LHA.DE WACC - Weighted Average Cost of Capital
The WACC of Deutsche Lufthansa AG (LHA.DE) is 6.1%.
| Range | Selected | |
| Cost of equity | 7.6% - 11.7% | 9.65% |
| Tax rate | 16.2% - 17.5% | 16.85% |
| Cost of debt | 4.0% - 5.9% | 4.95% |
| WACC | 4.9% - 7.3% | 6.1% |
| Category | Low | High |
| Long-term bond rate | 2.8% | 3.3% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.95 | 1.29 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.6% | 11.7% |
| Tax rate | 16.2% | 17.5% |
| Debt/Equity ratio | 1.82 | 1.82 |
| Cost of debt | 4.0% | 5.9% |
| After-tax WACC | 4.9% | 7.3% |
| Selected WACC | 6.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| LHA.DE | Deutsche Lufthansa AG | 1.82 | 1.39 | 0.55 |
| AEGN.AT | Aegean Airlines SA | 1.22 | 1.21 | 0.6 |
| AF.PA | Air France KLM SA | 6.45 | 1.4 | 0.22 |
| ENT.WA | Enter Air SA | 1.44 | 0.49 | 0.22 |
| EZJ.L | Easyjet PLC | 0.79 | 1.06 | 0.64 |
| FIA1S.HE | Finnair Plc | 3.5 | 1.51 | 0.38 |
| IAG.L | International Consolidated Airlines Group SA | 0.96 | 1.47 | 0.82 |
| NAS.OL | Norwegian Air Shuttle ASA | 1.09 | -0.08 | -0.04 |
| PGSUS.IS | Pegasus Hava Tasimaciligi AS | 2.14 | 1.82 | 0.65 |
| WIZZ.L | Wizz Air Holdings PLC | 3.1 | 1.23 | 0.34 |
| Low | High | |
| Unlevered beta | 0.37 | 0.57 |
| Relevered beta | 0.93 | 1.43 |
| Adjusted relevered beta | 0.95 | 1.29 |
LHA.DE's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for LHA.DE:
cost_of_equity (9.65%) = risk_free_rate (3.05%) + equity_risk_premium (5.60%) * adjusted_beta (0.95) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.