Easyjet Plc · LSE:EZJ
Easyjet — Investor Day (September 2008)
125 slides from Easyjet's investor day presentation, Sep 17, 2008
Slide 1: Investor Day 17 September 2008
Investor Day 17 September 2008
Slide 2: Introduction: easyJet – Turning Europe Orange
Introduction easyJet – Turning Europe Orange Andy Harrison Chief Executive Officer
Slide 3: Vision: To be the best low fares airline in the world
Vision: To be the best low fares airline in the world Operational Safety Our No.1 Priority Excellence Low cost and highly efficient Measurement F ‘06 F ‘07 Composite 0.82 0.82 Measurement F ‘06 F ‘07 risk indicator OTP 75% 75% Cost per seat ex fuel £ 28.36 26.55 Customer Low cost with care and conve
Slide 4: Agenda
Agenda 9.00 Introduction Andy Harrison, Chief Executive Driving financial performance Jeff Carr, Group Finance Director Operational excellence Cor Vrieswijk, Operations Director and team Neil Mills, Procurement Director Q&A session 11.00 Break 11.15 Safety Simon Stewart, SMS Development & Training M
Slide 5: easyJet – painting Europe Orange
easyJet – painting Europe Orange 4 Europe’s 4th largest airline Growth in passengers 37% CAGR over past 10 years 4 6.4% share millions 4 43 million passengers 50.0 50% 4 165 aircraft situated in 20 bases 40.0 40% 4 Pan European network 30.0 30% 20.0 20% 4 400 routes, 103 airports, 10.0 10% 26 countr
Slide 6: Superior margin improvement
Superior margin improvement PBT Margin Performance 2005 – 2007 Indexed 180 easyJet % PBT Marg indexed 160 Lufthansa British Airways 140 Ryanair 120 Air France 100 80 60 40 2005 2006 2007 Focus on network, revenue and costs has driven improved performance Introduction 6
Slide 7: Tactical reduction to growth in F'09
Tactical reduction to growth in F’09 4 European short-haul aviation is No-frills Charter fundamentally a growth industry Full service albeit with occasional short term corrections 4 easyJet has grown via market share gains from charter and 1995 2005 2006 1993 1994 2001 2004 2002 2007 1998 1987 1988
Slide 8: easyJet – strongly positioned
easyJet – strongly positioned 4 Low cost, financially strong and highly efficient 4 Europe’s No 1 Air transport network 4 Strong customer proposition Introduction 8
Slide 9: Low cost, financially strong and highly efficient
Low cost, financially strong and highly efficient 4 Focused, simple operation 4 New fuel efficient fleet - average age 3.5 years 4 Low ownership costs – Airbus contract 4 High asset utilisation 4 aircraft in operation 11.6 hours a day * 4 Average turn time of c.30 minutes 4 Strong cost reduction mom
Slide 10: Europe's No 1 Air transport network
Europe’s No 1 Air transport network 4 Convenient airports 4 Strong positions in key markets: 4 Gatwick No.1 4 Luton No.1 4 Milan No.1 4 Geneva No.1 4 Paris No.2 4 No.1 consumer reach 4 Over 289 million passengers within one hours drive 4 Broad appeal across geographies and customer types 4 Balanced
Slide 11: Europe's No 1 Air transport network
Europe’s No 1 Air transport network 45 45 Other market pa 40 40 Non primary airports 3 3 Number of market pairs 35 35 Operated between N2umber of mark primary airports operated betwe 30 30 primary airports 25 25 7 7 1 1 20 20 36 36 18 18 15 15 29 29 10 10 19 19 21 21 20 20 17 17 18 18 16 16 14 14 5
Slide 12: Strong customer proposition
Strong customer proposition 4 Across all customer groups Business people VFR & Commuters Short breakers Long breakers 4 Strong customer perception Source: Gfk Brand tracker easyJet BA Ryanair Value for money No.1 No.3 No.2 Friendly service No.1 No.2 No.3 Efficient No.1 No.2 No.3 4 Europe’s leading a
Slide 13: Vision: To be the best low fares airline in the world
Vision: To be the best low fares airline in the world Operational Safety Our No.1 Priority Excellence Low cost and highly efficient Measurement F ‘06 F ‘07 Composite 0.82 0.82 Measurement F ‘06 F ‘07 risk indicator OTP 75% 75% Cost per seat ex fuel £ 28.36 26.55 Customer Low cost with care and conve
Slide 14: Driving Financial Performance
Driving Financial Performance Jeff Carr Group Finance Director
Slide 15: Growth with superior margin improvement
Growth with superior margin improvement Millions of seats 60 25% £16.00 16.0% £14.00 14.0% 50 20% 44.5 20% 13.6% £12.00 12.0% 38.9 £9.98 40 £9.57 34.7 14% £10.00 10.0% 15% 12% 10.1% £7.50 30 £8.00 8.0% 10% 7.1% £6.00 6.0% 20 £4.00 4.0% 5% 10 £2.00 2.0% 0 0% £0.00 0.0% F'05 F'06 F'07 F'05 F'06 F'07 S
Slide 16: Fuel impacting industry margins
Fuel impacting industry margins Millions of seats 60 25% £16.00 16.0% 51.9 13.6% £14.00 14.0% 50 20% 44.5 20% £12.00 12.0% 38.9 17% £9.98 40 £9.57 34.7 14% £10.00 10.0% 15% 12% £7.50 10.1% 30 £8.00 8.0% 10% 6.5% to 7% * £6.00 7.1% 6.0% 20 £4.00 4.0% 5% 10 £2.00 2.0% 0 0% £0.00 0.0% F'05 F'06 F'07 F'
Slide 17: Addressing fuel cost increases
Addressing fuel cost increases Network 4Tactical reduction in F’09 growth, minimises margin erosion 4Continue to invest in key markets 4Address areas of underperformance 4Fleet plan and financial strength allows flexibility in F’10 Revenue 4Target superior yield management versus peer group 4Capital
Slide 18: Network - reduced growth F'09
Network - reduced growth F’09 4 Accelerated sale and return of expensive aircraft 4 A321 sale progressing 4 Removal of older A319 – 5 offered for sale 4 Accelerated return of B737-700 4 Reduced winter utilisation 4 11.6 hours per day to 9 hours per day for Winter 08/09 4 Capacity removed from underp
Slide 19: Network - winter focus on key markets
Network - winter focus on key markets Rest of UK Paris - 14% +28% Gatwick +20% Milan +91% Stansted Madrid -23% +17% Mainland Europe + 19% Driving Financial Performance 6
Slide 20: Network – growth flexible beyond F'09
Network – growth flexible beyond F’09 Current fleet plan – 85 deliveries in next 3 years F’08 F’09 F’10 F’11 A321 (GB spec) 7 0 0 0 A320 (GB spec) 9 5 0 0 A320 (easyJet spec) 0 15 25 25 A319 120 135 158 175 A320 family 136 155 183 200 B737 29 17 8 0 Total 165 172 191 200 Airbus deferral rights add f
Slide 21: Growth supported by strong balance sheet
Growth supported by strong balance sheet £m Mar ‘08 Sep ‘07 Fixed assets 1,133 936 Cash & money market deposits 850 913 Goodwill and other intangible assets 432 311 Other assets 540 355 Total assets 2,956 2,516 Debt 566 519 Other liabilities 1,227 845 Shareholders’ funds 1,163 1,152 Total equity and
Slide 22: And financial flexibility
And financial flexibility 4 Capital investment program 4 Continue to finance mainly on balance sheet 4 rebalancing owned versus leased mix; target 70:30 4 Indicative spend 4 F’09 - £500m 4 F’10 - £450m 4 Significant financing flexibility 4 Cash at September 2008 year end, expected to be around £900m
Slide 23: Revenue – market capacity continues to slow
Revenue – market capacity continues to slow 4 OAG data still unclear; early tentative estimate for the winter is a capacity reduction in European short-haul of between 2% to 4% 4 September OAG shows the 8% following reductions for Winter 6% ’08 vs the prior year 4% 7.2% 5.5% 5.7% 4 SAS minus 6.2% 2%
Slide 24: Costs - how we compare
Costs - how we compare Cost per ask - pence 4.00 3.71 3.41 3.50 3.00 2.79 2.76 0.6 pence due to decision to fly to 2.50 more convenient airports 2.00 1.64 1.50 1.00 0.50 0.00 Sky Europe Vueling Air Berlin easyJet Ryanair Based on latest full year reported data: Driving Financial Performance 11
Slide 25: Costs - need to drive harder
Costs - need to drive harder F’04 F’07 Change Ownership £3.82 £2.40 £1.42 Improvement Maintenance £3.54 £2.21 £1.33 Overheads £5.33 £3.77 £1.56 Airports / handling £10.51 £10.39 £0.12 Navigation £3.04 £3.19 (£0.15) Worse Crew £4.39 £4.59 (£0.20) Total £30.63 £26.55 £4.08 4 F’09 costs impacted by pri
Slide 26: Current trading
Current trading 4 F’08 outlook unchanged 4 Profit before tax : £110m to £120m (before GB Airways one off costs) 4 GB Airways one off costs c. £12m 4 H2 total revenue per seat up mid teens versus prior year (including Euro benefit) 4 F’09 will be challenging 4 To minimise margin erosion from higher f
Slide 27: The strategy is delivering
The strategy is delivering Margin performance: RASK-CASK (pence) 1.14 easyJet 0.81 0.79 0.72 Ryanair 0.62 0.46 easyJet 0.34 0.35 0.24 0.26 Ryanair 2003A 2004A 2005A 2006A 2007A Source: Company data Note: Year-end September; Ryanair financials are calendarised to September ¹ RASK is revenue divided b
Slide 28: Operational Excellence: Reducing cost, driving efficiency
Operational Excellence: Reducing cost, driving efficiency Cor Vrieswijk Chris Hope Ian Davies Neil Mills Margit Kulcsar Operational Excellence 1
Slide 29: Operations at easyJet
Operations at easyJet 4 Flight operations (1,700 pilots) 4 Cabin crew operations (4,000 cabin crew) 4 Ground operations (28 countries,106 destinations, 400 routes, 4 self handing bases) 4 Engineering & Maintenance (165 aircraft, 4 base mtce bases, 21 line mtce bases) 4 Operations control (20 aircraf
Slide 30: Low cost and efficient delivery
Low cost and efficient delivery 4 Effective and efficient delivery of: 4 Safety 4 Cost improvement 4 On time performance 4 Customer care 4 Employee satisfaction 4 Ensuring that operations can support growth and European expansion effectively and at lower cost: 4 Building a world class but low cost o
Slide 31: Building a world class but low cost organisation
Building a world class but low cost organisation Rapid growth and European expansion has meant the organisation must change to continue be efficient, focused and simple 4 Organisation redesign implemented 4 Recruitment of experienced airline managers with low cost mindset 4 In-sourcing of strategic
Slide 32: Highly focused organisation
Highly focused organisation Highly standardised, automated, hands on, focused on efficiency versus the legacy approach Operations Director Accountable Manager Q & S Manager Ground Operations Flight Operations Cabin Services OCC Engineering & Mtce Manage regulatory Manage regulatory Delivery of Safet
Slide 33: Investing in systems to drive efficiency gains
Investing in systems to drive efficiency gains 4Current IT no longer efficient 4Systems upgrade essential for future cost reduction Flight Planning and robustness Extent of AIMS Tail Assignment Scheduling Manpower Crew On the day Disruption Rostering Planning Tracking Operation Recovery Pairings Cre
Slide 34: Clear targets in place for cost reduction
Clear targets in place for cost reduction Ownership 4Higher cost aircraft exit -Target £40m p.a. by F’11 Maintenance 4Near term additional costs from in-sourcing programme 4Medium term will drive savings –Target £10m p.a. by F’11 Overheads 4Continue to leverage scale 4Head office redundancies, 60 he
Slide 35: Fuel burn and crew efficiency
Fuel burn and crew efficiency Chris Hope
Slide 36: Fuel burn – target 3% reduction
Fuel burn – target 3% reduction 4 Safety is our No.1 priority 4 Fuel bill is now nearly £1billion p.a. ! 4 Factors impacting fuel efficiency 4 Aircraft efficiency 4 Average aircraft age 3.5 years 4 Engine efficiency 4 Tech 56 insertion 4 Crew efficiency 4 Operating procedures 4 Pilot technique 4 Fue
Slide 37: Fuel – good progress made in 2008
Fuel – good progress made in 2008 4 Cross functional initiatives 4 Fuel burn assessment complete in 2007 4 Data driven analysis 735 730 725 720 715 710 705 700 695 2007 2008 2009 Burn USG/HR Operational Excellence 10
Slide 38: Fuel – more to achieve in 2009
Fuel – more to achieve in 2009 4 New 4D flight planning system 4 Improved fuel analysis 4 Overall cost optimisation 4 Engine performance monitoring 4 Weight saving programme 4 Removable items 4 Lighter equipment 4 Crew initiatives 4 Descent planning 4 Operating speeds 4 Acceleration altitude Operati
Slide 39: Crew efficiency – target 10% improvement
Crew efficiency – target 10% improvement 4 Already highly efficient 4 More productive vs legacy carriers 4 Crew tidy cabin between turns 4 Unionised but few rules 4 The easyJet difference 4 Simple operation 4 Team orientated 4 Customer focused Crew room - Paris CDG 4 No frills e.g. crew room Operati
Slide 40: Crew supply chain and productivity
Crew supply chain and productivity 1 2 3 4 5 6 7 8 9 Network Schedule Manpower Training Intermediate Day to Day Fleet planning Pairings Rostering planning planning planning Delivery Rostering Crewing AI cel/ ft AI cel/ ft ce ft ce ft ce ft ex roso ex roso Ex roso Ex roso Ex roso l l l MS MS c c c c
Slide 41: Crew efficiency delivery already underway
Crew efficiency delivery already underway Achievements so far….. 4 Pairings optimiser 4 Evaluation of rules & processes 4 Review of basing strategy 4 Optimisation of training Operational Excellence 14
Slide 42: Engineering & Maintenance
Engineering & Maintenance Ian Davies
Slide 43: Engineering & Maintenance overview
Engineering & Maintenance overview 4 Objectives 4 Highest standards of safety through SMS System 4 High reliability of A319, A320 fleet & Boeing sub-fleet 4 Continued focus on maintenance cost management 4 easyJet maintenance activity predominantly outsourced 4 Outsourced maintenance represents 90%
Slide 44: Building a world class E&M team
Building a world class E&M team 4 Stage 1 4 In source Maintenance Operations Control (MOC) from SR Technics in Feb ‘08 4 Direct control over line maintenance planning and allocation 4 Line maintenance performed 18 locations (2 in-house Luton and Liverpool) 4 Stage 2 4 Development of internal Enginee
Slide 45: While delivering good reliability
While delivering good reliability A319 Operational Reliablity July 07 - July 08 99.8 99.7 99.53% 99.6 99.5 99.4 99.3 99.2 99.1 99 98.9 98.8 98.7 ia sa li n e an t t i l gs S r l ia s ee ga bm Je Ai nc er ay SA an er ita in ri Fl sy tu Ib ra ls rw st rB W fh Al or se Ea rF Au ld Ai Lu Ai an rP or us
Slide 46: …..and keeping a tight focus on costs
…..and keeping a tight focus on costs Maintenance cost per seat 4 Renewal of major contracts £4.00 £3.50 (airframes, engines) £3.00 4 Fleet investment (replacement of £2.50 £2.00 737 700’s and ex GB 320 / 321) £1.50 4 Change in fleet ownership £1.00 £0.50 structure £0.00 2005 2006 2007 4 Leveraging
Slide 47: Airports & Ground Handling
Airports & Ground Handling Neil Mills
Slide 48: easyJet is present in 37 of the top 50 airports
easyJet is present in 37 of the top 50 airports 4 Top 50 airports cover 88% of intra European capacity 2008 Intra EU C apacity - Top 50 Airports (cover 88% of all capacity) 60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000,000 0 ZRH ATH HAM STN OSL ARN TXL MAN LIN HEL LTN VIE BRU IST ORY
Slide 49: easyJet's ground handling operation
easyJet’s ground handling operation 4 Working with strategic partners 4 To further reduce costs by increasing efficiencies 4 Influencing equipment purchasing decisions 4 Close contract management 4 Deliver the customer service standards 4 Three suppliers account for 60% of volume 4 Key suppliers inc
Slide 50: Delivering results
Delivering results 4 GB Airways integration March 2008 4 GB Airways Ground handling saved circa 33% 4 Gatwick Menzies Contract (savings c£350 per turn) 40% 4 Malaga transition (saving c£720 per turn) 45% 4 Share the pain – short term 4 Short term “Share The Pain” programme re fuel costs 4 Delivered
Slide 51: Challenges at regulated airports
Challenges at regulated airports 4 Sharp price increases at regulated airports 4 Stansted +88% to £12.57 per pax From 01 Apr 2007 4 Gatwick +25% to £13.66 per pax from Apr/Jul 2008 4 Amsterdam +32% to £28.53 per pax from Nov 2008 4 Paris CDG & ORLY inflation set at 5.5% per year for 3 years 4 The ma
Slide 52: Opportunities at regulated airports
Opportunities at regulated airports 4 London Gatwick 4 Judicial review of the CAA regarding the regulatory settlement 4 Initial position very positive 4 The emerging thinking from the CC re terminal tendering 4 Amsterdam Schiphol 4 Formal complaint to the NMa (Dutch competition authorities) under va
Slide 53: Regulated airports going forward
Regulated airports going forward 4 Regulated airports in the UK 4 Working with the Competition Commission (CC) for future airport regulation 4 Emerging thinking about the break up of the BAA is a first step but the best outcome is effective regulation at airports, ownership is a secondary issue 4 Co
Slide 54: Winning in Paris
Winning in Paris Margit Kulcsar
Slide 55: Winning in Paris - the easyJet way
Winning in Paris - the easyJet way 4 Paris is an important market for easyJet 4 Second largest airline with 6% share 4 Nine based aircraft between Orly and CDG 4 Broad range of routes 4 Making the low cost model work at busy airports 4 Lean, efficient operation 4 Driving cost savings 4 easyJet – “th
Slide 56: Managing turn times in busy airports
Managing turn times in busy airports 4 Turn time in Paris is 30 minutes 4 For cost reasons we use air bridges (thus only one point of exit/entry compared to steps). Delivered via: 4 Clear procedures and very close control of their execution 4 Cabin crew prepare aircraft within seven minutes 4 Handle
Slide 57: Reducing cost – CDG terminal move
Reducing cost – CDG terminal move 4 Handling agent 4 Europe Handling, part of the CRIT Group 4 Eager to adopt easyJet approach 4 Actively supported ‘share pain initiative’ despite increasing labour costs 4 Aeroport de Paris 4 Move from terminal 3 to terminal 2 B March 2008; capacity to grow to 7 mil
Slide 58: Conclusion
Conclusion Cor Vrieswijk
Slide 59: Reducing cost, driving efficiency
Reducing cost, driving efficiency 4 Clear targets for cost reduction 4 Investment in systems 4 Efficient, scaleable pan European organisation Operational Excellence 32
Slide 60: Safety
Safety Captain Simon Stewart
Slide 61: Safety – our vision
Safety – our vision “Safety is our No.1 priority” 4 Everyone committed to maintaining a safe and secure operational environment for our customers, our staff, and our shareholders 4 Our goal is more that just regulatory compliance, our focus is proactive risk management, underpinning the needs of the
Slide 62: We manage risks inherent in the system
We manage risks inherent in the system Key risks: System Risk 4 Cultural differences Assessment & easyJet Process Analysis SAFETY 4 Operational environment RADAR 4 Crew experience gradients System 4 Fatigue Defence Analysis Tactical Decision Strategic Making Decision Making Organisa- tional Learning
Slide 63: Tactical and strategic risk oversight
Tactical and strategic risk oversight Sensory Network Risk Assessment Risk Detection Notify & Precursor Inquire examples Rostering C O Hazardous C O Reactive Risk Environment Event/s Proactive N N Route risk Exploratory T T Individual R R Evaluative differences O O Time critical L L Adjust Risk Mana
Slide 64: easyJet risk performance is improving
easyJet risk performance is improving 4 Composite risk index (value/thousand sectors represented as Airline ASK/RV.) 4 Risk value current bench mark 0.8/1000. KPI set to maintain against company expansion rate versus ASK. Currently 0.81/1000. 4 Safety Reporting Culture 4 Safety Reporting rate KPI 30
Slide 65: Risk Transparency
We manage the risks inherent in the system Director Safety and Security Board Risk Transparency Safety Review Chair: CEO Board Airline Safety Chair: AOC Action Group Accountable Manager Departmental Chair: Post Holder Safety Action Group Just Culture Safety 6
Slide 66: easyJet continuing to invest in safety
easyJet continuing to invest in safety 4 easyJet strives to remain at the cutting edge of risk management capability to meet easyJet operational risk oversight and future regulatory requirement 4 Our strategic partners: 4 Regulators 4 Rule Makers 4 EU HILAS programme 4 NASA 4 Academic Institutions S
Slide 67: People
People Mike Campbell, People Director
Slide 68: Engagement into delivery
Engagement into delivery People Investment 4 Job opportunities and growth 4 Financial reward 4 Pride and satisfaction Shareholders Customers 4 Capital growth 4 Market-leading low-cost 4 Quality schedule 4 Reliable service People 2
Slide 69: Reward focused on performance
Reward focused on performance 4 Basic pay at market median 4 Pay linked to productivity and delivery 4 Pilots 15+% 4 Cabin crew 70+% 4 General and administration 40+% 4 Senior management 150+% 4 No frills, no seniority 4 85% employee share ownership 4 Different countries, different timing, locally f
Slide 70: Great results
Great results 2006 2008 Norm Response Rate 67% 72% Overall Satisfaction 68% 72% 55% Engagement 65% 70% 51% Employer Advocacy 62% 74% 41% Service Advocacy 72% 72% 46% People 4
Slide 71: Case study: our people deliver great results
Case study: our people deliver great results 4 GB Airways integration: changing colours 4 15 Aircraft (9 x A320’s and 6 x A321’s) 4 28 Gatwick slot pairs (plus Manchester) 4 Occupying North Terminal at Gatwick 4 1,030 People primarily based at Gatwick People 5
Slide 72: Case study: GB Airways
Case study: GB Airways 4 Tight process discipline 4 Light touch – no bureaucracy 4 Receiving manager – clear accountabilities easyJet has 36% of the capacity at LGW People 6
Slide 73: Our people make the difference
Our people make the difference Friendly Approachable 4 Drive in-flight revenues easyJet 49% 41% 4 Customer care BA 47% 38% Ryanair 34% 27% People 7
Slide 74: Customer: Commercial Strategy and Execution
Customer: Commercial Strategy and Execution Saad Hammad – Chief Commercial Officer Catherine Lynn – Head of Network Management David Osborne - UK General Manager Francois Bacchetta – France / Italy General Manager Customer 1
Slide 75: Commercial strategy
Commercial strategy 4 Maximise product attractiveness 4 Distinctive customer proposition through: 4 broad customer appeal 4 focus on key purchase drivers 4 listening to customers and acting on it 4 Network development translates proposition into appealing schedule: 4 leading presence on key routes a
Slide 76: Broad customer appeal
Broad customer appeal Revenues roughly equal across all groups - not overly dependent on any one category Business people VFR, 2nd Homers & Short breakers Long breakers Commuters 4 Main city airports 4 Identify trends and 4 Attractive and ever- 4 Broad range of 4 Schedule quality respond to changing
Slide 77: We deliver against key purchase drivers
We deliver against key purchase drivers Key drivers of purchase intention Cost Low Fares & Fare Transparency Value for Money Convenience Schedule & OTP Network & Airport Location Booking System & Online Check-in Care Friendly & Helpful Staff easyJet vs Main Competitors: Pan-European ratings 2 1 2 1
Slide 78: Customer advocacy is strong in the UK
Customer advocacy is strong in the UK 2007 2008 % 24 30 14 Strongly Recommend Recommend 36 27 27 easyJet British Airways Ryanair -10 -10 -15 -8 Unlikely to Recommend -13 Definitely not recommend -15 Sample: GfK Brand Tracker 2008 all airline passengers: UK (2,700) Customer 5
Slide 79: Advocacy is also growing in Mainland Europe
Advocacy is also growing in Mainland Europe Growth in Domestic Recommendations easyJet strengths vs easyJet + 13% competitors in all markets Air France + 2% 9 Good value for money easyJet + 15% Lufthansa + 4% 9 Low fares easyJet + 8% 9 Innovative Alitalia - 13% 9 Approachable easyJet + 8% lberia +1%
Slide 80: Customers - integral to product development
Customers - integral to product development 4 We have built a research forum to enable ongoing dialogue with our customers 4 representative sample (2000 customers) which engages twice weekly 4 No other airline has an ongoing real-time customer dialogue in this way 4 Recent topics include: easyJet Im
Slide 81: Network objective and strategy
Network objective and strategy Objective: 4 Paint Europe Orange: establish easyJet as the short-haul airline of choice across Europe’s largest unique catchments and point-to-point passenger flows Measures: 4 Population coverage; presence on top 100 routes 4 Market share; % where we are no. 1 or 2 St
Slide 82: Leadership in population coverage
Leadership in population coverage Consumers (m) 300 289 273 250 240 226 200 194 150 161 100 easyJet Ryanair KLM Air France Lufthansa British Airways 289m consumers within 60 minutes drive time of an easyJet airport Europe’s number 1 transport network Customer 9
Slide 83: 103 network points
103 network points Customer 10
Slide 84: Europe's No 1 Air transport network
Europe’s No 1 Air transport network 45 45 Other market pa 40 40 Non primary airports 3 3 Number of market pairs 35 35 Operated between 2 Number of mark primary airports operated betwe 30 30 primary airports 25 25 7 7 1 1 20 20 36 36 18 18 15 15 29 29 10 10 19 19 21 21 20 20 17 17 18 18 16 16 14 14 5
Slide 85: Investment in Europe is improving margin mix
Investment in Europe is improving margin mix APD – UK New bases- Europe Customer 12
Slide 86: We have been improving schedule quality
We have been improving schedule quality More routes with more frequencies Increasing peak departures for time sensitive customers 45% Daily Frequency 2005 2008 W2005 40% W2006 <1 9 68 W2007 35% W2008 1 141 242 30% 2 48 55 25% 3 18 30 20% 4+ 20 20 15% Growing in new markets 10% 5% Increasing frequenc
Slide 87: Route selection is a robust process
Route selection is a robust process Geographical Operational Market Scope Scope Attractiveness Competitive Bilateral Environment Constraints ‘Wildcards’ Rolling route shortlist Detailed financial evaluation Join the dots New routes End-product: Rolling airport shortlist Customer 14
Slide 88: We actively manage our portfolio
We actively manage our portfolio Unsuccessful routes are eliminated quickly 4 Up to 12% annual route churn (past 4 years) depending on market conditions 4 Dortmund routes 4 Poor ground transport links to Dortmund compared with Dusseldorf / Cologne: thin market with challenging yields 4 Berlin (Schoe
Slide 89: Building strength: Paris–Milan
Building strength: Paris–Milan Capacity Mkt share PAR-MIL growth Route Weekday freq From Thousands 250 LIN-ORY 1x daily May-04 CDG-MXP 1x daily Mar-06 200 CDG-MXP 2x daily Nov-06 CDG-MXP 3x daily Jun-07 23% 22% CDG-MXP 4x daily Oct-07 150 CDG-MXP 5x daily Sep-08 17% CDG-MXP 6x daily Oct-08 15% 100 1
Slide 90: High impact "Objects" advertising
High impact “Objects” advertising Customer 17
Slide 91: A campaign with proven cut-through
A campaign with proven cut-through Impact & Engagement vs. ads in all UK categories Motivation Distinctive Involving Interesting Disturbing Soothing Unpleasant Pleasant Irritating Gentle Mean UK norm 4.58 Boring Weak Dull ‘Objects’ 5.40 (Each axis 0-80%) Source: easyJet/Millward Brown Link Test 2007
Slide 92: Campaign targeted by market
Campaign targeted by market Outdoor innovation in Germany Re-branding the Metro in Madrid REM Concert in Naples Customer 19
Slide 93: Drives consumers to easyJet.com
Drives consumers to easyJet.com UK’s most visited airline site Sustained BA decline Customer 20
Slide 94: Continual improvement to easyJet.com
Continual improvement to easyJet.com Customer 21
Slide 95: Conversion: Pricing for market share growth
Conversion: Pricing for market share growth 4 Proprietary revenue management system 4 Transparent and simple for our customers 4 Target to be significantly cheaper than our competitors 4 Drive annual improvement subject to market conditions 4 Six pricing managers, three yield developers 4 Interventi
Slide 96: Conversion: maximising available revenue
Conversion: maximising available revenue Bookings by price level vs days to go e.g. Luton - Lisbon 2367 19/08/08 Pre-set fare classes triggered by days to go or demand Last-minute fare 140 120 100 Bookings 80 Entry-price point = cost- plus 60 40 20 0 0 20 40 60 80 100 120 140 160 180 200 220 Days to
Slide 97: Reduction in capacity drives yield improvement
Reduction in capacity drives yield improvement 4 Newcastle - Jet2 pulled capacity out for Summer ’08 4 Newcastle-Palma - 33% capacity reduction on route 4 Newcastle-Malaga - 36% capacity reduction on route 4 Milan Malpensa– Alitalia capacity reduced from 47% to 21% 4 Milan-Madrid - Alitalia & Vuelin
Slide 98: Strong progress in driving ancillary revenue
Strong progress in driving ancillary revenue Working with great partners with dedicated teams €1.5bn travel insurance world €2bn European market leader in leader; part of Elvia Travel car rental, large fleet & guaranteed Insurance (Allianz Group), availability operating in 33 countries with 8000 sta
Slide 99: Strong progress in driving ancillary revenue
Strong progress in driving ancillary revenue We continue to provide significant focus on up-sell 4 Improved user interface in the booking flow 4 Enhanced in-flight range 4 Optimisation of fees & charges 4 Baggage charges 4 Speedy Boarding Excluding checked bag charge Customer 26
Slide 100: We continue to drive ancillaries hard
We continue to drive ancillaries hard 4 Focused improvements on core products; 4 Better pricing & availability = improved conversion 4 Improved merchandising; 4 Simplify product communication on website 4 Improved post-booking (cross-sell) e-mails 4 In-flight range performance 4 Get the right produc
Slide 101: Commercial strategy
Commercial strategy 4 Maximise product attractiveness 4 Distinctive customer proposition through: 4 broad customer appeal 4 focus on key purchase drivers 4 listening to customers and acting on it 4 Network development translates proposition into appealing schedule: 4 leading presence on key routes a
Slide 102: Winning in key markets: London Gatwick
Winning in key markets London Gatwick David Osborne
Slide 103: Winning at Gatwick
Winning at Gatwick 4 We have made significant capacity investments 4 35 aircraft, reinforced by GB acquisition, combination of A319s and A320s 4 8.3m passengers in the next 12 months 4 Now the largest short haul airline at Gatwick and leader on 34 of the 44 markets served 4 Structural cost advantage
Slide 104: Great access to a large & affluent catchment area
Great access to a large & affluent catchment area Unique Catchment Areas of the Big 4 London Airports 4 It’s big: 4 9.3m catchment 4 35.2 m passengers in 2007 4 It’s wealthy: 4 76% of the Top 50 UK councils are within the LGW catchment (Source: Centre of Int’l Competitiveness) 4 It’s easy to get to:
Slide 105: Now the largest short haul airline at Gatwick
Now the largest short haul airline at Gatwick Capacity (seats) 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 2002 2003 2004 2005 2006 2007 2008 easyJet British Airways New easyJet routes this winter: Istanbul, Helsinki, Lyon, Salzburg and Basel Now market leader on 34 of th
Slide 106: BA tried to fight back this summer
BA tried to fight back this summer BA sun routes: daily to Paphos, Malta, Alicante, Faro, Gibraltar, Ibiza, Palma and twice daily to Malaga Customer 33
Slide 107: We fly 8 daily to Malaga (vs. 2 daily from BA)
We fly 8 daily to Malaga (vs. 2 daily from BA) Screen-grabs taken from easyJet.com on 03/09/2008 Customer 34
Slide 108: Average Fare (£)
Average Fare (£) Average Fare (£) 0 50 100 150 200 250 300 350 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 British Airways 48 49 50 51 52 Days Before Departure 53 54 easyJet 55 56 57 Days Before Departure 58 59 6
Slide 109: As a result, our planes are fuller
As a result, our planes are fuller Airport Pair from Gatwick British Airways easyJet Malta 59.4% 91.2% Palma 68.7% 84.0% Malaga 77.4% 88.8% Alicante 78.7% 84.2% Faro 79.4% 86.9% Pisa 82.0% 87.6% Gibraltar 83.6% 89.1% Thessaloniki 85.9% 89.2% In past 3 yrs, BA has dropped 10 routes from Gatwick: 4 Do
Slide 110: Winning in key markets: Milan breakthrough
Winning in key markets Milan breakthrough Francois Bacchetta
Slide 111: Milan breakthrough
Milan breakthrough 4 We have made significant capacity investment in the largest catchment in Northern Italy 4 Moving rapidly to fill Alitalia vacuum 4 Network serves the best business & leisure routes 4 We are now the biggest carrier at Malpensa 4 We have generated significant local support 4 Drivi
Slide 112: Malpensa – largest, wealthy catchment
Malpensa – largest, wealthy catchment Milan Malpensa 2h 40min 1h10 1h40 4Malpensa centre of catchment area of over 17m passengers within 2h 4 x2 Linate catchment x3 Bergamo catchment 4With Lombardy, richest region in Italy 4Biggest Business Pool (mostly SMEs) 4Relative low competition (Alitalia exit
Slide 113: Strong capacity investment at Malpensa
Strong capacity investment at Malpensa Sum of Aircraft Sum of Routes Over 3.5m pax p.a. to/from MXP at the end of FY08 (+41% growth vly) Customer 40
Slide 114: We fly the best business & leisure routes
We fly the best business & leisure routes Customer 41
Slide 115: We are now the leading carrier at Malpensa
We are now the leading carrier at Malpensa easyJet Alitalia 107,534 Volare Lufthansa Air One Summer 2008 Winter 2007 Air France Vueling KLM Iberia Swiss Top 10 Airlines at MXP (07 “Nov” & S08 “Aug”) Weekly Departing Seats Source OAG) Customer 42
Slide 116: easyJet has been welcomed by the local media
easyJet has been welcomed by the local media Customer 43
Slide 117: Brand awareness has increased significantly
Brand awareness has increased significantly 90% awareness already reached 100% 90% Italy 80% Milan 70% 60% 50% 40% 30% 20% 10% 0% 2007 2008 Customer 44
Slide 118: We are outperforming our competitors
We are outperforming our competitors Load factor performance Airport Pair Alitalia easyJet Malpensa-Bari 68% 92% Malpensa-Catania 71% 94% Malpensa-Naples 70% 92% Malpensa-Palermo 68% 93% Malpensa-Amsterdam 60% 93% Malpensa-Paris CDG 57% 87% Malpensa-Prague 48% 87% Average easyJet load factor at Malp
Slide 119: Our yields have developed strongly too
Our yields have developed strongly too Rolling year Rolling year revenue capacity (m) per seat (€) Sep 07 Ovt 07 Nov 07 Dec 07 Jan 08 Sep Feb07 08 Mch 08 Apr 08 May 08 Jun 08 Jul 08 Aug 08 Rolling 12 month revenue per seat Rolling 12 months capacity (m) Revenue per seat growth of 9% on all routes to
Slide 120: Conclusion
Conclusion Andy Harrison Chief Executive Officer
Slide 121: Vision: To be the best low fares airline in the world
Vision: To be the best low fares airline in the world Operational Safety Our No.1 Priority Excellence Low cost and highly efficient Measurement F ‘06 F ‘07 Composite 0.82 0.82 Measurement F ‘06 F ‘07 risk indicator OTP 75% 75% Cost per seat ex fuel £ 28.36 26.55 Customer Low cost with care and conve
Slide 122: Summary
Summary 4 2009 will be a tough year 4 Weakening consumer environment 4 Uncertainty over scale and timing of competitor reductions 4 Volatility of fuel and US dollar 4 easyJet strongly positioned 4 Strong, low cost highly efficient organisation with scale benefits 4 Europe’s No.1 air transport networ
Slide 123: Summary
Summary 4 2009 will be a tough year 4 Weakening consumer environment 4 Uncertainty over scale and timing of competitor reductions 4 Volatility of fuel and US dollar 4 easyJet strongly positioned 4 Strong, low cost highly efficient organisation with scale benefits 4 Europe’s No.1 air transport networ
Slide 124: Disclaimer
Disclaimer This communication is directed only at (i) persons having professional experience in matters relating to investments who fall within the definition of “investment professionals” in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001; or (ii) high
Slide 125: Question and answer
Question and answer