5Employee Benefits

5.1Personnel Expenses

5.2Long-term Incentive Plans

The employee benefit long-term incentive plans expense recognized in the Consolidated Income Statement is as follows:

During 2025, 2024 and 2023, the Group has operated the following long-term incentive plans, which are all settled for cash. and for which no shareholder exit or partial exit has been assumed in determining the respective provisions. All long-term incentive plans are subject to service and / or performance conditions to ensure alignment with shareholders’ interests .

The amounts reported above and in Note 7.3.1 show the variance in the value of the related financial provision year-on-year of all grants initially scheduled at the establishment of the plan in 2021 based on updates to the estimated value of the company. No vestings under the program took place until 2024.

In 2025, payouts occurred which were predominantly attributable to the wider management plan, while no vestings occurred under the remaining programs.

The figures in the table include:

Executive Management Board

The total accrued value for five separate grants under an equity-linked plan (IFRS 2 - cash settled) covering the years 2024 to 2025, with expected vesting between 2026 and 2028. All grants are subject to service conditions. While all grants also incorporate performance conditions (with the refinancing condition included only in certain later grants, alongside defined shareholder return metrics), the performance-based component reflects a lower proportion of the earlier grants compared to the final two grants. This plan allows the EMB to partake in up to 5% of the assessed equity value, with payment in 2028 and 2029, or an exit pay out in the case of a realization event, subject to either service conditions or a combination of service and non-market performance conditions. In the event of an IPO, any payout shall be settled in listed shares.

The total accrued value for five separate grants under a cash-based plan (IAS 19), covering the years 2024 to 2025, with expected vesting in 2027. All grants are subject to service and performance conditions (including successful re-financing), with payment in 2027.

No further grants are planned under the current program.

Board of Directors

The total accrued value for two separate grants under an equity-linked plan (IFRS 2 – cash settled) for non-executive members of the Company’s Board who are not shareholder representatives covering the years 2024 and 2025. Both grants are subject to time-based vesting and performance conditions (including defined shareholder return metrics). These grants vest at grant date with payment in 2028 and 2029, unless there is an earlier exit event. A final grant under this program is scheduled following the AGM 2026.

Wider Management

The total accrued value for a cash-based plan (IAS 19) for a wider group of management, covering the years 2024 to 2025, with expected vesting between 2026 and 2028. Payment in each year is subject to service and performance conditions, including absolute EBITDA, EBTIDA margin, and Free Cash Flow (FCF) targets, as well as successful refinancing.

No further grants are planned under the current program.

Old Plans

The remaining elements of other prior year plans (IAS 19).

As at December 31, 2025, the provision for long-term incentive plans amounted to EUR 78.3m (2024: EUR 31.0m; 2023: EUR 16.1m) (Note 3.10).

5.3Defined Benefit Plans

The Group provides defined benefit retirement schemes through a variety of arrangements comprised principally of stand-alone plans that cover a substantial portion of employees in accordance with local regulations and practices. The most significant plans in terms of the benefits accrued by participants are cash balance and final salary plans, and around 92.0% (2024: 92.0%; 2023: 92.2%) of the present value of obligations accrued to date come from defined benefit plans in Germany, Switzerland, the United Kingdom (UK) and the United States (US). A breakdown of the pension-related balance sheet amounts at December 31, 2025, 2024 and 2023, is shown below:

Germany

The primary German pension plan for future benefit accruals is similar to a defined contribution scheme in nature, providing old-age and risk benefits depending on contributions paid and a variable return based on the performance of the fund. Employee contributions of 1.0% of the contribution basis are mandatory, further contributions are voluntary. The employer is required to pay 5.2% of the contribution basis, of which 0.2% can be used to cover risk benefits. Due to a guaranteed minimum return of 0% on contributions, defined benefit accounting is required. When members retire from this plan, accrued balances are by default converted into annuities based on the applicable German GAAP (BilMoG) interest rate at the time and a fixed 1.0% pension indexation. Additionally, members can partially opt for lump sums or installments instead of annuities. Due to grandfathering, a large portion of the liability is still based in defined benefit plans, which are closed to new entrants and cover vested entitlements of members who joined the former career-average plan before January 1, 2016. Some employees hired before 2016 are also eligible for benefits based on a cash-balance plan which had a fixed 3.5% interest rate. The fixed 3.5% interest rate was partially reduced in 2021 to the maximum allowed guaranteed interest rate for the German life insurance industry (i.e. 1.0% since January 1, 2025).

The majority of liabilities are funded through plan assets from contractual trust arrangements. There are no legal minimum funding requirements. The plans are exposed to interest rate and longevity risk as well as investment risks, in particular the risk that the assets do not achieve the guaranteed investment return. Because of the plan design and a fixed 1.0% indexation being applicable to most pensions in payment, the impact of inflation is limited.

Switzerland

The Group operates a company-sponsored pension plan, which provides contribution-based cash balance retirement and risk benefits to employees, so as to meet its obligations under Switzerland’s mandatory company-provided pension requirements. The pension plan is established within a foundation that is a legal entity separate from the Group. The Board of Trustees of the foundation is composed equally of employee and employer representatives, who are empowered to decide on such fundamental aspects as the level and structure of the benefits and the fund’s investment strategy.

There are a number of guarantees provided within the pension plan which create exposure to risks of underfunding and may require the Group to help provide refinancing. Since Swiss pension law stipulates a minimum rate for conversion of pension savings into an annuity at retirement and guarantees a minimum interest on retirement assets, the pension plan is exposed beside the interest risk, in particular to the risk of changes in the life expectancy for pensioners and to the risk that the assets do not achieve the investment returns assumed. The plan holds a diversified range of assets, including equities, bonds, and property, which provide long term return potential but also short term volatility. The plan does not make use of explicit asset-liability matching instruments such as annuity purchase products or longevity swaps.

Generally, there is no opportunity for the Group to recover a surplus because under Swiss pension law any surplus that develops technically belongs to a pension plan and therefore the members. A reduction in future contributions is possible only at the discretion of the Board of Trustees of each pension plan and therefore there is a minimum funding requirement for the Group equal to the employer contributions set out in the pension plan rules. As the contributions are set out in the plan rules, the funding arrangements have limited impact on the future cash flow requirements of the Group (except in the case of underfunding).

In addition to this pension arrangement, the Group operates two small defined benefit plans in Switzerland that were acquired with subsidiaries in prior years. Given their immaterial size, no further detail is provided. In 2025, workforce reductions in one of these plans resulted in a curtailment gain of EUR 1.2m, recognized in profit or loss.

UK

All of the UK plans are final salary schemes, providing benefits to members in the form of a guaranteed level of pension payable for life and they are closed to future accrual of benefits. Future benefit accruals are provided through defined contribution plans. The pensions from the defined benefit plans receive inflation-related increases in deferment and once in payment. The benefit payments are from trustee-administered funds. Plan assets held in trusts are governed by local regulations and practice, as is the nature of the relationship between the Group and the Trustees, and the latter’s composition. Responsibility for governance of the plans, including investment decisions and contribution schedules, lies jointly with the Group and the Board of Trustees. The Board of Trustees is composed of representatives of the Group and plan participants in accordance with the plan’s regulations and UK pension law.

The plans expose the Group to the typical risks associated with defined benefit arrangements, including interest rate, inflation and longevity risks. In 2024, the majority of the plans’ liabilities were insured through a buy-in contract with a third party insurer, under which the majority of the associated risks were effectively transferred. This transaction was considered to be a change in investment strategy and therefore did not constitute a settlement under IAS 19. The associated one-off asset loss was recognized in OCI. During 2025, the Trustees continued the derisking process and initiated steps towards completing a full buy-out with the same insurer. As of December 31, 2025, the legal buyout had not yet been finalized, and the plans continue to be accounted for as defined benefit plans.

During 2025, following a legal review relating to Barber equalization, additional liabilities were recognized. This, combined with an enhancement to members’ benefits, results in a past service cost of EUR 5.1m recognized in profit or loss.

At the reporting date, the UK plans were in surplus. The amount recognized as a net pension asset reflects the application of the asset ceiling in accordance with IAS 19, which restricts the surplus to the present value of economic benefits available to the Group. Based on the contractual arrangements in place and the plan rules, the Group expects to have access to the remaining surplus once the ongoing process with the insurer is completed.

US

The Group operates defined benefit pension plans in the US to provide benefits to members in the form of a guaranteed level of pension payable for life and all plans are currently closed to new entrants and future accrual of benefits. Future pension benefit accruals are provided in defined contribution plans. Pensions from the defined benefit plans generally do not receive inflationary increases once in payment. The majority of benefit payments are from a trustee administered fund; however, there is also a small unfunded non-qualified plan where the Group meets the benefit payment obligation as it becomes due. Plan assets held in trusts are governed by Internal Revenue Service (“IRS”) regulations, and responsibility for governance of the plans, including investment strategy and funding decisions, lies with the Group within this regulatory framework.

The Group is exposed to risks common to defined benefit arrangements, including interest rate risk and longevity risk The Group manages investment risk through a liability aligned investment strategy. By December 31, 2025, the funded plan had substantially exited equity investments, with assets primarily allocated to high quality corporate bonds, improving liability matching and reducing funded status volatility.

Up until June 30, 2023, the funding requirements for the funded defined benefit pension plan were governed by special minimum funding rules ("Airline Relief") applicable to certain airlines and airline caterers sponsoring tax-qualified defined benefit plans. Under Airline Relief, a fixed 8.85% discount rate was used to determine funding liabilities, and the resulting unfunded liability was amortized over a closed 17-year period beginning on July 1, 2006. This unfunded liability was fully amortized on June 30, 2023. Beginning with the plan year starting July 1, 2023, the funding shortfall has been determined under the standard IRS minimum funding framework, which bases the discount rate on a two-year average of high-grade corporate bond yields, subject to a 95% to 105% corridor linked to a 25-year average of high-grade corporate bond yields (subject to a 5% floor). The effective rate for the plan year beginning July 1, 2024, was 5.34%. The initial shortfall calculated under the updated rules and subsequent changes are amortized over a rolling 15-year period, resulting in contribution requirements that are more closely aligned with market-based liabilities.

In 2025, the Group made a voluntary lump-sum contribution of EUR 27.2m to the funded plan as part of a derisking activity and to reduce regulatory variable premium charges. As the contribution was made into plan assets and did not extinguish the Group’s obligation, the transaction did not constitute a settlement under IAS 19.

Other Plans

The Group sponsors defined benefit plans in other countries where it operates. No individual country, other than those described above, is considered material.

The following are the principal events recognized in the periods covered by these Consolidated Financial Statements, with other changes having a negligible impact on a group level:

The Group recognized total defined benefit costs related to post-employment defined benefit plans as follows:

The remeasurement components recognized in the statement of other comprehensive income for the Group’s post-employment defined benefit plans and plan reimbursement rights comprise the following:

In 2025, remeasurement gains were mainly driven by the increase in discount rates in the Eurozone and Switzerland, with Germany contributing the vast majority of the financial assumption gain. Additional gains arose from strong asset returns in Switzerland and the US and from the change in the asset ceiling effect in the UK. These effects were partly offset by experience losses, mainly in Switzerland, and an adverse asset ceiling adjustment in Switzerland, as well as lower than expected asset returns in Germany.

In 2024, remeasurement gains were primarily driven by the increase in discount rates in Germany, the UK, and the US, partially offset by a net loss in Switzerland due to the reduction of discount rate. Additional gains resulted from the change in the asset ceiling restriction on the UK plans and higher than expected asset returns in Switzerland and the US. However, these were largely offset by actuarial experience losses, mainly in Germany and Switzerland, the asset reduction that resulted from buy-in transactions in the UK and lower than expected pension asset returns, particularly in Germany.

In 2023, remeasurement losses based on financial assumptions were primarily driven by decreases in discount rates in the majority of countries, the principal effect being in Germany and Switzerland. These losses were to a large extent offset by asset gains due to investment returns being higher than expected in most of the funded plans, primarily in Germany, the US, Switzerland, and Netherlands, by experience gains mainly in Germany, and by gains based on the change of demographic assumptions. The latter was mainly the result of the adoption of the Continuous Mortality Investigation (“CMI”) model, as well as an update of the disability rates, withdrawal rates and early retirement rates used in Switzerland following an experience study in 2023, and the adoption of the latest improvement scale CMI2022 in the UK. The loss further reduced as a result of the change in the asset ceiling restriction applying to plans in Switzerland and in the UK. Furthermore in 2023 the remeasurement of the plan reimbursement rights in Germany led to an additional loss.

The movements in the net defined benefit pension liability recognized within the Consolidated Balance Sheet are as follows:

The net employer contribution amount under the defined benefit pension plans in 2025 includes net refunds of EUR 17.1m from the Contractual Trust Arrangements (“CTAs”) thereof EUR 13.2m were refunded to the pensioners entities in Germany (“Rentnergesellschaften”) (2024: EUR 22.7m, thereof EUR 13.2m refunded to the pensioners entities; 2023: none).

Other changes in 2024 include the reclassification of EUR 2.8m from a previously recognized provision for legal disputes related to pension obligations in Germany. This transfer reflects the realization of the legal risk, with the amount now accounted for in the defined benefit plan.

The Group has a reimbursement right of EUR 9.0m in Germany at December 31, 2025 (2024: EUR 9.2m; 2023: EUR 8.4m). This relates to the refund made to the Rentnergesellschaften, which can be used to pay the future retirement benefits for the members within those entities. There are no other reimbursement rights for the Group. These reimbursement rights are recognized in other non-current receivables (Note 3.2).

The following table shows the change in the present value of defined benefit obligations:

The following table shows the change in the fair value of plan assets:

Benefits paid under the pension plans include EUR 17.1m paid from employer assets in 2025 (2024: EUR 21.3m; 2023: EUR 20.8m). The Group expects to contribute EUR 27.7m to its defined benefit pension plans in 2026.

The following table shows the change in the irrecoverable surplus:

Where applicable, the economic benefit available (used in the irrecoverable surplus calculation) as at December 31 is based on the present value of potential reductions in future contributions, which is partially offset by the liability in respect of a minimum funding requirement. For the UK plans, the economic benefit amounts reflect the estimated full potential amount due to be refunded back to the Group. As of 2023, continuing in 2024 and 2025, an asset ceiling restriction has been also applied for the Swiss Main pension plan, as there is no economic benefit applicable.

Pension plan assets do not contain shares of the Company. The major categories of plan assets are as follows:

The present value of defined benefit obligations by category of members at December 31, 2025, 2024 and 2023, is shown below.

The principal actuarial assumptions used for the defined benefit obligations at December 31, 2025, 2024 and 2023, and the following year’s pension expense are as follows:

Mortality rates have been set in accordance with current best practice in the respective countries. Future longevity improvements have been considered and included where appropriate. The average life expectancy in years of a pensioner retiring at age 65 on the balance sheet date and 15 years after the balance sheet date are as follows:

A feature all plans have in common is that the discount rate has a significant impact on the present value of obligations. The other assumptions have varying impacts on the different plans in the respective countries. In the breakdown presented below, the varying impact on the balance sheet from changes in the key assumptions is shown for the various countries.

The sensitivity analyses above are based on a change in a significant assumption, keeping all other assumptions constant. Interdependencies were not taken into account. Therefore, the sensitivity analyses may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation from one another. Starting from 2024, for the UK, due to the buy-in transaction, movements in the defined benefit obligation are largely offset by corresponding movements in the related insurance asset, resulting in a limited net impact on the balance sheet.

The duration of the defined benefit obligations at December 31, 2025, 2024 and 2023, are: