Slide 1: 2005 Preliminary results
2005 Preliminary results 22 November 2005 1
Slide 2: 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 net worth b
Slide 3: Headlines for FY 2005
Headlines for FY 2005 4 Passenger numbers up 21%: total revenue up 23% 4 Strong profitable growth in continental Europe: revenue up 78% 4 Ancillary revenue continued to perform well: up 38% in H2, up 41% for full year 4 Fuel cost per seat up 68% in H2, up 47% for full year 4 Cost reduction accelerat
Slide 4: Financial overview – strong second half
Financial overview – strong second half H2 Change 2005 Change Passengers (m) 16.1 + 19.0% 29.6 + 21.4% Total revenue (£m) 788 + 21% 1,341 + 23% Profit before tax (£m) 99 + 11% 68 + 9% Revenue / seat £42.37 + 2.8% £38.66 + 2.1% Cost / seat £36.57 + 4.4% £36.20 + 3.1% Cost / seat ex fuel £27.89 - 6.7%
Slide 5: Key messages
Key messages 4 Financial review 4 Business review – Network developing rapidly, particular focus on non-UK routes – Germany on track – Tough competition: progress in Europe, slowdown in UK 4 Outlook – New management team with clear targets – Managing revenue: active management of network and ancilla
Slide 6: Profit and loss account
Profit and loss account £m 2005 2004 Change Total revenue 1,341 1,091 + 23% Operating costs (1,133) (902) + 26% EBITDAR 209 189 + 10% Finance and Ownership (124) (110) + 12% Pre-tax profit (ex goodwill) 85 79 + 8% Margin 6.3% 7.3% Pre-tax profit (reported) 68 62 + 9% UK GAAP 6
Slide 7: Financial review: how we measure ourselves
Financial review: how we measure ourselves 4 Internally at a company level, we look at both revenue and cost per seat flown 4 Each seat flown incurs a cost of capital: we try to minimise the cost of debt through effective financing; we incentivise our top management to deliver higher returns on equi
Slide 8: Profit buildup: contribution per seat
Profit buildup: contribution per seat 200 £9m £16m 160 £21m 26p £13m 45p 120 £14m £16m 61p 37p £85m £79m 40p 80 (£83m) (£2.40) 40 0 v v 04 05 e d st p el re re ea m hi Fu co lu FY FY rs x l rh ci Pa Vo ps ne ve An O w O O 8
Slide 9: Passenger revenue: strong summer
Passenger revenue: strong summer H2 Change 2005 Change Passengers (m) 16.1 + 19.0% 29.6 + 21.4% Load Factor 86.4% + 0.9pp 85.2% + 0.7pp Seats (m) 18.6 + 17.7% 34.7 + 20.5% Passenger revenue (£m) 741 + 20% 1,254 + 22% Per seat £39.82 + 2.0% £36.15 + 1.1% 9
Slide 10: Ancillary revenues: increasing
Ancillary revenues: increasing H2 Change 2005 Change Ancillary revenue (£m) 47 +38% 87 +41% Per seat £2.55 +17.5% £2.51 +17.4% Change in ancillary revenue per seat H2 2005 Credit card fees + 19% + 19% Change fees + 19% + 11% Partner - 15% - 10% Excess baggage / other + 58% + 54% In-flight + 39% + 58
Slide 11: Cost per seat: all items down except fuel, navigation
Cost per seat: all items down except fuel, navigation Cost / seat Change vs Change vs last year last year Crew £ 3.92 - 10.8% - £ 0.47 Other £ 2.86 - 9.8% - £ 0.31 Better Ownership £ 3.56 - 6.7% - £ 0.26 Selling £ 1.40 - 8.9% - £ 0.14 Airports / handling £ 10.39 - 1.1% - £ 0.12 Maintenance £ 3.44 -
Slide 12: Net income and EPS
Net income and EPS £m 2005 2004 Change PBT (ex goodwill) 85 79 + 8% Tax (25) (21) + 20% Net income (ex goodwill) 60 58 + 3% EPS (fully diluted) 14.7p 14.3p + 3% Net income (reported) 43 41 + 4% EPS (fully diluted) 10.4p 10.1p + 3% 12
Slide 13: Strong balance sheet
Strong balance sheet £m Sep 05 Sep 04 Aircraft (inc. deposits) 419 325 Cash 696 510 Goodwill 292 310 Other assets 204 180 Total assets 1,611 1,325 Debt 217 120 Other liabilities 554 416 Shareholders’ funds 840 789 Total equity and liabilities 1,611 1,325 Gearing 31% 26% Gearing defined as (debt + 7
Slide 14: Good cash generation
Good cash generation 850 £98m 750 £26m £696m £85m (£109m) 650 £37m £510m £49m 550 450 350 IT ex 04 05 t g l t ta es or in EB ap 9/ 9/ pi m er nc ca tc /a sh sh nt na /i Ne k Ca Ca Fi pn W x Ta De 14
Slide 15: Business review: network expansion, fleet change
Business review: network expansion, fleet change Year end 2005 Year end 2004 Change Bases 15 14 +1 Airports 64 44 + 45% Routes 212 153 + 39% Countries 18 13 + 38% Fleet: B737-300 22 38 - 16 B737-700 32 33 -1 A319 55 21 + 34 Total 109 92 + 17 15
Slide 16: Business review: rapid growth outside UK
Business review: rapid growth outside UK Growth in revenue by location of route, vs last year Full Year £247m +78% Non UK H2 £150m +81% £870m +19% UK - Europe £517m +15% £225m +0% UK domestic £121m +1% 0% 20% 40% 60% 80% 100% 16
Slide 17: Business review: Germany on track
Business review: Germany on track Contribution per block hour, first full year of operation Current scale: Orly (FY 03) Berlin 4 7 aircraft 4 26 routes Berlin (FY 05) Dortmund 4 3 aircraft Geneva (FY 00) 4 11 routes Dortmund (FY 05) Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 17
Slide 18: Business review: competition overlap analysis
Business review: competition overlap analysis 70% Monarch Airlines - 12 60% MyTravel - 3 British Airways - 50 How important we are to them 50% bmibaby - 21 (# of mkt pairs overlapping) 40% 30% Wizz - 4 Air France - 15 flybe. - 10 How important they are to us 20% Ryanair - 25 KLM - 6 SkyEurope - 4 Th
Slide 19: Looking forward
Looking forward 4 A new team at easyJet, with clear financial targets 4 Capacity growth of 15% 4 Fleet: exit of old B737-300s; addition of efficient A319s 4 More expansion in Europe 4 Less growth in soft UK market 4 More to come on ancillaries 4 More to come on cost 19
Slide 20: A new team at easyJet
A new team at easyJet Andrew Harrison – CEO (Start date December 2005) Jeff Carr – CFO (Appointed March 2005) Mike Szucs – COO (Appointed October 2003) Saad Hammad – Commercial Director (Appointed November 2005) 20
Slide 21: New management financial targets
New management financial targets New financial target for the company based on RoE (from 2005 base of 7.4%): Threshold Target FY 2008 12.5% 15.0% Additional net profit required per seat - based on current year: Threshold Target FY 2008 + £ 1.30 + £ 1.96 RoE defined as net profit after tax, before go
Slide 22: How we manage revenue
How we manage revenue 1. Determine three-year growth rate, with reference to market opportunities, RoE targets and value-creation objectives 2. Carry out continuous prospecting for potential new bases / markets, in order to maximise 18 month commercial opportunities 3. Continuously monitor marginal
Slide 23: Managing revenue: three-year capacity growth
Managing revenue: three-year capacity growth Aircraft owned / leased at end of financial year 109 122 138 154 Seats flown + 15% + 15% + 15% Actual Expected Expected Expected FY 2005 FY 2006 FY 2007 FY 2008 23
Slide 24: Managing revenue: operated fleet by base
Managing revenue: operated fleet by base Base 9/05 9/06 Base 9/05 9/06 Gatwick 16 +1 Belfast 5 Luton 15 +1 Dortmund 3 +1 Stansted 13 Basel 3 +1 Bristol 8 Glasgow 3 Berlin 7 +1 Edinburgh 3 Liverpool 7 E Midlands 3 Newcastle 6 Malpensa +3 Paris Orly 5 Tactical 7 Geneva 5 +1 Unallocated +4 24
Slide 25: Managing revenue: active route development
Managing revenue: active route development 72 new routes in 2005 25
Slide 26: Managing revenue: active pruning
Managing revenue: active pruning 16 routes withdrawn since Oct 04 26
Slide 27: Managing revenue: ancillary revenue per seat +37p
Managing revenue: ancillary revenue per seat +37p Conversion rates: 4 Dynamic packaging intro during H2 4 Insurance +350% 4 Car hire +200% Rate revisions: 4 Sporting goods 4 Infants 4 Excess baggage 4 Change fees 4 2006: full-year effect of insurance / car hire / rate revisions 27
Slide 28: How we manage costs
How we manage costs 1. Low-cost, high-utilisation fleet 2. Efficient crew 3. Aggressive review of all supplier agreements 4. Low cost head office 28
Slide 29: Managing costs: aircraft ownership
Managing costs: aircraft ownership Change in aircraft ownership cost per seat £1.50 £0.75 £- -£0.75 (26p) -£1.50 2001 2002 2003 2004 2005 4 Older, more expensive aircraft leaving the fleet; cheaper Airbuses coming in 4 Optimisation of financing charges 4 2006: continued review of financing for cost
Slide 30: Managing costs: crew
Managing costs: crew Change in crew / training cost per seat £1.50 £0.75 £- -£0.75 (47p) -£1.50 2001 2002 2003 2004 2005 4 Training volumes falling as one-off Airbus conversion costs drop out – cost benefit of £6.4m / 19p per seat in FY05 4 Crew productivity returning to acceptable levels – cost ben
Slide 31: Managing costs: airports
Managing costs: airports Change in airport / handling cost per seat £1.50 £0.75 £- (12p) -£0.75 -£1.50 2001 2002 2003 2004 2005 4 Contract renegotiations at existing airports offset inflation effect of £7.6m / 22p per seat in FY05 4 Mix effect – capacity reduction at high cost / low return airports
Slide 32: Managing costs: maintenance
Managing costs: maintenance Change in maintenance cost per seat £1.50 £0.75 £- (10p) -£0.75 -£1.50 2001 2002 2003 2004 2005 4 SRT contract delivered £2.1m / 6p per seat of cost benefit FY05 4 SRT contract will deliver more than £10m / 25p per seat of cost benefit in FY06; higher ratio of aircraft on
Slide 33: Managing costs: selling and other
Managing costs: selling and other Change in selling and other cost per seat £1.50 £0.75 £- -£0.75 (45p) -£1.50 2001 2002 2003 2004 2005 4 Efficiency gains mean sales & marketing headcount fell from 293 to 246 in 2005 4 Falls in aircraft insurance cost per seat, reflecting economies of scale, our saf
Slide 34: Managing costs: fuel hedging
Managing costs: fuel hedging Jet A1 price per tonne (US$) 750 Collar ceiling weighted averages 700 H2 $677 / mt H1 $660 / mt 650 600 H1 $590 / mt H2 $590 / mt 550 500 Collar floor weighted averages 450 400 350 Amount hedged: 300 H1 50% H2 24% 250 Oct 04 Jan 05 Apr 05 Jul 05 Oct 05 Jan 06 Apr 06 Jul
Slide 35: Managing costs: US$ hedging
Managing costs: US$ hedging US$:£ 2.00 Collar ceiling weighted averages 1.90 H1 $1.85 H2 $1.83 1.80 H1 $1.79 H2 $1.78 Collar floor weighted averages 1.70 Amount hedged: H1 81% H2 80% 1.60 Oct 04 Jan 05 Apr 05 Jul 05 Oct 05 Jan 06 Apr 06 Jul 06 35
Slide 36: 2006 outlook
2006 outlook 4 Capacity: 15% growth in seats 4 Passenger revenue: we anticipate full year revenue per seat to be slightly down versus 2005 4 Ancillary revenue: continued focus and new initiatives should result in double-digit growth per seat 4 Cost ex-fuel: down 3% - 5% per seat 4 Profit before tax
Slide 37: Appendix
Appendix
Slide 38: Operating statistics
Operating statistics H2 Change 2005 Change Seats (m) 18.6 + 17.7% 34.7 + 20.5% Load Factor (%) 86.4 + 0.9pp 85.2 + 0.7pp Passengers (m) 16.1 + 19.0% 29.6 + 21.4% ASKs (m) 17,675 + 22.3% 32,141 + 26.3% RPKs (m) 15,350 + 23.9% 27,448 + 27.3% Stage Length (km) 950 + 3.8% 926 + 4.8% Sectors 122,363 + 16
Slide 39: Calculated amounts
Calculated amounts H2 Change 2005 Change Revenue per pax (£) 49.04 + 1.7% 45.38 + 1.3% Cost / ASK (p) 3.90 + 0.3% 3.96 - 1.9% Cost / ASK (ex fuel) 2.99 - 10.2% 3.15 - 9.0% (£) Cost / ASK (ex fuel / 3.18 - 5.7% stage length) 39