Group 1 - The article discusses Deutsche Lufthansa AG's recent Capital Market Day and reaffirms the fundamentals supporting a long-term investment thesis in the company [1] - The stock is viewed positively by buy-side hedge professionals who are conducting fundamental, income-oriented, long-term analysis across global developed markets [1] Group 2 - The article expresses a beneficial long position in the shares of DLAKY and DLAKF, indicating confidence in the company's future performance [2]

Group 1 - The article provides a comprehensive market analysis focusing on investment opportunities and trends in various sectors [1] Group 2 - The analysis includes insights on market performance, highlighting key metrics and indicators that influence investment decisions [1] - It emphasizes the importance of staying updated with market changes to identify potential risks and rewards [1]

Pilots for Lufthansa and its cargo carrier voted in favor of a strike in a dispute over pensions https://t.co/alyniEcm58 ...

Core Insights - Lufthansa plans to cut 4,000 jobs globally by 2030 to enhance profitability and efficiency, primarily focusing on administrative roles in Germany [2][3] - The restructuring will involve the largest fleet modernization in the company's history, with an expectation to add over 230 new aircraft, including 100 long-haul planes by 2030 [3][4] - Lufthansa aims to expand its core business and digital models as part of its "Ambition 2030" program, targeting significant revenue and profit increases by 2030 [4] Financial Performance - Lufthansa reported a 27% increase in operating profit year-on-year for Q2 2025, with revenue rising from €10 billion to €10.3 billion, marking a 3% increase [8] - The airline achieved a record revenue of €37.6 billion last year, a 6% increase from the previous year, although the adjusted EBIT dropped to €1.6 billion from €2.7 billion due to strikes and rising global costs [9] - New financial targets set for 2028 to 2030 include an adjusted operating margin of 8-10% and over €2.5 billion in adjusted free cash flow annually [5] Industry Context - The trend of adopting AI for operational efficiency is prevalent among companies, with 65% of firms conducting layoffs in the past year, primarily for cost-cutting, and 27% attributing layoffs to AI adoption [7]

Cost Reduction & Efficiency - Lufthansa plans to cut 4,000 administrative jobs by 2030 to address being "too complicated" and "too bloated" [1][2] - The job cuts are aimed at improving processes through measures like automation [3] - The company's cost base has struggled to meet its targets, necessitating these cuts [3] - Increased use of AI is expected to lead to greater efficiency [7] Financial Targets & Strategy - Lufthansa aims for an adjusted operating margin of 8-10% by 2030 [5] - The company intends to maintain its dividend policy [5] - Fleet renewal is a key goal, with new aircraft like the Boeing 787 Dreamliner being introduced [5][6] Risks & Challenges - A pending pilot strike poses a significant risk to cost-saving efforts [4][5] - Delays in aircraft certification, such as for the Boeing 787 Dreamliner seats, have slowed down fleet renewal [6]

Core Viewpoint - Lufthansa plans to cut 4,000 administrative jobs by 2030 as part of a strategy to streamline operations and reduce complexity within the company [1][2][3] Group 1: Job Cuts and Operational Efficiency - The job cuts will occur over several years, with the aim of addressing the company's bloated structure and improving efficiency through automation and process enhancements [2][3] - The company has struggled to meet its cost targets, and these cuts are expected to help achieve new financial goals [3] Group 2: Financial Targets and Dividend Policy - Lufthansa aims to maintain its dividend policy while setting a more optimistic adjusted operating margin target of 8 to 10% for 2023 [5] - The company has a cash goal and plans to renew its fleet, which has been hindered by certification issues with new aircraft, particularly the Boeing 787 Dreamliner [5][6] Group 3: Impact of AI and Industry Trends - Increased use of AI is seen as a potential avenue for greater efficiency, with airlines exploring how to better understand passenger needs and improve operational processes [7][8] - The airline industry is generally looking at AI to reduce labor intensity in various operations, although significant workforce reductions through AI may take time to materialize [9]

Core Viewpoint - Lufthansa plans to lay off 4,000 employees by 2030, marking the largest job cut since the pandemic, aimed at improving profitability [1] Group 1: Layoffs and Financial Goals - The layoffs will primarily occur in Germany and will be achieved through digitalization, automation, and process integration [1] - Lufthansa aims to achieve over €2.5 billion (approximately $2.9 billion) in free cash flow between 2028 and 2030, with an adjusted return on capital of 15% to 20% during this period [1] - The adjusted operating profit margin is expected to remain between 8% and 10% during the same timeframe [1] Group 2: Operational Challenges - The company has faced multiple performance guidance downgrades and has not met its mid-term profit margin targets set in 2021, partly due to several strikes affecting profitability [1] - New labor disputes are emerging, with pilots voting on a potential strike that could disrupt operations and financial performance [1] Group 3: Fleet and Product Development - Ongoing delays in aircraft deliveries are hindering Lufthansa's fleet renewal and transition to more fuel-efficient models [2] - The launch of the new Allegris premium cabin is also facing obstacles, with Boeing 787-9 business class seats awaiting certification [2] - Lufthansa anticipates adding over 230 aircraft by 2030, including 100 long-haul wide-body planes [2]

Group 1 - The company plans to cut 4,000 administrative jobs by 2030, marking the largest reductions since the pandemic [1] - Job reductions will primarily occur in Germany and will be driven by digitalization, automation, and process consolidation [1] - The airline aims to achieve free cash flow exceeding €2.5 billion ($2.9 billion) from 2028 to 2030, with an adjusted return on capital employed of 15% to 20% during the same period [2] Group 2 - The adjusted operating margin is projected to be between 8% and 10% from 2028 to 2030 [2] - The CEO is focused on improving performance by controlling costs, following previous guidance reductions and missed margin targets due to strikes [3] - The airline is facing potential labor unrest as pilots are concluding a strike vote, which could lead to operational disruptions [4] Group 3 - Ongoing delays in aircraft deliveries are affecting the fleet renewal and transition to more fuel-efficient models [5] - The rollout of the new Allegris premium cabin is encountering challenges, with pending certification for business-class seats on the Boeing 787-9 [5] - Lufthansa expects to add over 230 aircraft by 2030, including 100 long-haul jets [5]

Group 1: Russian Central Bank - The Russian Central Bank announced a 100 basis point cut in its key interest rate, reducing it from 18% to 17%, which was less than the anticipated 200 basis point cut to 16% [3][7] - The decision reflects a cautious approach due to ongoing economic slowdown and inflation concerns, with a target to return annual inflation to 4.0% by 2026 [3][7] Group 2: Deutsche Lufthansa AG - Deutsche Lufthansa AG is set to implement a major internal restructuring effective January 1, 2026, establishing four "Group Function Boards" focused on Hub Management, Technology, HR, and Finance [4][7] - This restructuring aims to improve internal collaboration and overall efficiency as part of a broader strategy to enhance profitability [4][7] Group 3: China and US Trade Relations - China has expressed a willingness to engage in dialogue with the United States to improve trade and economic relations, following discussions with global financial institutions [5][7] - The People's Bank of China has introduced new performance rules for its financial partners, indicating a focus on enhancing financial oversight and stability [5][7] Group 4: Geopolitical Tensions - The Kremlin announced a temporary pause in Russia-Ukraine peace talks, claiming that European countries are obstructing efforts while maintaining openness to dialogue [6][7]

Core Viewpoint - Lufthansa Group is actively pursuing a transformation plan, but the years 2025 and 2026 will remain transitional due to the need to curb rising costs [2] Financial Performance - The airline group has issued two profit warnings for 2024, facing dual pressures from soaring costs and labor unrest [2] - The cancellation rate for flights has stabilized at only 1%, leading to improved customer satisfaction [2] Strategic Initiatives - The CEO acknowledges that recent performance has not been satisfactory, emphasizing that 2023 will continue as a transitional year towards higher performance [2] - Lufthansa aims to achieve profitability for its flagship airline by 2026 and has initiated a comprehensive restructuring to control costs [2] - The company plans to deepen integration with group members such as Swiss International Air Lines, Austrian Airlines, and Brussels Airlines to enhance operational efficiency [2] Growth Drivers - New subsidiaries, City Airlines and Explore Airlines, are driving growth for the group due to their lower operating costs [2]