Lufthansa Group: Further Deleverage With Strong Execution (Rating Upgrade)

2025-05-01 06:35:18 ET

Summary

• Lufthansa's Q1 2025 results show a 10% sales growth and improved adjusted EBIT, despite a net income loss of €885 million.
• Strong cash flow and reduced net debt to €5.3 billion, driven by increased ticket sales and operational excellence.
• Record sales and EBIT in the MRO division and fuel cost savings bolster the investment thesis and support a positive outlook for DLAKF.
• Considering a valuation discount compared to the historical average and solid execution, we moved our rating to a Strong Buy Recommendation.

Following our update on Ryanair and easyJet, we are back to comment on Lufthansa Group ( OTCQX:DLAKF , OTCQX:DLAKY ) . Since our last update, Earnings Upside Ahead, the company shares have been declining by double-digit percentages (Fig. 1), and after having checked the Q1 release, we see a favourable entry time. Our investment thesis is backed by a solid balance sheet, MRO upside, and M&E firepower supported by ITA integration. With an ongoing valuation discount, the company is still a buy....

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