Hello and welcome to the OTCQX Best 50 Virtual Investor Conference. On behalf of OTC Markets, we are pleased to have you joining us. Today's presenters represent some of the top performing companies on the OTCQX Best Market in 2025 based on share performance and volume. Our next presentation is from Lufthansa Group. If you wish to ask a question, please submit it via the Q&A box on your screen. Today I'm excited to welcome Marc Nettesheim, Vice President, Head of Investor Relations at Lufthansa Group, which trades on the Deutsche Börse under the symbol LHA and on the OTCQX under the symbols DLAKY and DLAKF. Welcome, Marc. Yeah, thanks a lot, Michael, for the very kind introduction, and thanks a lot to all of you for your interest in Lufthansa Group, and I'm happy to introduce our company today to you. These are turbulent times. For a couple of weeks, we are facing a crisis in the Middle East, which has certainly impacted the whole airline industry. Nevertheless, I think we need to find the right balance today to talk about the fundamental building blocks of our company, the strategy, our value levers, and then maybe also shortly address current events, maybe also in the Q&A session. Hence, let me focus on who we are and where we want to go. We are the number one airline group in Europe and the number four in the world. The big three U.S. carriers, both by revenue and by fleet size. We have a revenue of roughly EUR 40 billion. We have carried 135 million customers, passengers, last year in over 730 aircraft. We are big in terms of aircraft, passengers, but also employees, more than 100,000 employees in the group. The question is, of course, what differentiates us from our main competitors? Why should you buy our stock? I think, in fact, it is the business model. The business model is rooted in four strong pillars. You see them here on that slide. Number one is the network airlines. Those are our hub carriers operating a long-haul and short-haul business model. I'll go into this in more detail later. As you can already see, it is roughly 70% of our revenue, so it is by far the biggest segment of these four. Number two, it's point-to-point business. This is also a passenger airline business, but it's not built around a hub, but it's in fact a point-to-point network, as the name already says. That means if a certain route is profitable, you fly it. If not, you just don't fly it. It's a leaner business model, less complex. It's a bit of the speedboat within the group. Number three, it's logistics. That's Lufthansa Cargo, our air freight business. That's a very dynamic business. It's a very strongly positioned brand in the industry. They are on their way to becoming number three worldwide. As you can see, they are currently our most profitable business unit. Pillar number four is MRO, maintenance, repair, and overhaul. Here we talk about Lufthansa Technik with EUR 8 billion of revenues. It's a very stable business, very plannable, long-term maintenance cycles. Half of the revenue up until the year 2028 is locked in already by today. You see that these four segments differentiate and complement each other also in terms of risk diversification. First, let's take a deep dive into our network airlines. I talked about them before, so it's a hub airline business, and you can see our hub airlines on this slide. In fact, it's five of them, Lufthansa, Swiss, Austrian, Brussels, and ITA Airways. In ITA Airways, we own a 41% stake currently, so it might become a majority this year or next year. Those carriers are operating out of six hubs. It's Frankfurt and Munich, Zurich, Vienna, Brussels, and Rome. What's common to these markets? Those are very affluent and wealthy markets in the center, in the heart of Europe. They're all benefiting from a high yield level and from very loyal customer bases. Secondly, those are all very, very strong brands. I think this is also a difference to the U.S. market, where usually if airlines do M&A, they fully integrate the target companies, and also oftentimes the acquired brand ceases to exist. Here we really live from our brands, particularly in Switzerland. There's a very strong identity and also identification with the Swiss people. Why do we have so many hubs? Does it add complexity? Well, to us, it mainly adds flexibility because it gives us room for maneuver to really dedicate different roles to the hubs. To say, there's one Africa hub, which is, for example, Brussels. It also gives us flexibility in terms of competing against each other. The hubs are competing, for example, on location cost. If Frankfurt becomes too expensive as a hub, we are shifting more and more capacity, routes, and aircraft to Vienna, for example, or to Munich. In that sense, that really gives us room for maneuver and also negotiation lever towards our main suppliers like airports or ATC or other suppliers that we are negotiating with. Finally, if you look at this map and also at our main competitors, you also see a key difference. For example, the 13 up on the left-hand corner and the 10. This refers to the hub size of Paris and London. Our main competitors, they do own very big hubs, which is not the case for us. We have smaller hubs because Germany is a federal country. It's a historical outset that we never could change. Therefore, from the beginning onwards, we were forced to have a much deeper degree, much higher degree of integration behind the scenes. This has really become now a USP also for us that we do have different hubs, but of course, we don't want them to cannibalize each other. Therefore, we are coordinating everything in terms of network planning. We also go beyond that, and we achieve synergies on the loyalty program, on sales forces, on IT. This is what you also see on the next slide. If you think about U.S. carriers, and I said that before, you are rather on the right-hand side, a very high degree of integration, usually only one headquarters, one brand. It's all out of one hand. If you think about European carriers, you're more on the left-hand side. As you see where it says European network airline peers. There are some synergies and some degree of integration, but it's not entirely like you know it from the U.S. market. You see ourselves, Lufthansa Group today, that's more to the right-hand side on a more of a unified approach. This is where we're now going the next steps. This is also part of our main value creation levers for the midterm future to achieve our midterm targets that we go further steps in integrating IT landscape, in integrating the content network planning, and it's all being done by one central planner and not by the different airlines. That we go the next step in terms of branding. We will push forward much more the group brand of Lufthansa Group so that be it a Swiss customer or Austrian or Brussels, they all use the same branding for the lounges they can use at the central outstations, for example. One example for this degree of harmonization is the network planning. You see that here on that slide, it's the long-haul network planning, the way we do it for a couple of years already. You take an illustrative customer who wants to travel from Athens to New York, from Greece to New York. Usually, if every single airline within our group could decide on their own when to fly to New York, they would probably all pick the same time. They would all start at, let's say, 12:00 P.M. because that would be perfect timing, arriving in New York early afternoon. This would be for each single airline a good thing to do, but not from a group perspective. Therefore, we do the network planning on a central level for the intercontinental network, and we staggered it across the day. That means that a person traveling from Athens, he can pick 14 different daily connections starting in the morning, ending in the late afternoon, going each time through one of our Lufthansa Group hubs. In that sense, it provides customers with unparalleled connectivity and also us with a maximum of synergies across the group airlines. Integration and centralization is one of the value levers. Another one is fleet. We want to do two things. Number one, modernize our fleet, and number two, harmonize our fleet. You can see on that slide for our long-haul aircraft, we have a very big variety of aircraft types for different historical reasons. We are now significantly shrinking that, and we come down from 13 different aircraft types in long-haul down to six by the year 2030. This means that we are in the middle of the most fundamental fleet rollover program of our history. As you can see on the right-hand side, we will increase the share of new generation aircraft from 27% right now up to almost 60% in 2030. Harmonizing the fleet, this is not only because it looks nice if you have fewer aircraft types. It means also a big boost in terms of productivity because the more homogeneous the fleet is, the easier it is to shift aircraft from left to right, from one company to the other. It's also many efficiencies in terms of crew training. You have a newer fleet, so that means you have more stable operations. You have less complexity in terms of maintenance. In that sense, fleet harmonization is one big lever for productivity. Not only for productivity, there's also true cost savings attached to every new aircraft. What you see here on this slide is comparing new generation aircraft with an old generation aircraft. As you can see, you're saving up to 30% of fuel. You save 20%-30% of maintenance cost. You have crew productivity, and you have a different kind of architecture of the aircraft. Therefore, you have up to 100% more belly capacity for cargo freight in the new aircraft. As you can see below on our route, for like comparison, on a route to Rio de Janeiro, you increase the contribution margin by 15 percentage points through deploying a new aircraft. How is our fleet renewal progressing? The answer is very well. As you see that here on the right-hand slide, so you have new onboard products in our new aircraft that comes along with the cost savings. You also increase revenue potential because there is a state-of-the-art new product. It's called Allegris for our main airline, Lufthansa. It's called SWISS Senses for the same product in Swiss. Then there is also, and that's the little gray area on the right-hand side, there is a retrofit in some aircraft so that by 2030, we will have 95% of the seats in the group airlines, in the long-haul aircraft, will be endowed with a state-of-the-art product with all aisle access. What we can see today, because the rollout is progressing as we speak, and we have experiences now in the track record since 2024, and we see a significantly higher willingness to pay. With that new product, Allegris, we have 12%+ in terms of unit revenues just because it's a new product. That's, of course, also one of the earning levers. It's not only a new product because what we have, and that's what you see on this slide, in the Allegris business class, you have five different seat types. If you are a very tall person, if you want to have more privacy, if you want to sit together with your spouse, you can deliberately pick and choose that seat in the booking process. That, again, increases ancillary revenues. We have seen 15% higher ancillary revenues last year compared to 2024. That's mainly driven by this new product, by the way to commercialize the product, by the advanced seat reservations, which come along with the rollout of the Allegris product. Now, as I said, it mainly relates to our main brand, to Lufthansa Airlines. The aforementioned Allegris and the revenue uplift and the increased ancillaries, they are one building block. That you see what you see here in the bright blue blocks, the premium customer offer and the increased ancillaries, they are part of this restructuring product. 1/3 is revenue effects, 2/3 is cost. In total, we talk about a EUR 2.5 billion gross EBIT impact target in 2028, EUR 1.5 billion this year. We already have achieved over EUR 500 million last year. We are well on track with this program. For the additional EUR 1 billion that we see this year, we have 80% of the measures already in implementation. In that sense, we are comfortable to also reach this target for this year. Now, having talked about the network airlines, let's now come to our point-to-point business. It's mainly known under the brand of Eurowings. Eurowings is a market leader in the big four major German catchments, which are not our hubs. Eurowings is not flying many routes in Frankfurt and Munich, but it's really flying in the other main metropolitan areas in Germany, Stuttgart, Cologne, Düsseldorf, and Hamburg. There they are a market leader. They do have a very strong footprint in the leisure business, also leisure destinations, Mediterranean area, also right now in the Middle East and Gulf, of course. It has been canceled. They have now diverted all the traffic that went to Dubai. That's now going to Palma de Mallorca, for example. They have also established a new brand, which is the tour operator business, Eurowings Holidays. They're aiming to become one of the top 10 tour operators in Germany. They are, as I mentioned before, the speedboat and also a role model in terms of flexibility and entrepreneurial spirit. The third pillar I was talking about in the very beginning is Lufthansa Cargo, air freight. They are doing very well. They have increased profits by 29% last year. That was not only driven by the strong demand situation coming from, for example, Chinese e-commerce business, from the pharmaceuticals industry, from semiconductors, but also from a decrease in unit cost. I think the USP of Lufthansa Cargo is that they do have a relatively big freighter fleet. Half of the freight they carry is in the bellies of the passenger aircraft. The other half is in freighters. This large freighter fleet of 22 dedicated freighters means a lot of flexibility because you did flexibly deploy the freighters where the demand environment is. We did that, for example, two years ago when the passenger business was dead towards China, but the freight business was booming. We just deployed the freighters there. That helps us a lot also versus our competitors. Then the third pillar, Lufthansa Technik, as I said, very stable. It's a very attractive market. EUR 150 billion is the amount airlines spend on buying aircraft every year. It's the same amount. Another EUR 150 billion is what airlines spend on maintaining, on MRO costs for each year. In that market, Lufthansa Technik is the market leader among the independent players, EUR 8 billion of revenues. It's very, very high barriers to entry. You need tons of licenses to operate this business. We have called out for an ambitious margin plan. They intend to increase the revenue up to EUR 10 billion in 2030. Also they are aiming at a 10% margin in that very same year. They will do this through geographic expansion, so building new facilities in Portugal, also in Canada and other locations. They're doing this to increase presence in the defense business where they have long-term contracts with the German Air Force and also through increased digitalization. Putting all this together, we come to the group P&L. As I said before, EUR 40 billion revenues, adjusted EBIT of roughly EUR 2 billion. That means almost 20%+ versus last year. We have overachieved our target. The target was a significant increase in EBIT. Significant means more than 10%. In that sense, we achieved the target last year. That in spite of a 12% increase in material cost without looking at fuel. In that sense, we are happy with how 2025 went. For the last 3 minutes that I have, talking about the outlook for this year. Again, in 2026, we want to grow, but in a disciplined way. We are envisaging a 4% capacity growth in ASK, in available seat kilometers. Also again, we want to increase our adjusted EBIT significantly. As I said before, significantly means 10%+. On CapEx, I said before, we are in the middle of a fleet renewal program. Out of the 730 aircraft, we are renewing 240 aircrafts. It's a sizable amount. The CapEx peak will be the years of 2026 and 2027. We have the first of these two peak years. We're talking about a net CapEx of EUR 2.9 billion. What does net CapEx mean? We have gross CapEx, and then we will do sale-leasebacks of part of the fleets in order to balance our cash flows. This is then the net number on CapEx. With that, we intend to end up with almost EUR 1 billion, EUR 0.9 billion of free cash flow for this year. Our capital allocation foresees a dividend payout of 20%-40%. For last year, we are paying out 30%. Having said all of this, we gave out the guidance, I think, two weeks ago. Three weeks ago, that was one week after the Middle East conflict started. Of course, since it started, and you can see the gray boxes on that slide, the degree of uncertainty has increased. As I said before, the crisis, it has upsides and downsides. It has both potential for us. On the one hand, we see increasing fuel prices that we will see at some point in our P&L. But we also do see a demand spike mainly towards Africa and Asia. We do see that we are hedged at a higher level than most competitors. Also with the U.S. carriers, they don't hedge fuel at all. In that sense, it puts us in a relatively better position towards our peers. We do also see clearly increasing cargo freight rates because of the scarcity in supply coming from many aircraft in the Gulf standing on the ground. That's also helping us. By that, depending on how long the crisis lasts, we think there is a chance that chances and risks are balancing and offsetting each other. Finally, our midterm targets, yeah, there it is. Where do we want to go? You see that we're coming from an almost 5% margin. We want to grow this to 8%-10% in the periods 2028 through 2030 alongside a ROCE of 15%-20% and a sustainable cash flow level of more than EUR 2.5 billion adjusted free cash flow. The main value levers on the left-hand side are all discussed in the presentation. We want to grow in a disciplined way, number one. Number two, we want to achieve synergies across the group by integrating and coordinating even further. Number three, we will finish the turnaround program of the main airline. Finally, we have two strong pillars of non-passenger airline business, which is MRO and cargo, and that also adds to our earnings, 8%-10% margin. As a framework, we are targeting a solid investment grade. Right now, we do have investment grade already. We are working with a liquidity buffer of 8%-10% in order to be prepared for certain risks and dividend income, dividend distribution. I commented already. Now with that, I'm looking forward to your questions. Yes, perfect. Thank you, Marc. I think that was quite a comprehensive overview. Hi everyone. Also from my side, my name is Cornelia. I'm an Investor Relations Manager at Lufthansa Group, and I'm now going to moderate the Q&A session. First of all, thanks for the numerous questions that have been handed in. Let's start with the first question that we have received in the tool, and that refers to the planned capacity growth of 4% in terms of ASK this year. The question is, given that Lufthansa wants to focus on intercontinental growth, where does Lufthansa see the biggest upside in long-haul traffic? In which traffic regions does Lufthansa plan to deploy the additional capacity? Yeah, happy to take this one. Indeed, 4% growth, 0% growth in the continental business, roughly 6% growth in the intercontinental business. The clear focus here is on the Southern Hemisphere. This is where we want to grow the strongest. We see very attractive routes towards South America, also to Africa, and then to selected parts of Asia. India is a strong market. Those are certainly the focus areas. Usually, I mean, taking the Middle East crisis out, Middle East would have also been a growth area. We'll need to see how the year evolves. The Southern Hemisphere is clearly the focus here. Additionally, there will be some growth over the North Atlantic, which is still the most powerful and valuable traffic stream. It will be disciplined, not too big in order to maintain also price and yield stability. Focus here is southern hemisphere. All right. The next question is about the diversified portfolio that you have mentioned. The question here is, do you think that the capital market evaluates the stability of the earnings streams and also the components of the Lufthansa Group portfolio, so especially Lufthansa Technik, appropriately, especially when it comes to peer comparison? Yeah, very good question. Talking about portfolio, one comment upfront. We have cleaned up our portfolio quite a bit over the past year. We used to own a huge catering business, credit card business. We have divested all the business where we didn't see any synergy. That was the guiding principle. The parts of the business which now belong to the group, they are synergy bearing and value accretive from our point of view that applies to both Lufthansa Technik and also Lufthansa Cargo. Is it being reflected in our multiple? Clear answer here is no. Should it be? Clear answer is yes. Yeah, we do think that a very significant part of our earnings streams, over EUR 600 million out of EUR 2 billion EBIT, is coming from a different risk profile like Lufthansa Technik. That should be reflected. I think we did a capital markets day on Lufthansa Technik. Since then, awareness has increased. I think also the understanding of the business model. More and more are talking about some of the past valuations. I think this is something we certainly should work on. We believe that Lufthansa Technik being a part of Lufthansa Group is value accretive because of synergies, learning curves, and also the intense supplier relationship that benefits both sides. Again, in our view, it should be reflected to a higher degree. Yes. All right. There have been various questions about premium. Maybe I try to group them all together and frame it quite simply. What are the main levers pushing premiumization forward? What is the potential that you can unlock from your premium strategy? Yeah, I think talking about premium, I know that's also a key building block for most U.S. carriers. We can confirm this. If you look at particularly the last year, so the demand, the resilience in demand has been really carried or has been supported by the premium demand. In the last third quarter, we had a certain demand weakness, but that was only applying to the economy class over the Atlantic, not to premium classes. In that sense, it's a key building block right now. We would wish to have a bigger premium class in terms of First and Business, change this on the short haul at least. Premium is a key topic. I think with the new product of Allegris and SWISS Senses, we are making the decisive step forward that we need to go here. We see that also in the yields and in the way it's being rewarded by the customers. The promise of premium comes along with the new product, and that applies to all classes, basically. We classify also premium economy as one of our premium products. It's the most profitable class and compartment that we have in aircraft. In that sense, it's a key building block. All right. Thank you. Maybe we can come back to the latest airline addition to the group, ITA Airways. Can you maybe elaborate a bit on the progress of the integration process and what the next steps of the deal look like? Do you expect to acquire the majority soon? We are very happy with the acquisition. ITA Airways contributed EUR 90 million to our earnings last year. We are pursuing the fastest integration of any acquisitions that we ever did. Right after closing of the 41% ownership, we moved in the terminal so that connecting was easier. We have codeshares on both continental and intercontinental flights. We have harmonized the loyalty programs. Now the Italian loyalty program ceases to exist. It's fully being transferred to the Miles & More program of Lufthansa Group. Lufthansa Cargo is marketing the bellies of ITA Airways aircraft. We have doubled our frequencies to South America through this acquisition. In that sense, we are happy with the progress we are making. The next important step in terms of integration is the inclusion into Star Alliance that will happen in April. We are waiting for the antitrust approval to include ITA Airways also in our transatlantic joint venture that we do have with United and Air Canada. Indeed, each year in June, we can exercise a call option to step up to 90% ownership. We will decide in May whether we do it this year. I think it's not unlike you see it either this year or next year, this step. Of course, the key decision factors are integration, achievement of synergies, and also the financial KPIs also for Lufthansa Group. As I said, investment grade rating is important to us. We'll, of course, see how the group financials change once we integrate and consolidate ITA Airways. Those will be the decision parameters. Again, integration is fast. We believe that both on ITA Airways being a very profitable and lean business, Rome as a fantastic hub and modern airport, and Italy itself as a very important market, the most important one outside our home markets in the U.S., that was a very value accretive acquisition. After having talked about ITA Airways, do you see further potential of consolidation in the European aviation sector? Yeah, look, we believe that the European market needs and deserves more consolidation. It is still more atomistic than the U.S. market. U.S. carriers tend to be more profitable than European carriers. In that sense, we believe we do have a very good track record in executing acquisitions and also integrations by preserving still the brand and the DNA of the company, but still achieving a maximum of synergies behind the scenes. I've talked about this before. There is an airline in Portugal called TAP Air Portugal. It's up for sale right now. The transaction process is up and running. Non-binding bids are due by the 2nd of April. We will hand in a bid. You can see the press that also our competitors, Air France and IAG, will do the same. We believe it would be a very good addition to our portfolio given the exposure towards South America, particularly Brazil, and having a hub on the western part of Europe that will also be geographically and strategically valuable complement. Thank you. With that, time's already over. In case there are any questions left, you can always contact us. You find our contacts on our website of Lufthansa Group. We are happy to shed more light on all the topics that we've already touched upon today. That's it from our side. Thanks a lot. Thanks for your interest. Talk to you soon.