Slide 1: FY 2016 Analyst & investor presentation
FY 2016 Analyst & investor presentation Tuesday 15 November 2016
Slide 2: Introduction
Introduction Carolyn McCall Chief Executive Officer
Slide 3: Proven business model in all market conditions
Proven business model in all market conditions • Strong performance in a tough year • Purposeful and disciplined growth; reinforcing our market positions • Revenue and network differentiate easyJet and drive RPS • Strong cost performance • Strong balance sheet to support strategy which delivers divi
Slide 4: Financial review
Financial review Andrew Findlay Chief Financial Officer
Slide 5: Financial performance
Financial performance FY 2016 FY 2015 Change* Change* £m £m % % @ CC Total revenue 4,669 4,686 (0.4%) (0.9%) Fuel (1,114) (1,199) 7.1% 7.4% Costs excluding fuel (3,060) (2,801) (9.2%) (5.3%) Profit before tax 495 686 Profit before tax at constant currency 576 686 ** EBITDAR 770 940 (18.0%) (9.0%) EB
Slide 6: Revenue performance
Revenue performance FY 2016 FY 2015 Change* Seats flown (m) 79.9 75.0 6.5% Load factor (%) 91.6% 91.5% +0.1ppt Passengers (m) 73.1 68.6 6.6% Average sector length (km) 1,098 1,118 (1.7%) Total revenue - reported (£m) 4,669 4,686 (0.4%) Total revenue -constant currency (£m) 4,644 4,686 (0.9%) Total r
Slide 7: A strong focus on costs
A strong focus on costs Total cost per seat bridge • Total cost per seat at constant currency: 4.6% decrease • Cost per seat ex fuel at constant currency: 1.1% decrease 0.10 0.13 0.59 0.10 54.62 0.40 0.30 1.41 0.53 53.33 0.09 1.96 52.81 1.32 52.26 Footer box on intersect of lines line h=8.03 9 and v
Slide 8: Impact of fuel & currency
Impact of fuel & currency FY 2016 fuel impact* FY 2016 FY 2015 Change* Fuel $ per metric tonne Market rate 415 619 204 Effective price 754 872 118 US dollar rate Market rate 1.41 1.54 (13 cents) Effective price 1.57 1.58 (1 cent) Actual cost of fuel £ per metric tonne 479 553 74 FY 2016 currency imp
Slide 9: Strong cash generation
Strong cash generation Cash flow bridge • Net cash: £213m (FY15: £435m) Cash generated from operations • Adjusted net debt: £508m (FY15: £363m) (excluding dividends): £724m 22 35 169 Investing and financing 99 139 498 1,345 219 106 969 939 6 586 22bold Footer box on intersect of lines line h=8.03 9
Slide 10: Strong balance sheet
Strong balance sheet £m FY 2016 FY 2015 Goodwill and other intangible assets 517 492 Property, plant and equipment 3,252 2,877 Derivative financial instruments 98 (297) Other assets (excluding cash and money market deposits) 324 348 Unearned revenue (568) (619) Other liabilities (excluding debt) (1,
Slide 11: Gross capital expenditure
Gross capital expenditure £1,100 £1,050 • Incremental capex in FY18 & FY19 driven by replacement £650 £600 expenditure • Unit cost savings of 13-14% are anticipated from up-gauging to 186 seat A320 Neo’s • Maintenance capex is projected to remain stable FY16 FY17 FY18 FY19 over the next 3 years Repl
Slide 12: Fleet flexibility
Fleet flexibility Extra aircraft allows greater flexibility in fleet planning 375 358 345 350 Base Case 357 331 Contracted Max 325 335 Contracted Min 302 300 312 301 279 275 257 250 257 239 225 234 222 200 Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 175 FY
Slide 13: Business Review
Business Review Carolyn McCall Chief Executive Officer
Slide 14: easyJet delivers returns in all market conditions
easyJet delivers returns in all market conditions Purposeful network strategy & Differentiated proposition + Capital Discipline + Tough on cost Supported by Strong balance sheet = 50% dividend payout Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold & Long term
Slide 15: Strong underlying demand in our markets
Strong underlying demand in our markets Expected passenger growth CAGR, 2016-21 3.5% 3.6% Netherlands United Kingdom 3.1% 3.2% Germany 3.8% France Switzerland 3.2% 2.4% Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Spain & Portugal Italy Passenger forecastin
Slide 16: Purposeful growth with a significant opportunity
Purposeful growth with a significant opportunity Purposeful to secure long term returns Growth Purposeful growth Build & strengthen No1 positions UK, Switzerland Take advantage of growth opportunities France Target specific catchment areas Eg: Amsterdam, Venice, Berlin Invest in lean bases Eg: Barce
Slide 17: Purposeful allocation of capacity
Purposeful Purposeful allocation of capacity Growth Returns driven by strong network positions at primary airports…. • Leverage, build and strengthen The sweet spot is being No1 at the Highly profitable • Strong positions airport and No1 behind legacy on the route carriers • Build or churn • Lean ba
Slide 18: Focused investment to drive the highest returns
Purposeful Focused investment to drive the highest returns Growth easyJet’s 2016 capacity split 15% 2017 new capacity growth - 5.5 million seats into No 1 positions Number 1 - 1.6 million seats into No 2 positions Number 2 Other - Flat seat growth in other 83% ▪ 98% of capacity touches a number 1 or
Slide 19: Strong positions in slot constrained airports
Purposeful Strong positions in slot constrained airports Growth Current morning Airport1 peak utilisation1,2,3 London Gatwick A network that is difficult to replicate Milan MXP London Luton 80% of easyJet capacity touches an Geneva airport that is slot constrained during Berlin SXF peak times Pari
Slide 20: Significant opportunities within the current network
Purposeful Significant opportunities within the current network Growth Capacity split at easyJet’s top 20 High return opportunities at easyJet’s airports top 20 airports easyJet Other LCC Non-LCC P2P 14m Other Non-LCC transfer 77m seats 63m seats at airports where easyJet hold a No1 or No2 position
Slide 21: Investment in the network in 2017 to capture market opportunities
Investment in the network in 2017 to capture Purposeful Growth market opportunities c.9% easyJet capacity growth in 2017 Build & strengthen No1 positions Take advantage of growth opportunities xx 2017 growth – seats, millions Target specific catchment areas Invest in lean bases UK 4.1m Netherlands 0
Slide 22: Track record of driving returns
Capital Track record of driving returns Discipline Contribution per block hour by route (FY16) Development of our top 25% routes Not operated in FY12 Mature routes (> 3 years) 14% Maturing routes (< 3 years) In top 25 46% % then 40% Outside top WACC = 8% 25% then 54% of our top 25% of Footer box on
Slide 23: The easyJet brand is strongest in our most profitable markets
The easyJet brand is strongest in our most Differentiated Proposition profitable markets First choice #1/2 airport % returning airline Value Digital Top rated positions % pax1 pax1 (vs LCC) 2 perceptions2 demand3 airline app4 14 45 79 #1 #1 #1 #1 6 14 68 #1 #1 #2 #1 2 11 82 #1 #1 #1 #1 First choice
Slide 24: Digital offering that drives ticket sales
Differentiated Digital offering that drives ticket sales Proposition Digital distribution strategy is built on three commercially mature channels 1. easyJet.com • Web visits now totalling over 350M • 84% passengers check in online – repeat visit 2. Mobile - Industry leading app • 4.5* UK Apple app r
Slide 25: Digital offering that drives ancillary revenue
Differentiated Digital offering that drives ancillary revenue Proposition Driving growth in non-ticket revenue Non ticket seat revenue +9% v FY15 • Allocated seating conversion uplift • >40% growth in eJ+ revenue • Flight club launch and roll out Inflight revenue +31% v FY15 • Premium in flight rang
Slide 26: Data is driving customer insight and loyalty
Differentiated Data is driving customer insight and loyalty Proposition Customer insight Driving loyalty • 26.3M marketable customers – an increase of We understand our 73.1m passengers: 5% YOY • 55% passengers originate from outside of the UK • easyjet Plus has increased 40% YOY • 20% travel for bu
Slide 27: Investment in business driving higher yielding growth
Investment in business driving higher yielding Differentiated Proposition growth On track to deliver increased business passengers of 25% over next 3 years GDS Record 1.3m contracts passengers in renewed September Over 300 14% increase corporate in Business agreements Fares Award Winning 12.5m Foote
Slide 28: On-going digital momentum
Differentiated On-going digital momentum Proposition Live or imminently going live initiatives • Inflight vouchers (live) • Earlier flight (live) • easyJet holidays (live) • Disruption portal & self service initiatives (live) • Personalised ancillary upsell at check-in (live) • Inflight pre-order (D
Slide 29: Increasing cost advantage
Tough on Increasing cost advantage cost Cost advantage over non LCC carriers Stage length adjusted CASK ex fuel, pence 9.7 8.6 Market share on easyJet’s network 6.0 3.5 easyJet IAG AF-KLM Lufthansa easyJet easyJet cost performance vs LCC’s Stage length adjusted CASK ex fuel cagr growth, 2011 - 2016
Slide 30: Proven delivery of sustainable savings
Tough on Proven delivery of sustainable savings cost Lean delivers sustainable savings 315 CPS ex fuel target: flat 2015 vs 2019 95 46 32 43 58 41 Lean programme Y2011 Y2012 Y2013 Y2014 Y2015 Y2016 Y2011-16 Y2017 offsets inflation Up-gauging: A structural advantage 13% -14% Efficient and effective c
Slide 31: Lean initiatives will continue to deliver
Tough on cost Lean initiatives will continue to deliver FY 2017 CPS 2018-19 CPS Inflation 2.0% 2.0% (inc. regulated airport increases) • Up-guaging • Airport and Ground handling contract negotiations and efficiencies easyJet Lean • Crew productivity initiatives including Cost saving seasonal basing
Slide 32: On-Time Performance
The operational environment has dramatically changed Operating in primary slot External factors constrained airports Airport congestion 80% of easyJet capacity touches an airport that is slot constrained during peak times European short haul capacity has increased by over 100m seats in the past
Slide 33: easyJet is investing in resilience
easyJet is investing in resilience • Aircraft availability • Leased business jet to deliver engineers and parts rapidly to where they are needed • Predictive maintenance programme to increase reliability • Crew • Investing in recruitment and training • Schedule and rostering • End to end planning to
Slide 34: Brexit – No impact on model or strategy
Brexit – No impact on model or strategy • EU AOC process on schedule • Extensive process to define criteria for best location • Process close to completion • Formal application expected in early 2017 • Will secure intra-European flying rights Flows % of current Flying rights (AOC) Flying rights at A
Slide 35: Outlook in 2017
Outlook in 2017 Capacity (seats flown) • H1 c.+9% (before disruption) • FY c.+9% (before disruption) Revenue per seat at constant currency • H1 revenue per seat: down mid to high single digits Cost per seat at constant currency • FY cost per seat: down c. 3% (assuming normal levels of disruption) •
Slide 36: easyJet is a structural winner
easyJet is a structural winner • Purposeful future growth plans • Significant opportunities for profitable growth • Best customer proposition with constant innovation to drive demand and loyalty • Cost plan to deliver flat CPS ex-fuel Footer box on intersect of lines line h=8.03 9 and v=8.75 with fo
Slide 37: Q&A
Q&A
Slide 38: Appendix
appendix
Slide 39: Fuel and foreign exchange hedging
Fuel and foreign exchange hedging Fuel US dollar Euro surplus CHF surplus requirement requirement Six months ending 83% at $664/ 31 March 2017 79% at $1.53/£ 78% at €1.36/£ 73% at CHF1.42/£ metric tonne Full year ending 81% at $617/ 30 September 2017 74% at $1.52/£ 82% at €1.35/£ 71% at CHF1.41/£ me
Slide 40: H1 forward bookings
H1 forward bookings H1 bookings in line with prior year % seats sold* 93% 90% Winter 2016 Winter 2017 50% 49% 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 2017 (October 2016 to March 2017) as at 12 November 2016 40 40
Slide 41: Profit after tax
Profit after tax £m FY 2016 FY 2015 Change* Profit before tax 495 686 (27.9%) Tax charge (68) (138) 51.1% Profit after tax 427 548 (22.0%) Effective tax rate 13.7% 20.1% 6.4ppt Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold *Favourable / (adverse) 41 41
Slide 42: Revenue per seat
Revenue per seat £ per seat FY 2016 FY 2015 Change* Seat revenue 57.43 61.54 (6.7%) Non-seat revenue 1.03 0.94 9.7% Total revenue 58.46 62.48 (6.4%) Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold *Favourable / (adverse) 42 42
Slide 43: H2 Performance
H2 Performance Reported £m H2 2016 H2 2015 Change* Total revenue 2,898 2,919 (0.8%) Fuel (652) (683) 4.5% Operating costs excluding fuel (1,587) (1,426) (11.1%) EBITDAR 659 810 (18.5%) Ownership costs (140) (131) (8.5%) Profit before tax 519 679 (23.6%) PBT margin 17.9% 23.3% (5.4ppt) Seats (m) 45.3
Slide 44: Cost per seat excluding fuel – key drivers
Cost per seat excluding fuel – key drivers Cost per seat Variance at Variance at Weighted variance at excluding constant constant constant currency* Drivers fuel currency* currency* £ £ £ % • Decrease in average sector length Navigation 4.21 0.19 4.7% 0.5% • Price benefits in France and Germany • Re
Slide 45: Increasing proportion of A320's
Increasing proportion of A320’s FY 2016 FY 2015 Change A319 (operating lease) 45 49 (4) A319 (owned / finance lease) 99 99 0 A319 Total 144 148 (4) A320 (operating lease) 18 18 0 A320 (owned / finance lease) 95 75 20 A320 Total 113 93 20 Total fleet 257 241 16 Operating lease 25% 28% (3ppt) Number u
Slide 46: Currency impact
Currency impact Revenue Costs FY 2016 FY 2015 FY 2016 FY 2015 Sterling 50% 49% 27% 27% Euro 39% 40% 35% 32% US dollar 1% 1% 32% 35% Other (principally Swiss franc) 10% 10% 6% 6% Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Average effective Euro rate for re
Slide 47: ROCE calculation – including 7x lease adjustment
ROCE calculation – including 7x lease adjustment Reported £m FY 2016 FY 2015 Earnings before interest and tax – reported 498 688 Interest element of operating lease payments 34 38 Earnings before interest and tax - adjusted 532 726 Tax 20% 20% Normalised operating profit after tax (NOPAT) 426 581 Av