Operating Margin - Deutsche Lufthansa AG (XETRA:LHA)

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Price: 8.598 EUR 1.61%

Market Cap: 10.3B EUR

3.8%

Current

Average

5.1%

Industry

Operating Margin represents how efficiently a company is able to generate profit through its core operations.

Higher ratios are generally better, illustrating the company is efficient in its operations and is good at turning sales into profits.

Operating Margin

3.8%

Operating Profit

1.5B

Revenue

39.1B

Operating Margin Across Competitors

Country		Company	Market Cap	Operating Margin
DE		Deutsche Lufthansa AG XETRA:LHA	10.3B EUR	4%
US		Delta Air Lines Inc NYSE:DAL	47B USD	10%
US		United Airlines Holdings Inc NASDAQ:UAL	36B USD	9%
UK		International Consolidated Airlines Group SA LSE:IAG	19.6B GBP	12%
CH		Kinarus Therapeutics Holding AG SIX:KNRS	19.5B CHF	N/A
US		Southwest Airlines Co NYSE:LUV	22.5B USD	1%
IE	R	Ryanair Holdings PLC LSE:RYA	15.4B EUR	15%
IN		Interglobe Aviation Ltd NSE:INDIGO	1.9T INR	14%
CN		Air China Ltd SSE:601111	147.8B CNY	0%
CN		China Southern Airlines Co Ltd SSE:600029	127.8B CNY	4%
CN		China Eastern Airlines Corp Ltd SSE:600115	119.3B CNY	1%

Deutsche Lufthansa AG
Glance View

Economic Moat

None

Market Cap

10.3B EUR

Industry

Airlines

Deutsche Lufthansa AG, the largest airline in Germany, has carved a significant niche in the global aviation industry since its inception in 1953. Headquartered in Cologne, Lufthansa operates a complex and vast network, embodying both the practicality of air travel and the ambition of a legacy carrier. The company deftly manages a multifaceted business model, centered not only on transporting millions of passengers safely across continents but also on tapping into ancillary revenue streams like cargo operations, maintenance services, and catering. At the heart of Lufthansa's operations is its expansive fleet of aircraft that reflects its commitment to modernization and efficiency, balancing reliability and customer experience. With hubs in Frankfurt and Munich, Lufthansa connects major global destinations, making it a key player in transatlantic and European markets. Beyond the realm of passengers and aircraft, Lufthansa is a master of diversification within the aviation sphere. The airline's branch, Lufthansa Cargo, focuses on freight services, offering solutions that keep global supply chains thriving. Meanwhile, Lufthansa Technik stands as a towering figure in aircraft maintenance, repair, and overhaul, lending its prowess not just to itself but to myriad airlines worldwide. Catering is another revenue bolt, driven by the division LSG Sky Chefs, which provides inflight dining to airlines across the globe. This integrated approach allows Lufthansa to craft a robust and sustainable revenue model, insulating itself from the volatility inherent in passenger air travel. By blending traditional airline services with these diversified operations, Lufthansa not only secures its financial footing but also strengthens its position as a premium brand in the competitive aviation market.

View LHA Analysis

LHA Intrinsic Value

What is Intrinsic Value?

Economic Moat is a concept popularized by Warren Buffett to describe a company's durable competitive advantage. It represents the 'moat' that protects a company from competitors and helps it sustain profitability over the long term. Our analysis of the past 10 years showed that companies with a wide economic moat significantly outperformed the market, delivering +645% returns compared to +189% for the S&P 500.

Our research into Economic Moat performance spans the past 10 years and focuses on companies with a wide economic moat. For this analysis, we calculated the average stock price returns of these companies, comparing them to the performance of the S&P 500 index over the same period.

The results were compelling: wide moat stocks achieved a remarkable +645% average return, compared to +188% for the broader market. This difference highlights the long-term benefits of investing in businesses that can maintain their market position and pricing power over time.

Note: This research does not account for survivorship bias. Past performance is not indicative of future results.

Determining whether a company has an economic moat requires both a deep dive into financial metrics and a qualitative assessment of its competitive position. Our analysts conduct a rigorous evaluation that focuses on identifying structural advantages that enable a company to sustain profitability and defend its market share over the long term.

The process begins with an analysis of a company’s historical financial performance. We assess how consistently the company has generated returns above its cost of capital and whether those returns have been stable or improving. However, financial performance alone doesn’t reveal the full picture. To understand the sources of these advantages, we evaluate five key drivers of economic moats:

Network Effect: We analyze whether the value of a company’s product or service grows as its user base expands. Platforms like payment systems or marketplaces benefit from this self-reinforcing.

Switching Costs: We assess whether customers face significant costs or disruptions when switching to a competitor’s product or service. High switching costs create customer stickiness and provide pricing power.

Intangible Assets: Strong brands, patents, and regulatory licenses can protect a company’s market position by creating barriers for competitors or enabling premium pricing. For example, a well-recognized consumer brand may command higher customer loyalty and margins.

Efficient scale: Occurs when a market is optimally served by one or a few players, making it unprofitable for new entrants to compete. This typically happens in industries with high fixed costs or geographic constraints, such as utilities or pipelines.

Cost Advantage: Companies with structural cost advantages can produce goods or services at a lower cost than their competitors, enabling them to offer competitive pricing or maintain higher margins. These advantages often arise from economies of scale, superior supply chain management, or proprietary technology. Firms like Walmart leverage their massive scale to negotiate better terms with suppliers, allowing them to undercut competitors on price.

By examining these factors in combination with a company’s financial performance and market positioning, we classify each company into one of three categories:

This rigorous evaluation ensures that our moat ratings are both comprehensive and reliable, giving investors the tools they need to make well-informed, long-term decisions.

The AI Assistant may sometimes provide inaccurate information.

Make your own investment decisions or consult a licensed financial advisor.

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Deutsche Lufthansa AG
XETRA:LHA