Easyjet Plc · LSE:EZJ
Easyjet — Merger or Acquisition (February 2008)
34 slides from Easyjet's merger presentation, Feb 19, 2008
Slide 1: GB Airways integration update
GB Airways integration update February 19th, 2008 1
Slide 2: Jeff Carr, Group Finance Director
Jeff Carr Group Finance Director 2
Slide 3: Purpose of today
Purpose of today Q Reminder of the deal logic Q Update on the progress of integration Q Commercial Q Operations Q Synergies Q Financial impact and reporting 3
Slide 4: A reminder of the deal logic
A reminder of the deal logic Q Focus on Gatwick Q easyJet's largest base, favourable yields Q Attractive catchment area for high value consumers Q Slot constrained Q Enhances easyJet’s platform in North West of England Q New base at Manchester Q Complements existing Liverpool base Q Catchment area -
Slide 5: GB Airways delivers many benefits to easyJet
GB Airways delivers many benefits to easyJet Q Combined business 24% of LGW slots (easyJet 17% + GB 7%); BA 25% Q 28 summer slot pairs giving a 50% increase in peak time slots Q Significant improvement in network flexibility Q Young fleet of 15 A320 family aircraft Q in common with existing easyJet
Slide 6: Where we are now
Where we are now Q Acquisition was completed January 31st 2008 Q Consideration of £103.5m paid in cash Q BA franchise period continues until March 29th 2008 Q Transition Services Agreement in place between BA & GB Airways to ensure smooth operation until termination of franchise Q GB Airways managem
Slide 7: Turning GB Airways orange
Turning GB Airways orange Pre completion Q 1/1/08 Summer season on sale at easyJet.com October to January Q Aggressive launch campaign for new routes Post completion Q Winter sales continue through BA.com and other channels BA franchise Q White tailing and de-branding of aircraft January 31st - Marc
Slide 8: Commercial, Saad Hammad
Commercial Saad Hammad easyJet pic
Slide 9: GB routes appealing to easyJet customers
GB routes appealing to easyJet customers easyJet customer profile - Gatwick Inspiring Some other destinations & purpose Education value for money Business 7% 2% Inspiring 18% destinations & Holiday - convenient any other airports 18% Weekend break 18% Value for money Visiting friends & relatives 37%
Slide 10: GB routes on sale via easyJet.com
GB routes on sale via easyJet.com 1.1.08 GB Airways easyJet.com Q ba.com Q Great fares with no middle Q Franchise fee man: Value for money Q GDS fees Q Travel agent Q Pay-as-you-go product Q Commission Q Ability to tailor holiday (dates, Q Tour operators location, accommodation) Q Margin Q Fuel and
Slide 11: From 1st Jan we've painted the town orange!
From 1st Jan we’ve painted the town orange! Poster Press Radio 91% adults @ 49.7 hits in London 20% adults @ 15 hits 57% adults @ 3.7 hits 11
Slide 12: We have generated strong online traffic
We have generated strong online traffic Share of website hits amongst commercial airlines 12
Slide 13: Forward bookings are encouraging
Forward bookings are encouraging No loss in forward momentum from change in distribution Q Over 30% of summer seats booked as at February 16th (similar to last year) GB routes – forward load factor vs easyJet proxy routes 35% 30% 25% 20% Good 15% performance 10% 5% 0% April May June July August Sept
Slide 14: There is upside potential from ancillaries
There is upside potential from ancillaries Q Ancillary revenue per seat Q GB 2007 - £2.19 Q easyJet Q1 2008 - £5.06 Q Additional services Q Speedy Boarding Q Sporting goods carriage Q Partner initiatives Q Hotels, insurance etc… Q In flight - customer pays Q Extract value from existing assets Q In-f
Slide 15: We will optimise the network
We will optimise the network Q Changes already made Q New route launched Manchester to Malaga Q A320 redeployed from GB route to LGW – Athens Q Winter ‘08/09 onwards Q Rationalise capacity on marginal routes Q Cull under-performing routes Q Optimise use of slot portfolio e.g. deploy larger gauge air
Slide 16: Operations, Cor Vrieswijk
Operations Cor Vrieswijk easyJet pic
Slide 17: Painting GB operations orange
Painting GB operations orange Q On track to deliver smooth transition to single operation by start Winter ‘08 / ‘09 Q Cutover to easyJet AOC 29th / 30th March Q Complete aircraft re-branding and configuration by May ’08 Q Full transfer to easyJet IT systems Q Alignment of terms and conditions to eas
Slide 18: Gatwick - a big operation gets bigger
Gatwick - a big operation gets bigger Current Post acquisition 6 million p.a. 8 million p.a. Passengers 28 check-in desks c45 check-in desks Ground Handling agent – Menzies Menzies (additional 145 staff) Operations 75 departing flights per day 105 departing flights per day 20 aircraft 33 aircraft (3
Slide 19: Gatwick ground operations post cut-over
Gatwick ground operations post cut-over Q Initially split terminal operation at Gatwick Q No operational capacity to consolidate early Q Aircraft will be split by destination not gauge (14 in North, 21 in South) Q Over time specific countries will be allocated a terminal Q Crew will move to single c
Slide 20: Fleet re-branding
Fleet re-branding easyJet white Q During BA franchise Q No easyJet branding Q White tailing (removal of BA branding) Q Cut-over weekend Q AOC changeover, franchise ends Q easyJet stickers on aircraft White out BA logo and lettering Q After franchise Q Re-branding to easyJet Q Reconfiguration: 9 x A3
Slide 21: Crew – turning orange
Crew – turning orange Q Culture and operating practises Q Cabin tidy and minimum crewing levels agreed Q Roll out of uniform has commenced Q easyJet and GB cabin crew recruitment teams fully integrated Q 70 voluntary crew seconded to GB Q Crew communication: “changing colours”, crew room visits Q Jo
Slide 22: Cut-over weekend 29th/30th March
Cut-over weekend 29th/30th March Q AOC cut-over and end of BA franchise Q ‘Major military operation’ Q 15 aircraft converted in a six hour window Q Five teams to modify, clean, strip and stuff every aircraft; one standby team Q De-brand/re-brand LGW terminal, other stations and launch new sales desk
Slide 23: Finance, Jeff Carr
Finance Jeff Carr easyJet pic
Slide 24: Significant synergies available
Significant synergies available Q Timing of synergies Immediate Medium term (F’09) Longer term Overhead costs Engineering Aircraft ownership costs Franchise fee Crew cost Network optimisation Ancillary revenues Ground handling Insurance Q Minimum targets Q F’08 eps positive after one off costs Q One
Slide 25: Pro-forma results - 2007
Pro-forma results - 2007 Profit & loss £m easyJet ‘07 GB ‘07 Total ‘07 Revenue 1,797 250 2,047 Operating cost 1,499 216 1,715 EBITDA 298 34 332 Ownership 107 31 108 Profit before tax 191 3 194 KPIs easyJet ‘07 GB ‘07 Total ‘07 Pax (m) 37.2 2.8 40.0 Seats (m) 44.5 3.4 47.9 Loads 83.7% 81.8% 83.5% Sec
Slide 26: Key metrics - per seat & per ask
Key metrics - per seat & per ask Per seat (£) easyJet ‘07 GB ‘07 Total ‘07 GB impact Total revenue 40.52 73.53 42.73 +5% Total cost 36.12 72.77 38.69 +7% Total cost ex fuel 26.55 53.65 28.46 +7% Profit before tax 4.30 0.76 4.04 (6)% Per available seat kilometre (pence) easyJet ‘07 GB ‘07 Total ‘07 G
Slide 27: Revenue impact
Revenue impact Q Impact on easyJet capacity growth 2007/08 Q Seats +12% (+18% with GB Airways) Q ASKs +16% (+30% with GB Airways) Q GB Airways February - September 2008 key revenue statistics* Revenue (£m) 199 Seats (‘000) 2,674 Loads 83.7% Passengers (‘000) 2,237 ASK’s (m) 5,512 Revenue per seat (£
Slide 28: Synergies – immediate (this financial year)
Synergies – immediate (this financial year) Q Elimination of BA franchise fee c£10m (offset by loss of business revenue) Q Development of ancillary revenues to easyJet levels, >£3 per seat Q Reduction of ground handling costs Q Gatwick move to Menzies contract on March 30th (saving c£350 per turn) Q
Slide 29: Synergies – medium & longer term
Synergies – medium & longer term Q Medium term (next year) Q Move engineering maintenance onto easyJet contracts Q Alignment of crew contracts Q easyJet max hours 900 per annum, GB capped at 775 hours before overtime Q Reduction of crew complement on A320 & A321’s Q Elimination of seniority Q Longer
Slide 30: One-off costs around £12m
One-off costs around £12m Q Key categories Q Redundancy Q Retention payments Q Transfer to easyJet terms and conditions Q Property dilapidations and write-offs Q IT set up costs Q Pre-acquisition marketing support Q Split biased with majority in 1st half and remainder in 2nd half 30
Slide 31: Reporting
Reporting Q Traffic statistics Q February & March, easyJet underlying statistics reported Q GB / BA franchise load factors with prior years data reported separate Q April onwards traffic statistics reported on a combined basis Q Half year – 31st March 2007 Q GB incorporated into numbers, revenue and
Slide 32: Summary
Summary Q Integration of GB Airways progressing well Q Current trading GB Q February and March load factors >85% Q Summer schedule selling well Q Current trading easyJet Q Improving Q1 trends continuing into Q2 Q January total revenue per seat plus 2% vs prior year Q February load factors broadly in
Slide 33: 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 34: Questions and answers
Questions and answers easyJet pic