Deutsche Lufthansa AG (LHA) Earnings Call Transcript & Summary

Good morning, everyone. Thanks for making the time to join our conference call today. Here with me are Lufthansa Group CEO Carsten Spohr and CFO Remco Steenbergen. Together, we look forward to discussing our medium-term plans, our financial targets for 2024 and our measures to return to a strong balance sheet. You will find our press release and our presentation, which we published last night and which Carsten and Remco will be referring to in their prepared remarks, in the Investor Relations section of lufthansagroup.com. Over to you, Carsten.

Yes. Thank you, Dennis. And good morning, ladies and gentlemen. Thanks for joining our call on quite some short notice, but obviously you understand why that was necessary. It's really only a few weeks ago when we spoke last time. It was the end of April. And you might recall that we found ourselves in the middle of the third wave those days, increasing incidence rates and very little progress, at least over here in Europe, on the vaccination campaigns. And since then, things have significantly changed to the better. The incidence rate, in Germany at least, which was around 170 when we last talked to you in the quarter results, has now dropped to below 20. And there is an increasing number of completely free COVID areas -- sorry, completely COVID-free areas in our home markets. Secondly, the vaccination campaigns have really gained momentum now all over Europe. Thirdly, the EU digital green pass will come into effect shortly to make travel within the European Union much easier. And last but not least, millions of people in our home markets look forward to leaving the past 15 months behind them and to visit friends and family again and spend their summer holidays abroad. Of course, we're not yet back to normal after this unprecedented crisis, but I think it's worth to say that in our view it's time now to look ahead with confidence. And it's obvious to us that the acceleration of the recovery for us is at a turning point. And maybe to sum it all up and maybe the most important sentence of the whole morning today is that we in Lufthansa are switching from the crisis mode to the transformation mode. And it's our explicit ambition as the industry leader to also lead the recovery in our industry. And in that regard, we are confident to reach an adjusted EBIT margin of at least 8% by 2024. Our confidence is based on numerous initiatives, projects, decisions that will make Lufthansa a more efficient and a more profitable company. Additionally, a potential equity raise offers a clear path to leaving the stabilization package of Germany and eventually the other countries who helped us in the crisis behind us. And that's in the end why we have invited you to this call this morning. Let's talk about the market opening. In the past few weeks, global demand for air travel has picked up now noticeably -- or both noticeably and significantly, and capacity offered in European short haul has more than doubled within less than 3 months only. Vaccination campaigns have taken up speed after quite a slow start and close to half of the German population at least has received one vaccine dose by now, and the first countries indeed are coming close to herd immunity. And as a result, new bookings at our airlines have more than doubled compared to March and April levels. Bookings for the summer months have accelerated week after week since about mid-May, driven by touristic, private leisure and VFR demand. Customers book short term, that means for June and July, but increasingly also for leisure trips in August and early September as the confidence in the easing of restrictions and the safety of travel increases. And the longer this pandemic lasts, the more it becomes clear that also business travel will recover. Let's talk about the phases of the crisis. We have passed, as I mentioned, the low point of the crisis. And compared to the second quarter of 2020, we more than halved our cash drain to EUR 235 million in the first quarter of 2021; and cash drain will be further reduced in the second quarter. And based on the surge of bookings which I just mentioned, we even expect operating cash flow to be positive in this quarter already. In the 12 months since the beginning of the crisis, we reduced fixed cash costs by 35%, which is more or less EUR 4 billion. We have cut our investments by 2/3. And the stabilization measures agreed upon with the governments of our home countries provide the base of our successful return to the capital markets, where we raised a record EUR 4.5 billion within just a few months. And at the end of the first quarter, available liquidity amounted to EUR 10.6 billion, equaling around 50x our monthly current cash drain. We can hence focus on the structural transformation of the group now, which we have accelerated since the beginning of the crisis. We target structural cost savings of EUR 3.5 billion to rightsize our cost base. We are adapting our operating model to the long-term changes in the market, and we establish the basis to eventually capitalize on growth in the new normal. And in sum, we are confident to achieve an adjusted EBIT margin of at least 8%; and adjusted ROCE, excluding cash, of at least 10% by 2024 as a result. And based on our medium terms, which Remco and I will outline in more detail in these presentations, we are preparing a capital increase to reestablish a sustainable and efficient long-term capital structure and therefore to make an important step towards ending the stabilization measures. With that, Remco, over to you.

Thank you, Carsten. And good morning, everyone. The long-term restructuring of the group's cost base will lay the foundation for future profitable growth. The full leadership team of the Lufthansa Group is committed to use the crisis as a catalyst for change building on the focus of cost reduction and cash generation, which has become deeply rooted in our organization since the crisis which hit us by no fault of our own. Based on our 2024 margin and capital return expectations, we target to structurally lower group-wide costs by around EUR 3.5 billion compared to the 2019 levels. This includes unit cost reductions at the group airlines amounting to a low to mid-single digits percentage rate and the lowering of structural costs in all other group companies and functions. The targeted reduction of EUR 3.5 billion is a gross number, so it's sized to offset inflation and cost headwinds we expect in certain areas, especially those subject to regulation and other noncontrollable market factors. By the end of the year, we expect to have secured around half of the targeted savings already. Overall, we have identified more than 1,000 single measures across all parts of the group, for which we track progress on a monthly basis. 3 main drivers will account for the bulk of the savings: the reduction of personnel costs; operational simplification and overhead reduction; and third, the modernization and standardization of our fleet. Personnel cost reductions are targeted to amount to around EUR 1.8 billion by latest 2024. Half of the savings, i.e., around EUR 900 million, have been achieved already even when excluding the effect of the divestiture of LSG Europe. This is mainly the consequence of the reduction of almost 26,000 employees since the start of the crisis. Going forward, we expect an effect of almost EUR 200 million from the current restructuring at SWISS, where around 1,700 full-time positions will be reduced by the end of the year, including the forced dismissal of around 550 employees. In Germany, we aim to reduce personnel costs through a combination of collective agreements, voluntarily departures and forced dismissals, in total equivalent to a head count reduction of up to 10,000 positions. For this purpose, we have launched voluntary redundancy programs for the ground and admin personnel at Deutsche Lufthansa AG and Lufthansa Technik. An additional voluntary program for the cockpit personnel is planned to follow in the second half this year. In addition, we target to turn the existing crisis agreements with Vereinigung Cockpit and Verdi, which rule out forced dismissals in both work groups until the end of 2021 and the first quarter of 2022, respectively, into long-term agreements that ensure the required sustainable cost reductions so that more jobs can be saved. Any remaining cost overrun will have to be addressed and will be addressed with further voluntarily programs and forced dismissals. Nonpersonnel-related structural cost savings are expected to amount to approximately EUR 1.7 billion. Let me highlight our key initiatives to simplify our operations and reduce overhead costs. We have used the momentum created by the crisis to reduce organizational complexity. We closed SunExpress Deutschland in the process of bundling our touristic long-haul business in just one operation, Eurowings Discover. The Eurowings business in Germany is operated in only one AOC now, thanks to the discontinuation of flight operations of Germanwings. And we have shut down multiple bases at smaller airports in Germany and Austria and closed various businesses and sites at Lufthansa Technik. In operations, we see great opportunities to increase synergies between the airlines. While it's important to adapt the offer of our airlines to the specifics of their respective home markets, we strive to further standardize noncustomer-facing systems and processes. For example, this includes the standardized joint management and maintenance of aircraft and engines; two, the standardization of pilot and crew training stations across the airlines; and three, use of the same state-of-the-art systems for technical control, operations control and crew planning. Overall, we target to halve the number of operating systems in the area of operations. Measures to streamline group overhead costs include not only personnel reductions but also the downsizing of office space, the reduction of external consulting and marketing expenses, the renegotiation of key supplier contracts and the change to a more digital and more cost-efficient approach in our ways of working. When it comes to our fleet too, it's all about modernization and standardization. The downsizing which the crisis had made necessary has greatly accelerated our transition to a more modern, more sustainable and more homogeneous fleet. Since the beginning of the crisis, we have decided to phase out 115 aircraft, primarily the very long-haul planes such as the A380 and the older Boeing 747s but also the oldest parts of our short-haul fleet, including legacy aircrafts such as the Dash 8. As a result, the number of aircraft types in operation in our long-haul fleet will shrink by 8, more quickly than initially planned. This will not only lower fuel costs and improve our environmental footprint but also reduces the hidden costs of complexity in areas such as maintenance and crew training and deployment. It will also lower the ratio of reserve aircrafts and support higher aircraft productivity, coupled with further efficiency improvements that we are implementing in our network. By 2023, based on our current capacity outlook, we plan to have around 650 aircrafts in operation compared to 800 before the crisis. The latter included around 30 wet leases, which we have terminated in the meanwhile. We will reduce our fleet by approximately 230 aircrafts and add 80 new aircrafts over this period. The latter will include around 60 new-technology A320 family short-haul aircrafts; and around 20 long-haul aircrafts, including the Boeing 787s, of which we will start taking delivery of towards the end of this year, additional A350s and the first new Boeing 777 in 2023. Finally, Lufthansa Cargo will add another 777F still in 2021. The continued modernization of our fleet will go hand-in-hand with the sustainable reduction in capital expenditures compared to precrisis levels. We will continue to make use of attractive low-cost aircraft financing options such as the Japanese operating leases, the so-called JOLCOs, to finance straight purchases as Lufthansa has done successfully in the past. We will also consider operating leases depending on the required flexibility and the financial conditions offered by lessors, so the kind of financing of new aircrafts will be decided on a case-by-case basis, depending on the strategic and financial considerations. Overall investments, of which around 2/4 will remain aircraft and engine related, are expected to be around EUR 2.5 billion in '23 and '24 while being lower in 2021 and 2022. Ladies and gentlemen, thank you very much for listening to me. Dear Carsten, over to you.

Yes, thanks, Remco. And I want to talk a little bit about the group transformation initially. And I think it's obvious that the rightsizing of our cost base is key to our future. It will provide the means to drive our transformation. And we are committed to position the group so we can seize also future opportunities and therefore emerge as a structural winner in our industry. We will focus on capturing market opportunities. Based on our strength in strategic markets and also in the way the industry will recover, we believe there will be options for us. We will further enhance customer centricity to deliver an individual and seamless travel experience. Digitalization will play an increasingly important role in this aspect, as does sustainability, where we are committed to decarbonization driven by technological innovation. And finally, we are dedicated to streamlining our processes and our portfolio. Our strategy remains firmly based on the multi-hub system of our Network Airlines. We call Europe's economically strongest markets our home markets. This economic strength, however, is regionally distributed; and multiple smaller catchment areas require a bundling of demand for our intercontinental traffic. And in this regard, an efficient and sufficiently dense feeder network is the prerequisite for operating a successful long haul business of the hubs in Frankfurt, Munich, Zurich, Brussels and Vienna. And we are confident that both businesses, short haul and long haul, will turn profitable very soon again once we have progressed further in the recovery. And in the early stages of the recovery, the crisis-related fall in passenger volumes will even favor hub over point-to-point traffic, where demand on many routes will remain too small to operate them in a profitable way. Our long haul business is set to benefit disproportionately not only from the expected shape of the recovery but also from long-term growth trends, but transatlantic, where our airlines and our partners from United and Air Canada have a leading market share, is expected to recover fastest. After the lifting of travel restrictions for vaccinated U.S. citizens in many European countries, we are looking forward to see Germany following this. And we expect opening steps on the other side of the Atlantic also in due course. And accordingly, we plan to ramp up capacity significantly in July. By the end of August, we'll be back to 90% of our long-haul network in terms of destinations and we'll be serving 100% of our U.S. destinations. The recovery of the U.S. -- sorry, of the Asia Pacific is expected to be somewhat slower compared to the transatlantic. However, as the leading European flag carrier on routes to Asia, we are best positioned to capitalize on the high levels of growth expected medium term in these markets. The joint ventures we operate in all major long-haul markets will support a coordinated restart among our partners and us. And in sum, those joint ventures account for 70%, 7-0 percent, of our long haul revenues before the crisis. And their value for the customer, be it greater connectivity, operationality -- optionality, ease of transfer, those options and advantages really weigh even heavier as long as global networks have not been fully reestablished. And commercially, the joint offer, the joint distribution, the joint pricing will help us still in the capacity, in sync with the recovery of customer demand and regulatory steps to reopen the markets. And we expect this to support yields and profitability during the restart. When it comes to customer segments, the recovery in VFR and leisure travel will likely outpace the corporate segment also in the next months. And duty-of-care considerations will hold back traveling initially, especially among the large corporate customers. Also, beyond the immediate crisis, we forecast video conferencing and sustainability considerations to primarily affect short-haul trips, though, because in contrast, long-haul trips, which often combine multiple meetings or multiple reasons for travel, will be much more difficult to substitute. On that basis, we estimate the corporate travel segment to recover to around at least 80% of precrisis capacity by 2024. We obviously plan to mitigate this effect in multiple ways. First, we will reduce the share and the number of first- and business-class seats in our long-haul fleet. Decommissioning of very large long-haul aircraft with a high share of premium seats, as example, the 380 which we already decided last year, will lead to a reduction of 30%, of course partly compensated by new additions. Secondly, we will adapt aircraft configurations where sensible, expanding Premium Economy in particular whose contribution per square meter is 40% higher than that of a business-class seat. We will take advantage of the desire among leisure travelers to enjoy more space and comfort by traveling business class, a trend which has gained momentum since the very beginning of this crisis. And finally, we will offer a record number of leisure destinations this summer, reflecting the structurally growing importance of the segment in our mix. Also in this context, we are just launching Eurowings Discover in Germany. Eurowings Discover will focus on offering leisure long- and medium-haul routes out of our German hubs; and thereby follows the blueprint of Edelweiss, Switzerland's leading touristic airline based in Zurich and the sister company of SWISS. Eurowings Discover will be closely integrated in the feeder network of Lufthansa German Airlines to ensure maximum connectivity for our passengers. It will start operations in summer '21 with initially 3 Airbus 330s flying to touristic destinations such as Windhoek in Namibia, Las Vegas or Mauritius. In the coming winter season, additional [ 330s ] and also 320s will be added to its fleet in order to also cater to medium-haul warm-water destinations such as the Canary Islands, for example. Based on high productivity and efficient processes, we expect the cost structure of Eurowings Discover to be materially below our Network Airlines. And it's important to say that Eurowings Discover is managed independently of Eurowings. With the latter, it only shares its brand; and therefore it benefits from the strong, broad reach of this touristic brand. Eurowings has made enormous progress, by the way, in its restructuring process, which started, as you might recall, even before the crisis. The Eurowings fleet has been modernized and standardized and consisting of now solely Airbus 320 family aircraft; as mentioned already by Remco, reduced operational complexity by closing 2 AOCs in Germany and by terminating all external [ deal on ] wet leases. Since 2019, Eurowings achieved an overhead cost reduction of more than 30%, with aircrafts and crew productivity to be improved once traffic levels come back to normal. Overall, CASK are targeted to be almost 20% lower in 2024 compared to 2019 levels, which is basically around EUR 0.05. Taking into account Eurowings' yield premium over low-cost competitors, this is a very competitive cost level. Preserving its strategic focus on those segments expected to recover the fastest, leisure and VFR, Eurowings is well positioned to earn profit margins at least in line with the overall group in the medium term. Let's talk about the customers because, all airlines and spanning the entire customer journey, we have a full pipeline of innovations planned or already in execution. Based on extensive customer feedback we collected, we have decided to focus on making even more tailor-made and personalized offers to our customers; secondly, enhancing the travel experience by unleashing the potential of digitalization; and thirdly, by putting even more focus on sustainability. We acknowledge that the regional needs obviously [ offer ], and that's why we let our customers select which services they would like to enjoy and which services they therefore pay for. That's why our new business class to be launched in '23 will offer different seat options. And that's why we give customers a broader and better choice between different food and beverage options on European short-haul flights. What unites all our customers, however, is the wish to be constantly kept informed especially when things are not going according to plan. We have therefore significantly expanded digital customer service options since the beginning of the crisis. And with the launch of innovative biometric services, our customers now enjoy the latest technology also for seamless and therefore even more comfortable travels. With the standardization of booking platforms across the group airlines, we will enable customers to move seamlessly between the different airline [ worlds ] and to make booking flight intuitive and easy. Seeking a consistent customer experience, we consolidate our digital touch points with our customers. This is another prerequisite for the personalization of our offer, for example, based on past general patterns which we have highlighted before. Miles & More, which is Europe's largest frequent flyer program, ties in closely with that. Miles & More will be more than just a classic rewards and benefits program. It is key to create long-lasting customer relationships, also embracing loyal customers who fly less than the classic business travelers and also with a strong focus on sustainability. The expansion of direct distribution is key for much of what I just have described. Direct distribution allows us to control the entire customer journey and to make relevant individual offers, creates a modern retail experience. And we have constantly increased the share of direct distribution from only 30% in 2015 to over 50% in 2019. And by '24, we target direct distribution channels to account for 75% of our bookings; and that, of course, around the world, including places like Africa where there is still quite other infrastructure in place. Direct distribution enables dynamic pricing, and direct distribution also facilitates the sale of ancillary services. Costs are lowered because GDS fees and the related customer surcharges no longer apply. This helps us to offer more attractive prices for our customers and especially in very price-competitive markets. Meanwhile, sustainability is an integral offer -- or part of our offer and the way customers make their travel decisions. That's become a key element of our license to operate, so we must reflect it in all aspects of our strategy. Of course, sustainability has many different elements: climate protection, noise reduction, the avoidance of waste, just to name a few. And let me focus on the most material ones, climate protection and the reduction of net CO2 emissions. We are committed to drastically reducing our environmental footprint. By 2050, we target to be net carbon neutral. By 2030, we aim to have halved our net emissions. Technological innovation holds the key to decarbonization. Fleet renewal, technical retrofits such as our newly introduced AeroSHARK skins and adaptive operational procedures alone will make a 10% to 15% contribution to our 2030 reduction target. And sustainable aviation fuels are expected in this to contribute between 5% and 10%, very much dependent on their availability and their prices. The entire aviation system and the producers must join forces to commerce the -- or commercialize the current production methods. We are willing to lead such a cooperation wherever possible. And in addition, regulators and the governments have to establish the basis for greener aviation. This is, for instance, applying to research or [ mentioned ] development initiatives for SAF manufacturing. If a single European sky makes its announced contribution, another 5% to 10% will be added. And the remaining difference to the target will be achieved through compensation and offsetting. Since long, we have been participating in the EU ETS scheme, with CORSIA now following. Our corporate customers are increasingly choosing green fares to offset the business travel. And our Compensaid platform gives private travelers the choice between offsetting and buying SAFs for their flight. We are also transforming the way we work. The reduction of more than 20% of leadership positions has helped to streamline the organization, reduce complexity and accelerate decision-making processes. The organizational separation of Lufthansa German Airlines ensures a clear split of group and airline responsibilities. We also have cut back the matrix organization in some areas. The core airline functions, we put even more focus on it to increase synergies significantly. Across the organization, we strive to ensure that all business units carry full entrepreneurial and P&L responsibility. As a result, the group's management board will be able to focus even more on the group's strategy, strategic capital allocation and value creation. The constant evaluation of our portfolio is another essential part of this. As announced before, the group is in the process of evaluating options for a partial divestiture in Lufthansa Technik. We continue to consider Lufthansa Technik core to the group because of the multiple synergies with the airlines. However, this will still allow selling or listing a minority stake of this business. For AirPlus and the LSG group, full divestitures are targeted once the market environment allows the fair value to be realized. We expect the progressing market recovery to add further momentum to these 2 divestiture processes. With that, back to Remco.

Thank you, Carsten. Based on the strategic and operational measures and the related cost savings actions we just presented, we target at least an 8% adjusted EBIT margin by 2024. In addition, we target a capital return, measured as adjusted ROCE excluding cash, of at least 10% by 2024. Note that we will adjust ROCE for cash-related items going forward in line with common practice in our industry. All targets are based on an expected capacity amounting to 90% to 95% of 2019 levels in 2024 and the shape of recovery by region and customer segment, which Carsten outlined. We are confident to limit the unit's revenue decline to a low single-digit percentage rate. Unit costs are targeted to decline at a low to mid-single-digit percentage rate, taking into consideration our ambitious cost-saving targets. Of course, we expect the reduction to be even larger when we reach precrisis capacity levels. Finally, CapEx of around EUR 2.5 billion in '23 and '24 will support free cash flow generation expected to be at least EUR 2 billion in '23 and '24. Ladies and gentlemen, the strengthening of our balance sheet back to pre-COVID levels is a journey. With our presentation today, we try to map out this journey in as much detail as possible. Knowing that flexibility will remain key, we are ready to adapt our plans to different recovery scenarios as required, so let me conclude by saying that we are strongly committed, one, to pull all levers to reach positive results and free cash flow and regain our strong balance sheet as soon as possible so that we reach our mid-term targets by latest 2024; to part ways with parts of our businesses for which we are not the perfect owner; to exit the stabilization by the governments of our home markets, the sooner, the better. A capital increase, for which we are currently making preparations, will be important milestone in this regard. Yes, Carsten, back to you.

Yes, thanks, Remco. And ladies and gentlemen, let me just summarize so we have time for your questions. It's we are very convinced -- and as I said, most important sentence is turning from the crisis mode to a transformation mode -- that this transformation will in -- make Lufthansa a stronger, more efficient and a more profitable, more customer-focused and a more sustainable company. And we are confident to get there because we have taken decisive action to ensure liquidity during the pandemic and obviously to respond to the unprecedented disruptions caused by the corona crisis. We have made strong progress in implementing key restructuring actions which will create a stronger, more resilient business. We enjoy a leading position in our industry in terms of innovation. And we constantly enhance our product; and make it more convenient, more individual, more sustainable, solidifying our competitive advantage in this area. And we have aligned financial management in a way to strengthen the balance sheet and drive very attractive returns. And with that, we now look forward to your questions.

[Operator Instructions] First question comes from the line of Ruxandra Haradau-Doser with Kepler Cheuvreux.

Three, please. First, as bookings start to improve, is price elasticity improving as well? Is it possible to stimulate traffic with price discounts? And what yield trends relative to 2019 shall we expect in June and July? Second, on medium-term restructurings, with long-haul flights having a disproportionate high CO2 emission and with a slower recovery in the corporate segment, does it make sense to have overlaps between the long haul networks in Frankfurt, Munich and Zurich? Or shall we expect restructurings of the long haul networks over the next years? And third, cargo has been the best-performing part of the business since the start of the crisis. Do you expect any sustainable benefits in this segment post COVID? And do you see the potential for cargo to bridge the gap of corporate traffic [ until at least with noticeable ] recovery in 2024?

Yes, thank you very much. Price elasticity: I think it's important to understand that, of course, all the yield management systems have never seen what they are seeing now, so there's a lot of manual experience going into this process. And I'm happy to say that we see quite some good discipline across the market when it comes to pricing. And with the load factors going up much faster than we thought, also our pricing optimization systems are kicking in. So we don't see basically -- with all, of course, marketing we do to fill our airplanes, we don't see yields being depressed as some people were afraid. Restructuring, I've answered that many times. We have the 5 wealthiest home markets as our home markets. And not to offer long range from Vienna or not to offer long range from Brussels to Africa, to the U.S., to [indiscernible] would be crazy. So we will destroy value by limiting our long range to less than the 5 hubs where we are operating in now. We did take long range away from Düsseldorf. So it's from 6 to 5, but those 5, we're currently planning to stay there, obviously with much smaller networks in Vienna and Brussels compared to the [ 360 global networks ] we are offering out of Frankfurt, Munich and Zurich. And cargo. Indeed there's 2 reasons to believe that some of the effects we have seen in cargo during the pandemic will continue. E-commerce is even more on its rise, after this pandemic, than it has been before. And Lufthansa Cargo plays a huge role in e-commerce; and that, we believe, is a customer segment to stay. And also I think it's worth to say that Germany, which of course is our strongest cargo market, maintains its role in the global export environment. Exports in Germany continue to be strong. Look at the car industry alone. And in all modesty, Lufthansa Cargo is taking a huge advantage of that strong position in our home market of Germany in terms of its export focus.

The next question comes from the line of James Hollins with BNP Paribas.

Two for me, please. And the first one, I see on your mid-term targets you've assumed fuel at $57 a barrel. I was wondering how your capacity plans and cost program might change if we were to see fuel at around the $73 per barrel we're currently seeing. The second one is on the operating cash flow positive in Q2. I was wondering if there are change for -- I think your previous guidance was for EUR 200 million outflow per month. Is the change entirely down to that surge in bookings? And maybe you could quantify the new guidance on monthly inflows for Q2.

James, Remco here. Let me take those 2 questions. In the fuel forecasting, we take the current fuel curves, as we have also indicated. So that's where it's based on. Of course -- when fuel prices would change, of course, there is also a pricing element in what we have to charge our customers, as we expect competition to do. So we will to -- see no difference in our EBIT targets or profitability guidance based on a different oil price, as we currently see. On your second question, the indication of the -- what we call the cash drain, which is basically the EBITDA: We had in Q1 an outflow of EUR 235 million. We guided for Q2 EUR 200 million negative per month on average. We expect that to be less, right, in -- the EUR 200 million to be performing better than that number, but with the inflow of all the bookings, we expect the operating cash flow to enter positive. So that's the combination of those 2 elements, but equally, on the EBITDA or the cash drain we're also performing better at this point than we guided in April.

Next question comes from the line of Stephen Furlong with Davy.

Carsten, Remco, Dennis, yes, just really one question. I mean, in terms of the medium-term target, over 8% margin on returns, I mean, I see you -- like we're broadly there in '17 and '18 [ but have mentioned ] Eurowings, where you talk about, obviously, taking advantage of the leisure recovery there and that profitability levels will be in line with the overall group. So if you go back to kind of pre crisis, clearly Eurowings was loss making, maybe a little bit profitable in '17, so is it that you think Eurowings will be -- kind of have margins like the group? Or is that what you're kind of forecasting?

Well, indeed that's what I was trying to say. Maybe I need to look at what I actually said, but that's exactly what I was trying to say. We believe that, with restructuring in Eurowings, which is a lot stronger and even more significant than the restructuring in the group in general, we'll return that business not only back into the positive but indeed on a level of profitability compared to the rest of the group. And we have cleaned up the fleet. We have taken long range out. We are focusing on one AOC in Germany, took more than 1/3 of the overhead out. And also the competitive landscape in Germany is changing, to the advantage of Eurowings. Other competitors are pulling back from the German markets or at least are shrinking in Germany, so I am very optimistic on Eurowings indeed.

Next question comes from the line of Daniel Roeska with Bernstein Research.

Three then, if I may. The first one, a little bit strategic, on the short-haul travel. You mentioned the potential impact on short-haul business trips you're expecting, business needs or kind of big cities in Europe on long haul with the frequency and connectivity on long haul, but leisure on short haul typically are not just the big city destinations and not as high frequency. And so kind of how does -- that short-haul network that you need to feed the long haul business, how does that fare in a market that's more leisure on short haul? What effect does that have on your short haul? Second, you talked about your plan to achieve 75% of non-GDS bookings by '24. And I remember, at the outset, kind of breaking free of the GDs and the lack of availability of IT solutions was a big problem in the direct distribution landscape. Could you talk about your IT strategy here; and if you think there are now providers in the market, maybe even among the GDSes or something like Farelogix, who help you with the direct distribution? I mean, is it more a buy or more a build strategy from here on out in the direct distribution IT? And then lastly, for Remco: You still are planning moderate fleet growth past '23, but you're planning to keep CapEx below D&A. How does that work? And is there possibly then a CapEx hike later in the cycle?

[ Daniel Roeska, second one ]. On your first question, on network, I mean, that's the -- well, the miracle you can do if you have a fleet which in -- on short haul ranges from Canada air's with 90 seats, all the way to a 321 with more than 200 seats. So you'll see the 321 going to Athens and going to Mallorca. And you see the Canada air going to [indiscernible] or to a small place in Denmark or Norway. So [ we do then ] answer to your question why aircraft sizing. Of course, we maintain the connectivity in all our [ banks ] to the key business destinations. That's the very backbone of our business. As you know, we fill a 350 in Munich with about 50 feeding flights, similar in Frankfurt. And these feeding flights, as you rightly point out, are less leisure focused but more corporate focused. And that's why, if anything is visible in terms of adapting our network, we do that mainly via aircraft and [indiscernible] size and less via frequency. We'll be maintaining those 4 frequencies a day to Toulouse or other business destinations to fill our long range. No change in that. If at all, again we change the depth, sometimes by day, the [indiscernible] size. On your second question, on direct distribution. Indeed the answer -- are we being helped by innovations in this market? The answer is a clear yes, and it's neither build or buy. It's both, but as you also recall, we usually tend to have a high element of build in there. We are convinced to be the industry leader on direct distribution around the world. And therefore, we continue to build our own systems where necessary and to separate us from others, but also we have very flexible agreements with GDS providers or with other new entries into the market. We are buying. It is part of our strategy. And there's examples. Like Farelogix, where we indeed find a good mix between what's off the shelf and what do we customize; and the new platforms like airline.com we're developing ourselves are the mix which you are rightly pointing out in your question.

And Daniel, Remco here. Let me take your third question. If you look at our CapEx last year and also the guidance we have given for this year, you see that we are investing significantly less, also in line with the flights we -- the aircraft we have taken out. Once we come back more in a normal situation in '23, '24 and equally the years after, we target CapEx to be in line with the depreciation and amortization, also in line with what we expect with the top line. And we expect, with that level of investment, we -- which is still a significant amount of money -- we shouldn't forget EUR 2.5 billion per year in investment, that this can also catch up with a normal growth percentage we expect in those years. So it's not only for '23 and '24. And a good investment portfolio holds that in line with depreciation and amortization.

Maybe just to clarify on that last point. The CapEx you're showing and targeting here below D&A, is that kind of your gross all in, including leasing? Or are leases, the JOLCOs or maybe op leases, beyond that CapEx figure?

No. It's an all-in number.

Okay.

And you should not forget, Dan Roeska, it's a very good time to go aircraft shopping. You get a lot more for EUR 2.5 billion now than you got for EUR 2.5 billion 2 years ago.

Next question comes from the line of Neil Glynn with Crédit Suisse.

I'll also grab 3, please. And the first one is just following on from the previous Eurowings question. You've moved, I think, about 80 320 family units from Eurowings to Lufthansa mainline as part of your simplification of Eurowings, but I assume those 80 aircraft were performing worse than the ones that remained within Eurowings. And I just wanted to understand the economic impact at a group level. What's the profitability outlook for these aircrafts? Do they -- do their -- does their performance actually improve, or do they just leave the group? Then the second question, with respect to free cash flow generation: Remco, you mentioned, I think, EUR 2 billion per annum 2023, 2024, but how do you manage the interim period? I know there's CapEx creeping up for this year, so for next year, is it imperative that you generate positive free cash flow in the context of the capital raise? Or is it still quite transitional? And then the third question, with respect to restructuring. I think it's quite clear that you're trying to simplify decision-making and expedite things in terms of decision-making, but can you give us an example of what actually changes and perhaps whether it's evidence from the past of where speedier decision-making would have produced a better outcome? Or is it more likely to be a focus on a fairer competition for capital across the businesses, for example?

Excuse me, Mr. Spohr. We cannot hear you.

Neil, sorry. I was trying to gather what the very first question of yours was implying because the three of us here don't believe that we got it right. As you know, we closed down Germanwings. Of course, the aircrafts from Germanwings were moved both to Eurowings and to Lufthansa. We reduced the number of aircraft in Eurowings, at the same time modernized the fleet there, but maybe you give us one more chance to understand the first question.

Absolutely. I guess -- so theoretically, if those 80-ish planes were losing money under Eurowings and now they've been absorbed by Lufthansa mainline, what is the future for the performance of those planes? Do they become a lot more profitable because they're operated by Lufthansa mainline? Or actually...

The number -- sorry to interrupt you. The number is wrong. We didn't move 80 aircraft from Eurowings. We obviously took the long range out in Eurowings. We took SunExpress out, which was considered to be part of Eurowings, but that 8-0 is way too high. They are now operating probably 100 aircraft next year in total in Eurowings. I think we were at a total of 160 before, including long range, including wet leases and all that, but there is not a number of 8-0 aircraft moved across the group. So that is -- I'm sure Dennis and you can take that up later on. There must be some misunderstanding there. What we did do, we cleaned up the fleet and -- in Eurowings. And we announced actually or even today that we brought back up to 80 aircraft in Eurowings into service from down to 10 in the beginning of the year. So maybe that was the confusion. So the CEO of Eurowings announced last night that we now have -- I think it's 81, to be precise, aircrafts back into operation. And we go back up to 100 next year. So Eurowings cleaned up the fleet, cleaned up the AOC landscape, cleaned up the overhead [ of fleet ], very positive on that. Second one will be done by Remco. On the third one, I think fleet is always a great example. When we now buy airplanes, we buy them as a so-called gray fleet through the Board of the group, then we allocate them to the AOCs where they contribute the highest return of investments. In the old days, every network-planning department of every airline was making its own dimensioning, dreams and wishes. We now do that much more centrally and make sure that we allocate aircraft to create maximum returns. That's one example, stabilization of aircraft. We don't do that necessarily anymore, that we allow every airline to specify its own aircraft. We do that centrally, but some other examples: We decided to reduce more or less 30,000 people within weeks from 140,000 before the crisis to 110,000 in the middle of the crisis. We closed the flight school in Bremen, which for decades has been a very core element of Lufthansa. We have done the restructuring in SWISS, which we just announced in these days, I think, within weeks of arrival of the new CEO. So I think -- if you look at us in the last years compared to how we did things then and how we're doing things now, I think you can see the further acceleration which we already achieved over last years to speak up in the last month.

Neil, let me take the second question. For 2022, for the full year, we are targeting, expecting an -- a positive operating cash flow for the full year. For the free cash flow, it's a little bit too early to say. That really also depends how 2022 plays out and what level it will end up, but as soon as we can say something more here, we will get back to you.

Next question comes from the line of Muneeba Kayani with Bank of America Global Research.

Three questions, please. I -- firstly, on the near-term bookings on Slide 3, can you quantify how much the bookings are as a percent of 2019 levels? And what's your expectation on the transatlantic opening given the news flow from G7 and EU Commission kind of in the last couple of days? Secondly, on fleet, on Slide 9, can you help us understand what's the breakdown of those deliveries in '21, '22, '23? And then the third question, just in terms of the capital raise, are you still targeting net debt-to-EBITDA of under 3.5x for -- in terms of the capital raise?

If I got your first question right, the news flow from opening, I think it's important to differentiate. The EU, weeks ago, has decided to recommend member states to open for vaccinated non-European travelers, which many European countries have implemented by now, latest France, also Italy, Greece and Croatia some time ago. We're now waiting for Germany to also go along with that and allow nonvaccinated non-European -- sorry, vaccinated non-Europeans to be allowed into Germany. That's probably days away, but to be honest, for our business model, it's almost more important that Southern European countries and Eastern European countries have opened up because that's where we transport people [ through ], then to have non-Europeans visit Germany itself even though -- we are a wonderful country to visit. So for us, part of the effect is already there. Our aircraft from the U.S. are filling up while we speak, Germany and other Europeans to be added to the list of countries opening [ rather ] quickly. The other way around, Europeans going to the U.S., we don't know. I think nobody knows. There's various rumors in the market that something will happen in July, so we expect that to be in effect for us the second half of the summer. And we are increasing our schedule to and from the U.S. after the first week in July significantly. That was your first question. And number of aircraft over the years. Let me see if we find that quickly here. And the number of aircraft types is 787s, more 350s and 777s in '23, but if you want to break down exactly per year, then we will deliver to you. But it's more or less broadly distributed between those 80 aircrafts and the 3 years; the exact numbers, we could of course provide if you want them. And I'll hand over to Remco for the capital increase question.

In terms of the balance sheet structure, there are 2 things which are important. One is the liquidity levels. As said before, we target a liquidity level after crisis between EUR 6 billion and EUR 8 billion in a combination of RCF and physical cash. So it's not all cash. And we do that in the most efficient way possible but that we have a larger buffer than we were handling in the past from a liquidity perspective. Secondly, from a debt and equity level, we target a net debt-over-EBITDA indeed of less than 3.5x and in that sense also coming back to investment grade. So you have to see all the actions we are taking, one, because we're becoming more profitable and coming back to profitability; secondly, the divestments [ we have targeted ]; and thirdly, what you have read about, our capital raise. So that combination, we would want to come as soon as possible back to investment grade but equally with the liquidity structure that we are actually with a stronger balance sheet than we had before the crisis and, should something new happen, that we are standing on our own feet. I hope that answers your question.

One -- that is clear. Just one clarification on the bookings. What are bookings to be as a percent of 2019 levels at this time?

Well, they're higher because of the surge, but it depends on the time frame you look at. So on a day like today, we get in more bookings than we got in 2019 because we have to, of course, close the gap. If you take the longer stretch of time, of course, they're way below. In terms of passenger numbers, maybe we have -- expecting 30% of passengers, compared to 2019, in June; 45% of our passenger numbers, compared to 2019, in July; and 55%, compared to 2019, in August. And we will see that going up, probably up to 70% at the rest of the year, but of course, it's less details to be announcing that as things are changing while we speak. But for the whole year, we're still guiding 4-0, 40%. That's your question, but on a day like today, per hour for a day, we'll get in sometimes more bookings. There's even some destinations where we're already flying more people to [ than we did in ] '19. So that very much depends on the [ network element ] you're asking about. And maybe important, that the numbers I just gave you were passenger numbers. The guided 40%, of course, is capacity, so in that element, long range and short range plays a role. When it comes to pure passenger numbers, we'll be above 40% because short haul will have a higher share than long haul for the year. So if you want to book a vacation, be quick, at least if you want to fly with the Lufthansa Group.

The next question comes from the line of Jaime Rowbotham with Deutsche Bank.

Three from me, please. First one, slightly predictable, I guess, but could you just remind us how you see the adjusted EBIT margin improvement by division? For example, cargo was breakeven in 2019 and then had a super normal 28% margin in 2020. Where do you see that normalizing within the target for the group to be at 8%? Perhaps you could comment on the other businesses as well. Second question, again coming back to this expectation near term of an operating cash positive in Q2, Remco, could you give us any sense of the magnitude of the working capital inflow you've seen, thanks to the surge in bookings? And any implications for Q3 operating cash when you'll obviously fly those flights? And is this a -- what I might call a genuine cash generation, or are you still getting some help from deferring payments like the taxes at Technik? Third and final question. It sounds like you see Eurowings Discover as a sensible tool for targeting long-haul leisure in a post-COVID world, but 3 aircrafts going to 11 doesn't sound like very many in the context of the group. I mean, would you be ready to reallocate aircrafts from the mainline carriers if that became appropriate?

Jaime, let me take the first 2 questions, at least start with those, right. So in terms of the margin by division, yes, you've seen, of course, very good results of cargo, also in Q1. And we expect cargo to come to record-breaking results this year. And we're very happy with that, but if you still keep in mind -- that in the coming years, the passenger airlines, right, across the industry will be less, right? So the belly capacity, in that sense, will be less. We expect still cargo to also continue with good profitability levels for coming years, albeit, of course, it's lower than what it -- what we expect for this year and what we had last year. We should not forget that, while cargo is a very -- has been historically a volatile business, right, the returns -- if you think about EBIT over capital employed, cargo is a very, very good business to be in. And in the coming years, we expect that volatility to be less because of the belly capacity to be less than in the past. And in that sense, we will be, of course, careful in putting additional investments in because we want to maintain that in the total industry, but we will be looking for opportunities where we can -- think we can get good returns. If you think about margins across the other businesses, you should expect margins to come back what you have seen historically, where of course, and I also mentioned earlier in the call, we expect Eurowings to really turn from a loss-making division into a profitable division. And we would also expect that Brussels and Austrian also become positive again in the years to come. So in that sense, we're looking across the businesses in a way which -- supporting the overall results of the group. If you look at the operating cash flow and your question for Q2 and for Q3. As I said before, in Q2, the EBITDA or the cash drain being less than EUR 200 million on average per month, with the bookings coming in, we expect the operating cash flow to be positive. There is no help in here from other elements or deferral of payments. In the second half of this year, we do expect to start repaying on some of the taxes benefit we have had in Technik. So that should impact the operating cash flow negative. Equally, if bookings are further coming up in Q3, that should have some compensation as well. We'll continue with our strict working capital. How that then exactly net-net pans out in Q3? I think that's a bit too early to comment on, but I hope this gives you some of the data points where we currently stand.

Yes. And your question on Eurowings Discover: Indeed it's 11 330s we are planning to operate there by early '22, plus 10 Airbus 320s for mid-haul routes like the Canaries. So that's 21 aircraft compared to Edelweiss, which is our blueprint that's already quite a bit bigger, but indeed the business model goes well. It's very much depending on the, of course, tourism industry. It's opening new destinations for Lufthansa, Salt Lake City, Fort Myers, Kilimanjaro on Africa. So there is a lot of innovation in terms of the network in there. If it turns out to be as positive as we think, we indeed can grow that business. It's important, I think, to understand that, after settling the pilot conflict between '14 and '17, we don't have any scope clause anymore, so we can grow the business depending on the market requirements and the profitability we can achieve there. In the end, it's all about strict capital allocation based on performance.

Next question comes from the line of Andrew Lobbenberg with HSBC.

Can I just stay on Eurowings Discover for a moment? Because part of the story of the improvement at Eurowings is simplifying it and having fewer AOCs, and suddenly we're putting -- you're putting A320s into Eurowings Discover. So is that because Eurowings Discover can operate at lower cost than Eurowings? So why are we adding another low-cost or value-based 320 operation if we -- when I thought we were focused on simplifying? In terms of the organizational structure. I mean, would you just -- I mean, are you in principle aiming for the structure that IAG sits with? Is that what we're emulating? And how far down the road are you with the extraction of Lufthansa Passage from the group? And then just a third question, I guess. The environmental debate in Germany is moving very, very fast in the context of the elections that's playing out, but how comfortable are you with the latest commentary out of the various political parties? How concerned are you about the call from the Green party to, midterm, remove domestic short-haul flying? At least I think that's what they said at the weekend.

Yes, Andrew, thanks. On Eurowings Discover, a couple additions to that. It's a fully integrated commercial model in our hubs, whereas Eurowings, out of the non-hubs, is operating on a Navitaire platform, which is as we know focused on point-to-point traffic. So let's call them the original Eurowings outside the hubs. They remain outside the hubs with Navitaire as a platform, point to point. Eurowings Discover, in the Amadeus world, fully integrated into our commercial model here in Frankfurt and in Munich, like Edelweiss is in Zurich, and complementing our network. And that's why the big difference between those two is not the fleet, but it's rather how are they commercially integrated. We had 3 AOCs, before, operating our long haul outside of the Lufthansa brand in Germany: CityLine, Eurowings then doing it with SunExpress Germany and with Brussels Airlines in Düsseldorf. So simplifying all that to the new AOC, we're adding the short haul operation, which we also had in the hubs before on 2 different AOCs, into the same one. And that will be like Edelweiss in Switzerland, the second AOC used in the hubs besides, of course, the regional AOC we have in CityLine. So we did a significant simplification. On the extraction of Lufthansa airlines, we actually have done it. We run it now like all our other business units, the way, yes, management team is working there; the way they have the P&L responsibility; the way we allocate capital according to performance, including the Lufthansa main airline. That is all done. The element missing is the legal extraction of the Lufthansa airline. And there are significant tax and traffic right issues to be solved, so that's something we don't talk months. We talk years, but we already manage it as if that has significantly also changed. I think the attitude in the airline, also how unions have to cope with the cost challenges there. So I think the functional holding is there. And at the same time, compared to our friends in London or Madrid, I think we are a little bit further when it comes to synergy generation. I understand they are partly now copying our model to have best of both worlds, synergies as much as you can and P&L responsibility in a decentralized fashion to maintain the entrepreneurial spirit. That's at least what we believe we are mastering in the organizational structure which we have. The political situation in Germany. I know you are following this. You probably realize that, when the greens went out a couple of weeks ago, being quite aggressive on short haul, they got bashed by other parties, by the media, by the population, by people in their own party, so they pulled back. And they have, more important for us, fully understood our business model of hubbing which does require us to operate domestic flights. And I think everybody now has understood in Germany that what the French did initially sounded great in terms of PR, but if we look behind it, they have done a smart thing. You still allow short haul operations when it has connecting [indiscernible], which in our case is the whole business model based on it. And even the greens have just publicly stated that they understood that, if we had put the French system in place in Germany, there would be exactly one route which we would have to cancel. It's Düsseldorf-Stuttgart. Everything else falls under the same exceptions as we have them in France. So I think that discussion is more and more rationalized in Germany, to sum it up, rather of some of the irrational beginnings in the beginning, so I'm less concerned, besides that most likely the greens will not win the election, anyway. But intermodality, for example, is something we are -- strongly believe in, but it does take 30 years in Germany to build a new track. And some people now are saying on a [ railroad track ] there's thousands which are hearing the noise every day, 6 times a day. On an airport or an air route, there is only 2 on either end. So I think this discussion is far from over in a densely populated country like Germany, but everybody has now understood across the party spectrum how our hub system is the backbone not only of Lufthansa but the backbone of the German aviation system.

Next question comes from the line of Johannes Braun with Stifel.

I have 2. Firstly, on the capital increase and obviously appreciate that you don't give us or can't give us a timing and the size of it but just curious. When you -- when sizing the capital increase, do you bank on the potential proceeds from the blend and divestitures? So would you size the capital increase by already assuming those proceeds to come in, I guess, especially the potential partial divestiture of MRO so that in combination with the capital increase you would achieve an investment-grade rated balance sheet? Or would those proceeds from the divestitures come on top, so to speak? And the second question, on the cargo business, obviously still very strong on yields. Have you ever thought about increasing the order book for the full freighters beyond the current 777 order book in order to capture more of the strong cargo market?

Johannes, with regard to the capital increase, perhaps I have to restart a little bit on what we're targeting. I think #1 is that, of course, to be positive in terms of profitability and positive in terms of free cash flow generation, right, because that is sustainable elements of a good balance sheet, also at some point to be able to give dividends again, et cetera, right? So that is one element. I said before as well we need a certain level of liquidity. And then we believe that an equity raise is still part of the equation, in combination, of course, with the divestitures. What we clearly do not want to do is to make divestitures an absolute necessity and in that sense not being able to crystallize on the value. We don't want to be there under pressure. Of course, we want to [ grow ] as fast as possible but not to be under pressure. And then it becomes a little bit of a timing question overall. Are divestitures then in or out? To a certain extent, they are in when you have really to think about AirPlus and LSG. That's part of the equation, and the time frame we are looking at on Lufthansa Technik. And we, so far, don't include that, but equally it's to be said it's then again just a matter of timing because then it means that the balance sheet strengthening will just happen a bit earlier than we currently planned. So we have that flexibility and that is where we are looking at. I hope that answers your question.

It does.

And one -- on cargo one. We already did increase the number of full freighters in Lufthansa Cargo. We initially always had the mid-term sizing of 10 aircraft in mind. We have actually ordered 2 more in the crisis alone, total now targeting 14 777 freighters. So that is partly -- not because of the pandemic developments in cargo but our mid- and long-term outlook in cargo, what we have done. And we even are looking at the short-haul cargo market, which we believe could the -- be something very interesting from a profitability point of view. So indeed the cargo is, as I mentioned in my opening, for us a mid- and long-term strategic element where we want to increase our exposure even further than being #1 in the world already.

Could you -- just as a follow-up, could you give us a rough idea to how much higher the cargo capacity will be after the crisis versus, I guess, 2019?

Of -- I don't have that at hand now. And obviously with 12 777 freighters, we're saying that we have the same cargo capacity as we did before because obviously 777 freighters compensate for more than one MD11. So 2 over 12 is, what, well, a little bit more than 10%, 15%. So yes, maybe 15% is a good estimate, but of course, that is cargo freighters only, right? Then on belly, of course, the long-range fleet will be significantly smaller around the world, also in Lufthansa, so that is to be deducted from that, but then to make it more complicated: We are taking out aircraft with little belly capacity like the 380. And we are bringing in aircraft with quite large belly capacity, 350s and 787s, so it's a constant mix in that regard. Happy to give you more details if -- when [indiscernible] goes beyond this conference call. In the end, flexibility is key also there, right? It's a more volatile business. And therefore, it's always having the right amount of capacity available, which is part of the success in that business here is -- now for us, but there will be a favorable supply-demand relationship, in our view, in the years to come.

In the interest of time, I will hand back to Dennis Weber.

I think we've got one more question. I think we still have time to take that.

Next question comes from the line of Sathish Sivakumar with Citigroup.

Yes. I just have 2 questions, which actually resonates with what Andrew flagged but -- and also the divestiture plans. So firstly, on the traffic mix, what is your current pure domestic point-to-point exposure actually that is not related to feeder traffic? And do you expect this mix to be unchanged as we come out of this pandemic, into '23 and '24? And secondly, on the divestiture plans, any update on the timing of divestiture of AirPlus and Technik? And do you see like the capital increase likely to be first? Or which will take priority actually? Because based on your answer to previous questions, it looks like you might say capital increase has been the one that's been fast forwarded versus the divestiture.

Yes, let me answer the first one, and Remco will take the second one. If I -- we couldn't perfectly understand the question, but what I can give you as statistics is 50% of our passengers are short haul. 50% are long haul. Of the 50% which are short haul, again 50% are connecting. So that gives us about 25% of our total passengers are point-to-point short-haul passengers. If I get your question right: On domestic, 5% of our turnover is still coming from domestic point to point in Germany, coming down because of trains and obviously us growing in the long haul market stronger than in the short haul market. So if that was the question, then the answer is 5% of Lufthansa's turnover come from point to point [ in Germany ]. And now on divestitures, Remco?

Let me take that quick. On the divestiture timing, as we said before, we want to crystallize the right value before an -- I'll say, a real closure of this divestment. Is that more likely to happen next year than this year? The answer on that is yes. Could it happen this year if the right offers would come in? Absolutely, but the likelihood is much more it's going to be next year. With regard to a capital increase, we cannot comment yet on the timing. What we clearly did and what you saw also today and the reason we do the announcement, we have been on the journey from last year on all the cost and cash savings actions really on the spot and transforming that in a structural change of the company, outline how we want to do our business and in which structure and also the whole cost savings and the underpinning of that. We have closed on that in terms of a very concrete plan internally and to share that with you externally and then coming back in those mid-term targets we have now [ outlined ]. In that sense, we are very, very committed. We have asked our banks to now calibrate with the investor community, based on the homework we have done, how they see us. We are very positive in this regard. And depending on that calibration, we will decide then on the timing of the capital increase, what would make sense, but we believe we are doing our homework well here. And we have now to see what the market thinks of us.

Okay. Just actually on a follow-up on the divestiture: Given how the cargo market has actually turned out in the last 12 to 18 months, would you see it as actually an opportunity there in terms of a partial spin-off of your cargo and probably you might realize more -- better value there versus the AirPlus or Technik?

No. You need to understand that, in pre-COVID times and in post-COVID times, 50% of our cargo capacity is done in the bellies of our passenger aircraft. So it's a highly integrated business, including the questions where do you fly to. The cargo demand has an impact on where do we fly our passenger aircrafts, by the way, a lot stronger right now but also in normal days. So that is such a highly synergetic business to the passenger business. You can't spin that off, in our view. There is no profitable long-range route without cargo, so you really need cargo in the long range network like we're operating it with almost 200 wide-bodies around the world, yes. So thanks for all these great questions, sometimes detailed questions, but let me just remind us why we called you in today. This was not a regular quarterly call. We wanted to inform you that our transformation is being accelerated. We want to share with you why we are so convinced that we will be a structural winner in the new normal after COVID. I think we prove not only to you but also to others that we have taken decisive action to respond to the crisis to manage our liquidity. We will be continuing to be the innovator -- or one of the innovators in this industry, be it on digital issues, be it on technical issues, sustainability issues. So I think we will maintain that leading role we have in the industry, but maybe even more obvious in terms of our financial performance is that we were able to take restructuring actions in this crisis, a country like Germany as a home country, the legal system, you probably wouldn't have allowed us without COVID. So I think the restructuring of this group has been accelerated by COVID beyond what we could have done in normal times. And put on top of that the quite disciplined financial management I think we have proven; and which also my new CFO, Remco, really stands for with all his personal experience. I think all that added up will make us an even more successful player in this industry. We are the largest airline group in the world, after the 3 Americans. One day, maybe the Chinese will take that position from all 4 of us, but until then, not only in terms of size and quality, but more important when it comes to profitability, we want to maintain our top position in that exciting league we are in. So thanks for accompanying us on that journey; also accompanying us on your holiday journeys, hopefully, in the next weeks. Looking forward to welcome you onboard like we welcomed you on this call today. Stay healthy. All the best for your families. Thanks for dialing in.