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Lufthansa cash bonds move 1-3bps tighter despite slight misses on earnings

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  • Revenue at €35.4b (c€36.3b) & though it boosted EBIT margin by 270bps yoy, Net income at €1.7b (c€1.8b) & FCF at €1.85b (c€1.6b) missed. Capex rose by ~€500m to €2.8, rise attributed to purchase of new aircraft.
  • Net debt (adj. EBITDA & including pension liabilities) fell to 1.7* (from 2.3* last year but up from 1.4* last qtr) - much of that was from net pension obligations that rose ~€600m to €2.7b.
  • Its also resumed dividends at €0.3/share (~€360m for FY23) and is targeting 20-40% of profit return to shareholders going ahead.
  • Its guiding to a strong increase in revenues (consensus is looking for +8.7%) but flat adj. EBIT (~in line with consensus) & FCF of at least €1.5b (c€1.6b) that includes a drag from capex guidance of €2.5-3b.

Not much positives for credit, but it does price wide for its rating (Baa3, BBB-,BBB-;S) - its narrowed a 50bp premium late last year to IAGLN (Ba2,BBB-) to now trade ~in line.

Earnings call at 11:30am London; https://event.choruscall.com/mediaframe/webcast.ht...

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