Slide 1: Full year results analyst and investor presentation
Full year results analyst and investor presentation Tuesday 17 November 2015
Slide 2: Introduction
Introduction Carolyn McCall Chief Executive Officer
Slide 3: easyJet strategy delivers record results
easyJet strategy delivers record results Profit before tax has increased for the fifth consecutive year Passengers + 6.0% 69 million Revenue + 3.5% £4,686m Profit before tax + 18.1% £686m PBT margin +1.8ppts 14.6% EPS + 21.5% 139.1p Operating cash flow + 12.9% £895m DPS + 21.6% 55.2p ROCE + 1.7ppt 2
Slide 4: Financial review
Financial review Andrew Findlay Chief Financial Officer
Slide 5: Strong financial performance
Strong financial performance FY 2015 FY 2014 Change Change £m £m % % @ CC Total revenue 4,686 4,527 3.5% 6.5% Fuel (1,199) (1,251) 4.2% 4.6% Costs excluding fuel (2,801) (2,695) (3.9%) (8.7%) Profit before tax 686 581 18.1% 20.2% Profit before tax margin 14.6% 12.8% 1.8ppt EBITDAR 940 823 14.1% 16.7
Slide 6: Profit before tax increased 18%
Profit before tax increased 18% Profit/(loss) bridge 800 159 (38) (68) 750 12 698 700 686 650 686 52 600 581 0 Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold FY 2014 Fuel Revenue Crew Other Costs FY 2015 Fx FY 2015 @ CC resilience, de-icing and disruption 6 6
Slide 7: Revenue performance
Revenue performance £m FY 2015 FY 2014 Change Passengers (m) 68.6 64.8 6.0% Load factor (%) 91.5% 90.6% +0.9ppt Seats flown (m) 75.0 71.5 4.9% Average sector length (km) 1,118 1,112 0.5% Total revenue - reported (£m) 4,686 4,527 3.5% Total revenue - constant currency (£m) 4,821 4,527 6.5% Total reve
Slide 8: A strong focus on costs
A strong focus on costs Total cost per seat bridge • Cost per seat ex-fuel: -0.9% • Cost per seat ex-fuel @ constant currency: +3.6% 0.16 0.36 0.58 56.71 0.25 0.12 0.12 56.50 1.53 0.13 0.43 0.38 55.19 1.64 53.33 FY 2014 Regulated De-icing and Eurocontrol Other Before A320 mix Crew Load factor FY 201
Slide 9: Impact of fuel & currency
Impact of fuel & currency FY 2015 fuel impact favourable / (adverse) FY 2015 FY 2014 Change B/(W) Fuel $ per metric tonne Market rate 619 973 354 Effective price 872 977 105 US dollar rate Market rate 1.54 1.66 (12 cents) Effective price 1.58 1.59 (1 cent) Actual cost of fuel £ per metric tonne 553
Slide 10: Strong cash generation underpins dividend policy and fleet growth
Strong cash generation underpins dividend policy and fleet growth 50 98 138 536 688 92 16 615 180 21 6 422* 435* Net cash Operating Depn & box on Footer Net Tax intersect of lines lineCAPEX Own h=8.03 9 and v=8.75 Restricted FX not bold with font 10pt Arial Other Net cash Dividend Net cash Sep 2014
Slide 11: Strong balance sheet
Strong balance sheet £m FY 2015 FY 2014 Goodwill and other intangible assets 492 478 Property, plant and equipment 2,877 2,542 Derivative fiancial instruments (297) (21) Other assets 348 388 Other liabilities (excluding debt) * (1,606) (1,637) Capital employed 1,814 1,750 Cash and money market depos
Slide 12: Future capital investment
Future capital investment FY15 FY16 FY17 FY18 2019-2022 Additional aircraft 55% 58% 73% 53% 37% Replacement aircraft 18% 14% 4% 29% 43% Maintenance 27% 28% 23% 18% 20% Total 100% 100% 100% 100% 100% Total expected fleet acquisition and overhaul 11% 11% 13% 17% 12% expenditure as a % of easyJet reven
Slide 13: Debt repayment profile
Debt repayment profile Total debt: £504 million 200 £182m 150 100 £88m £74m £60m £54m 50 £46m 0 Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold FY16 FY17 FY18 FY19 FY20 FY21 13 13
Slide 14: Outlook
Outlook Capacity (seats flown) • H1 c.+8.0% (before disruption ) • FY c.+7% (before disruption) Revenue per seat (constant currency) • H1: Slight decline (assuming normal levels of disruption and constant load factors) Cost per seat including Fuel (constant currency) • FY c.-1% (assuming normal leve
Slide 15: Initial thoughts and areas of focus
Initial thoughts and areas of focus Initial Thoughts: • Great people with passion and commitment to the business • An enviable customer proposition • A strategy that continues to deliver sustainable shareholder returns • Significant opportunities for growth Areas of focus for me: • Reinforce our cos
Slide 16: Business Review
Business Review Carolyn McCall Chief Executive Officer
Slide 17: Continuing to win
Continuing to win • easyJet has delivered another record performance in 2015 • Delivering through the cycle – favourable trends will support strong demand for easyJet • Future growth and returns drivers • Network offers significant opportunity • Best customer proposition and sector-leading digital o
Slide 18: Favourable economic trends
Favourable economic trends Positive outlook across key markets Recovery in consumer confidence 2.7 2.5 Consumer Confidence Index, standardised 2.5 2.0 2.3 Real GDP Growth YoY (%) 2.2 1.5 2.0 1.0 1.7 1.8 1.6 1.7 0.5 1.5 1.5 1.5 0.0 1.2 1.2 1.1 1.1 (0.5) 0.8 (1.0) 0.5 (1.5) (2.0) (2.5) 2000A 2002A 200
Slide 19: 2015 – outperformance in a competitive market
2015 – outperformance in a competitive market FY15 easyJet constant currency RASK vs median Sector RASK, year on year change % rev. change Market capacity growth (%) 4 3.7 6.0 2.4 2 1.8 5.5 5.0 0 -0.7 4.5 -0.8 -2 -1.9 4.0 -4 3.5 -3.9 -4.8 -6 3.0 Q1 Q2 Q3 Q4 Sector RASK growth easyJet Market capacity
Slide 20: Exciting initiatives underway
Exciting initiatives underway Embedded Launch in FY2016 Launch in FY2017 (with more to chase) - Base in Venice - New base openings - Business passenger - New leading edge website - Continue RMS and Network - Base openings (Amsterdam, Revenue Naples) - New call centre online optimisation development
Slide 21: easyJet operates in the right airports and markets
Best easyJet operates in the right airports and markets Network - Number 1 or 2 position in the primary airport in 12 of Europe’s top 25 catchment areas by GDP1 easyJet network Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 1) Catchment areas defined as popul
Slide 22: No 1 European network
Best No 1 European network Network Positions built over time Strong share at key airports +38% easyJet has grown capacity by over 7m seats with a CAGR of c.5% at our top 10 airports over Airport Market Based Touching the past 5 years % growth in Share1 aircraft aircraft Seats seats 2011-15 +34% +14%
Slide 23: Profitably growing our network
Best Profitably growing our network Network easyJet Market capacity capacity growth growth ROCE 2013 3.3% 1.3% 17.4% Returns 2014 5.1% 4.3% 20.5% 2015 4.9% 5.4% 22.2% 12% ROCE Routes CPBH FY13 CPBH FY14 CPBH FY15 Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
Slide 24: Profitably deepening our network
Best Profitably deepening our network Network Increasing share drives higher returns1 Adding frequency increases contribution2 4,000 3,500 Route A 3,000 Progression of returns with increased Seats [Millions] CPBH [£/BH] 2,500 share over time (base illustration) 2,000 2015 1,500 1,000 CPBH (£/BH) 201
Slide 25: We make rational capital allocation decisions
Best We make rational capital allocation decisions Network Madrid Rome MXP 8 NAP • 8 Madrid-based aircraft were moved to other bases • Delivered an incremental network contribution of c.£25m • We expect a similar outcome from reallocating the aircraft based in Rome FCO Footer box on intersect of lin
Slide 26: Much more to go for
Best Much more to go for Network Significant number of low risk opportunities to pursue Range of easyJet FY20 fleet size Number of aircraft 2 13% 87% 3 Portugal 400 35-50 331-396 346 350 50-80 335 Netherlands 9% 91% 300 Germany 4% 96% 25-35 250 241 10-20 227 Italy 12% 88% 200 150 Switzerland 23% 77%
Slide 27: Utilising flexibility to take market opportunities
Best Utilising flexibility to take market opportunities Network Extra aircraft allows for greater flexibility in fleet planning 359 358 355 346 333 347 346 330 335 312 303 305 311 311 304 304 280 294 Contracted Max 280 Base Case 257 255 Contracted Min 241 Previous Base Case 230 239 233 212 227 221 2
Slide 28: Favourable easyJet customer trends
Customer Favourable easyJet customer trends proposition Increasing propensity to spend Customers spending more time online Purchased Something on the Internet the last 12 Months, UK Consumer Ave spend £25,000 £300 100% easyJet Ave booking value 16-24 25-34 35-44 All 92 90 88 87 88 90% % Consumer Ave
Slide 29: Digital Leadership
Customer Digital Leadership proposition Over 500m visits Value of Mobile Global Recognition across platforms in FY15 YOY Mobile Revenue 83% Best Mobile Innovation Travel & in direct Tourism marketing Winner CRM increases customer value easyJet Mobile app 32% Best Passenger Best Airline in Mobile Ass
Slide 30: Strengthening our customer relationships
Customer Strengthening our customer relationships proposition % seats booked by returning customers Brand consideration New Existing % Existing 80% 74% 73% 75% % from Returning customers 72% 70% Number of seats 68% 69% 70% Value perceptions 65% 60% 30 55% 50% 10 11 12 13 14 15 Footer box on intersec
Slide 31: Rewarding our loyal customers
Customer Rewarding our loyal customers proposition FLIGHT CLUB • Aim to recognise and retain our high frequency and loyal customers • Simple and low cost to administer • Will continue to encourage customer loyalty Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bol
Slide 32: Business opportunity continuing to develop
Customer Business opportunity continuing to develop proposition TMC GDS Business Average 38% sales grew fares grew Saving on top 32% YOY at 58% YOY Business Routes Increased focus Award winning Business Sense on FTSE/CAC Business Marketing & DAX companies Program Campaign Footer box on intersect of
Slide 33: Leisure leadership
Customer Leisure leadership proposition • Launched almost 60 new leisure routes in 2016 • easyJet holidays revenue per seat increased by 144% in summer 2015 • easyJet has launched around 60 new leisure routes in the 2016 schedule. Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 1
Slide 34: £110m opportunity from up-gauging by 2021
£110m opportunity from up-gauging by 2021 Cost Fleet up-gauging Up-gauging delivering CPS savings easyJet fleet mix 13% -14% 100% 3% 8% 90% 18% 24% 26% 26% 33% 80% 39% Mix of fleet (%) 44% 70% 71% 53% 60% A320’s 19% 51% 47% 46% 45% 50% 40% 30% 61% 52% 47% 20% 39% 32% 29% 28% 28% 10% Current New 0% g
Slide 35: easyJet lean – c. £50 million savings in 2016
Cost easyJet lean – c. £50 million savings in 2016 Increased pipeline of initiatives • easyJet lean continues to deliver and develop significant cost reductions across • Maintenance : AJ Walters • Airports/Handling: deals, automation, structure of charges • Navigation - SESAR • Process and efficienc
Slide 36: Operational excellence
Operational excellence Cost 100% easyJet network OTP 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2010 2011 2012 2013 2014 2015 Building increased resilience Gatwick north terminal consolidation 1. Network remains robust 2. Gatwick improving 3. Opportunity for step change in operationalFooter excellence a
Slide 37: What does this mean for our shareholders?
What does this mean for our shareholders? Expected passenger Stable margins Strong EPS growth of over the cycle growth 7% - 8% CAGR 40% annual dividend payout Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 37 37
Slide 38: easyJet is a structural winner
easyJet is a structural winner • Europe's best network of primary airports • Best customer and digital proposition • Constant innovation to drive demand and loyalty • Cost discipline, up-gauging will deliver savings of £110 million by 2021 Footer box on intersect of lines line h=8.03 9 and v=8.75 wi
Slide 39: Q&A
Q&A
Slide 40: Appendix
appendix
Slide 41: Fuel and foreign exchange hedging
Fuel and foreign exchange hedging Fuel US dollar Euro surplus CHF surplus requirement requirement Six months ending 85% at $852 / 31 March 2016 89% at $1.62/£ 75% at €1.20/£ 69% at CHF1.46/£ metric tonne Full year ending 83% at $830 / 30 September 2016 81% at $1.63/£ 80% at €1.22/£ 67% at CHF1.46/£
Slide 42: H1 forward bookings
H1 forward bookings H1 bookings in line with prior year % seats sold * 93% 91% Winter '15 Winter '16 49% 49% Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Oct Nov Dec Jan Feb Mar H1 H1 (October 2015 to March 2016) as at 13 November 2015 42 42
Slide 43: Profitably growing our business in 2016
Profitably growing our business in 2016 Overall c. 8.0% capacity growth over winter United Kingdom c. +9% Netherlands c. +27% France c. +6% Germany c. +7% Spain c. +4% Switzerland c. +8% Portugal c. +21% Italy c. +3% Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not
Slide 44: Capacity environment H1 2016
Capacity environment H1 2016 7.4% split by carrier Winter 14/15 Winter 15/16 Other 7.8% 7.7% 7.4% easyjet Vueling 7.0% 6.8% 6.8% BA 5.2% Ryanair 3.7% Capacity change total easyJet capacity change Competitors on easyJet Capacity Change SH Market markets easyJet markets Footer box on intersect of line
Slide 45: Profit after tax
Profit after tax £m FY 2015 FY 2014 Change Profit before tax 686 581 18.1% Tax charge (138) (131) (5.3%) Profit after tax 548 450 21.8% Effective tax rate 20.1% 22.5% 2.4ppt Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 45 45
Slide 46: Revenue per seat
Revenue per seat £ per seat FY 2015 FY 2014 Change Seat revenue 61.54 62.40 (1.4%) Non-seat revenue 0.94 0.91 2.2% Total revenue 62.48 63.31 (1.3%) Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 46 46
Slide 47: Revenue, profit and margin growth in H2
Revenue, profit and margin growth in H2 Reported £m H 2 2015 H 2 2014 Change Total revenue 2,919 2,825 3.3% Fuel (683) (714) 4.3% Operating costs (excluding fuel) (1,426) (1,352) (5.5%) EBITDAR 810 759 6.6% Ownership costs (131) (125) (3.4%) Pre-tax profit 679 634 7.2% PBT margin 23.3% 22.4% 0.8ppt
Slide 48: Cost per seat excluding fuel - key drivers
Cost per seat excluding fuel - key drivers Cost per seat Variance at Variance at Weighted variance excluding constant constant at constant Drivers fuel currency currency currency £ £ % £ • Regulated airport charges • Impact of higher load factor Airports and ground handling 14.96 (0.37) (2.4%) (1.0%
Slide 49: Increasing proportion of A320's
Increasing proportion of A320’s FY 2015 FY 2014 Change A319 (operating lease) 49 54 (5) A319 (owned / finance lease) 99 99 0 A319 Total 148 153 (5) A320 (operating lease) 18 18 0 A320 (owned / finance lease) 75 55 20 A320 Total 93 73 20 Total fleet 241 226 15 Operating lease 28% 32% (4ppt) Number un
Slide 50: Currency impact
Currency impact Revenue Costs FY 2015 FY 2014 FY 2015 FY 2014 Sterling 49% 47% 27% 26% Euro 40% 42% 32% 33% US dollar 1% 1% 35% 35% Other (principally Swiss franc) 10% 10% 6% 6% Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Average effective Euro rate for re
Slide 51: ROCE calculation – including 7x lease adjustment
ROCE calculation – including 7x lease adjustment Reported £m FY 2015 FY 2014 Earnings before interest and tax – reported 688 581 Interest element of operating lease payments 38 41 Earnings before interest and tax - adjusted 726 622 Tax 20% 21% Normalised operating profit after tax (NOPAT) 581 491 Av