1

Overview on LSG Sky Chefs

Investor Day 2007 Frankfurt , 25th January 2007

Walter GehlChief Executive OfficerLSG Sky Chefs

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LSG Sky Chefs at a Glance

Global presence190 locationsin 49 countries

Group sales 2005 (consolidated)

€ 2.2 billion

Employees worldwide

~ 28’000

Customers worldwide270 airlines

Meals per year~ 369 Mio.

3

00 04

-25%

Airline catering market development

2000-2004 [%]

-24%

-38%

-14%Asia/Pacific

Market shareLSG Sky Chefs

2000-2004 [%]

Asia/Pacific

Factors for crisis

� Geopolitical instabilities (e.g. September 11, Iraq War)

� Financial weakness of customers(e.g. Chapter 11 of US carriers)

� Epidemics(e.g. Mad cow disease, SARS, bird flu)

� Expansion of low cost carriers

� Stagnating passenger volumes

� Decreasing service level

� Decreasing market share in Americas mainly driven by the U.S.

� Worldwide airline catering market decreased by nearly one quarter

7%15%

48%

40%

29%

36%

00 04 00 04 00 04

LSG Sky Chefs was able to build up market share in Eu rope and Asia/Pacific in a strong declining airline catering m arket

Europe1)

Americas2)

Americas2)Europe1)

1) The region Europe also includes Middle East and Africa 2) Americas include North and Latin America

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Revenue

[m EUR ]

EBITDA

[m EUR]

2’215

1’713 5317

Operating result

[m EUR]

-167

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In 2005 LSG Sky Chefs managed the turnaround – 2006 fur ther significant improvements in results

2’334

46

115

� Positive development of previous year 2005 confirmed – significant increase in positive EBITDA and operating result

� Revenue growth of 4,7% compared to YTD September 2005

1) Including Chef Solutions

2’667

20031) 20041) YTD Sept.2006

2005

217

20031) 20041) YTD Sept.2006

2005

20031) 20041) YTD Sept.2006

2005

-215

5

Main achievements and goals of LSG Sky Chefs

Positive Operating Result in 2005

Positive Cash Flow in 2006 (excl. new catering facility in Frankfurt)

Positive CVA in 2007

Portfolio adjustments

Profitable growth

����

����

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Lean Total Direct Cost 1)

� 190 m EUR savings through significant reductions of overhead costs (end 2008)

� 75% of cost saving target achieved through end of 2006

Triangle 1)

Identified savings per year [m EUR]

� Restructuring of all loss making legal entities through 2007

Loss making legal entities 1)

-88-54

-37

2004 2005 2006

+15

2007

Operating result [m EUR]

17 14 6 0No. oflossmakers

� 170 m EUR savings through significant reductions of production costs (end 2008)

� 25 m EUR realized savings in 2005� 40 m EUR forecasted savings in 2006

Sustainable total cost savings of at least 350 m EU R

Three main levers to continue increasing LSG Sky Chefs’ profitability

1) Status YTD November 2006

2004 2005 FC 2006

Target2007/2008

75%

25

64

53

48 190 Supplier/Material

15% on acces. Material Cost

Labor Productivity15% on acces. Dir. Labor Cost

Net Pay Rate3% on Acces.Direct Labor

Revenue Assurance1,25% on Revenue

11 22

33

44

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Turnaround in North America mainly driven by essential cost cutting and restructuring actions

New laboragreements

New facility leasecontracts

� Approval of a concessions proposal by LSG Sky Chefs employees to reduce labor cost to a competitive level

� Cost reductions of 54 m USD1) p.a. (duration 4 years)

1) Excluding one-time pay deal payments of 27 m USD

� Successful termination of 9 and renegotiation of 3 important facility lease contracts in the US

� Total cost reductions of ~4 m USD p.a. until 2018

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LSG SC has been successful in securing existing and acquiring new business

Overview tendered business 2006 per region1)

Americas 2)Europe/Middle East/Africa Asia/Pacific

Top 3 retained customers [m EUR]

� United Airlines (16)� TUI fly Nordic (14) � Sterling (9)

� American (82)� Northwest (49) � 7-eleven (21)

(Retail)

� Continental (5)� Emirates (3) � Northwest (1)

Newbusiness

2006

New business won [m EUR] 54 8

Top 3 new customers[m EUR]

� Singapore (7) � Atlas Jet (5)� Virgin Atlantic (4) (Frozen Meals)

� Delta (14)� Northwest (5) � Air Tran (3)

� Qantas (2)� British Airways (2) � KLM (1)

Success rate [%] 66% 75% 38%

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Retention rate [%] 69% 88% 81%

Retained business [m EUR] 72 191 13

1) Status YTD November 20062) Americas include North and Latin America

Retainedbusiness

2006

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All regions except North America with above-average rev enue development in the market

1) Sum of all regional revenues do not correspond to total revenue LSG Sky Chefs. Revenue total includes headquarter and consolidation effects not shown in this table; JVs in Asia/Pacific included

2) Europe also includes Middle East and Africa

Revenue development YTD Sept.

2005 2006Regions

LSG Sky Chefs 1)

423 428 +1%Germany

Europe 2)

w/o Germany461 514 +11%

Latin America 48 55 +14%

North America 458 436 -5%

274 294 +8%Asia/Pacific

Solutions 222 302 +36%

Successful expansion of Solutions (In-flight management, equipment solutions, distribution centers and central production units)

Revenue development YTD September 05-06 [m EUR]

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Airline catering life cycle by region

Characte-ristics

� Strong growth� Market not consolidated� High margins� Full service on all routes

� Low growth/shrinking MR/SR1) business

� Consolidated market� Medium margins

� Declining market with focus on LR2)

� Food is pure com-modity/low margins

Market 2005

Bubble size: €0.5bn

1) MR: Mid-range (2-4 h), SR: Short-range(<2 h) 2) LR: Long-range (>4 h)

Strategy

� Increase market coverage

� Market penetration mainly through strategic partnerships

� Introduction of alternative food and service concepts

� Product development

� Introduction of new operating model

Stage

Growth (>5%) Maturity (0-5%) Decline (< 0%)

MiddleEast

Eastern Europe

China/India

Central Asia(ex. China/India)

Central Europe

SubSahara

Mediter-ranean Nordic

Latin America

Japan, NZ,

Australia

UK North America

Airlinecatering

LSG Sky Chefs’ strategic focus differs depending on th e market’s economics and characteristics

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Significant shifts in the airline catering market in terms of segment split and regional growth prospects

� Catering spend for LR1) flights still growing

� BoB3) expected to grow at expense of SR/MR, driven by mature markets (e.g. U.S.)

Market development by region

Premium� Consequent development of new

culinary excellence solutions focusing on quality and innovative concepts

� Implementing new and innovative equipment solutions

LCC/Charter� Systemize on board Retail and

Buy-on-Board concepts � Focus on disposable food and

equipment solutions

Strategy LSG Sky Chefs

1) LR/MR/SR = Long(>4 h)/mid(2-4 h)/short(<2 h)-range flights; 2) LCC = Low-cost catering; 3) Buy-on-Board

Market development by segment

Expected market growth p.a. 05-09: ~2%

� Strong growth in China, India, Middle East

� Despite recovery of U.S. carriers, catering expenses will decline due to decreasing service levels and alternative concepts

2005

Europe/Middle East/Africa

Americas

Asia/Pacific

Expected market growth p.a. 05-09: ~2%

Trend

2005

LR1)

MR1)

SR1)

LCC2)

2005 2005

Trend

Estimations

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LSG Sky Chefs aims to strengthen its position in grow ing airlinecatering markets

� Market size: ~200 m EUR

� Market growth: 8% p.a.

� Market share LSG SC: 55%

� 10 JVs with local airlines

� Market size: ~60 m EUR

� Market growth: 9% p.a.

� Market share LSG SC: 3%

� Licence agreements at new airports in Hyderabad and Bangalore

� Market size: ~600 m EUR

� Market growth: 7% p.a.

� Market share LSG SC: 1%

� Market size: ~230 m EUR

� Market growth: 6% p.a.

� Market share LSG SC: 24%

� Continue expansion to inter-national/local hubs and high growth airports

� Further intensify partner-ships with hub carrier or airport authorities

URC

CH

INA

DXB

MID

DLE

E

AS

T

IND

IA

PRG

EA

ST

ER

NE

UR

OP

E

� Expansion mainly through strategic co-operations with local partners

� Access hubs of top 5 Middle East airlines via management agreements and create opportunity for JV/acquisition

� Establish new locations in Eastern Europe directly through LSG/AIRO

Regional development 2005

HYD

BLR

HYD

BLR

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� Gaining larger share and broader scope of customer’s business

� Reduction of sales cost

� Long term customer retention

� Becoming more competitive and innovative, developing additional insights and capabilities

Virgin Atlantic example – THE HOUSE

In-flight spend and LSG SC share [%]

The In-flight agency� In-flight agency manages the whole in-flight supply

chain for Virgin Atlantic (total catering budget)

Before In-flight agency

With In-flight agency

100%

Other suppliers

LSG SC Equipment Management

LSG SCCatering

100%Total spend on In-flight [%]

25%55%

10%

25%

LSG Sky Chefs aims to participate in customers’ growthby taking over larger parts of their supply chain

10% Savings

Win-win situation

Goals Customer

� Generate cost savings and increase quality

� Implement innovative concepts

Benefits LSG Sky Chefs

Caterer of the Year 2006