April 5, 2005

Lufthansa Systems successfully ended business year 2004 with considerably improved earnings and an increase in revenues. The past year was affected by the ongoing difficult economic situation in the aviation industry and only weak growth impulses in Germany. Despite these factors, the company was able to increase its operating result by 56.4 percent to a total of 61 million EUR. Revenues rose to EUR 628 million in 2004 and were thus nearly three percent higher than revenues in the previous year, which amounted to 610.7 million EUR.

Particularly significant was the positive development of revenues from business with customers outside the Lufthansa Group, which continued to grow in business year 2004. These revenues climbed by 9.8 percent to 224.2 million EUR and thus accounted for almost 36 percent of total revenues.

"Our clearly positive earnings in the past business year shows that Lufthansa Systems was able to adjust quickly to changing market conditions in 2004 and to adapt costs to the development of the market," explained Wolfgang F. W. Gohde, who took over as Chief Executive Officer of Lufthansa Systems on April 1, 2005.

Market and product development
Growth rates in 2004 fell short of those predicted by analysts for the aviation industry. Nevertheless, a gradual increase in the willingness to invest was apparent. With its innovative solutions, Lufthansa Systems succeeded in gaining numerous new customers from the airline and aviation industry, such as TACA, the largest Latin American airline, as well as Spanair and Shanghai Airlines. New customers outside the aviation industry included the chemical company Almatis and the Cominvest Group. Business with logistics service providers also expanded successfully.

Innovations
"Innovative products and services are key factors to expanding our leading market position. In business year 2004, Lufthansa Systems accelerated the development of its own product portfolio," Gohde said.

In its efforts to innovate, the company focused on the modernization and modularization of core applications for passenger systems. Lufthansa Systems launched the FACE (Future Airline Core Environment) project in order to be able in the future to offer a solution for all passenger processes that is independent of global distribution systems.

Electronically generated route charts for cockpits were another innovative product from Lufthansa Systems. The Lido Route Manual is a significant step on the way to a paperless cockpit, which will become a reality in the near future. Since September 2004, these electronic route charts have been used successfully in Lufthansa cockpits. Hapag-Lloyd became the next customer to adopt the new navigation charts in March 2005. Airbus Industries intends to make this solution available in all Airbus aircraft in the future and will integrate the system in the new A380 passenger jet.

Strategy and outlook
The core competence of Lufthansa Systems lies in the international airline and aviation market. The company is one of the world's largest, most experienced providers of IT services in this market. In the current year, Lufthansa Systems will continue to develop its portfolio for this industry in order to offer aviation companies new ways of optimizing their core processes and thus increasing efficiency.

"We consistently align our airline-specific services with our customers' business processes. This makes us the only provider on the market to offer airlines a full-service portfolio from a single source," explained Wolfgang F. W. Gohde.

"Based on the slight recovery of the airline industry, we anticipate a growing willingness to invest in the current year," Gohde continued. "We believe revenues will rise primarily due to the increased demand for outsourcing services which we are expecting from more and more customers outside the airline and aviation industry."

Lufthansa Systems provides IT solutions to medium-sized and large companies in all industries, and it also handles the operation of IT and telecommunications systems, as well as networks. "Our range of products and services related to the outsourcing of critical IT infrastructures will continue to be of central importance to our company in the current year," Gohde said.

The company's sales activities will focus on further developing the American and Asian markets. On the basis of Lufthansa Systems' strong position in the domestic European market, the company intends to continue on the path of growth of the past years in particular in the market outside of the Lufthansa Group.