Task Description

The focus of the analysis is on the quarterly data of Lufthansa AG.

a) Investigate whether the fuel costs for passenger traffic can be better explained by
the independent variables, (i) number of passengers or (ii) number of flights for
passenger traffic, each individually using simple linear regressions. Comment on the
most important parts of the regression output and justify your decision.

b) Perform a stochastic break-even analysis for the Q1 2023 operational business.

The quarterly result before interest and taxes (EBIT) is calculated as the sum of the
following revenues and costs (in million euros):

Traffic revenues Simulation

Other operating revenues 2558

Miscellaneous operating income 596

Fuel costs for passenger traffic Simulation

Other material expenses -2 724

Personnel expenses -2013

Scheduled depreciation -569

Other operating expenses -1 174

The traffic revenues are calculated as the number of seat kilometers sold multiplied
by the average revenue per seat kilometer. In addition, assume that in Q1 2023, it is
planned to perform the same number of flights, transport the same number of
passengers, and offer the same number of seat kilometers as in Q4 2022.

(i) Simulate the number of seat kilometers sold in Q1 using a triangular distribution.
For the simulation of seat kilometers sold, use an occupancy rate of offered seat
kilometers of 80% as the most likely case, 70% as the worst case, and 90% as the best
case. Independently simulate the average revenue per seat kilometer using a
triangular distribution (worst case 0.09€, most likely case 0.1€, best case 0.12€).

(ii) Independently simulate the fuel costs for passenger traffic using a triangular
distribution from the previous simulations. For the simulation, use your preferred
linear regression from subtask a) as the most likely case estimate. Based on historical
data, select values for the worst and best cases and justify your choice.
(iii) Calculate the expected result, the probability of loss, and the expected amount of
loss in the event of a loss for Q1 2023. [3 points]

Resources and Assistance

• The presentation "Linear Regression and Implementation in Excel", Excel exercise

examples with solutions, and a YouTube video on Moodle provide helpful tips for
implementing regression in Excel.

• Use the Excel Add-In Risk Kit for subtask b). Register at https://www.wehrspohn.de/,
download Risk Kit for Excel, and install the add-in. With the key
638131743759660294, you can activate an academic license for Risk Kit in Excel until
the end of the semester (Risk Kit -> Add-In Tools -> Activate Risk Kit). Please activate
the license only on one computer, as the department has only a limited number of
licenses available.

• The add-in is only available for Windows. If you do not have access to a Windows
computer or cannot install the add-in for any other reason, you can alternatively
work in the PC rooms of the University of Vienna. To do this, open the "Oracle VM
Virtual Box" program on a PC in the PC rooms and start the "Windows 10 PLIS"
virtual machine. The add-in is installed in Excel within this virtual machine.

• Simulate the two triangular distributions independently of each other as shown in

the YouTube tutorial on Moodle. Use 50,000 runs as the simulation number.

• Use the "Mean" and "Probability" functions (Risk Kit -> Statistics -> Mean or
Probability) to calculate the expected result and the probability of loss.

• Use the "ShortfallDown" function with the loss probability as the confidence level to
calculate the expected amount of loss in the event