Slide 1: Half Year Results Analyst and Investor presentation
Half Year Results Analyst and Investor presentation Wednesday 15 May 2013 1 1
Slide 2: Introduction
Introduction Carolyn McCall Chief Executive Officer 2 2
Slide 3: Key messages
Key messages 1. easyJet’s competitive advantages means it continues to be a structural winner in the European short-haul market despite a difficult economic environment 2. Significantly improved winter performance 3. Strategy is delivering strong results and returns for shareholders Reducing winter
Slide 4: Finance review
Finance review Chris Kennedy Chief Financial Officer 4 4
Slide 5: Management action taken to offset headwinds
Management action taken to offset headwinds Loss per seat bridge £ per seat -2.04 0.35 0.83 -3.87 0.10 2.44 3.50 1.34 0.83 H1 Fuel per Seat Cost FX excl Fuel Easter Revenue easyJet lean A320 Mix H1 2012 increase per Seat incremental 2013 5
Slide 6: Financial Results
Financial Results £m H1’13 H1’12 Change B/(W) Total revenue 1,601 1,465 136 Fuel (496) (483) (13) Operating costs excluding fuel (1,042) (982) (60) EBITDAR 63 - 63 Ownership costs (124) (112) (12) Loss before tax (61) (112) 51 EBITDAR margin 3.9% 0.0% 3.9ppt Loss before tax margin (3.8%) (7.6%) 3.8p
Slide 7: Financial results
Financial results £m H1’13 H1’12 Change Loss before tax (61) (112) 45.5% Tax credit 14 22 (36.6%) Loss after tax (47) (90) 47.8% Effective tax rate 23% 20% 3ppt Loss per share 12.0p 21.2p (43.4%) Return on capital employed* (0.9%) (2.8%) 1.9ppt Notes: Return on capital employed (ROCE) measure includ
Slide 8: Improved revenue performance
Improved revenue performance £m H1’13 H1’12 Change Passengers (m) 26.6 25.2 5.3% Load factor (%) 88.6% 86.9% 1.7ppt Seats (m) 30.0 29.0 3.3% Average sector length (km) 1,042 1,061 (1.8%) Total revenue (£m) 1,601 1,465 9.3% Total revenue per seat (£) 53.39 50.47 5.8% @ constant currency (£) 54.80 50.
Slide 9: Revenue improvement driven by initiatives
Revenue improvement driven by initiatives Year on year drivers of revenue per seat change (£/Seat) 0.83 0.59 3.23 0.09 53.39 1.64 50.47 H1 2012 Revenue New Route Non-seat Easter FX and H1 2013 Actual initiatives maturity hedge Actual 9
Slide 10: Currency impact
Currency impact Currency split Currency split – total revenue – total costs US Dollar 31% Euro 37% Euro 44% 45% Sterling 1% Other 6% Swiss Franc 3% 8% 25% Other Swiss Franc Sterling H1‘13 currency impact favourable / (adverse) EUR CHF USD Other Total Revenue - Euro rate €1.22 (2012: €1.16) (36) (6)
Slide 11: Timing of Euro: Sterling movement drove adverse fx
Timing of Euro: Sterling movement drove adverse fx GBP: Euro rates: 1.30 1.25 1.20 1.15 1.10 FY'12 FY'13 1.05 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Sharp decline in value of Sterling to Euro in January 2013 High level of forward bookings posted at above 1.20, cost incurred at lower rate 11
Slide 12: Impact of fuel
Impact of fuel H1'13 H1'12 Change B/(W) Fuel $ per metric tonne Market price 1,041 1,028 (13) Effective price 988 972 (16) US dollar rate Market rate 1.59 1.59 - Effective rate 1.61 1.60 1c Actual cost of fuel £ per metric tonne 613 608 (5) Year on year drivers of £(13)m fuel cost increase • £(2)m f
Slide 13: Cost per seat – key drivers H1'13 vs. H1'12
Cost per seat – key drivers H1’13 vs. H1’12 £ cost £ var at % var at Favourable/ per seat Constant Constant Drivers (Adverse) ex fuel Currency Currency • Steep increase in airport charges in Spain & Italy Ground 15.47 (1.57) (10.9%) • Increase in de-icing costs due to adverse weather Operations cond
Slide 14: Increasing proportion of A320's
Increasing proportion of A320’s Mar‘13 Mar‘12 Change A319 (operating lease) 49 55 (6) A319 (owned / finance lease) 105 111 (6) A319 Total 154 166 (12) A320 (operating lease) 14 6 8 A320 (owned / finance lease) 42 32 10 A320 Total 56 38 18 Total fleet 210 204 6 Percentage of operating leases 30% 30%
Slide 15: Seasonal working capital benefit from summer bookings
Seasonal working capital benefit from summer bookings £m 390 34 85 97 36 1,194 131 239 193 883 40 56 Sep 2012 * Operating Depn & Net Tax, net int Ordinary CAPEX Borrowings Sale & Restricted FX Mar 2013 Loss amort Working & other dividend Leaseback Cash Capital paid * Includes money market deposits b
Slide 16: Strong balance sheet
Strong balance sheet £m Mar ‘13 Mar ‘12 Property, plant and equipment 2,192 2,193 Goodwill and other intangible assets 456 452 Other assets 554 591 Liabilities (excluding debt) (1,968) (1,772) 1,234 1,464 Debt 761 1,169 Cash and money market deposits (1,194) (1,211) Net debt / (cash) (433) (42) Shar
Slide 17: Fuel and foreign exchange hedging
Fuel and foreign exchange hedging Fuel US Dollar Euro requirement requirement surplus Six months to 30 September 2013 83% 80% 85% Average rate $980/ tonne 1.60 1.18 Full year ending 30 September 2013 85% 82% 85% Average rate $983/ tonne 1.60 1.18 Full year ending 30 September 2014 67% 62% 71% Averag
Slide 18: Forward bookings
Forward bookings H2 bookings in line with prior year % seats sold * 89% 87% FY '1 2 FY '1 3 49% 49% Apr May Jun Jul Aug Sep H2 Easter Impact H2 (Apr‘13 to Sept‘13) * As at 6 May 2013 18
Slide 19: Outlook
Outlook Capacity (seats flown) • Q3: c. +4% (before disruption) • H2: c.+3.5% (before disruption) Revenue per seat (constant currency) • H2: c.+4% Cost per seat ex fuel (constant currency) • H2: c.+4% (assuming normal disruption levels and constant load factors) Second half results • H2: £5 million
Slide 20: Business Review
Business Review Carolyn McCall Chief Executive 20 20
Slide 21: Environment creating opportunity for easyJet
Environment creating opportunity for easyJet Industry Headwinds + Competitive environment + Competitive advantages = Growing returns • Economic • Legacy carriers 1. Efficient, low Clear opportunity uncertainty & incurring cost model to deliver sluggish growth significant short 2. Strong network sust
Slide 22: Profitable opportunities within existing markets
Profitable opportunities within existing markets Share of traffic within easyJet’s Growth in existing markets top 20 airports • easyJet has approximately 22% share of capacity at its top 20 airports – equating to around 46 m seats EZJ Other LCC 46m seats • Other low cost carriers (LCCs) have 51m sea
Slide 23: Continued competitor capacity retrenchment
Continued competitor capacity retrenchment Capacity growth H2‘ F’13 (OAG) Capacity H2’12 H1 ‘13 H2’13 change (YOY) capacity capacity capacity easyJet change 13% Competitors on easyJet markets Competitors on -3.0% -2.8% -1.0% Total change on easyJet markets EZJ routes 7% easyJet +7.5% +3.3% +3.5% 4%
Slide 24: Strategy to drive growth and returns
Strategy to drive growth and returns Leverage easyJet’s cost advantage, leading market positions and brand to deliver point-to-point low fares with operational efficiency and friendly service for our customers 1. Drive demand, • Sustainable growth conversion and yield • (slightly in excess of market
Slide 25: 1. Drive demand: Digital developments
1. 1. Drive demand: Digital developments Drive Demand demand Developments • easyJet is the 3rd most searched for airline globally • easyJet App now has 4.5m downloads • Flight tracker introduced used over 4 million times since launch • Over 4,000 updates posted • Inspire me launched in October • Mob
Slide 26: 1. Drive demand: CRM improvements allow targeted upsell
1. Drive 1. Drive demand: CRM improvements allow targeted upsell Demand Consolidated data sources to create a single customer Pre-booking view allowing improved targeting and allocation of Departure marketing spend Inspire me Allocated seating Airport info 48 hours to go Additional products • Hotels
Slide 27: 1. Drive demand: Brand recognition scores improving
1. Drive Drive 1. Drive demand: Brand recognition scores improving Demand Demand 98% 100% 98% 90% 92% 88% 19% 21% 12% 13% 6% 7% H1'12 H1'13 H1'12 H1'13 H1'12 H1'13 UK France Italy Total brand awareness Brand choice/preference Brand strength is building: • Sustained strong brand awareness in all mark
Slide 28: 1. Drive demand: Allocated seating on track
1. 1. Drive demand: Allocated seating on track Drive Demand Delivered against objectives 1. No impact on asset utilisation • Strong operational performance, best in class OTP 2. No negative impact on cost per seat 3. Drive increased customer satisfaction • Satisfaction with boarding experience has i
Slide 29: 1. Drive demand: Business travel
1. 1. Drive demand: Business travel Drive Demand Building blocks FY11 FY12 FY13 FY14 FY15 Proposition improve punctuality Delivered o add new network points Ongoing o increase frequency Ongoing Product launch & develop flexi fare Delivered deploy allocated seating Delivered o enable Fast Track
Slide 30: 2. Network: Optimising the network
2. 2. Network: Optimising the network Network Overall c. 3.5% capacity growth in H2 (assuming minimal disruption) United Kingdom Germany +5% +4.5% France +4% Italy Switzerland +7% +13% Portugal +2% Spain -16% Source : Internal easyJet projection April 2013 30
Slide 31: 3. Cost: Innovating to reduce cost
3. 3. Cost: Innovating to reduce cost Cost advantage Bendibelt • New technology to load bags onto aircraft • Reduces headcount required to load bags from 3 to 2 people Forced air de-icing • Trialling forced Air technology • Potential to reduce de-icing fluid usage by c. 40-50% Reducing weight & fuel
Slide 32: 3. Cost: easyJet turn to reduce costs
3. 3. Cost: easyJet turn to reduce costs Cost advantage ‘easyJet turn’ logged 360 activities required to turn an aircraft round • Simplifying the process without compromising safety E.g. • Refuelling in Italy • Ground handling contracts Targeting reducing time on ground by 3 minutes 32
Slide 33: 4. Continued growth in network returns
4. 4. Continued growth in network returns Capital Discipline Rolling 12 months returns: April – March ‘13 vs. Improving returns April to March ‘12 • In 2012 - 56 routes were Returns delivering less than 40% of average ROCE; now only 20 routes • 18 Improved • 18 Dropped. E.g. o Liverpool: Brussels Ro
Slide 34: 4. Evaluation of new generation aircraft
4. 4. Evaluation of new generation aircraft Capital Discipline • Technical evaluation complete • Competitive process • Rigorous level of governance of the process • No decision yet made and dependant on making an order that is in the interests of all shareholders 34
Slide 35: Summary: strategy continues to deliver
Summary: strategy continues to deliver Strategy delivered Favourable Further opportunities strong performance competitive to take profitable share over winter environment 1. Efficient, low cost Modest capacity growth • Legacy carriers’ losses model Strong unit revenue • Weaker carriers 2. Strong
Slide 36: Q&A
Q&A 36 36
Slide 37: Appendix
Appendix 37 37
Slide 38: ROCE Calculation – including 7x lease adjustment
ROCE Calculation – including 7x lease adjustment Reported £m H1 2013 H1 2012 Loss before interest and tax – reported (40) (99) Interest element of operating lease payments 16 17 Loss before interest and tax - adjusted (24) (82) Tax 23% 24% Normalised operating profit after tax (NOPAT) (19) (62) Aver
Slide 39: ROCE Calculation – NPV and Target liquidity
ROCE Calculation – NPV and Target liquidity Proforma £m H1 2013 H1 2012 Loss before interest and tax – reported (40) (99) Interest element of operating lease payments 9 14 Loss before interest and tax – adjusted (31) (85) Tax 23% 24% Normalised operating profit after tax (NOPAT) (24) (65) Average sh
Slide 40: RASK and CASK
RASK and CASK £m H1 2013 H1 2012 Change B/(W) Total revenue per seat 53.39 50.47 5.8% at constant currency 54.80 50.47 8.6% RASK at constant currency (pence) 5.26 4.76 10.5% Total cost per seat ex fuel 38.89 37.70 (3.1%) at constant currency 38.96 37.70 (3.4%) CASK ex fuel at constant currency (penc
Slide 41: 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