Slide 1: Full year results Analyst & Investor presentation
Full year results Analyst & Investor presentation Tuesday 15 November 2011 1 1
Slide 2: Introduction
Introduction Carolyn McCall Chi f Executive Chief E ti 2
Slide 3: Agenda
Agenda 3 1. Review of F’11 3 3 3 3 3 2. Financial review 3. Looking forward 3 3 3 3
Slide 4: Operational performance fixed
Operational performance fixed On Time Performance LGW and Network 90% • First wave focus 80% 70% 60% • Firebreaks in schedule 50% 40% • Proactive disruption 30% management LGW Network • Improved I d standby t db Flightstats.com 12 months to September levels • Better communication and engagement Note
Slide 5: Customer satisfaction improved
Customer satisfaction improved Summer 2010 vs. 2011 • Overall satisfaction quarter on quarter has increased from 66% to 80% • Satisfaction with on time performance has increased from 60% to 80% • Increase in likelihood to recommend up from 74% to 83% Overall satisfaction Satisfaction with Likelihood
Slide 6: Robust operation, returns to shareholders, customer satisfaction
Robust operation Returns to Customer share holders satisfaction Our people – driving performance anddddelivering li i theh strategy Cost reduction Marketing & CRM Revenue growth 6
Slide 7: Finance review
Finance review Chris Kennedy Chief Financial Officer 7
Slide 8: Summary
Summary • Revenue improvement driven by: £ per seat • Improvements in revenue management 0.88 3.97 0.00 • Increase in customer satisfaction 0.41 • St Strong H2 ancillary ill performance f 3.36 1.59 0.07 1.80 • Capacity investments maturing 2010 PBT Currency R e v enue Fuel (inc Crew Di sr uption O t
Slide 9: Financial results
Financial results £m F ’11 F ’10 Change Total revenue 3,452 2,973 16.1% Fuel (917) (733) (25.0)% Operating costs excluding fuel * (2,067) (1,851) (11.7)% EBITDAR 468 389 20.4% Ownership costs * (220) (201) (6.1)% Profit before tax (underlying) * 248 188 31.5% Underlying cost adjustments * - (34) - P
Slide 10: Strong expansion in second half margins
Strong expansion in second half margins £m F ’11 F ’10 Change Total revenue 2,186 1,802 21.3% Fuel (534) (428) (24.8)% Operating costs* (1,139) (1,008) (12.9)% EBITDAR* 513 366 40 2% 40.2% Finance and ownership* (112) (99) (13.2)% Pre-tax profit* 401 267 50.2% Seats - m 34.4 30.8 11.8% Fuel cost per
Slide 11: Currency impact
Currency impact Currency split Currency split – total revenue – total costs US Dollar Euro 35% 35% Euro 44% 47% Sterling 1% 2% Other 5% 24% 7% Swiss Franc Other Swiss Franc Sterling F ‘11 currency impact favourable / (adverse) CHF EUR USD Revenue 24 - - Fuel - - (17) Costs excluding fuel (21) - (8)
Slide 12: Improved revenue performance
Improved revenue performance £m F ’11 F ’10 Change Passengers (m) 54.5 48.8 11.8% Load factor (%) 87.3% 87.0% 0.3ppt Seats (m) 62.5 56.0 11.5% Average g sector length g ((km)) 1,110 , 1,123 , ((1.2)% ) Total revenue (£m) 3,452 2,973 16.1% Total revenue per seat (£) 55.27 53.07 4.1% @ constant curren
Slide 13: Passenger and ancillary revenues
Passenger and ancillary revenues £m F ’11 F ’10 Change Passenger revenue (net of passenger taxes) (£m) 2,732 2,402 13.8% Gross passenger revenue per seat (£) 50.01 48.09 4.0% Net passenger revenue per seat (£) 43.75 42.87 2.1% Ancillary y revenue incl. checked bag g (£m) ( ) 719 571 25.9% Ancillary
Slide 14: Seat and non-seat revenue
Seat and non-seat revenue £ per seat F ’11 F ’10 Change Gross seat revenue 60.51 57.14 5.9% Passenger taxes (6.26) (5.22) (19.8)% Net seat revenue 54.25 51.92 4.5% Non-seat revenue 1.02 1.15 ( ) (11.3)% Total revenue 55.27 53.07 4.1% Seat revenue Non-seat revenue 4 Ticket price 4 Partner deals, e.g.
Slide 15: Impact of fuel
Impact of fuel Change F’11 F’10 B/(W) F l $ per metric Fuel i tonne Market rate 959 688 (271) Effective price 818 732 (86) US dollar rate Market rate 1 61 1.61 1 55 1.55 6 cents Effective price 1.61 1.64 (3 cents) Actual cost of fuel £ per metric tonne 508 445 (63) £63 per metric t i ttonne iincreas
Slide 16: Fuel and foreign exchange hedging
Fuel and foreign exchange hedging Fuel requirement US dollar Euro surplus requirement Half year ending 31 March 2012 80% at $950/tonne 80% at $1.60/£ 76% at €1.13/£ Full year ending 30 September 2012 73% at $956/tonne 69% at $1.59/£ 71% at €1.13/£ Full year ending 30 September 2013 48% at $979/tonne
Slide 17: ETS Exposure
ETS Exposure • Granted a level of free permits annually • Free permits calculation based on 2010 Revenue Tonne Kilometres (RTKs) and the EU benchmark RTK (‘000s) ( 000s) * Benchmark (CO2 / RTK) = Free CO2 (metric tonnes) 5.8 * 0.6797 = 4.0 • Exposure driven by excess requirement and the carbon price
Slide 18: Cost per seat excluding fuel - key drivers
Cost per seat excluding fuel - key drivers cost increase shown as “+”; cost decrease as a “-” Movement Cost per Constant Reported** currency Drivers versus F‘10 seat (£) Ground Operations 14.79 +3.0% +1.5% 4 Significant regulated price increases at LGW and AENA airports in Spain 4 Offset by ground h
Slide 19: Fleet profile
Fleet profile Sep ‘11 Sep ‘10 Change A319 (operating lease) 56 46 10 A319 (finance lease) 6 6 - A319 (owned) 105 107 (2) A320 (operating lease) 6 6 - A320 (finance lease) 5 2 3 A320 (owned) 24 15 9 Main fleet 202 182 20 Sub-fleet (Boeing 737 and GB Airways) 2 14 (12) Total fleet 204 196 8 O Owned d
Slide 20: Flexibility in fleet planning
Flexibility in fleet planning • easyJet has a high degree of 270 259 flexibility in its fleet planning 260 Max fleet • Fleet capped at 204 aircraft 251 250 241 • Young fleet intrinsic to business 240 model d l Fleet Count 227 230 • Maximise utilisation 221 220 214 214 217 • Minimise maintenance cost
Slide 21: Capital cash flow including overhauls
Capital cash flow including overhauls New capacity deliveries Replacement deliveries PDP Payments Maintenance/ESV Capex ¹ Disposal of ex-GB aircraft $742m $773m 64 193 150 $586m 72 200 Total 248 Total 421 Aircraft Capex: Aircraft 101 796m Capex: Total 623m Aircraft 171 303 Capex: 182 386m 114 (118)
Slide 22: Continuing cash flow generation
Continuing cash flow generation £m 2010* Operating Dep’n and Working Other Financing Capex 2011* Proposed Proposed 2011 profit amort’n capital ordinary special proforma dividend dividend * Includes money market deposits but excludes restricted cash 22
Slide 23: Strong balance sheet
Strong balance sheet £m Sep ‘11 Sep ‘10 Property, plant and equipment 2,149 1,928 Goodwill and other intangible assets 451 452 Other assets 465 451 Liabilities (excluding debt) (1,463) (1,290) Net Assets 1,602 1,541 Debt 1 300 1,300 1 212 1,212 Cash and money market deposits (1,400) (1,172) Net debt
Slide 24: Business review – Looking forward
Business review – Looking forward Carolyn McCall Chief Executive 24 24
Slide 25: Focus on return on capital employed
Focus on return on capital employed • F’11 achieved 12.7% ROCE despite £100m 12% ROCE increase in unit fuel cost through the 5 year planning cycle • F’12 headwinds from higher fuel • Driving revenue Levers L tto iimprove • Smart cost management margins • Returns to shareholders Capital discipline •
Slide 26: Levers to improve margins
LEVERS TO IMPROVE MARGINS 26
Slide 27: Passengers travelling on business: Where are we?
Passengers travelling on business Where are we? • Sales teams in place • FlexiFare launched • Deals with GDS contracts and TMC’s • Pipeline of B2Bdeals • Promotional and advertising campaign rolling out 27
Slide 28: Passengers travelling on business: Our philosophy
Passengers travelling on business Our philosophy Be flexible Access the On time best fares make it y easy keep it From any simple channel At the right time Speed Fly to the through the right h place l airport 28
Slide 29: Passengers travelling on business: How we'll track progress
Passengers travelling on business How we’ll track our progress • Business B i passenger penetration i • Revenue uplift from passengers travelling on business • Incremental margin KPI FY11 FY15 Business passenger between penetration as % of 18% 20% & 24% easyJet seats sold RPS uplift from between 20%
Slide 30: Passengers travelling on leisure
Passengers travelling on leisure Building on our strength in leisure • New leisure route development • Improved Impro ed in in-flight flight range • Family Friendly • easyJet Holidays (UK) 30
Slide 31: Driving revenue through easyJet.com and CRM
Driving revenue through easyJet.com and CRM Rollout November 2011 to April 2012 • Targeted lead banners on easyJet.com • Mobile apps to be rolled out H1 • Ancillary up-sell post-booking • Improved p targeting g g • By customer type • By route searched • By campaign • By GEO IP 31
Slide 32: Driving revenue through targeted campaign
Driving revenue through targeted campaign Europe by easyJet campaign is delivering Much more likely A little more likely Old 10 35 New 23 36 0 20 40 60 80 100 Impact of advertising on likelihood to book with easyJet Customers describing themselves as ‘much much more likely to buy from easyJet’ has i
Slide 33: Other revenue drivers
Other revenue drivers • Bags revenue grew +4.1% per seat • Price increases Ancillary revenue per seat • Peak season pricing 30.1% • Price bands by sector length • Continuing benefit F’12 17.0% • Increase in booking and credit card d ffee 2.7% • Yield management of Speedy Boarding -3.7% • Allocated s
Slide 34: Smart cost management
Smart cost management Off setting significant inflation and investment in F12 through g £90m savings g from easyJety lean • Procurement deals at airport p +0.8ppt • Ground handling efficiency ‐3.9ppt • Continued focus on driving down 5% to 6% maintenance costs 2% to 3% • Crew scheduling efficiencies
Slide 35: Capital discipline
CAPITAL DISCIPLINE 35
Slide 36: Returns to shareholders
Returns to shareholders Objectives Measures Achievement F11 Return targets g • Earn returns in excess of cost of • Improve p PBT p per seat to GBP5 • PBT p per seat £3.97 capital through the cycle • Post tax ROCE of 12% through • ROCE of 12.7% • Invest in growth opportunities the cycle where returns
Slide 37: Portfolio approach to managing network performance
Portfolio approach to managing network performance • easyJet’s network is a competitive advantage • Network managed as a portfolio • Routes assessed against 12% ROCE target • In a dynamic market place important to constantly monitor route performance • Aim to raise network returns through initiative
Slide 38: Network development
Network development Average daily frequency on A/B routes H1 2012 • Building network for business 2011 traveller 3 6 1 • Strengthen French position with 2 new regional i l bases b ency per day 5 2 • Launching base at Lisbon 4 11 9 • Clinical approach to reviewing Avverage freque 19 3 route performan
Slide 39: Focused approach to H1 capacity growth
Focused approach to H1 capacity growth Overall flat capacity for winter (before disruption) Netherlands 6.9% Germany U it d Kingdom United Ki d 0.1% 1.5% F France 2.6% Italy Switzerland 1.3% 2.7% Spain 0.6% 39
Slide 40: Measuring our progress
Measuring our progress Our business passengers are contributing to our revenues 40
Slide 41: Measuring our progress
Measuring our progress • Consistent metrics across all bases and departments • Bonus targets aligned: OTP, customer satisfaction, cost per seat and Profit before Tax Our business passengers are contributing to our revenues • Longer term incentives aligned to ROCE • United team p pulling g in the sam
Slide 42: Outlook
OUTLOOK 42
Slide 43: Forward bookings in line
Forward bookings in line • First half bookings in-line with prior year • c. c 45% of available winter winter* seats now sold sold** % seats sold * F'12 F'11 89% 88% 80% 79% 54% 53% 28% 29% 17% 17% 12% 12% October November December January February March % monthly capacity p y +2 7% +2.7% +2 1% +2.1%
Slide 44: Outlook
Outlook Capacity (seats flown) • FY c.+4% reported • H1 flat (assuming normal disruption levels) Revenue per seat (constant currency) • H1 up mid id single i l didigits it Cost per seat ex fuel (constant currency) • FY up p 2% to 3% ((assuming g normal disruption p levels)) • H1 up 4% (assuming norm
Slide 45: Summary
Summary • Strategy is delivering strong operational and financial results • Significant headwinds: fuel and weak consumer environment • Key focus areas F’12: 1. easyJet lean 2 Driving revenue 2. 3. Capital discipline • easyJet well positioned to deliver a 12% ROCE through the five year planning cycl
Slide 46: Q&A
Q&A 46
Slide 47: Appendix
APPENDIX 47
Slide 48: Return on capital employed
Return on capital employed Reported £m Sep ‘11 Sep ‘10 Earnings before interest and tax 269 174 Normalised operating profit after tax (NOPAT) * 199 127 Average shareholders’ equity 1,603 1,402 Average net debt / (cash) (30) 43 Average capital employed 1,573 1,445 Return on capital employed 12.7% 8.8
Slide 49: Contracted fleet position
Contracted fleet position Sep’11 Sep’12 Sep’13 A319 167 158 151 A320 35 55 66 Boeing 2 Total 204 213 218 Change in fleet size +9 +5 49
Slide 50: RASK and CASK
RASK and CASK F‘11 F’10 Change B/(W) Total revenue per seat 55.27 53.07 4.1% at constant currency 54.87 53.07 3.4% RASK at constant currency (pence) 4.94 4.72 4.7% Total cost per seat ex fuel* 36.62 36.62 flat at constant currency* 36.15 36.62 1.3% CASK ex fuel at constant currency 3 26 3.26 3 31 3.
Slide 51: 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