Lufthansa Analysis

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Lufthansa
(Financial Analysis)

Business Analysis and Valuation

Arjola Mura
Mirela Baholli
Lora Muco
Kristiana Duri
Fatjon Ceka
Table of content

Introduction.......................................................................................3 Rivalry among existing firms………………………………………4 Substitute products…………………………………………………7 Firm’s competitive strategy………………………………………...9 Accounting poilicy and flexibility.....................................................11 Quality of disclosure..........................................................................13 Identifying red flags...........................................................................14 Financial analysis...............................................................................15 Cas flow analysis................................................................................26 Forecasted income statement............................................................26 Forecasted balance sheet...................................................................27 Forecasted cash flow........................................................................28 WACC..............................................................................................29 Valuation...........................................................................................30 Apendex.............................................................................................31 Introduction

We are going to analyze Lufthansa Airline. It is one of the largest airlines and the flag carrier of Germany. The name comes from Luft-air and Hansa-Hanseatic League, a powerful medieval trading group. It was found on January 6, 1926 by the combination of Deutcher Aero Llyod and Junkers Luftverkehr. The offices are positioned in Deutz, Cologne and main operations are based in Frankfurt. About 2.8 billion euro was announced for the 2010 revenues. The transport volume was about 1.8 million tons of cargo and also 8.9 billion revenues were from ton-kilometers. Those figures make possible the Lufthansa Cargo to be in the forefront of companies engaged in the transport of air cargo. Till now there are 4500 people worldwide that work for this company. Growth of the company

As mentioned before the company was founded in 1926, when flying wasn’t even percept. However times changed and it become very important transportation method. The company started to grow too. Although, it developed with high steps the seventies announced two oil crises, which resulted in a huge economy decline. Lufthansa Group found it very difficult to gain with that kind of crisis. However, the engineers applied methods to reduce fuel consumption and succeed. In 2001, Lufthansa’s focus was on innovation and quality. Since 2001 till 2005 crises of aviation industry occurred. The program called “Future European Operation” played crucial role in the remaining Lufthansa on the ascent. The 50th anniversary of Lufthansa took place in 2005. SWISS integrated in Lufthansa Group as an independent airline to consolidate Lufthansa’s position among Europe’s leading network carriers. Three years after, Lufthansa created new prospective for Germany’s future as a business location. The Lufthansa Aviation Centre became an architectural flagship. In addition, it becomes partner of Star Alliance. Rivalry among existing firms

The main competitors of Lufthansa Airlines are DAX, British Airways and Air France. The competitors to Lufthansa Technic are on the one hand the original equipment manufacturers (OEMs) of aircraft, engines and components. They are joined by other airlines that offer maintenance services, such as Air France-KLM, as well as independent contractors (e.g. ST AERO, SR Technics). This competition is getting tougher, as new MRO capacities enter the market and increase price pressure, while cost and margin pressure on the airlines remains high. Lufthansa Technic quickly introduced programs to counteract this,...
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