Company valuations 8
Overview on methods 8
Summary target prices 8
Price to Book (P/BV) 8
Replacement values (P/RV) 10
Returns on capital (EV/IC) 10
Lufthansa: sum-of-parts 11
Stock performance drivers 11
Sector supply & demand 13
The global airline cycle 13
Demand outlook 2009-10 14
Supply outlook 2009-10 14
The demand-supply balance 15
Sector yields: a key issue 16
Current trading 16
Fuel prices 17
The outlook for sector profits 18
Consolidation issues 18
Company investment
summaries 20
Overview of our forecasting assumptions 20
Revenue analysis 21
Cost and profit analysis 22
Savings and capex 23
Financing risk 24
FX issues 24
Fleet age 24
Major hubs networks 25
Air France-KLM: Overweight (V) 26
British Airways: Neutral (V) 29
Lufthansa: Overweight (V) 32
Detailed financials 35
Summary overview of forecasts for all three companiesAir
France-KLM 36
Air France-KLM 37
Financials & valuation: 41
British Airways 42
Financials & valuation: 46
Lufthansa 47
Financials & valuation: 51
Appendix: methodology of our
seat survey 52
HSBC survey of capacity 52
Disclosure appendix 55
Disclaimer 59
Contents