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Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the Lufthansa Group First Quarter 2022 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Dennis Weber. Please go ahead.
Yes. Thank you, and good morning, ladies and gentlemen. Welcome to our quarterly results presentation. As usual, with me on the call today are our CEO, Carsten Spohr; and our CFO, Remco Steenbergen. Carsten will give you a quick overview of the most recent trends in particular our intake of bookings over the past couple of weeks, before then Remco dives deeper into our quarterly financial results development. Afterwards, you'll have the opportunity to ask your questions. As usual, please make sure to limit your questions to three. Thank you very much. And Carsten, over to you.
Yes. Thank you, Dennis, and ladies and gentlemen, welcome from Frankfurt also from my side. Let me in a way, summarize the current situation in just one sentence, people are traveling again. And exchange of ideas in-personal interaction, meeting relative friends, business partners. All of this is finally possible again, now that the worldwide pandemic is indeed subsided. And more than ever, there's a global acknowledgment of the significance of travel and transport between partnering countries, whether near or far and our mission to indeed connect people, cultures and economies in a sustainable way is perhaps more relevant than ever. After all, aviation does make a significant contribution to international understanding and thus also to peace.
Every day, we now see firsthand how much people have missed personal contacts, discovery and traveling. We see that airports, on our airplanes and especially, we see it through our ticket sales. The coronavirus, ladies and gentlemen, has demanded a lot from us, as you're all aware, the pandemic challenged us, and we had to deal with the worst financial crisis in our history, but I think it is now time to put this crisis behind us, at least mentally. We are in a new normal, and we're now looking ahead with confidence. And in summary, I'd like to say that we now are at a point where crisis management was yesterday and now it's about shaping the future again.
The decisive factor, while we can leave the coronavirus crisis behind us is we mentioned desire to travel by our customers. After two long years of travel restrictions, the need to catch up is great. It applies to business customers, but especially to leisure customers. We expect strong growth for our airlines in the upcoming summer months with probably more tourists onboard our airplanes than ever before in our 100 years of history. And structurally, we are well positioned to meet the growing demand in the private travel sector. We have, as you probably know, consistently expanded our offering in this area even before the crisis. and we are now benefiting from this strategic decision.
More than ever, our successful multi-brand and multi-hub strategy is paying off. It gives our customers the greatest possible flexibility and choice. And to further improve the travel experience of our guests on board, we are indeed investing into the un-walked experience. Over the next 18 months, for example, we will be monitoring or introducing, not monitoring, but monitor the introduction of new seats in all travel classes. Like I already assure you we will set industry standards here. The number of destinations we serve is back already to 2019 levels, and our network is fully restored. We fly to over 300 cities worldwide via our hubs this summer, the same as in 2019. In the U.S., we offer even more destinations than before the pandemic. And for our leisure-oriented travelers, the choice is greater than ever before with more than 120 vacation destinations in our network.
Lucas [ Zacago ] remains a success story. Worldwide, supply chains continue to be interrupted. Ocean Freight continues to be basically offering from serious problems in the system and a Chinese airport sorry, seaports, for example, the problems are currently increasing, not decreasing, up to 350 ships in front of Shanghai Harbor. And as a result, demand for airfreight capacity remains very high and Lufthansa Cargo achieved an adjusted EBIT of almost EUR 0.5 billion in just one -- of course, the first quarter. Another new record set.
Despite all the joy of our fully booked airplanes and people's desire to travel, the upcoming summer will, undoubtedly, be a major operational challenge for the whole industry. We, of course, think and plan ahead as good as we can, we will add to our resources where necessary. We are maximally flexible can adapt to changes immediately, and we have improved our operational processes even further wherever feasible. But we're also fully aware that many partners, such as airports, air traffic control, caterers, are currently struggling with significant staff shortages. Some problems will surely not be solved by this summer. And together with our partners, we are obviously looking for solutions. I'm sure we're not going to find all the solutions we need by the summer.
It's obvious, and this is also my appeal to them that all stakeholders must once again significantly step up their efforts when it comes to those operational deficiencies because now after the pandemic satisfaction of our guest has to be back as our #1 priority. Because as mentioned before, people want to travel, demand is rising sharply. And let me go into a little bit more detail here. Again, the latest bookings show that the pent-up demand is enormous. Last week, total bookings exceeded 2019 levels for the first time. And actually, April 26 was the strongest booking days since the full crisis began. So customers are also increasingly confident that pandemic is finally over, which results in, again, longer booking term patterns sometimes several months in advance. And the current booking level for June and July over 80% of the pre-crisis level. The figure is all the more remarkable given that it was significantly lower just 3 months ago, and it's remarkable because we still have much less capacity on offer this summer than we did in the year 2019.
Transatlantic traffic remains particularly strong from both sides of the Atlantic. Contrary to some initial fears, demand in the U.S. is very strong, supported, of course, by the strength of the U.S. dollars when it comes to our balance sheets. And therefore, here in particular, bookings in premium classes are up as customers are giving themselves a treat to fly either in first class, business class or premium economy. Overall, not just in the U.S., demand for premium classes is recovering faster than demand for economy. And this is despite the fact that the return of business travel is still lagging behind the recovery of leisure travel, but also trends are changing in this respect. Led by small- and medium-sized enterprises, bookings have also recovered in our business travel sales channels. By the end of '22, we now expect to welcome back around 70% of our business customers on board of our airlines.
Due to all the effects mentioned above, we expect average yields in the further course of the year to be significantly above the previous year and even before -- sorry, above the 2019 pre-COVID levels, and Remco will go into this in more detail in just a moment. Before Remco explains the set of our first quarter results in detail, let me briefly mention the special nature of those first 3 months this year. The beginning of the year was still strongly influenced by the development of the pandemic, rapidly rising numbers of infections triggered by the highly contiguous Omicron variant. Obviously, cost restrictions also in travel and therefore, customers were reluctant not just to fly, but also to book. In the course of the weeks that followed though, the picture gradually changed, restrictions fell. And immediately, the number of new bookings went up significantly already in February, but especially then in March.
I must see rarely -- I must say, rarely we've ever seen a quarter where trends have changed so quickly and so significantly in all the years, I've been, in this industry. Let me give you some figures to illustrate this. Corporate bookings rose from just around 20% in January to a level of more than 50% now in March, always compared to 2019. In January, we worked on 3.7 million guests on board. In March, almost 6 million, the first quarter in total, 4x more passengers than the year before. Seat load factor went from 59% to 70%. And also the aircraft maintained by Lufthansa Technik around the world completed almost 1 million flight hours in March, which was significantly less in January.
So at this moment continues, we are, therefore, very optimistic about the future. We see this mentioned strong increase in bookings. We believe that we are strategically well prepared for the changes in demand. And maybe most important, because the successful transformation of the company, it has made us more flexible, more efficient and truly more effective today than we were before the pandemic. And as I mentioned also in other quarterly reports, we have done things in Lufthansa. We surely couldn't and wouldn't have done without the pandemic. So taking this opportunity of the crisis, I think, was key for us besides survival. And with that, I hand over to Remco for more detail.
Thank you, Carsten, and a warm welcome to all of you also from my side. As always, I would like to begin by giving you an overview of the group's financial results of the first quarter of 2022. As we have said in early March, the environment was everything but favorable for airlines at the beginning of 2022. Omicron was spreading and infection rates were at record high levels in already seasonally low volume time of the year. However, adjusted EBITDA still came in at close to breakeven levels, thanks to structural cost-saving actions taken and the business improvements in the later stages of the quarter.
Adjusted EBITDA was minus EUR 28 million in the first quarter. Adjusted EBIT amounted to minus EUR 591 million compared to a loss of more than EUR 1 billion in the first quarter of last year. This result excludes adjustments for onetime non-operational effects related to the war in Ukraine of EUR 110 million at mainly Lufthansa Technik, but also LSG and Lufthansa Systems for operations in Russia following the implementations for sanctions. Adjusted free cash flow was the highlight of the quarter.
We recorded an inflow of EUR 780 million, reflecting the continuous improvement in bookings from week to week. Analyzing our performance in the first 3 months of the year in more detail, the results of the passenger airlines reflects the difficult environment, especially at the beginning of the quarter.
Capacity increased significantly during the quarter and the period as a whole, it amounted to 57% of 2019, only slightly lower than originally forecasted because of the demand related to cancellations, particularly in February. Adjusted EBIT amounted to minus EUR 1.1 billion. Despite a difficult quarter, we saw some very encouraging developments in our Passenger Airline business. Yields in long haul were up against both 2019 and the prior year. In short haul,compared to 2019 was smaller than previous quarters.
On the cost side, the restructuring made further progress, in line with our forecast cost reductions were partly offset by the sharp reduction of short-time work subsidies, they were hardly there compared to the prior year. In most parts of the organization, short-term work has come to an end. Nonetheless, unit costs declined compared to prior year, supported by the continuous normalization of traffic. Particularly Eurowings stands out in this regard with unit costs below pre-crisis levels despite capacity still being down 44% versus 2019.
This highlights the deep restructuring, which the business has gone through, including a significant change of the network towards more lesser focused medium-haul destinations. Our aviation service companies made a significant contribution to the group's results also in the first quarter of 2022. First and foremost, Lufthansa Cargo continues to exceed all our expectations. Supply chain disruptions and the congestion in sea freight persisted also in the first quarter. The war in Ukraine and the resulting closure of the Russian air space for Western Airlines further reduced cargo capacity on the important Europe to Asia routes.
All this led to a further increase in cargo yields. As a result, Lufthansa Cargo reported an adjusted EBIT of EUR 495 million just in the first quarter, again, setting a new record. At Lufthansa Technik, momentum improved further as airlines worldwide began to prepare for further market recovery in the coming months.
Revenues increased 60% as demand picked up, especially in the key engine and Components segments. Adjusted EBIT improved to EUR 120 million. Underlying trends also improved in the catering segment around LSG, primarily driven by the industry recovery in North America. Adjusted EBIT was minus EUR 14 million as the Asia Pacific business continues and continue to be very difficult. Nonetheless, adjusted EBIT was above the prior year when adjusting for EUR 53 million of grants related to the U.S. Cares Act recognized in the first quarter of last year. Finally, the more negative results in other business and group functions was mainly related to a sharp reduction to almost nill in the short term -- of the short-term work subsidies as a consequence of ramp-up. Let me turn to our cash flow performance, where the recovery of our business was most obvious in Q1.
Over the course of the quarter, we generated new bookings in the amount of over EUR 2 billion as the momentum was very strong, especially towards the end of the quarter, this around EUR 1.1 billion had become cash effective. The difference is primarily due to payments made by credit card into agencies, which we collect with a small time lag. These payments are part of our receivables at the end of the quarter. Net capital expenditures were EUR 630 million and IFRS 16 operating lease charge amounted to EUR 86 million.
In sum, this resulted in a positive adjusted free cash flow of EUR 780 million in the first quarter. Due to the positive free cash flow, the group's available liquidity increased further in Q1 at EUR 9.9 billion, it was about EUR 400 million higher compared to the end of 2021. Even though we repaid corona-related stabilization measures in the amount of EUR 352 million in Switzerland and the U.S. In April, we concluded the revolving credit facility of EUR 2 billion with a syndicate of banks replacing EUR 700 million of existing bilateral credit lines. Therefore, in the second quarter, we intend to repay the remaining CHF 210 million currently drawn and to cancel the remaining facility of around CHF 1.3 billion, thereby terminating the state support measures in Switzerland as of schedule, similar to what we did in Germany last year.
Pro forma of the net effect from the RCF and the termination of the Swiss government support, the available group liquidity would amount to EUR 9.7 billion at the end of March, significantly above our long-term target liquidity of EUR 6 billion to EUR 8 billion. In line with the positive development of our liquidity position, our other balance sheet figures also continued to improve during the quarter. I've always said that restoring the strength of our balance sheet is key, and I'm proud of the progress we've made in the past 3 months as well. Net debt declined to EUR 8.3 billion due to the positive free cash flow.
In addition, we are a beneficiary of the current change in monetary policies, mainly due to the positive valuation effect resulting from a 50 basis point increase in the IFRS discount rate, the net pension liability declined by EUR 1.3 billion to EUR 5.3 billion. The decline would have been even larger if planned assets had not performed negatively, reflecting the losses in the global bond and equity markets. At EUR 451 million, we even recorded a surplus in the Swiss pension plan now.
Reduction of pension provisions and positive valuation changes meant shareholder equity increased almost EUR 1 billion to EUR 5.4 billion despite the net loss in the quarter. This equates to an equity ratio of more than 12%. Since we spoke in March, we have also made further progress in the implementation of our cost saving program, around EUR 2.9 billion of cost saving measures have already been implemented, equaling around 80% of the target reduction of EUR 3.5 billion.
On the personnel cost side, the renegotiation of labor agreements for the cockpit and cabin crews at the Lufthansa mainline is the single most important topic. We will continue the intensive dialogue, especially with Vereinigung Cockpit in order to conclude follow-up agreement before the current scope clause and wage agreements expire at the end of June. In Switzerland, we just proved that this is possible. Swiss and the local corporate union have agreed on the basic parameters of a new collective labor agreement.
The agreement increases the flexibility and speed, which we switch can respond to market changes. Union members will vote on the new CLA in June, so we expect the new CLA to enter into force on the 1st of July. In addition, we will drive the growth of higher productivity and lower cost platforms such as Eurowings Discover and otherwise. -- especially on less than heavy routes where yields are structurally lower, a highly efficient cost base is absolutely necessary. Eurowings Discover, for example, will serve more than 50 destinations in the upcoming summer season.
As announced in March, we also initiated the creation of a new short-haul flight operation to improve the profitability of our [ neto ] or network feeder traffic. We expect flight operations of this so-called CityLine 2 to start in spring next year. On the non-personnel cost side, we are even a step further. Here, only a gap of around EUR 200 million remains to be closed. We plan to achieve this by lowering external spend as well as further optimization programs at Eurowings and at CityLine. Achieving our cost reduction target is all the more important as we face headwinds in cost areas outside our control. The most important of them is fuel.
Our hedging portfolio continues to largely protect us from the sharp increases in the oil price since the outbreak of the war Ukraine. 63% of our exposure to crude oil in the remainder of 2022 is hedged at an average rate of USD 74 per barrel. Also for the year 2023, with revenue hedged nearly 30% at an average breakeven price of $82 per barrel. However, the war in Ukraine has not only driven up the price of crude oil. It has also led to physical and financial disruptions in the oil products market especially the market for jet fuel has come under pressure. -- exacerbated by the recovery of the amount, this has led to a sharp increase in the price differential between jet fuel and crude oil, the so-called jet crack, which has increased from just around USD20 at the beginning of March to a level of about USD 50 recently. This is multiple times higher compared to historical levels.
Given the only minimal volatility in [indiscernible] historically and then I talk about the last decade and the liquidity of the jet crack hedging market, we continue to focus our hedging on crude oil. While we started to come -- to close some jet crack hedges for the summer period, we'll still be faced with a significant fuel cost burden. Current forward prices indicate an average jet crack of around USD 38 for the remainder of the year. One thing is clear. The current increases in fuel prices impact our industry and is far too high to be offset by additional cost reductions. Therefore, ticket prices will have to rise. As Carsten highlighted, customers have a great desire to start flying again after 2 years of pandemic. So based on current bookings and adjusted we made to our pricing, we expect yields to increase by at least a high single-digit percentage rate compared to 2021 in the remaining of the year with the next few months looking particularly strong. As a result, yields will be higher this year compared to the precrisis levels of 2019.
As the month grows, we're also expanding our flight schedules. In the second quarter, we plan to ramp up to an average capacity of around 75% compared to 2019. In peak summer, that means in the third quarter, we expect capacity to reach at least 85% of 2019 levels. On short and medium haul, capacity utilization will even be higher. In this segment, we expect to return to 95% of pre-crisis levels in the summer. Eurowings will offer even more capacity compared to summer 2019. While total long-haul capacity remains lower due to the continuing restructures in Asia capacity on the transatlantic is expected to reach around 85% in summer. This increases to slightly more than 90% when including the offer of our joint venture partner, United, with whom we share revenues and jointly managed capacity distribution and pricing. For the full year of 2022, we have increased our outlook and now expect an average capacity of around 75% compared to 2019, instead more than 70% before then assuming a continued recovery also by the summer.
Before discussing our overall financial outlook, let me spend a bit of time on Lufthansa Cargo, which we expect to make a significant contribution to group profits also in 2022. At this stage, an end to the current air flight boom is not yet inside. Global supply chains continue to be out of sync with the current lockdowns in China imposing an additional supply chain risk. Disruptions in sea freight is worse rather than better. Air freight capacity will remain limited despite the return of some belly capacity in the further course of the year.
New freighter aircraft are not easy to come by, hence the operation of some old freighters will become an economical once rates weaken to more normalized and fuel costs remain high. Against this background, we expand Lufthansa Cargo's exceptional performance to continue for some time to come. While we expect the yields to start trending down from the current extremely high levels in the second half year, expect profits to at least come close to the record levels of 2021 also for the full year 2022. This brings me to our financial outlook. Based on our current bookings, the capacity ramp-up and further progress in implementing our cost reduction program, we expect financial performance to improve in the further course of the year. We still aim for a positive adjusted EBIT in the second quarter. However, the volatility of fuel cost makes precise financial forecasting impossible even when it comes to next quarter. We confirm our outlook of an improvement in adjusted EBIT compared to the prior level in the full year of 2022. We also expect that CapEx to amount to approximately EUR 2.5 billion.
Ladies and gentlemen, we live in uncertain times. So it's even more important that Lufthansa is effective, as flexible and as resilient as ever before. In this regard, I'm firmly convinced that we are on the right track. We strengthened our balance sheet. We have built high levels of liquidity. We have significantly reduced our costs and we have adjusted our business model to take maximum advantage of the current high customer demand, which is returning strongly. As Carsten said at the beginning, we are leaving the corona crisis behind us. After a difficult past 2 years, business is coming back, and we're working hard to make this recovery also come through in our profits and our cash flow. That is why we confirm our target of achieving an adjusted EBIT of at least 8% by 2024, also today. Carsten and I will be happy now to answer your questions.
[Operator Instructions]
The first question is from the line of Muneeba Kayani from Bank of America.
Some strong yields that you're seeing in your bookings and the guidance. Can you help us think about loads for this summer and for the full year and hence RASK outlook for the year? Do you think that like unit revenues would be above 2019 levels. We heard quite bullish commentary from the U.S. airlines of over mid-teens improvement in RASK. And so if you could help us understand what you are expecting for this year, that'd be very helpful. So that's my first question. And then secondly, if you could just update on the asset sale process, where you are right now and how we should be thinking about timing on that, please?
Yes, maybe I'll start with the asset sale process because I'm afraid there's not much more to say than what you already know. So we are, as you well know, focused on [ energy ] rest of the world. We're looking at a plus, we're looking at the minority disposal potentially in Lufthansa Technik. So nothing to add to what's only been communicated, and I'll hand over to Remco for the first question in terms of loads.
Yes, I think it's a clear question. And we actually see the same what you also commented from the U.S. carriers. You see the seat load factor in the summer to come very close to 2019 level. As we currently see, it's only 1% or 2% below 2019. So it's indeed coming back significantly. And that, of course, in combination with the yield increasing is resulting in an even higher RASK improvement than we have guided on the yield. So in that sense, we are as positive as the U.S. carrier as well.
Next question is from the line of Jaime Rowbotham from Deutsche Bank.
Three questions, please. On Slide 5, where you consider bookings, you talked about the transatlantic being particularly strong. What differences are you seeing in the nature of those bookings versus pre-crisis? Is it spread across the usual destinations? And are there any changes in competitive dynamics perhaps for Swiss out of Zurich more than for Lufthansa out of Frankfurt? Second question, are you worrying at all about rising inflation whether it's transitory or more sustained, both in terms of impacts on your cost base ex fuel and the impact that could have on consumer spending? And thirdly, you've gained a new material shareholder since you last briefed us in early March in the form Klaus-Michael Kuehne with 10%. Carsten, I wondered if you could give us a bit of color in terms of Lufthansa's relationship both with Mr. Kuehne and with Kuehne + Nagel for which we know you operate air cargo services.
I'd start with number one and number three, and Remco will add, obviously, number two. The transatlantic compared to the pre-COVID times. What are we seeing? We're seeing a very strong dollar. We're seeing very strong ability to pay by U.S. travelers. A number maybe which even I wasn't fully aware of. If you buy a business class ticket from San Francisco to Frankfurt round trip, paying up to USD 16,500 for that business class. First class, we're talking USD 23,000, and those classes are full. So of course, there's other fares in the market. But this thing is a little bit different than what we've seen before COVID. Backbone is still hub to hub.
As it is in our business model with United, but we have added quite a few more leisure-oriented destinations on both sides. On the U.S. side by flying there nonstop through Eurowings Discover, and we see a lot more U.S. travelers through our hubs going towards leisure-oriented destinations in Italy and Greece and so on. And as I mentioned in my opening, quite a few leisure travel oriented passengers on board in premium classes as well. So that may be in terms of what's a little different than what we've seen before in corporate, as we said before. Corporate, as we said before, we now see the booking levels of 50%, and I would think that will be coming very strongly back to in the third quarter as well.
We have more destinations in the U.S. We have now 30 destinations across the North Atlantic, including Canada. So, again, I think this will be a backbone of our success this year. Kuehne + Nagel, Mr. Kuehne indeed has been a very faithful customer with this Kuehne + Nagel forward business for cargo since many years, although we were back to before my time in cargo, but also when I worked at cargo, I had the pleasure to work with him. And you see a trend in forwarding that they are expanding towards air travel. Some have bought airlines, some have bought aircraft, some are working closer with airlines.
So I think it's not just the individual here, but we see a trend in global forwarding to put an eye on air travel. A similar development you see in Italy with the Aponte family in MSC, who is looking, as you well know, together with us at ITA. So I think this goes beyond an individual interest into an airline. And I think that business relationship, we have seen so successfully for many decades on the cargo side, we will now very much looking forward to expend -- sorry, to extend to the shareholder aspect.
Jaime, the second question on the inflation. Let me first say I'm very happy with the progress we made on the cost reductions, which are now under our control to the progress we have on the EUR 3.5 billion and we want to complete that. If you look at this year on the cost increases of fuel as you have already commented on that. On the cost, excluding fuel, we don't see yet a significant inflation impact for the coming years, that might be applicable. We have to see that if that's the case, that will be applicable across our society, we see that everywhere where prices are increasing. It will be applicable for our industry. And the same as we are currently doing with kerosine cost increases. We will pass that on to our customers.
In that sense, I have to say I'm very proud that our sales force as well. They have been on top of the pricing and the whole yield management. We see that clearly in Q1, the guidance I've given you also for Q2 and the rest of the year with this yield improvements, we will be on top of that and make sure that the costs which are impacting our society, industry are passed on, and therefore, we can generate as soon as possible positive profit and positive free cash flow and create value accordingly. So am I worried? No. But of course, it requires a lot of work on our end to make sure that this is fast all in the right way.
I think it's worth to add as you probably all know, though, we have been more disciplined when it came to capacity management and pricing during the crisis. And if you see where we are now compared to some of our competitors, we are still more disciplined or not flowing capacity into the market, but rather keeping an eye on pricing and yield. So I think we will continue to do that through the course shortly this year, adding less aircraft to the fleet than some others, and we have taken more out than others. So I think that capacity discipline will also pay off in times of inflation.
The next question is from the line of James Hollins from BNP Paribas.
A few for me, please. The first one is on, which on your capacity and sort of strategic planning. You say you've been quite disciplined in our capacity. I was just wondering if you could give me your thoughts on how much of that discipline, if you will, has been impacted by aircraft delays as well as these issues you talked about sort of staffing issues at airports, et cetera. And ultimately, would you have gone much higher than 75% of capacity this year if you hadn't had either of those things. Secondly, I was chatting to someone the other day and we're talking about your MRO business Technik.
And for many, many years, Carsten, you said, look, we don't want to sell it. It's good to have, et cetera. I get why it was talked about during COVID kind of liquidity of it. Now I think -- I hope that type of thing is behind us. Are you still 100% committed to spinning that off even if just as minority. And the third one to Jaime's question on Kuehne. I was wondering if just, again, your thoughts, at what point does the regulator get a little bit concerned about how much influence Kuehne might have given you have these business relations on the freight side?
Yes, James, I'll go in the order of your question. we still have extra aircraft, extra pilots, extra flight attendants. So we have not pushed ourselves to our operational limits when it comes to capacity, but we rather did that by our assumptions about demand. And again, coming back to Remco's point, trying to have a healthy yield management in place. So as you well know, there is up to 4. -- there's 14 380s alone sitting in Spain. We could have flied back to the air.
So it's not an issue of delayed aircraft or operational bottlenecks neither in Lufthansa nor what we will be seeing in the airports, which has demand -- if you defined our capacity planning. Also the shortcomings in the airports, which are surely there, you know that we have to cancel 100 flights 1 weekend compared to some other airports, if I may say so, in Europe, that's very small, an issue here in Frankfurt. And also that would not define our capacity planning as we talk specific hours of the day on specific days of the week.
Top 2, Lufthansa Technik -- thanks for that question because let me reiterate, we never said we need to sell this for liquidity issues. We actually, I think, said that every single quarter we report, we don't do fire sales. There's a strategic reasoning here that we do believe that bringing somebody else on onboard of Technik, who brings additional investment opportunities, which we, as a mother company, are focusing rather on aircraft than on investments in Technik or one way or another, we come to our limits to make sure we maintained the cash flow we promised to you in our midterm targets.
So there is, obviously, limits to what we can do. We think bringing somebody else on board will help us to make Technik more successful business than it already is. And that's why we are, as you well know, preparing for a transaction maybe in '23 and no acceleration there, neither where we were in terms of liquidity very much in need. We found other ways, as you know, and this is not part of our liquidity management or planning rather of our strategic positioning of the group in its various parts for the long-term future.
Mr. Kuehne, I don't have the exact number of share in our cargo business, but also our cargo business is well spread out. So from my days, I would recall it to be maybe 10%. I'm sure it's not much more now. So I think there, the impact is limited, and at which percentage point regulators would get nervous? I cannot tell you, you're probably right, there would be a certain limit of what regulators would allow to be done. Mr. Kuehne said in an interview in the biggest German newspaper that he would not go above 25% because of also this issue. So that's probably the only public information available on this topic I have at this point.
Okay. And just if I can come back on the German state 14%. I mean -- I think you've got a record of saying you'd like that gone sooner rather than later. Maybe just sort of your latest thought on that.
The 14% German stake still owns, as you well know, have to be disposed by October next year. That's in the contracts and in the EU restrictions. Obviously, we have no insights into that sales process, as [ Chinese ] walls with our contacts with the government and those people in the government who are responsible for the disposal of these stakes. So no public information available, but also an interview by our new finance minister who said that, he has started the disposal of the -- Lufthansa shares has started because we were in 20%, as you know, and we're now down to 6%. And we should not forget that the German taxpayer probably is looking at a EUR 1 billion profit selling at current share prices and looking at what Germany is spending right now, I would not expect this to last too much longer to finally give the shareholder the EUR 1 billion we made for him.
The next question is from the line of Stephen Furlong from Davy.
Normally, when input costs or oil prices go up, there's a lag for the airlines to try and pass that through to higher takeup prices. And I think it's coming much sooner now and presumably it's because of pent-up demand. But is it also other change in mix or the fact that there's later bookings that's helping you to pass through the fuel cost and maybe you could just comment on that. And then also in terms of higher ticket prices, where you see Europe, whether it's a network airline or Eurowings into the summer, presumably, particularly Eurowings, it's very weighted to calendar Q3 and the summer tourist season?
Yes, Stephen. Indeed, you mentioned the main argument. Compared to normal booking patterns, we see much shorter lead times between booking and actually boarding our airplane. Then, of course, in times of increasing oil prices hubs to pass on those spikes to the customers. There's also a more long-term element, which was the reason why we reduced our hedging limit levels, is that both cargo and our point-to-point business in Eurowings, obviously, allow us to pass on our fuel changes basically works both ways also when the fuel price comes down to our customers more than our more long-term booking oriented network business. So that's why we remember, 2 years ago, before COVID reduced our hedging levels.
And now again, on top of this, more strategic long-term development we see, as you rightly put in your question, that COVID-driven short-term booking schemes we have been suffering from. But in this regard, of course, it helps. On top of that, we are hedged a little higher than most others. So as Remco pointed out, this is a significant issue for us, but maybe a little less from some of our competitors. In Eurowings, this summer, indeed, we'll see more than 100% of the capacity we have seen in 2019. You probably saw from -- or you heard from Remco that the cost restructure in Eurowings is by far the most successful of all players in the group.
Shutting down Germanwings, helped a lot. We brought the overhead costs down by 1/3. And again, people are willing to spend more money on summer vacation or on vacation in the summer, and I think we see that positive element as well on Eurowings. So yes, we have, I think, fought for this business model for quite some years. You remember the labor struggles we had to push it through. I'm glad we took that pain and we'll now start to see the gain.
That's great, Carsten. Can I just come back and just remind me why you put Eurowings back into the reporting in the group, all the airlines together as before, it was a separate kind of reporting line. I think it's, obviously, due to the way you restructure and manage the business.
What have -- we have to remind you, we always reported Eurowings individually. And then there is a Eurowings Discover, as you know, operation, which is -- fits into the hubs in Frankfurt and Munich that we don't report individually. But the regular, let's call it, the Eurowings Dusseldorf, has always been -- and we consolidated the numbers of our ownership in SunExpress there, but maybe I misunderstand. So please get back to me or maybe even Dennis needs to help me if I don't get your question right.
I can comment correctly. Before Eurowings was a separate segment, as you call it, under the financial reporting. I know all the airlines are together into one segment. So we still provide the separate results or in terms of insight, nothing changed. Only the total is from the total airlines together, including Eurowings, rather than having Eurowings separately from the rest.
The next question is from the line of Sathish Sivakumar from Citi.
I've got two questions here. So first one, on the cargo. What percentage of the volumes are actually on a long-term contract? And more specifically, do you have any like a very specific block space agreement within your network? Again, this just goes back to the increasing stake from Kuehne. I just wanted to understand is there any block space agreement that you have right now, how things might change in the future? On Slide 5, the second one, actually, you mentioned that the premium segment is recovering stronger than non-premium. If you could actually share some color on the load factor in these two segments as of today versus 2019? And also any color on yield performance?
Hello, Sathish. Let me start on the cargo question. As you probably would assume with a great or strong demand-driven developments in cargo, we're, of course, reducing our long-term block space agreements and we increased our ability to take advantage of the spot market. You have to understand, we see prices up to EUR 30, EUR 40 per kilo in some markets. So a lot more than you ever paid as a passenger, by the way, regardless of your body weight. So this, of course, is unseen.
And therefore, our yield management team in cargo, which works closely with the management team also in the passenger airlines and the way we train people and so on, so we try to get a high performance team there just as we do in passenger is taking advantage of that particular market situation and bringing down the long-term contracts. And then we have -- and -- was that the first question. And then the second question, Remco, maybe a few more data points on our...
Yes. So to your question for the premium, whether the seat load factor and the yields are higher than the average? Clearly, on the seat load factor, that's the case in the premium, we are much higher booked. If you need exact numbers, we have to come back to you separately, but for sure, it is more. On the yield, I would say it's on both ends, it's increasing. So it's not a premium it's much more increasing than non-premium.
Just a follow-up on the first one, actually on the block space agreement. What percentage of the capacity is actually on block space right now?
We don't publish that because, of course, it's part of our yield management to optimize this, but it's by far the minority, as you can imagine. I won't say more than that. Don't tell my competitors, how good we are at this.
The next question is from the line of Johannes Braun from Stifel, Europe.
Three questions from me as well. Firstly, you said yields will be up for the remainder of the year. I was wondering if you could split that a bit more into long haul and short haul and also mainline and Eurowings for that matter. Second question, coming back to the remaining stake of the German state. Just a technical question. Could this go also to an individual investor or does it have to be placed on the market? And then lastly, you mentioned the Swiss CLA with the pilots. I was wondering if you could give any more details in terms of what the duration in especially what the productivity gains are here? And then maybe you could also remind us what is the time line and also the sticking points in the talks with the Vereinigung cockpit in Germany.
[Audio Gap] As always, we have to differentiate between the various pilot groups in the Lufthansa Group. We have, Vereinigung cockpit deals in Eurowings. We have deals in CityLine and then there is the main airline, which, by now, is more or less half of our pilots, not more anymore of the whole group, where we have successfully done crisis agreements -- temporary crisis agreements, but we have not achieved any agreement on structural cost savings. So after now 2 years, we took the decision, as you know, a few months ago, to therefore, take a structural decision, which is creating a second CityLine, which is not bound to scope clauses like the current CityLine, either in size or in other elements, and that will allow us to change the mix in our feed traffic short haul in Frankfurt, Munich by having a larger share of that fee done by those additional lower-cost platforms.
It's already partly done by CityLine, partly done by Air Dolomiti, partly done by Eurowings Discover. You know that it's not a fee-up model, but a more point-to-point model. But of course, it does feed into the hub. And now we are creating the second CityLine to allow us A320 family operation in that lower cost platform, which also Remco pointed out in his speech has been a strategy for some years now to create more growth in lower-cost platforms than we have created growth in the main airline due to its cost disadvantages.
The CLA and Swiss, I must unfortunately say I don't have that information ready. How many years that it's lasting. You probably know that in Switzerland, it's a different story anyway because it can't be terminated, but I don't have that exact detail yet. [indiscernible]
Or perhaps if the condition's correct of the Swiss CLA what is really well done is that there's an agreement on the flexibility because if the business is going significantly better and much more work is required, there are more favorable conditions then actually, when there is a more low seasonal element and business is doing worse. So that there is a clear benefit on the cockpit side but also when it goes the other way that there is also an equal share of the burden that's there. And we are very happy with that conclusion because that drives flexibility, and that is what we need. Now to come back on your first question with regard to the yields and the split between short and long haul, when you have to think about the remaining part of the year in the high single digit we said overall, you have to think about short haul and double-digit increases, and you have to think for the long haul about mid-single-digit increases.
So the short haul is growing faster, but both are going up. If you compare it to 2019, right, last year, you know that short haul was still about 14% behind 2019. For the remaining part of the year, we expect to come close to the 2019 level. It might be slightly below, but we are targeting to come very close. And for the long haul, it would be mid-single-digit increase versus 2019. So all in all, you see the outstanding performance of our colleagues in the sales department. And this is also where we needed to be flexible in this to bring the company back to a profitable value-creating company. I hope that answers your question.
The next question is from the line of Jarrod Castle from UBS.
Could you see how quickly the pension deficit is coming down? Just want to get a bit of color related to maybe future payments around the pension if this is going to be on hold now indefinitely? And kind of related, I guess, to future payments, any thoughts on dividend payments going forward. Then just coming back to new bookings above '19 levels. I mean if this continues, either you need to kind of increase pricing, I guess, it's kind of fill the capacity because it sounds like you're not going back to 100%. Sounds like there's more demand out there than the supply that you're putting into the market at the moment.
So are we going to see an acceleration in pricing as you build back your load factors? Or potentially, could we see a bit more capacity than planned at the moment bookings are above '19 levels? And then just a question around fuel. I mean, obviously, we've got these elevated crack spreads for Jet kerosene in an environment where, obviously, globally, airlines are flying materially lower volumes. How -- I mean, any color on what you feel is causing this and how the crack spreads, I guess, normalize to previous levels of maybe 10%, 15% rather more than double that level.
I can take this first on the pensions, right? Yes, this increase in the discount rate is bringing the liability down. We see further at this point in time in Q2, the discount rate going further up. So depending on how equity in both markets develop, we could see further decreases in this quarter. And clearly, that helps. Since I also said that with that discount rate and also our liabilities, which relate to that, the defined benefit plan, which is the case, which is more than 20 years out, and the fact that our assets has always delivered a return, which is significantly above the discount rate, which is needed to be actually on a 0 liability there's, no need to fund on the DB plan.
So we will not fund this plan. We didn't do that last year or this year. And also currently, as I see it, there's no need. Of course, we have obligations from the defined contribution plan. That is the active plan, both in Germany, but also Switzerland and other ones. Of course, for the defined contribution plan we are funding every year. Last year, we funded both '20 and '21 because we were behind in 2020 for Germany, and we will keep on doing that. You have to think about an amount, I think all in of about EUR 400 million a year. So that is quite consistent and normalized. With regard to the bookings, correct?, And the pricing, our policy is still to find the right balance between demand, capacity and yield management.
We keep on doing that. I think you see for the rest of the year, quite an increase in capacity, correct. If you think about 57% to 75% to peak coming to 85%. And of course, next year, that will go further up. And we manage that well to make sure there's a good return and that we will continue. I think your second pricing was the question really increase pricing and dividends. I think when you think about dividends from a shareholder perspective, it's too early. But of course, when we become profitable again and we create a positive free cash flow, et cetera, again, at some point, we'll also come back to paying the shareholders dividend again, but it will be too early to comment when that will be. Last question on the jet crack. It becomes a bit technical, but to give you the proper answer. Like crude oil -- with certain crude oil, you can make diesel, heating oils and jet.fuels. With the current crisis, which is out there, the demand for particularly diesel, but also for heating oil as a replacement of gas that demand has gone up since the beginning of the year. The jet fuel at the beginning of the year, when you think about January and you compare it now has almost doubled. So in that equation, there is significantly more demand for the refineries who produce diesel, heating oil and jet fuel. And that crease we're currently in. The refineries increasing their overall capacity. Now this is combined with most of the refineries related to this transfer of oil in these commodities comes from Russian oil. And as you know, Russian oil is being stopped to come in here.
So the oil has to come from somewhere else, which we're currently processing. So that's the other dynamic which is in. We hope that this very, very unusual squeeze will stop soon because there's all the logic in it that it changes. If you would think about the last 25 years, only in 2008, there was an increase to a level of a $40 per barrel, mainly at that time also because of a high request for the jet fuel and the overall demand. So it's quite unusual, and that normally would say that, that would come down again very soon. But that uncertainty is also the reason why we're not giving an outlook because we don't know, and it really is outside our control at the moment. I hope that a little bit longer answer explains that to you.
The next question is from the line of Andrew Lobbenberg from HSBC.
Thanks for the discussions. Can I come back on the labor. If the Vereinigung Cockpit don't agree anything on mainline. Does anything happen? Or does it just mean that you proceed with the planned to CityLine 2. And indeed, the CityLine 2, all done? Is it all straightforward to launch? The second question related to that is you were talking about how you have lower cost feed platforms of Air Dolomiti even of Eurowings Discover, CityLine 1, CityLine 2. The consumers not care any more about brands because obviously, you're selling Lufthansa as a premium experience. And yet there's heaven only knows what's painted on the side of the Blooming airplanes. So yes, a consumer is not bothered about brands? Or do you make it seamless enough? . And then the final question, I guess, would be about United, really, because you described yourself as being the most cautious of the flag carriers, and that's giving you a yield premium. And yet your dialing partners in the U.S. are the most aggressive expansionist people internationally by a long, long way. So given that you guys are in a revenue-sharing agreement, does that not have sort of a depressing fact on your -- or do the pressing influence on your unit revenue prognosis? And isn't it a bit alarming that they're quite so aggressive in foreign capacity into these markets where you're hoping to get decent yields?
Andrew, yes, I'll start with the last one. First of all, I think it's worth to say that all 3 joint ventures are more or less in line when it comes to their developments on the North Atlantic. And you're probably right, there's always a little bit more to it from the American side than there is from the European side. On the other hand, you know that our American friends in all 3 major carriers are canceling more and more of those flights due to operational reasons. So I think in the end, the difference will not be as large as maybe what we had all announced in the last days and weeks.
And indeed, there is a formula, there is not only one formula, there's a very complex system of formulas in that joint venture, which also partly reflects who is growing more than the other and who is, therefore, taking more yield risk and making sure that, that is not being put on the other side either. So part of that element, I think you are describing, we will not see in that magnitude as you're describing it. It is in line with what the other advances are doing. And even if that comes into effect, there is a formula in the model, which will make sure that Lufthansa is not disadvantage.
On the first two on labor. What happens if we don't agree? As you know -- as you know in Germany, contracts are continuing unless you replace them by something else. So we don't have new agreement, CLA by the end of June, which when is the current track is running out, it will just continues until we find a new agreement. And on CityLine 2, that is not the beginning of this period. It's a learning from those 2 years where we didn't achieve structural cost savings. So that is on go, and we've actually already got the license from -- for the legal founding of the company and now the German government and the German authorities have to authorize that, but it's more or less Bureaucratic process, which is on track.
So that has, in my view -- therefore, if I understand your question right, no impact on what we achieved with the main pilots. It's always the main airline pilots in Vereinigung Cockpit. What we needed from them, I think, to make no new platform necessary is not realistic anymore. So for us, that second CityLine is a goal and will make us more cost efficient in our hub feed. That comes to your second question, is the customer caring. I would go as far as even you as an expert. If you're on a CityLine airplane from wherever I'm Munich to Dusseldorf or from Frankfurt to London, you wouldn't notice. So that plane -- that airplane, the branding, the product on board, the training of flight attendants is completely in line with our premium promise we give on the main airline.
And on CityLine -- sorry, on Air Dolomiti, we even get higher grades from our customers than we get for short-haul on Lufthansa. Eurowings discover is a different story. There, we are using a different brand, a different product, promise, more leisure oriented. Needless to say, the feedback is very good now after the first year, but it is a different customer experience. We make sure that we only use those airplanes on those leisure markets because it's a different customer segment. But that's why also when I described that as part of our hub feed, you might recall, I said that kind of edge to it.
This is not completely integrated, but of course, there are also transfer passengers on Eurowings Discover. But the two, CityLines and Air Dolomiti, are fully integrated. And again, the customer experience is at least as in CityLine, the same as on the main airline and Air Dolomiti is even rate a little higher. Operation of the second CityLines will be summer next year. And same thing, the customer will not notice. We are definitely thinking about copying CityLine's business model here, which will allow us to use that same seamless customer promise you have been asking for.
This concludes our Q&A session. I hand back to Dennis Weber.
Yes. Thank you for your time. Thank you for your interest this morning. We look forward to being in touch with you over the next few weeks as part of our investor outreach activities. If there are any open questions, we don't think so, of course, please reach out to the IR team. Have a good day. Bye-bye.
Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.