5.2 Cash flow

Cash flow from operating activities of the Lufthansagroup continues to develop very well. Net cash flow from operating activities was EUR 2.9bn in the reporting period, EUR 757m above the level of the previous year. This sharp rise is principally due to a considerable improvement in the profit before income taxes and positive changes in working capital. The difference between outstanding liabilities and unrealised receivables at the balance sheet date has increased as a result of further optimising payment targets to Lufthansa's advantage. In contrast, much higher income taxes were paid in 2007.

 

Gross capital expenditure, after deduction of cash acquired with the purchase of consolidated companies, amounted to EUR 1.5bn, in total. This includes the primary, secondary and financial investments described above and repairable spare parts for aircraft. The disposal proceeds (EUR 1.0bn) mainly include the cash payment of EUR 800m received from the sale of the Thomas Cook stake. Interest income and dividends received rose by 10.3 per cent to EUR 320m. Total net cash used for investing activities was EUR 174m (previous year: EUR 1.5bn).

 

Free cash flow, derived from cash flow from operating activities less net cash used for investing activities, went up as a result to EUR 2.7bn in 2007 (previous year: EUR 584m). The internal financing ratio was 207.7 per cent (previous year: 109.1 per cent).

 

A total of EUR 1.6bn was set aside for funding pension payments in Germany and abroad. Following the sale of securities / fund investments worth EUR 1bn, the position for purchase / sale of securities was balanced at EUR 647m. EUR 266m was used for the scheduled repayment of financial liabilities. New borrowing, on the other hand, only amounted to EUR 386m. Dividends to shareholders of Deutsche Lufthansa AG and minority shareholders of other Group companies stood at EUR 325m, and current interest payments at EUR 196m.
For financing activity, therefore, only EUR 401m was used and cash and cash equivalents climbed by EUR 1.6bn to EUR 2.1bn (previous year: EUR 455m). Total liquidity (including securities held in the liquidity reserve) went up to EUR 3.6bn, an increase of 42.1 per
cent over the previous year.