Annual Report 2013 - Lufthansa TechnikReport+2013.pdf · Annual Report 2013 More mobility for the...

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Annual Report 2013 More mobility for the world

Transcript of Annual Report 2013 - Lufthansa TechnikReport+2013.pdf · Annual Report 2013 More mobility for the...

Annual Report 2013

More mobility for the world

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Lufthansa Technik Group at a glance

(all figures quoted in thousand Euro) 2013 2012

Revenue 4,180,288 4,012,659Result from operating activities 466,455 377,103 *Earnings before tax (EBT) 456,226 361,887 *Operating profit 404,048 328,307 *Investments 135,682 129,640Depreciation on assets 98,740 100,764Balance sheet total 3,458,733 3,178,145 *Employees (year average) 19,927 20,368Personnel costs 1,227,384 1,226,734 ** The reference figures for the previous year have been retrospectively adjusted in line with the changes to IAS 19.

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Foreword from the Board

Ladies and Gentlemen,

2013 was a good year for the aviation industry. For the very first time, more than three billion people traveled by plane, and air transport safety reached the highest level in the history of aviation. Although some airlines were forced to discontinue operations and fuel prices remained high, many airlines were able to increase their efficiency and profitability. The world fleet continues to grow and the order books of manufactur-ers are full.

The maintenance, repair and overhaul (MRO) market was characterized by stable development. However, the persisting financial strain felt by many airlines, especially in Europe, as well as the further increase in MRO services offered worldwide continue to pose challenges for the industry and increase the price pressure.

Within the framework of its program for the future, SCORE, Lufthansa Technik im-plemented numerous measures to improve its result. Even before the launch of the SCORE program, several projects were initiated and implemented to reduce costs, for example in the areas of engines, components and overhaul. The reduction in administrative staff that was accomplished with the help of the NETwork project is also beginning to have a positive effect on costs. Now that we have defined the corner-stones needed to increase revenue in the long term, we can concentrate on imple-menting them through sales activities with a stronger regional focus and increased commitment to the growth driver innovation.

By accommodating new aircraft types and extending the product portfolio, Lufthansa Technik was able to expand its good market presence even further. Technical services for the new Airbus A350, Boeing 777-9x or the CSeries are in preparation and will be offered as soon as these aircraft types are introduced into scheduled service. The cooperation with aircraft, engine and component manufacturers has been significantly extended through a series of cooperation agreements, thus laying the foundation for long-term technology and market access.

Thanks to the market-driven development of our global group of companies, suc-cessful sales and cost management as well as our increased commitment to technol-ogy and innovation, we have managed to solidify and strengthen Lufthansa Technik’s competitiveness in 2013.

August Wilhelm Henningsen

August Wilhelm HenningsenChairman

Dr. Johannes BussmannHuman Resources, Engine- and VIP-Services

Dr. Peter JansenFinance

Dr. Thomas StügerProducts,Services and IT

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Lufthansa Technik Group

This annual report is intended to reflect the growing importance of Lufthansa Technik AG’s global group of companies by presenting financial information for the Lufthansa Technik sub-group. In fiscal year 2013, the basis of consolidation consisted of 22 companies based in Ger-many and elsewhere in addition to the parent company, Lufthansa Technik AG. In this report, we present the parent company Lufthansa Technik AG as well as those production companies in the global group of companies that are listed here.

Lufthansa Technik AG, Hamburg: Established in October 1994 as a subsidiary of Deutsche Lufthansa AG, Lufthansa Technik AG is the parent company of the technology business seg-ment of Deutsche Lufthansa AG and the global Lufthansa Technik Group, and comprises a total of 53 companies. Lufthansa Technik is the foundation of Deutsche Lufthansa’s top-tier technical image and numbers more than 700 other airlines and operators of commercial aircraft among its customers. Its revenue amounted to EUR 3.7 billion in 2013. The heart of the company, which has a total of 10,600 employees, is the overhaul, development, and logistics center in Hamburg, where technical operations began in 1955 following Lufthansa’s reestablishment after the War. Lufthansa Technik AG employs 6,630 people at this site alone; they work primarily on the overhaul of widebody aircraft, the maintenance of engines, equipment and components, the completion of large commercial aircraft, and in the area of research and development. The company’s maintenance center is in Frankfurt and has a staff of 2,705, followed by Munich with 470 employees and Berlin with 425.

BizJet International Sales & Support Inc., Tulsa, Oklahoma, USA: BizJet is a leading American company in the completion and care of VIP aircraft and larger business jets. It has been part of the Group since 2000, had an average of 334 employees in 2013 and generated revenue of EUR 56 million.

Hawker Pacific Aerospace, Corp., Sun Valley, California, USA: Established in 1912 and a wholly owned subsidiary of Lufthansa Technik since April 2002, this company offers landing gear overhaul services in Sun Valley, California. In the year under review, its revenue amounted to EUR 55 million with an average workforce of 317.

Lufthansa Technik AERO Alzey GmbH, Alzey, Germany: This company has been very suc-cessful for the past 25 years, especially in maintaining turboprop engines from Pratt & Whitney and CF34 turbofan engines from General Electric. AERO Alzey’s revenue was EUR 213 million in the year under review with an average of 465 employees.

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Lufthansa Technik Airmotive Ireland, Dublin, Ireland: This subsidiary, which became a member of the Lufthansa Technik Group in 1997, specializes in repairing CFMI and Pratt & Whitney engines. During fiscal year 2013, revenue of EUR 74 million was generated by an average workforce of 404. Due to sig-nificantly decreasing revenues and declining market opportunities, the company‘s closure was initiated at the end of 2013.

Lufthansa Technik Budapest offers overhaul and maintenance services for Boeing 737 Classic and Next Generation aircraft as well as the Airbus A320 family. Founded in 2000 as a joint venture with Budapest Airport Plc., which holds a share of 15%, Lufthansa Technik Budapest produced revenue of EUR 27 million in 2013 with an average workforce of 377.

Lufthansa Technik Component Services LLC, Tulsa/Oklahoma, USA: With its five locations in the U.S., this subsidiary offers a wide spectrum of aircraft component maintenance services, particularly for customers in North and South America. In 2013 the company generated revenue of EUR 21 million and had an annual average of 130 employees.

Lufthansa Technik Landing Gear Services UK, London, United Kingdom, specializes in the main-tenance, repair, and overhaul of landing gear. The company was formed from the English location of Hawker Pacific Aerospace and renamed in March 2011. It had revenue in 2013 of EUR 42 million with an average of 297 employees.

Lufthansa Technik Logistik Services GmbH, Hamburg, Germany: This logistics subsidiary spe-cializes in logistical services such as procurement, warehousing, and transportation of materials. The company generated revenue of EUR 232 million and had an annual average of 684 employees.

Lufthansa Technik Maintenance International GmbH, Frankfurt, Germany: This company, which was formed by merging Condor Cargo Technik and parts of the maintenance division of Lufthansa Technik, has been the competence center for maintenance services for non-Lufthansa Passage custom-ers since the beginning of 2009. In its fifth fiscal year it generated revenue of EUR 114 million with an average of 799 employees.

Lufthansa Technik Malta is a joint venture with Air Malta, which holds a share of 8%. The company has been offering maintenance and overhaul services since 2002, focusing on Boeing 737 and Airbus A320, A330 and A340 aircraft. An average workforce of 541 produced EUR 46 million in revenue in the year under review.

Lufthansa Technik Philippines Inc., Manila, Philippines: Established in 1999 as a joint venture with Macro Asia, this company maintains and overhauls aircraft, engines and components for the fleets of Philippine Airlines and other customers. Revenue of EUR 130 million was generated in 2013 by an average workforce of 2,750.

Shannon Aerospace Ltd., Shannon, Ireland: The maintenance portfolio of Shannon Aerospace, which was founded in 1992, focuses on overhauling short-haul aircraft for European customers. In 2013 the company generated revenue of EUR 72 million and had an average workforce of 547.

Management Report of the Lufthansa Technik Group 2013

Lufthansa Technik is the world’s leading provider of maintenance, repair and overhaul services +++ Product innovations and partnerships help the com-pany tap new customers and markets +++ Greater offer of services increases price pressure in the MRO market +++ Worldwide capacities and flexibility are important competitive factors +++ Significant increase in revenues and operat-ing result despite difficult market conditions

Business and strategy

Lufthansa Technik is the world’s leading MRO providerLufthansa Technik is the world’s leading manufacturer-independent provider of maintenance, repair and overhaul (MRO) services for civil and commercial aircraft. The Lufthansa Technik Group is home to 31 technical maintenance or-ganizations which together have almost 20,000 employees. The corporation has direct and indirect equity investments in 53 companies.

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Status: December 31, 2013

Lufthansa Technik operations

Lufthansa Technik stations

Lufthansa Technik sales offices

Lufthansa Technik’s range of services is covered by six product divisions: Maintenance, Aircraft Overhaul, Engines, Components, Aircraft Systems and VIP Aircraft (completion and maintenance). The spectrum encompasses prod-ucts and product combinations with a variety of structures – from the repair of single devices to consulting services and the fully integrated supply of entire fleets. These Total Support services guarantee customers comprehensive care that extends all the way to complete fleet management, and are the products most frequently requested by Lufthansa Technik customers. By developing new products and services, Lufthansa Technik enables airlines to introduce new aircraft types and technologies safely into scheduled service and save fuel, for example.

Innovation and technology are the core topics of the coming yearsLufthansa Technik relies on the development of product innovations to tap new markets and customers. Preparations for new aircraft types and technol-ogies thus continue to play an important role and are supported by research activities, including research on new repair procedures and technologies. This also contributed to the company’s revenues and result in 2013. For example, Bombardier Aerospace placed an order with Lufthansa Technik for the delivery of cabin management (CM) and inflight entertainment (IFE) systems for the new Challenger 350 program. In 2014, Lufthansa Technik will also equip 20 of Lufthansa Passage’s Airbus A321 aircraft with the BoardConnect inflight enter-tainment solution, which was developed by Lufthansa Systems. The wireless access points (WAP) required for this were developed by Lufthansa Technik.

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In addition, the LED cabin lighting solution HelioJet, a joint development of Lufthansa Technik and SCHOTT, can now be experienced in normal airline operations. Numerous other research projects are currently being prepared and implemented. The organizational orientation toward innovation and technology development will help ensure that Lufthansa Technik continues to be optimally equipped for the future.

Another key point in Lufthansa Technik’s corporate strategy is the intensification of its presence in growth markets through the expansion of the Group in major regions of the world and targeted partnerships with airlines and manufacturers. Strategic partnerships with other members of the Lufthansa Group are likewise extended in order to maximize synergies. At the same time, this strengthens Lufthansa Technik’s position vis-à-vis competitors such as original equipment manufacturers (OEM) of aircraft, engines and components. Even for an inde-pendent MRO provider such as Lufthansa Technik, cooperations make sense in order to gain access to knowledge and licenses and to win and secure busi-ness.

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Achieving sustainable revenue growth remains a core topic for Lufthansa Technik, and this goal is pursued through structured programs. Key elements include the stronger regionalization in sales and customer services, a focus on growth regions and growing customer segments (e.g. low-cost carriers in Asia) and specific product adaptations to meet changing customer require-ments. The introduction of new aircraft types is also going well, with further Boeing 787 and Airbus A380 contracts having been won. And preparations are currently underway to introduce the new CSeries, A350 and 777-9x aircraft types as well.

Markets and competitors

Price sensitivity and cooperations represent the framework conditions in the MRO segmentAround the world, 19 airlines with a total of 194 aircraft discontinued oper-ations in 2013. Due to the expansion of MRO capacities, more and more services are being offered, which together with the ongoing difficult financial situation of many airlines increases price pressure in the MRO business.

Among Lufthansa Technik’s most important competitors are original equip-ment manufacturers (OEMs) of aircraft, engines and components, the MRO operations of other airlines, and other independent providers of MRO servic-es. OEMs are continuing to push onto the MRO market: Owing to the high costs of development and the low share of revenues from the sale of aircraft, manufacturers of aircraft, components and engines are striving to expand their business activities. Thus they make it difficult for other MRO businesses to gain access to their intellectual property and only sell licenses selectively. However, Lufthansa Technik was able use this development to its advantage through several OEM cooperations in 2013.

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Lufthansa Technik is the world’s market-leading independent MRO providerLufthansa Technik has more than 770 customers around the world, primarily airlines and aircraft leasing companies, but also operators of VIP jets and public authorities. With a revenue share of 67 percent, Europe and Russia continue to be the most important sales markets for the company. The Americas and the Middle East/Africa region (including VIP conversion projects) as well as the growth region Asia Pacific each brought in 11 percent of total revenues.

Overall, Lufthansa Technik improved its market position slightly in 2013 and thus remains the world’s market leader among independent MRO providers, with its comprehensive, state-of-the-art product portfolio covering around 80% of the market’s volume.

Development of business operations

Important contracts extended and wonIn the year under review, Lufthansa Technik managed to win 47 new custom-ers and conclude 461 contracts with a total volume of EUR 3.4 billion for 2013 and the following years. During the period under review, the number of aircraft maintained under exclusive contracts increased significantly to a total of 2,820 (+25%). Among the most important contractual developments were the contract

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extension with Lufthansa Cargo, which has entrusted the supply for its entire fleet to Lufthansa Technik for another eight years, and the already ongoing in-tegration of Germanwings, whose fleet is growing considerably. New customer Copa Airlines, a leading carrier in Latin America, signed a five-year contract for Total Component Maintenance for its entire Boeing 737NG fleet. With low-cost carrier Spirit Airlines, which is one of the fastest-growing airlines in the United States, Lufthansa Technik concluded an exclusive four-year contract for the maintenance of airframe-related components on 28 aircraft from the Airbus A320 family, including an option for further aircraft to be added later. South Af-rican Airways (SAA) is continuing its cooperation with Lufthansa Technik in the area of engine overhauls, which began in 2001 with the care for 23 engines of the Boeing 737-800 fleet and has now been extended until the airline takes the aircraft out of service.

March 2013 saw the successful start of component supply for the 140 aircraft of Scandinavian Airlines (SAS). At the same time, an extensive modification program began for the long-haul fleet of Lufthansa Passage: Over a period of three years, some 79 aircraft will be converted to the new Business and First Class and equipped with new inflight entertainment systems and Internet on board (Flynet 2). And at the request of Airbus, Lufthansa Technik is modifying the wings of the A380 fleets of various customers in several locations around the world.

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Regional aircraft from the Embraer E-Jet family will receive component support from Lufthansa Technik and Air France Industries via the joint venture Spairlines with headquarters in Hamburg, where the two companies have been cooperat-ing successfully in the area of A380 components for several years. Landing gear maintenance for this aircraft type in the American market will be provided by the associate Hawker Pacific Aerospace in future. For the European market, prepara-tions are underway to introduce this maintenance service in Hamburg. Lufthansa Technik continues to make targeted investments, particularly at its existing loca-tions in Hamburg, Shenzhen and Malta.

Significant contribution to earnings achieved through SCOREThe industry is characterized by constantly changing market and competitive conditions, which makes it important to respond with structural adjustments, innovative products and continuous improvements in efficiency. Under the umbrella of the SCORE program, Lufthansa Technik has therefore implemented numerous measures to secure the company‘s future and sustainably improve its results. Measures that were already started in 2012 made a significant contribu-tion to earnings.

Another focal point that is becoming increasingly important is the company‘s technology and innovation leadership: To extend and professionalize the diverse innovation activities, Lufthansa Technik is adapting its organization and signifi-cantly increasing the investment volume.

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The NETwork project, which was initiated in 2012 with the aim of reducing the number of employees in functions that are not directly productive by 650 by the year 2015, is proceeding as planned and has already resulted in some cost savings. The newly organized overhaul network in Europe is also contributing to the achievement of the SCORE program‘s goals through centralization and the use of shared services.

Lufthansa Technik also made changes to its investment portfolio in 2013: To-gether with McKinsey & Company, it founded the consulting firm Lumics & Co. KG. Commitments in Australia and Switzerland were ended. In addition, the company disposed of Airliance Materials and the equity participation Belac, both of which are based in the United States. And due to significantly decreasing revenues and declining market opportunities, the closure of Lufthansa Technik Airmotive Ireland (LTAI) was initiated at the end of 2013.

Revenue and profits

Good order situation leads to significant increase in earningsSales revenue increased to around EUR 4.2 billion in 2013 (+ EUR 167 million). Despite a revenue-intensive modification program, sales from business with Group companies remained at the same level as the previous year with EUR 1.6 billion. At the same time, external sales rose by 7% to a total of EUR 2.6 billion, with external business accounting for a slightly increased share of 62.2% (+ 1.7%) of the total revenue.

The revenue growth at Lufthansa Technik AG – especially in component main-tenance, engine maintenance and the VIP segment – compensated for the decline in revenues as a result of portfolio streamlining (Lufthansa Technik Airmotive Ireland, Airliance Materials and Lufthansa Technik Switzerland, among others). At EUR 229 million, other operating income remained largely at the previous year’s levels. In fiscal 2013, Lufthansa Technik generated total operating revenue of EUR 4.4 billion (+ 4.2%).

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Revenue development Lufthansa Technik Group(in EUR million)

Total operating expenses increased to EUR 4.0 billion (+ 2.5%). The higher volume of modifications and the overall increase in VIP and engine business meant that the cost of materials increased by 5.2% to EUR 2.1 billion, despite the significant relief resulting from the change in material depreciation. At EUR 99 million, other depreciation, amortization and impairment losses remained largely at the previous year‘s levels. Other operating expenses declined slightly to EUR 610 million (- 0.8%) owing mainly to currency effects.

A restrictive approach to new appointments, especially in administration, and offers for early retirement as well as the closure and sale of various companies led to a reduction in the average number of employees to 19,927 (- 2.2%). This reduced staffing level means that, despite the collective agreement pay increase valid from August 2013 and rising expenses for pensions and staff reduction measures, personnel costs remained largely the same at EUR 1.2 billion.

As a result of growth, the successful implementation of various SCORE meas-ures and some positive one-time effects, Lufthansa Technik generated operating profit of EUR 404 million (+ 23.2%). Other segment income rose to EUR 54 million (+ 45.9%), mainly due to the reversal of provisions that were no longer needed. The contribution from joint ventures and associates consolidated using the at-equity method increased to EUR 19 million (+ EUR 4 million). In total, segment profits amounted to EUR 457 million (+ 21.2%).

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Segment investments increased slightly to EUR 136 million (+ 5.4%). Impor-tant investments were the purchase of spare engines at LTAIL for the expan-sion of the Lufthansa Group fleets and infrastructure investments, for example in Hamburg.

Multi-period overview shows increase in profitsFor the past five years, Lufthansa Technik generated operating profits in the range of EUR 257 to 328 million. This underscores the stabilizing effect of the maintenance, repair and overhaul business segment for the Lufthansa Group even in economically weaker periods. Thanks in part to one-time effects on the cost side and an especially good order situation, Lufthansa Technik was able to increase its operating result to EUR 404 million in 2013.

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Operating profitLufthansa Technik Group(in EUR million)

Assets Dec. 31, 2013 Dec. 31, 2012

(all figures in EUR thousand)

Intangible assets 52,484 39,073Property, plant and equipment 886,947 900,172Repairable aircraft parts 881,438 816,748Equity-accounted financial assets 144,897 120,386Other financial assets 30,917 30,832Receivables and other assets 118,153 131,756Non-current assets 2,114,836 2,038,966

Inventories 394,319 396,136Receivables and other assets 940,200 736,666Securities 0 685Cash and cash equivalents 8,553 5,690Assets held for sale 826 0Current assets 1,343,897 1,139,178 3.458,733 3,178,145

Shareholders‘ equity and liabilities Dec. 31, 2013 Dec. 31, 2012(all figures in EUR thousand)

Shareholders‘ equity 610,654 586,125Provisions 451,340 604,993Financial liabilities 26,705 28,536Liabilities 932,106 810,988Non-current provisions and liabilities 1,410,151 1,444,517Provisions 315,299 296,062Financial liabilities 5,854 19,274Liabilities 1,116,775 832,167Current provisions and liabilities 1,437,928 1,147,503 3,458,733 3,178,145 The reference figures for the previous year have been retrospectively adjusted in line with the changes to IAS 19.

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Lufthansa Technik GroupBalance sheet as of December 31, 2013

2013 2012(all figures in EUR thousand)

1. Revenue 4,180,288 4,012,6592. Other operating income 229,390 224,182Total operating revenue 4,409,677 4,236,841

1. Personnel costs 1,227,384 1,226,7342. Cost of materials 2,068,805 1,965,5073. Depreciation, amortization and impairment losses 98,740 100,7644. Other costs 610,700 615,529Total costs 4,005,629 3,908,534Operating profit 404,048 328,307

1. Net effect from the disposal/reversal

of impairment losses on financial assets 10,859 6,0292. Other income from the reversal of provisions 51,935 28,7083. Other income 18,754 17,4284. Sonstiger Aufwand 19,140 3,369Earnings before interest and tax (EBIT) 466,455 377,103

1. Income from equity investments 18,048 15,0672. Net interest costs -28,212 -29,9893. Impairment losses on financial assets 65 294Net finance costs -10,229 -15,215Earnings before tax (EBT) 456,226 361,887

The reference figures for the previous year have been retrospectively adjusted in line with the changes to IAS 19.

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Lufthansa Technik GroupIncome statementfor fiscal year 2013

I. Accounting policies

1. Use of IFRS In addition to preparing single-entity financial statements in accordance with the Handelsgesetzbuch (German Commercial Code, HGB), or region-al GAAP, Lufthansa Technik AG and its subsidiaries also prepare financial statements in accordance with the International Financial Reporting Stand-ards (IFRSs) to facilitate consolidation. These IFRS single-entity financial statements form the basis for the consolidated financial statements present-ed here for Lufthansa Technik AG and its subsidiaries. These statements have been included in the audit of the consolidated financial statements of Deutsche Lufthansa AG. The auditors have issued the respective inter-office opinions.

The use of IFRSs enhances the international comparability of the annual financial statements. The standards in effect as of January 01, 2013 have also been applied.

The IFRS financial statements contain the following accounting policies in variance with German law: Translation of foreign currency denominated re-ceivables and liabilities at the closing rate; recognition of internally produced intangible assets; pro-rata recognition of revenue from long-term customer contracts (percentage-of-completion method); recognition at present value of noncurrent provisions and liabilities on which interest is paid above or below market rates; derecognition of other provisions if the probability of use is less than 50 percent; recognition of deferred taxes in accordance with the asset and liability method; recognition of the asset and of the remaining liability under finance leases in accordance with the allocation criteria of IAS 17; and measurement of pension provisions using the projected unit credit method. Due to the existence of a Group-wide hedging policy, the provisions of IAS 39 have only been applied to a limited extent in the IFRS financial statements of Lufthansa Technik AG.

2. Changes to the reporting standard IAS 19R “Employee benefits”, which is applicable since January 1, 2013, has resulted in changes to the reporting standard. In the interest of better compa-rability, the figures for the previous year listed in this report were determined as though IAS 19R had already been applied that year.

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Notes to the consolidated financial statements as of Dec. 31, 2013

3. Basis of consolidation In 2013, the following twenty-two companies based in Germany and elsewhere were included in the basis of consolidation in addition to the parent company, Lufthansa Technik AG:

Companies: Interest (%) Lufthansa Technik Immobilien- und Verwaltungsgesellschaft mbH, Hamburg, Germany 100Hamburger Gesellschaft für Flughafenanlagen mbH Hamburg, Germany 100Lufthansa Technik Objekt- und Verwaltungsgesellschaft mbH, Hamburg, Germany 100Lufthansa Technik Logistik Services GmbH, Hamburg, Germany 100Lufthansa Technik Logistik Services GmbH, Hamburg Germany 100 Lufthansa Technik AERO Alzey GmbH, Alzey, Germany 100Lufthansa Technik Maintenance International GmbH, Frankfurt am Main, Germany 100JASEN Grundstücksgesellschaft mbH & Co. KG, Grünwald, Germany 100Lufthansa Technik Airmotive Ireland Holdings Limited, Dublin, Ireland 100Lufthansa Technik Airmotive Ireland Limited, Dublin, Irland 100Lufthansa Technik Airmotive Ireland (Leasing) Limited, Dublin, Ireland 100 Shannon Aerospace Ltd., Shannon, Ireland 100Lufthansa Technik Landing Gear Services UKHayes, England 100 Lufthansa Technik Switzerland GmbH, Basel, Switzerland 100 *Lufthansa Technik North America Holding, Corp., Wilmington, Delaware, USA 100BizJet International Sales & Support, Inc., Tulsa, Oklahoma, USA 100Lufthansa Technik Component Services LLC, Tulsa, Oklahoma, USA 100AirLiance Materials LLC, Wilmington, Delaware, USA 100 *Hawker Pacific Aerospace, Corp., Sun Valley, California, USA 100Lufthansa Technik Malta Limited, Luqa, Malta 92Lufthansa Technik Budapest Kft, Budapest, Hungary 85Lufthansa Technik Philippines, Inc., Manila, Philippines 51*) sold in fiscal year 2013

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4. Consolidated financial statements Lufthansa Technik AG is exempt from the obligation to prepare its own con-solidated financial statements or Group management report. The company is included in the consolidated financial statements of Deutsche Lufthansa AG. The consolidated financial statements are prepared in accordance with the International Financial Reporting Standards (IFRSs), and are filed with the Cologne Local Court under reference HRB 2168.

II. Notes to the balance sheet

5. Equity-accounted financial assets(in EUR thousand) 12/31/2013 12/31/2012Shares in joint ventures 59,165 40,399Shares in associated companies 85,732 79,987Total 144,897 120,386

6. Other financial assets (in EUR thousand) 12/31/2013 12/31/2012Shares in affiliated companies 20,484 20,518Loans to affiliated companies 5,582 5,461Associates and joint ventures: 3,962 3,825Other loans 889 1,028Total 30,917 30,832

7. Non-current receivables and other assets(in EUR thousand) 12/31/2013 12/31/2012Other receivables due after one year 2,767 1,786Other receivables from affiliated companies due after one year 9 11Deferred tax assets 115,377 129,959Total 118,153 131,756

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8. Inventories(in EUR thousand) 12/31/2013 12/31/2012Spare parts for aircraft 379,015 386,017Raw materials and consumables 1,811 1,764Unfinished goods, work in progress 12,004 8,299Advance payments made 1,489 56Total 394,319 396,136

9. Current receivables and other assets(in EUR thousand) 12/31/2013 12/31/2012Trade accounts receivable 416,180 356,521Trade accounts receivable from affiliated companies 323,428 185,523Receivables from associates and joint ventures 26,335 6,175Other assets 174,257 188,447Total 940,200 736,666

10. Shareholders‘ equity The capital stock of Lufthansa Technik AG amounts to EUR 220 million, divided into 44,000,000 no-par-value shares. Deutsche Lufthansa Aktienge-sellschaft is the sole shareholder.

11. Non-current provisions (in EUR thousand) 12/31/2013 12/31/2012Provisions for pensions and similar obligations 301,902 437,397Other non-current provisions 149,438 167,596Total 451,340 604,993

12. Financial liabilitiesFinancial liabilities relate to non-current liabilities to banks.

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13. Non-current liabilities(in EUR thousand) 12/31/2013 12/31/2012Liabilities to affiliated companies 900,793 779,330Other non-current liabilities 23,413 21,434Advance payments received 5,908 7,899Provisions for deferred taxes 1,992 2,325Total 932,106 810,988

14. Current provisions(in EUR thousand) 12/31/2013 12/31/2012Provisions for other personnel costs 13,294 11,529Other current provisions 302,005 284,533Total 315,299 296,062

15. Current liabilities(in EUR thousand) 12/31/2013 12/31/2012Trade accounts payable 253,895 215,952Liabilities to affiliated companies 5,774 6,357Liabilities to associates and joint ventures 9,378 6,173Advance payments received and deferred income 148,953 161,871Other liabilities 698,582 441,409Provisions for taxes on income 193 405Total 1,116,775 832,167

III. Notes to the income statement

16. Revenue Revenue is broken down as follows:(in EUR thousand) 12/31/2013 12/31/2012Group companies 1,582,137 1,583,416Non-Group companies 2,598,151 2,429,143Total 4,180,288 4,012,559

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17. Other operating income(in EUR thousand) 12/31/2013 12/31/2012Currency translation differences 23,883 30,354Miscellaneous other operating income 205,507 193,828Total 229,390 224,182

18. Other operating expenses(in EUR thousand) 12/31/2013 12/31/2012Personnel costs 1,227,384 1,226,734Cost of materials 2,068,805 1,974,491Depreciation, amortization and impairment losses 98,740 100,764Miscellaneous other operating expenses 610,700 615,529Total 4,005,629 3,908,534

19. Other non-operating income and expensesOther non-operating income reflects primarily the closing date measurement of financial liabilities. Other non-operating expenses increased due to dispos-als of associates and joint ventures as well as unplanned impairment losses on property, plant and equipment.

20. Net finance costs(in EUR thousand) 12/31/2013 12/31/2012Income from profit and loss transfer agreements 747 1,269Income from other associates and joint ventures 20,162 13,849Expenses from loss transfers 2,861 51Income from long-term loans 546 683Other interest and similar income 6,200 4,288Interest and similar expenses 34,958 34,959Impairment losses on financial assets 65 294Total -10,229 -15,215

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IV. General notes to the financial statements

21. Number of employeesIn the year under review, the Lufthansa Technik Group had an average of 19,927 employees (previous year: 20,368).

22. Supervisory Board and Executive Board The members of the Lufthansa Technik AG Supervisory and Executive Boards are listed on page 25.

Hamburg, February 08, 2014

Lufthansa Technik Aktiengesellschaft

Executive Board

A.-W. Henningsen Dr. P. Jansen Dr. T. Stüger Dr. J. Bussmann

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Supervisory Board

Dr. Christoph Franz

Chairman of the Executive Board

Deutsche Lufthansa AG

Chairman

Dietmar Stretz

Head of the Transportation Division,

Multi-service trade union ver.di

Hamburg region

Employee representative

Deputy Chairman

Hauke Brockmann

Member of the Hamburg Works

Council

Employee representative

Cornelia Dörries

Secretary of trade union ver.di

Employee representative

Anka Hätzel

Officer, Process and

Quality Management

Employee representative

Li Hai

President & CEO

China Aviation Supplies Import and

Export Group Corporation, Beijing

Anke Heß

Aircraft electronic technician

Employee representative

Prof. Dr. Jochem Heizmann

Member of the Executive Board,

Volkswagen AG

Dr. Peter Klaus

Member of the Executive Board,

KfW Bank Group

(retired since May 1, 2007)

(to August 31, 2013)

Wolfgang Mayrhuber

(Chairman of the Executive Board,

Deutsche Lufthansa AG through De-

cember 2010)

(to June 30, 2013)

Simone Menne

Chief Officer Finance and Aviation

Services of Deutsche Lufthansa AG

Bernard Meyer

Managing Partner

MEYER WERFT GmbH

Jobst D. Siemer

Chairman of the Supervisory Board

ExxonMobil Central Europe Holding

GmbH

Carsten Spohr

Member of the Executive Board of

Deutsche Lufthansa AG, Chairman

of the Executive Board of Lufthansa

Passage

(since July 1, 2013)

Sigfried Trissler

Aircraft mechanic

Employee representative

Burkhard Walter

Industrial clerk

Employee representative

Dipl.-Ing. Dr.-Ing. E.h. Jürgen Weber

(Chairman of the Supervisory Board,

Deutsche Lufthansa AG through

May 2013)

(since September 1, 2013)

Dipl.-Ing. Wolfgang Weynell

Head of division

Employee representative of

executive managers

Executive Board

August Wilhelm Henningsen

Chairman

Dr. Peter Jansen

Finance

Dr. Thomas Stüger

Products, Services and IT

Dr. Johannes Bussmann

Human Resources, Engine and

VIP Services

Supervisory Board and Executive Board

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Imprint

Lufthansa Technik AGWeg beim Jäger 19322335 Hamburg, GermanyPhone +49(40) 50 70-36 67Telefax +49(40) 50 70-85 34e-mail: [email protected]: www.lufthansa-technik.com

Editorial:Bernd Habbel, Corporate Communications, Lufthansa Technik AG

Design/Production:Jespersen Communication, Hamburg

Photograph credits:Jan Brandes, Sonja Brüggemann, Gregor Schläger

www.lufthansa-technik.com