Easyjet Plc · LSE:EZJ
Easyjet — H1 2020 Earnings Presentation
40 slides from Easyjet's earnings presentation, June 2020
Slide 1: H1 2020 results presentation
H1 2020 results presentation
Slide 2: Introduction
introduction Johan Lundgren – CEO
Slide 3: easyJet - Positioned to win
easyJet - Positioned to win easyJet has been decisive in meeting the challenges of Coronavirus to ensure we can manage a prolonged grounding by: 1. Cutting costs 2. Delivering vastly reduced capex while retaining excellent fleet flexibility 3. Securing c.£2bn additional funding, in addition to the
Slide 4: Financial review
Financial review Andrew Findlay – CFO
Slide 5: Response to coronavirus
response to coronavirus Current cash position (as @ 22 June) Maximise liquidity £2.4bn Does not include funding from: • equity raise + £400m to £450m • SLB transactions still to complete + c.£300m Cost Reductions & Additional funding Payment Terms Fleet Deferrals • Delivered c.£300m from SLB • c. 70
Slide 6: Scenario planning - Updated
Scenario planning - Updated Total cash burn scenarios* 3 months 6 months Scenario assumptions: grounding grounding • Refunds vs voucher/rebook ratios continue at a similar rate as those seen £1.0bn £2.1bn to date • FX and fuel rates based on spot price as at 25th May ’20 • Assumes no material change
Slide 7: Proposed equity placing
proposed equity placing > Firm placing of up to 9.99% of issued share capital > Additional placing of up to 5% of issued share capital, conditional on shareholder approval EQUITY PLACING (ordinary resolution) > Allocations expected to be split proportionally between the two placings > Expected gross
Slide 8: Key performance indicators
Key performance indicators H1 2020 H1 2019 Change* Seats flown (m) 42.7 46.2 (7.6)% Passengers (m) 38.6 41.6 (7.4)% Load factor (%) 90.3% 90.1% +0.2ppt Average sector length (km) 1,095 1,068 2.5% Revenue per seat - reported currency (£) 55.60 50.71 9.6% Revenue per seat - constant currency (£) 55.87
Slide 9: Financial performance
Financial performance H1 2020 H1 2019 Change* £m £m £m Total revenue 2,382 2,343 39 Headline costs: Headline costs excluding fuel (2,041) (2,016) (25) Fuel (534) (602) 68 Headline loss before tax (193) (275) 82 Headline loss before tax at constant currency (224) (275) 51 Non-headline items: Sale and
Slide 10: Revenue performance
Revenue performance Reported RPS +9.6% RPS @ CC +10.2% +8.3% -1.2% (£0.61) -0.6% £55.87 (£0.27) £55.60 c.18k Flights cancelled in March due to £4.20 Coronavirus c.£0.2bn +2.0% £1.01 Impact on total +1.1% revenue £0.56 £50.71 H1 2019 Reported Thomas Cook Ancillary Underlying Trading Coronavirus H1 20
Slide 11: Headline cost per seat
HEADLINE cost PER SEAT Headline CPS ex fuel Headline CPS @ CC = 7.2% @ cc +9.5%, of which: Headline CPS ex fuel @ CC = 9.5% c.5.0% underlying £0.66 £0.11 £0.15 £60.81 £0.06 £60.75 £1.00 • In line with guidance £0.99 • Lower capacity growth £59.75 for the half £1.22 • Ongoing, regulatory and inflat
Slide 12: Impact of fuel & currency
Impact of fuel & currency H1 2020 fuel impact H1 2020 H1 2019 Change* Fuel $ per metric tonne Market rate 563 650 87 Effective price 638 645 7 US dollar rate Market rate 1.28 1.29 1 cents Effective price 1.34 1.31 (3 cents) Difference between market rate and effective rate 0.06 0.02 Actual cost of f
Slide 13: Cash flow bridge
Cash FLOW bridge Net debt: £467m 365 18 (H1 19: £201m) 20 114 1,854 174 262 1,576 452 2 1,388 173 111 19 Cash & MMC at Operating loss Depn & amort Net working Other operating Tax paid Ordinary Cash & MMDs Sale & leaseback Cash Capex Repayment of Restricted case, FX 30 September capital Dividend (FY1
Slide 14: Balance sheet
balance sheet 31 March 31 March 30 September £m 2020 2019 2019 Goodwill and other intangible assets 613 551 561 Property, plant and equipment 4,823 4,286 4,661 Right of use assets 468 572 502 Derivative financial instruments (554) 48 63 Equity Investments 33 54 48 Other assets (excluding cash and mo
Slide 15: Utilising flexibility in fleet
Utilising flexibility in Fleet 360 • Deferred 24 aircraft deliveries Current contractual Max to beyond 2025 350 350 337 • Leads to re-timing of pre delivery 340 3351 New Plan Max2 payments 328 (excludes potential, 330 326 opportunistic fleet additions) 327 • Utilising flexibility of 24 320 operating
Slide 16: Gross capital expenditure
Gross capital expenditure £1,400m 1,400 New Aircraft Maintenance Guidance range 1,200 Lease payments Other 1,000 £900m 800 600 £600m £600m £600m £400m 400 200 0 HY'20 H2’20 FY'21 FY'22 FY'23 16
Slide 17: Fuel and foreign exchange hedging
Fuel and foreign exchange hedging Fuel Hedging and Ineffectiveness • Pre Covid-19 fuel was 71% hedged @ $654/MT for FY20 and 51% hedged for FY21 @ $638/MT • At H1 FY20 a charge of £164m was recorded as hedge ineffectiveness largely driven by over hedged amounts on Jet Fuel and foreign exchange relat
Slide 18: CEO update
ceo update Johan Lundgren – CEO
Slide 19: easyJet is back flying!
easyJet is back flying! Expected ramp up for Summer 2020 Europe with confidence Forecast Peak Operating Aircraft1 155 147 Early signatory to EASA’s Aviation Industry Charter for COVID-19: 85 • To ensure passengers are aware of measures taken 10 • To avoid people with June July August September sympt
Slide 20: easyJet's first day back!
easyJet’s FIRST DAY BACK! MailOnine | Sin | EXPRESS E&I FLYING HIGH Easydet flights resume | easyJet flights resume today: ‘Coronavirus: EasyJet fights return il Giornale it today hare’ the full of where | Company enforce strict new srloskdown eaves ___,_| EasyJet restarts operations for T1 di Malpe
Slide 21: Safety is always our #1 priority
Safety is always our #1 priority Safety for our crew & customers Have implemented a number of Bio-security measures: • Daily disinfection process which provides surface protection from viruses that lasts for at least 24 hours • All passengers and crew required to wear masks onboard at all times • Bi
Slide 22: easyJet - leading the recovery
easyJet - leading the recovery 1. Short-haul recovery ahead of long-haul Worth– UK1 79 78 • Lower government restrictions impact 76 74 • Greater consumer confidence to travel 73 72 69 • Leading network offer 66 2. Consumers will seek value in response to weaker 60 economic conditions • 2008/9 downtu
Slide 23: Our plan – delivering our strategy
Our plan – delivering our strategy Seamlessly connecting Europe with the warmest welcome in the sky #1 or #2 in Winning our Value by Innovating The right primary customers’ efficiency with data people airports loyalty 23
Slide 24: Market leading network
#1 or #2 in Market leading network primary airports Leading positions in major European cities easyJet’s network 2019 Top 50 European cities by GDP/capita1. Bubbles represent easyJet touching capacity3. provides a competitive Base ranking 1 2 Other / Non base advantage that can not 160 easily be rep
Slide 25: Network strength enables profitable flying
#1 or #2 in Network strength enables profitable flying primary airports The strong network enables Profitability by base easyJet to be efficient with its Scale allows capacity to be adjusted to Candidates for capacity network choices, with an absolute match demand and opportunistic growth reductio
Slide 26: easyJet – driving customer confidence
Winning our easyJet – driving customer confidence customers loyalty As demand returns, consumers will easyJet is the leading low cost airline move to trusted brands in terms of trust by market2 Factors important to booking the next flight after social distancing 1st 2nd 3rd restrictions are lifted1.
Slide 27: easyJet holidays
Winning our Easyjet holidays • Positive impact of easyJet actions customers loyalty o Cost focus at the airline creates value in Holidays o Provides customers with confidence to travel • No capacity constraints from cuts at airline • Variable cost base c.65% o Very low fixed costs of disrupted pax W
Slide 28: Value by efficiency
Value by Value by efficiency efficiency Cost-out Programme Driving operational efficiency A major cost-out program has been launched • Swift action in March / April to reduce to respond to COVID19 to: operational cash burn • Drive cash generation • Proposed staff reduction by up to 30% • ensure easy
Slide 29: Leading sustainability position
Leading Sustainability position Sustainability front of mind for customers 2% Thinking about sustainability MORE than before 40% Thinking about sustainability the SAME as before Thinking about sustainability LESS than before Tackling carbon emissions 58% easyJet were the world’s 1st major airline to
Slide 30: Forward looking
Forward looking • Q4 2020 capacity – c.30%: • Encouraging booking numbers for easyJet holidays • easyJet expects to deliver c. FLAT CPS ex fuel at cc in FY’21 vs FY’19 • At this stage, given the level of continued uncertainty, it is not possible to provide financial guidance for the remainder of the
Slide 31: easyJet - Positioned to win
easyJet - Positioned to win Decisive action undertaken as soon as the crisis began: • Minimised cash burn • Maximised liquidity with cost reductions, fleet deferrals and additional funding • Equity raise under way Investment-grade balance sheet, one of the strongest in the industry easyJet leadin
Slide 32: Q&A
O&A easyJet
Slide 33: Appendix
APPENDIX easyJet
Slide 34: Loss after tax
Loss after tax £m H1 2020 H1 2019 Change* Headline loss before tax (193) (275) 29.8% Headline tax (charge)/credit (1) 54 (101.8%) Headline loss after tax (194) (221) 12.2% Total loss before tax (353) (272) (29.8%) Total tax credit 29 54 (46.3%) Total loss after tax (324) (218) (48.6%) Total effectiv
Slide 35: Revenue total and per seat
Revenue total and per seat Total Group reported H1 2020 H1 2019 Change* Passenger revenue 1,833 1,824 0.5% Ancillary revenue 549 519 5.7% Total revenue 2,382 2,343 1.7% £ Airline per seat Airline H1 2020 H1 2019 Change* Passenger revenue 42.93 39.48 8.7% Ancillary revenue 12.67 11.23 12.8% Total rev
Slide 36: Headline cost per seat
Headline cost per seat Cost per seat Variance at Variance at Weighted variance at excluding constant constant constant Drivers fuel currency* currency* currency* £ £ % % • Annualised increases in charges at regulated and non Airports and ground handling 16.65 (0.11) (0.6%) (0.3%) regulated airports
Slide 37: Fleet breakdown
Fleet breakdown H 1 2020 FY 2019 Change A319 (Leased) 64 56 8 A319 (owned) 59 69 (10) A319 Total 123 125 (2) A320 (Leased) 43 43 0 A320 (owned) 160 157 3 A320 Total 203 200 3 A321 (owned/Total) 11 6 5 Total fleet 337 331 6 Leased 107 99 8 Number unencumbered 230 232 (2) Percentage of A320s in fleet
Slide 38: Return on capital employed
Return on Capital Employed H1 2020 H1 2019 Headline loss before interest and tax (174) (255) UK corporation tax rate 19% 19% Normalised headline operating loss after tax (NOPAT) (141) (207) Average shareholders’ equity 2,539 2,849 Average net debt 397 168 Average adjusted capital employed 2,936 3,01
Slide 39: Non-headline items
Non-headline items H1 2020 H1 2019 Change* Description £m £m £m The sale and leaseback of 10 A319 aircraft in both years resulted in a Sale and leaseback gain 1 2 (1) profit on disposal of the assets. Cost of establishing a multi-AOC post-Brexit structure following the Brexit-related costs - (4) 4 U
Slide 40: Currency impact
Currency impact Revenue Costs H1 2020 H1 2019 H1 2020 H1 2019 Sterling 42% 41% 33% 32% Euro 48% 48% 32% 37% US dollar 1% 1% 28% 24% Other (principally Swiss franc) 9% 10% 7% 7% Average effective Euro rate for revenue for H1 2020 was €1.14 (H1 2019: €1.13) Average effective Euro rate for costs for H1