Deutsche Bank strategists say Lufthansa’s chance of rejoining Germany’s benchmark DAX 40 index has become uncertain after recent union strikes triggered a sharp decline in the carrier’s share price.
The DAX quarterly review is scheduled for March 4, with any changes taking effect on March 23. In the days leading up to the review, Lufthansa had appeared positioned to use the index’s fast-entry rule to re-enter the DAX after having been removed during the Covid-19 crisis in 2020 following more than three decades as a constituent.
However, analysts Carolin Raab, Maximilian Uleer and Francesca Mazzali at Deutsche Bank say the airline’s subsequent stock sell-off has placed its inclusion "in the balance." Under the fast-entry provisions, a company that ranks 33rd or higher on the DAX selection list can replace the index’s lowest-ranking member immediately.
Deutsche Bank estimates that Lufthansa currently sits in the 33rd position, which would marginally satisfy the fast-entry threshold. The bank’s calculations show the airline only has a free-float market-cap cushion of about 60 million - roughly 0.7% - above the company in 34th place, the edge that preserves fast-entry eligibility.
"Given the small buffer, Lufthansa’s inclusion in the DAX now hangs in the balance, making the coming days crucial for investors to monitor stock movements," the analysts wrote.
If Lufthansa were to secure fast entry, it would put pressure on the weakest current DAX member. Deutsche Bank identifies Zalando as holding the most vulnerable position and says that Zalando would be removed should Lufthansa gain the fast-entry slot. Scout24 and Porsche Holding are also in the zone of potential danger and could be displaced if they fall behind Zalando by the review date.
By contrast, regular entry rules are more restrictive. Under those rules, a company ranked in the top 40 can only join if an existing member falls below 47th place. At present, no DAX constituent ranks that low. Deutsche Bank notes that Zalando has an approximate 200 million, or about 4%, buffer to the 48th-ranked spot under that mechanism.
The definitive rankings will be set using free-float market capitalisation as of Feb. 27, with each stock’s standing calculated from its 20-day average volume-weighted average price (VWAP).
Deutsche Bank also provides ETF flow estimates tied to a potential switch. The bank gauges total DAX ETF volume at about 25.5 billion. If Lufthansa were added with an estimated 0.5% index weight, that would imply roughly 130 million in inflows into DAX-tracking ETFs. At the same time, MDAX ETFs would be expected to sell roughly 270 million of Lufthansa stock, since the airline currently represents about 5.6% of MDAX ETF holdings and total MDAX ETF volume is estimated at 4.8 billion.
Deutsche Bank’s analysis suggests trading in Lufthansa shares could surge during the March 20 closing auction - potentially rising to 10 to 12 times the daily average volume. The analysts estimate that, in a fast-entry scenario, Zalando would experience about 70 million of DAX ETF outflows while seeing approximately 150 million of inflows into MDAX ETFs.
Sector composition effects within the DAX would likely be limited. Both Lufthansa and Zalando are classified in the Consumer Discretionary sector, so a swap between the two would not materially alter the index sector distribution according to the bank.
Deutsche Bank’s view aligns with its mid-January upgrade of the Travel & Leisure sector to overweight. The analysts expect strong tailwinds in 2026 underpinned by robust global travel demand, particularly in Europe. They point to rising airfares and consensus earnings expectations of around 8% growth as factors that could allow upside surprises.
Timing and mechanics to watch
- Final free-float market-cap rankings determined as of Feb. 27 using 20-day VWAPs.
- Quarterly DAX review occurs March 4; membership changes, if any, take effect March 23.
- Investors should monitor intra-period share moves closely because Lufthansa’s buffer to the next-ranked company is narrow.