Lufthansa CityLine A strong partner in the Lufthansa group

2. Lufthansa CityLine A strong partner in the Lufthansa group Lufthansa CityLine: • a 100% subsidiary of Lufthansa AG • the Regional Passenger Airline within the group • a legally independent company which operates more than one third of the Lufthansa European network • in 2003 our fleet has 80 aircraft (18 ARJ, 43 CRJ 100/200, 19 CRJ 700) and we will transport 7,5 Mio passengers

3. Lufthansa CityLine Our responsibility in the Lufthansa group • Within the group CityLine is a competence center for all airlines operating regional aircraft focusing on: • operations, e.g. operations control, dispatch, ground handling • product matters, e.g. service, equipment, processes • contracting partner on behalf of Lufthansa, e.g. for additional regional partners

4. Lufthansa has decided to strenghten its regional operations including partnerships by consolidating it • The aim of this “Business Unit Regional“ is to create synergies in core business processes but also to reveal and improve strenghts • Main strategic Lufthansa regional partners are cooperating in this business unit, currently EW, IQ, KI, EN, CLH • The “Business Unit Regional“ is focussing on different main areas: • Maintenance (joint activities, buying power, cost reduction) • Handling (joint activities, buying power, cost reduction) • Operational Control (IOC Integrated Operational Center) • Branding (currently under discussion) • ........ • ........ June 03 Seite 4 Lufthansa CityLine - Challenges and Milestones AGIFORS, Auckland, June 2003

5. Crewdisposition Maintenance Control (short notice, technical aircraft rotation) Crew Control Maintenance Control (Disposition work packages) IOC - Integrated Operational Center Outer Circle > 72h Inner Circle (<72h) Operational Control Office-Dispatch Dispatch Operational Control Crew Control Maintenance Control

6. IOC - Integrated Operational Center

7. IOC - Integrated Operational Center

8. IOC - Effects of an integrated solution • Overall control of flights • Improvement in punctuality and reliability • single point of contact for all involved parties • faster and efficient solutions due to reduced interfaces • overall and combined competence of all decision-makers • higher product and service quality June 03 Seite 8 Lufthansa CityLine - Challenges and Milestones AGIFORS, Auckland, June 2003

9. Be Exellent Taking up the quality challenge CLH expressed a new vision for the company: „We become better (we know our business better than others), more flexible (we love to go new ways) and more popular (we are first choice)“ • Management Commitment: data base evaluation is launched • This is to be shown in every single process, product and service, and is realized top down as well as bottom up • Application for the National Quality Award LEP 2002 • Cityline was directly nominated one out of three finalists • Application for the European Quality Award in 2003

10. Influences by a new market segment: No Frills-Airlines • A lot of major companies first of all considered them to be nothing more than sheet lightnings: far away, sometimes visible, but nothing harmful and without any major influence • The days showed that they turned out to be thunderstorms with great influence not only on smaller but also on larger and strategic airports • The Consequences: competition raises, passenger numbers decline and yields are decreasing • The problem: the larger capacity of the aircraft results into lower unit costs per passenger • The challenge - focus on the core business: concentrate on quality, best service, high passenger convenience, conprehensive network and maintaining low costs

11. Thank you for your attention and Air New Zealand for hosting the conference!