Slide 1: Full Year Results Analyst and Investor Presentation
Full Year Results Analyst and Investor Presentation Tuesday 18 November 2014
Slide 2: Introduction
Introduction Carolyn McCall Chief Executive Officer
Slide 3: Continued execution of the strategy
Continued execution of the strategy Strong revenue performance Resilient operational performance RPS1 CPS2 2013 2014 2.0% 1.9% 1.9% 90% 80% 70% 60% 50% 1.0% 40% 0.7% 0.6% 30% 20% 10% 0.0% 0% FY'14 H2'14 Overall Satisfaction with On-time satisfaction punctuality performance Profit per seat growth Top
Slide 4: Financial review
Financial review Chris Kennedy Chief Financial Officer 4
Slide 5: Profit before tax increased
Profit before tax increased Profit per seat bridge Driven by impact of longer average sector length 1.20 0.20 0.37 8.12 1.02 0.10 0.44 0.16 0.04 7.03 FY 2013 Revenue Fuel Costs De-icing Disruption easyJet A320 Mix FX FY 2014 lean Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10
Slide 6: Financial results
Financial results £m (reported) FY 2014 FY 2013 Change Change Total revenue 4,527 4,258 269 6.3% Fuel (1,251) (1,182) (69) (5.8%) Operating costs excluding fuel (2,453) (2,365) (88) (3.7%) EBITDAR 823 711 112 15.8% Ownership costs (242) (233) (9) (4.2%) Profit before tax 581 478 103 21.5% EBITDAR ma
Slide 7: Financial results: 114.5p EPS, 20.5% ROCE
Financial results: 114.5p EPS, 20.5% ROCE £m FY 2014 FY 2013 Change Profit before tax 581 478 21.5% Tax charge (131) (80) (63.8%) Profit after tax 450 398 13.1% Effective tax rate 22.5% 16.7% (5.8ppt) Earnings per share 114.5p 101.3p 13.0% Ordinary dividend per share 45.4p 33.5p 35.5% Special divide
Slide 8: Fleet expenditure broadly in line with current levels
Fleet expenditure broadly in line with current levels 2005-2012 2013-14 2015-2017 2018-2022 Additional aircraft 49% 52% 66% 26% Replacement aircraft 42% 28% 9% 45% Maintenance 9% 20% 25% 30% Total 100% 100% 100% 100% Total expected fleet acquisition and overhaul expenditure 18% 9% 11% 10% - 12% as a
Slide 9: H2 margins improved due to tight cost control
H2 margins improved due to tight cost control Reported £m H2 2014 H2 2013 Change Total revenue 2,825 2,657 6.3% Fuel (714) (686) (4.0%) Operating costs (1,352) (1,323) (2.3%) EBITDAR 759 648 17.3% Ownership costs (125) (109) (16.0%) Profit before tax 634 539 17.5% PBT margin 22.4% 20.3% 2.1ppt Seats
Slide 10: Continuing revenue per seat growth
Continuing revenue per seat growth £m FY 2014 FY 2013 Change Passengers (m) 64.8 60.8 6.6% Load factor (%) 90.6% 89.3% 1.3ppt Seats (m) 71.5 68.0 5.1% Average sector length (km) 1,112 1,091 1.9% Total revenue (£m) 4,527 4,258 6.3% Total revenue per seat (£) 63.31 62.58 1.2% At constant currency (£)
Slide 11: easyJet strategy delivers further revenue growth
easyJet strategy delivers further revenue growth Year on year drivers of revenue per seat change (£/seat) 0.54 0.46 63.31 0.65 • Business passenger • Allocated seating 62.58 • Disciplined capital allocation • Revenue Management System initiatives • Longer sector length • Increased load factor • Digi
Slide 12: Growth in RPS
Growth in RPS At constant £ per seat FY 2014 FY 2013 Change currency Gross seat revenue 69.65 68.66 1.4% 2.2% Passenger taxes (7.25) (7.02) (3.2%) (4.4)% Net seat revenue 62.40 61.64 1.2% 2.0% Non-seat revenue 0.91 0.94 (2.5%) (1.6%) Total revenue 63.31 62.58 1.2% 1.9% RPS growth at constant currenc
Slide 13: Favourable currency impact
Favourable currency impact Currency split – total revenue Currency split – total costs Sterling Euro 26% 33%34% 35% Euro 42% 47% Sterling 5% Swiss Franc 1% 1% Other 3% 8% 35%25% Other Swiss Franc USD FY 2014 currency impact favourable / (adverse) EUR CHF USD Other Total £m Revenue (23) (4) (3) (3) (
Slide 14: Progressive weakening of the euro
Progressive weakening of the euro GBP: euro rates (spot) 1.3 1.28 1.26 FY 2013 FY 2014 Impact of €/£ rate on P &L £m H1 H2 1.24 Revenue 17 (40) Fuel (1) 3 1.22 Costs excluding fuel (6) 46 1.2 Total 10 9 1.18 1.16 P&L impact shown after effects of hedging cashflows 1.14 Key booking 1.12 period Peak e
Slide 15: Impact of fuel
Impact of fuel FY 2014 FY 2013 Change B/(W) Fuel $ per metric tonne Market rate 973 992 19 Effective price 977 980 3 US dollar rate Market rate 1.66 1.55 11 cents Effective price 1.59 1.58 1 cent Actual cost of fuel £ per metric tonne 614 619 5 Footer box on intersect of lines line h=8.03 9 and v=8.
Slide 16: Cost per seat excluding fuel - key drivers
Cost per seat excluding fuel - key drivers Cost per seat Variance at Variance at excluding constant constant Favourable/(adverse) fuel currency currency Drivers £ £ % • Lean initiatives savings • Decrease in de-icing costs following milder Airports and ground 15.48 0.03 0.2% winter weather condition
Slide 17: Management actions taken to control costs
Management actions taken to control costs Cost per seat bridge External factors Management action 0.15 0.20 0.54 0.84 Including: Airports and ground handling – £0.26 Fuel and maintenance initiatives – £0.09 0.33 5 5 .5 5 5 5 .5 3 0.44 0.11 5 5 .19 0.10 0.09 0.19 0.19 Footer box on intersect of lines
Slide 18: Increasing proportion of A320s
Increasing proportion of A320s FY 2014 FY 2013 Change A319 (operating lease) 54 54 - A319 (owned / finance lease) 99 99 - A319 Total 153 153 - A320 (operating lease) 18 18 - A320 (owned / finance lease) 55 46 9 A320 Total 73 64 9 Total fleet 226 217 9 Unencumbered 94 82 12 Operating lease 32% 33% (1
Slide 19: Flexibility in fleet planning
Flexibility in fleet planning Maximum, minimum and base case fleet size under the framework agreement Contracted Max Base Case Contracted Min 330 327 316 317 296 281 311 311 304 304 259 241 261 226 250 226 214 204 200 197 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 Footer box on intersect of lines
Slide 20: Strong balance sheet
Strong balance sheet £m FY 2014 FY 2013 Property, plant and equipment 2,542 2,280 Goodwill and other intangible assets 478 467 Other assets 477 428 Liabilities (excluding debt) (1,747) (1,716) 1,750 1,459 Debt 563 679 Cash and money market deposits (985) (1,237) Net cash (422) (558) Shareholders' eq
Slide 21: Cashflow
Cashflow £m Self funding ordinary dividend and capex 69 66 118 133 581 445 175 1,237* 112 76 13 985* Sep 2013 Operating Depreciation Net of lines Footer box on intersect Tax, line net h=8.03 Ordinary Capital 9 and v=8.75 with font Special Borrowings 10pt Arial not bold Other FX Sep 2014 profit and w
Slide 22: Fuel and foreign exchange hedging
Fuel and foreign exchange hedging US dollar Fuel requirement Euro surplus requirement Six months ending 91% at $958 / 31 March 2015 91% at $1.60/£ 84% at €1.19/£ metric tonne Full year ending 80% at $944 / 30 September 2015 85% at $1.59/£ 77% at €1.18/£ metric tonne Full year ending 58% at $921 / 30
Slide 23: Progress against financial policies and metrics
Progress against financial policies and metrics Objectives Metric Progress Capital • High asset efficiency • Fleet size flexibility of • 226 aircraft with 11 hours discipline • Maintain high level of fleet flexibility between 204 and 316 asset utilisation aircraft by 2019 + • Ensure robust capital s
Slide 24: Business review
Business review Carolyn McCall Chief Executive Officer
Slide 25: Industry-leading business model to drive returns
Industry-leading business model to drive returns Leading business model Strategic drivers Growth and returns easyJet will continue • Flexible seat growth 1. Build strong #1 between c.5% and to deliver: and #2 network c.8% per annum A. Future profitable positions growth 2. Maintain cost • Maintain to
Slide 26: Feeling positive about the airline
Strong position built over time Growing market share Sustaining unit cost performance 2011 market share 52% 5.0% 49% 47% 4.9% 42% 2014 market share 4.0% 4.5% 40% 41% 36% 29% 32% 3.0% 3.3% 25% 26% 21% 2.0% 2.4% 1.0% 0.0% Gatwick Edinburgh Nice Malpensa Geneva Basel easyJet Ryanair Norwegian Vueling*
Slide 27: Increasing capacity environment
Increasing capacity environment Norwegian Other Capacity growth Capacity growth CityJet H2’14 vs. H2’13 H1’15 vs. H1’14 Transavia easyJet Winter 13/14 Germanwings Ryanair Winter 14/15 7.3% Vueling BA 5.9% 5.0% 3.7% 3.5% Flybe slots 2.2% 1.5% 0.6% 0.6% Capacity on easyJet city pairs Capacity change t
Slide 28: Disciplined investment over Winter
Disciplined investment over Winter Overall c. 3.5% capacity growth over Winter (before disruption) easyJet Market growth easyJet growth in the market United Kingdom +2.7% Netherlands +13.3 % 5.5% 13.3% 2.7% 10.3% France +4.1 % Germany +15.1 % 15.1% 4.1% 2.9% 5.9% Spain -2.2 % Switzerland +6.0% 5.8%
Slide 29: Continuing to execute in 2015
Continuing to execute in 2015 #1 and #2 network Maintain cost Drive demand, Disciplined use of positions advantage conversion and yields capital Opening Amsterdam easyJet lean pipeline of New brand campaign Ordinary dividend and Porto in 2015 initiatives to deliver £30 payout ratio from one Personal
Slide 30: Opportunities across the network
1. Opportunities across the network Network This slide contains a selection of new routes 30
Slide 31: Strong position in London
1. Strong position in London Network Compelling network Uniquely positioned Number of routes 120 108 100 80 60 48 40 25 20 12 0 Gatwick Luton Stansted Southend “Serious consideration” by consumers London 70% 66% Catchment size 65% 63% (millions) Market share Gatwick 12 49% 60% Luton 11 44% Stansted
Slide 32: Successful execution in Italy
1. Successful execution in Italy Network Opportunity Focus on higher yielding airports 1. Build on strong market share in major catchment areas MXP VRN BGY 2. Focus on business passengers VCE and those with higher LIN TRS BLQ disposable incomes TRN GOA FLR 3. Keep on building the brand and PSA AOI d
Slide 33: Maintaining the cost advantage
2. Cost Maintaining the cost advantage Advantage Capacity deployed on easyJet network(1) easyJet lean easyJet Legacy carrier Low cost carrier Covers the Governance Charter total cost and base milestones Long and Embedded short term throughout CASK ex fuel, Airport; ground handling, navigation and en
Slide 34: Pipeline of initiatives
2. Cost Pipeline of initiatives Advantage easyJet lean initiatives will continue to deliver 2015 2016 2017 2018 2019 Engineering & Maintenance Airport deals Engine selection Up-gauging Benchmarking Engineering & Fleet up-gauging Savings across process Maintenance and fuel savings the cost base • Cos
Slide 35: Continuing to drive demand & conversion
3. Continuing to drive demand & conversion Demand Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 35
Slide 36: Continuing to drive demand & conversion
3. Continuing to drive demand & conversion Demand Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 36
Slide 37: Loyalty
3. Loyalty Demand Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 37
Slide 38: Capital allocation continues to drive returns
4. Capital Capital allocation continues to drive returns Discipline Improved returns year on year CPBH FY13 CPBH FY14 £769 million Returns returned to shareholders Special dividend (m) Ordinary dividend (m) £175m Routes Top quartile ROCE £150m £180m £133m 20.5% £85m £46m 17.4% 2010 2011 2012 2013 20
Slide 39: H1 forward bookings
FY’15 H1 forward bookings Outlook H1 bookings slightly ahead of prior year % seats sold * 90.9% 89.1% Winter 13/14 Winter 14/15 48.6% 49.2% Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Oct Nov Dec Jan Feb Mar H1 H1 (October 2014 to March 20114) as at 12 Nov
Slide 40: Outlook
FY’15 Outlook Outlook Capacity (seats flown) • H1 c.+3.5% (before disruption) • FY c.+5% (before disruption) Revenue per seat (constant currency) • H1: flat to very slightly up on the prior year Cost per seat ex fuel (constant currency) • H1 c.+2.5% (assuming normal disruption levels and constant lo
Slide 41: Industry-leading business model to drive returns
Industry-leading business model to drive returns Leading business model Strategic drivers Growth and returns easyJet will continue • Flexible seat growth 1. Build strong #1 between c.5% and to deliver: and #2 network c.8% per annum A. Future profitable positions growth 2. Maintain cost • Maintain to
Slide 42: Q&A
Q&A 42
Slide 43: Appendix
APPENDIX 43
Slide 44: H2 margins improved due to tight cost control
H2 margins improved due to tight cost control Reported £ per seat H2 2014 H2 2013 Change Total revenue 69.85 69.82 - Fuel (17.64) (18.04) 2.2% Operating costs (33.44) (34.76) 3.8% EBITDAR 18.77 17.02 10.3% Ownership costs (3.11) (2.85) (9.1%) Pre-tax profit 15.66 14.17 10.5% Footer box on intersect
Slide 45: ROCE Calculation – including 7x lease adjustment
ROCE Calculation – including 7x lease adjustment Reported £m FY 2014 FY 2013 Earnings before interest and tax – reported 581 497 Interest element of operating lease payments 41 34 Earnings before interest and tax – adjusted 622 531 Tax 21% 23% Normalised operating profit after tax (NOPAT) 492 409 Av
Slide 46: ROCE Calculation – NPV and target liquidity
ROCE Calculation – NPV and target liquidity Proforma £m FY 2014 FY 2013 Earnings before interest and tax – reported 581 497 Interest element of operating lease payments 25 31 Earnings before interest and tax – adjusted 606 528 Tax 21% 23% Normalised operating profit after tax (NOPAT) 479 407 Average
Slide 47: RASK and CASK
RASK and CASK FY 2014 FY 2013 Change Total revenue per seat (£) 63.31 62.58 1.2% At constant currency (£) 63.78 62.58 1.9% RASK at constant currency (pence) 5.73 5.74 - Total cost per seat excluding fuel (£) 37.70 38.17 1.2% At constant currency (£) 38.41 38.17 (0.6%) CASK excluding fuel at constant
Slide 48: Aircraft cashflows including overhauls
Aircraft cashflows including overhauls Aircraft FY 2015 FY 2014 Number of aircraft deliveries 20 9 Cashflows (USD) $m FY 2015 FY 2014 Final delivery payments 555 246 Pre delivery payments 110 290 Heavy maintenance - owned fleet 122 38 Total 787 574 Heavy maintenance - leased fleet 114 121 Total cash
Slide 49: Disclaimer
Disclaimer Certain statements in this presentation constitute or may constitute forward-looking statements. Any statement in this presentation that is not a statement of historical fact including, without limitation, those regarding the Company’s future expectations, operations, financial performanc