressive. And we do see, due to the short distances between some of the cities, that doesn't really hurt us on the connecting traffic because people still prefer to fly to Frankfurt and Munich.

But on point-to-point, we definitely see that. And with this cost structure in Germany to fly point-to-point, like other airlines have pulled out, and of course, probably doing the same thing in Eurowings, we do see more competition, especially from Deutsche Bahn.

When it comes to other competitors, obviously, we take everybody seriously, it from Istanbul, Paris, Dubai, [indiscernible], Berlin, we look with respect to everybody and find our commercial answers.

When it comes to lobbying or location cost, of course, we had a setback just a few days ago when the aviation tax had not yet been reduced. But if I may say, whenever I go to Berlin, people do understand not so much the problem for Lufthansa because they see our numbers and they see that we are able to move towards Rome or Zurich, but they more and more see the problem for the German export-driven economy.

There are parts of Germany, Paderborn, [indiscernible], midsized economic centers, which are cut off from aviation. And I think that argument is working in the heads in Berlin and will eventually feed my optimism that we have seen the worst when it comes to regulatory cost.

Have we seen concrete improvements yet? No.

And Jamie, thanks for the question on the ITA topic. It's true that the about EUR 90 million contribution contains an FX effect, which is about EUR 70 million.

Nevertheless, you can see that also on the operating result, there's a positive contribution already, even if you strip that out this effect. And you're quite right. When you have probably looked at the results of ITA from last year, you could see that the fleet is largely a lease fleet. And I would phrase it like that.

ITA is currently, for us, a minority shareholding, as you know. And therefore, I would say, at the latest, hedging, of course, would be aligned to the way we look at things and we manage things once we increase our stake to control. It's true that we are currently also looking at that, but that's for me an open topic at the current stage.

Then the next question comes from Antoine Madre from Bernstein.

Two for me, please. First one on Allegris, how are new ancillaries revenue from this project tracking versus the plan? And second, how are the blocked seats going?

Okay. I understood. The second question was about the blocked seats. We expect this is only a topic on the 787. We expect the first aircraft to come in September with block seats in business class.

A big part of the business class will be blocked. We will only use the aircraft initially, for example, to destinations like Montreal, where we don't have much business class demand, and we have already put it into the booking system.

By the end of the year, the partners, which are Boeing, Collins, and the FAA, expect that certification to be arriving. So by the end of the year, we hope to release all seats to the market.

When it comes to the yield lift, it's in the double-digit framework easily, and we only have 10 aircraft at the time. So we believe that this will even further increase once we are able to put the aircraft on all the routes where yield upselling abilities exist. And overall, as I mentioned, I think in the numbers, we still have our extraordinary revenues have significantly outperformed our expectations, including Allegris, but not only in Allegris.

So I think the best is yet to come here as well. And this, as you know, was one of the big innovations of Allegro, having differently priced seats in business class. I even know that some in the capital markets were critical.

We are now 5 different seats, and it works not for all 5 the same way. But for sure, the strategy and the innovation behind it are proving right, and we will further now optimize that with more aircraft to come.

And the next question comes from Andrew Lobbenberg from Barclays.

Can you talk a little bit about Discovery or Discover? Where are the numbers? Where do they sit in? How is it trading? And, yes. How does it compete against its Strike competitor?

And then my second question might come back to ITA. I'm clearly precise that it made EUR 20 million in the June quarter, benefiting from Easter. I think just recently, there was a business plan approved by the Board of ITA. So, are you able to offer us any color as to what's in the 5-year business plan?

And in the context of that EUR 20 million profit in the June quarter, can you offer any color on what the expectations for its profits are for this year?

Andrew, it's Carsten, Discover Airlines. We consolidate the numbers in the Lufthansa Airlines. So we don't show them. But as I mentioned before, and I'm happy to repeat that here, they are profitable.

They are growing both now, not only in Frankfurt but also in Munich, and we expect them to operate up to 33 aircraft by '27. We are just about to also take a decision on the new generation widebodies, which Discover will need to receive to replace the 330-200s for the longest flights, and we are about to do that as well.

So that, I think, is as much as we are willing to, let's say, publish on this. And you know from our previous comments, we are quite happy with how we initially found a niche, but that niche is widening and widening and widening to have leisure-oriented travel out of the German market.

And with the latest stimulus from the German government, we especially expect in this segment, additional fuel for the success of Discover.

On ITA, and you may have seen it in some of the disappointed reactions of some of the Italian unions, we were basically having the option of go on value creation first or to go for market share first. And in the dialogue between ITA and us, we have decided to go for profitability and value creation first, and not stretch the growth of ITA too much.

That's what was decided yesterday, and that's what caused some disappointment in unions who were hoping, of course, for even more jobs to be created, which was a little bit in the Italian media today, but we believe that's the right way of going. And profit outlook for '25, I think it's fair to say this will be the first positive year of ITA, partly due to the first synergies with us, but also due to, of course, a very positive development of the Italian market.

And on top of that, we have first synergy effects, which I mentioned in my speech, think about Villata and Miles & More. We have put the first flights from Lufthansa to ITA due to its lower cost and other things.

So I think there is more to come on that. But already profit in '25, I think, is a black 0, the CEO of ITA calls it. So it's what we also expect a little bit more than 0, to be honest.

And just to flag, I've got the clientele inviting me to welcome you to answer Harry and Jamie's question on Q3 unit revenues, but I'll leave it to you.

Say that again, Andrew? Sorry, we didn't get that.

I think there's a curiosity about, and I think there was a question from Harry and also by Jamie. To what extent do you expect Q3 unit revenues, Q3, Q4 unit revenues, and how are advanced loads? And what commentary can you offer on unit revenues? I appreciate that you don't guide, but what commentary can you offer?

If we get you right, this will be a CFO answer. We don't guide on RASK, Andrew, and you know that. So that's why we're wondering if we didn't quite get your question. But let me repeat in qualitative terms what I said before. We said it in Q1 with very soft data. Now we have better data for Q3, there will be a weakening of lower booking classes towards the U.S., especially in Germany, to a little less degree in Austria and Switzerland, and to almost no degree in the rest of Europe.

So living in Germany, I do believe there surely is an element of media effect on German consumers on the lower end of our price range, spending a vacation in the U.S., who are worried about, let's say, the hospitality of the United States.

There have been some crazy stories about immigration, which we try to counterargue by saying that we have no proof of additional problems in U.S. immigration whatsoever at all the 26 airports we serve. But still, that seems to be an issue, especially in the mind of Germans, interesting enough, not in the mind of our other European travelers going towards the U.S. from the U.S., of course, we have a little bit of a U.S. dollar effect.

But putting that aside, as Till said before, we see strong demand from the U.S. in all booking classes. And as a third comment, when it comes to premium, we see no weakening in both directions whatsoever. As a matter of fact, first class is even going better than business class, business class is going better than premium economy, and premium economy better than economy. So nice staggering there. That's what we can say about the North Atlantic. Sorry, Till.

And if I may add just one point, of course, at a low level of booking when we look into October, we see also a positive evolution as we see, but this is, of course, on a low seat load factor, respectively, sales.

One comment on that. My perception of living here was at its worst was the Easter days. Remember when there were the crazy announcements made from the White House, Rose Garden, and people thought globalization would blow up.

I think with recent developments, still not all to my liking, but still, I think we see now a rationalization of this question, what's happening on the North Atlantic, and that's maybe already reflected in the October numbers, as Till said, too early on the data point of proof.

But looking at the papers and the media, I think we have seen the worst. And I'm pretty sure that what we have been seeing in Easter is not, and it's proving not to be the trend for the whole future.

And the next question comes from Ruairi Cullinane from RBC Capital Markets.

I've got a question linked to the previous question. Given the latter booking profile, can you talk about how close-in bookings have evolved at the end of Q2 and start of Q3?

And then secondly, just in MRO, how quickly should we expect cost increases and tariffs to be passed through to customers?

Let me start off maybe with the second question, and then I think the first one we answered already to a large extent in terms of booking evolutions.

Look, MRO, as Carsten has explained already in his part, we've made good progress in terms of generally increasing the recovery or pass-through of inflation-related input costs. You remember that it has been one of the topics we talked about in the past.

So there's good progress in terms of new contracts being on a different model, which allows us to recover more of the inflationary cost, and also existing contracts are being renegotiated. The way I would phrase it is good progress. That's clearly there.

Tariffs are a little bit of a different animal because, of course, this came also relatively short term and appears to be always an almost volatile topic where also parts lists are varying in terms of what tariffs are applied where.

Generally, as I said, we suffered in the first half of the year about EUR 20 million headwind from the aluminum and steel tariffs for Lufthansa Technik. We now need to see the exact definitions of how it' going to play out in the second half of the year. But again, of course, if you just think of the longer term, in the end, this is also an input cost. If it goes up, there needs to be also a certain way of sharing that or passing it on in the end.

I think it's worth mentioning that both Brussels and Washington have confirmed that not only airplanes are out of the tariff scheme, but also aircraft parts. And they don't seem to be agreeing on much of what they agreed on in Scotland. But this one, interesting enough, both sides of the Atlantic sent the same messages to the industry, not only airplanes are out also aircraft parts, and that, of course, applies to Lufthansa Technik in a positive way.

And the next question comes from Antonio Duarte from Goodbody.

Two for me, if I may. One of them is related to ancillaries. You clearly mentioned quite a good performance and growth year-on-year. I would like to know if all the projects that you intend to roll out are now being completed, or if you are still seeing this type of growth going forward into the full year and end of next year?

And my second question is about the Middle East impact, if it would be possible for you to quantify this impact? And if you are seeing any adjustments in terms of capacity and deals drag from this region?

Yes. Maybe worth mentioning on ancillaries, they are up 25% at Lufthansa Airlines only. And if you now look at the fact that a big part of that comes from Allegris, and we only have 10 aircraft out of 200 wide-bodies now being Allegris, I think that gives you an idea of how much more there is to come on ancillaries.

And also the commercialization due to our improved app and the Lufthansa digital hangar, which is continuously improving our app, I think it's the right tool to take advantage of this.

So in short, yes, we do believe there's much more room for growth. We are very convinced to be seen.

And the second question, sorry, none of us caught. So if you can repeat that, maybe closer to the microphone or a better microphone.

The second question is related to the Middle East. If it would be possible for you to please impact, specify the impact it had on your operations, namely going forward, and any adjustments you're planning to make in terms of capacity and its impact on yields?

Thank you. That is the very last question of our conference. I was waiting for that question all morning because the Middle East being taken away from us has a huge impact on profitability for us, which is very unfortunate. And there was no question on this whatsoever, yet.

So yes, we're actually starting Tel Aviv tomorrow. And don't forget, for us, in Lufthansa at least, it's not only the traffic between the Middle East and Europe, there's a huge amount of people going on to the North Atlantic of the Middle East, be it Iran, where we are one of the few operators who have flown to Tel Aran at all, but also we are very strong as a group in Tel Aviv.

So yes, this had a huge impact. We're very happy for various reasons to restart tomorrow. And this is easily a 3-digit number we have lost due to the developments there out of the Middle East, which we are now hopefully able to recover step-by-step, starting, yes, interesting enough, tomorrow.

Ladies and gentlemen, this was the last question. I would now like to turn the conference back over to Marc-Dominic Nettesheim for any closing remarks.

Thanks to all of you for your interest in dialing in for the questions and for the constructive discussions. Thanks to you, Carsten, and Till for your answers. We from Investor Relations are looking forward to continuing the dialogue. And to all of those who go on vacation, we wish you a great summer. Thanks. Talk to you soon.