Slide 1: 2005 Q3 investor update
2005 Q3 investor update 25 August 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: Ray Webster Summary
Ray Webster Summary
Slide 4: Financial highlights for 3 months to 30 June 2005
Financial highlights for 3 months to 30 June 2005 Total revenue up 19% to £343m, per seat up 1.5% Passenger unit revenue up 0.8%, – Reflecting our efforts to improve revenue mix, and our decision not to impose fuel surcharges Ancillary unit revenue up 12% – Continuing the strong trend seen in H1 Tot
Slide 5: Business highlights
Business highlights Business continues to develop Growth of pan-European network continues Consumer offering further enhanced Strong ancillary contribution Reducing costs to offset fuel 5
Slide 6: Our current guidance (as at 5 August 2005)
Our current guidance (as at 5 August 2005) We expect unit revenue (total revenue per seat flown) to finish slightly ahead of last year We expect our total fuel cost for this financial year to reach £260m (vs. £147m in financial year 2004) At the time of our interim results in May, we stated that we
Slide 7: Jeff Carr Financial review
Jeff Carr Financial review (based on interim results)
Slide 8: Profit and loss account
Profit and loss account £m H1 2005 H1 2004 Change Total revenue 553 440 + 26% Operating costs (516) (406) + 27% EBITDAR 37 34 + 11% Finance & ownership (60) (52) + 15% Pre-tax loss (ex goodwill) (22) (19) + 21% Margin - 4.0% - 4.2% Pre-tax loss (reported) (31) (27) + 14% 8
Slide 9: Available seat kilometres
Available seat kilometres H1 2005 H1 2004 Change Sectors flown 106,705 87,453 + 22% Avg seats per plane 150.8 148.8 + 1% Stage length (km) 903 845 + 7% ASK (m) 14,526 10,991 + 32% Revenue per ASK (p) 3.81 4.00 - 5% CASK (ex goodwil) (p) 3.96 4.17 - 5% Difference (p) (0.15) (0.17) 9
Slide 10: Revenue - performance
Revenue - performance H1 2005 H1 2004 Change Total revenue per pax (£) 41.03 40.59 + 1.1% Total revenue per seat (£) 34.38 33.81 + 1.7% Passengers (m) 13.5 10.8 + 25% £m Passenger revenue 513.6 412.3 + 25% Ancillary contribution 39.7 27.4 + 45% Total revenue 553.3 439.7 + 26% 10
Slide 11: Revenue – ancillary contribution per passenger
Revenue – ancillary contribution per passenger Change vs. last year Credit card fees + 18% Change fees + 1% Partner - 2% Excess baggage + 47% In-flight + 91% Total + 16% per pax 11
Slide 12: Unit cost development
Unit cost development Cost per Change Contribution to ASK (p) vs. last yr. CASK % change Airports / handling 1.16 - 8% - 2.4% Crew 0.46 - 13% - 1.7% Better Ownership costs 0.41 - 13% -1.5% Maintenance 0.40 - 7% - 0.8% Other 0.33 - 6% - 0.5% Selling 0.18 - 3% - 0.1% Worse Navigation 0.34 - - Fuel 0.6
Slide 13: Impact of higher fuel costs in H1
Impact of higher fuel costs in H1 Price £40m FX (£12m) Hedging 2005 cost (£10m) £99m Efficiencies (£2m) Net impact £18m 2004 cost Volume £65m £18m 13
Slide 14: Ownership costs
Ownership costs H1 2005 H1 2004 Change Average no. of aircraft 96 78 + 24% £m Depreciation (11) (14) - 19% Leases (59) (43) + 38% Net interest 10 4 + 127% Net ownership cost (60) (52) + 15% Cost per ASK 0.41p 0.47p - 13% Cost per aircraft (0.62) (0.67) - 7% 14
Slide 15: Net income and EPS
Net income and EPS £m H1 2005 H1 2004 Change PBT (ex goodwill) (22) (19) + 21% Tax 9 8 + 17% Net income (ex goodwill) (14) (11) + 24% EPS (3.4p) (2.8p) + 23% Net income (reported) (22) (20) + 13% EPS (5.6p) (5.0p) +13% 15
Slide 16: Cash flow movement
Cash flow movement Financing 2005 Tax and interim £15m interest £14m total cash £637m Working Net capex capital £149m (£29m) 2004 year end total cash £510m EBIT Depreciation / (£41m) amortisation £20m 16
Slide 17: Balance sheet
Balance sheet £m Mar 05 Sep 04 Aircraft (inc. deposits) 330 325 Cash 637 510 Goodwill 301 310 Other assets 179 180 Total assets 1,447 1,325 Debt 129 120 Other liabilities 559 416 Shareholders’ funds 759 789 Total equity and liabilities 1,447 1,325 Gearing 29% 26% Gearing defined as (debt + 7 x annua
Slide 18: Hedging – US$
Hedging – US$ 2.00 US$:£ 1.90 (Range $1.78 to $2.05) Avg: $1.85 1.80 1.70 Avg: $1.70 (Range $1.65 to $1.82) Q3 65% Q4 71% 1.60 Oct 03 Jan 04 Apr 04 Jul 04 Oct 04 Jan 05 Apr 05 Jul 05 Oct 05 18
Slide 19: Hedging - fuel
Hedging - fuel Jet A1 metric tonne (US$) H2 39% capped at 650 avg: $609 600 550 500 450 400 Avg: $362 350 (Range $318 to $475) 300 Avg: $284 (Range $280 – $300) Q3 22% 250 Oct 03 Jan 04 Apr 04 Jul 04 Oct 04 Jan 05 Apr 05 Jul 05 Oct 05 19
Slide 20: International accounting standards
International accounting standards Finance systems work largely complete – Currently parallel accounting Publication timetable – No additional IAS information in these results – 2005 full year as normal in November – Release of IAS figures to follow in January – 2006 interims and full year under IAS
Slide 21: Ray Webster, Chief Executive
Ray Webster Chief Executive
Slide 22: Business highlights
Business highlights Business continues to develop Growth of pan-European network continues Consumer offering further enhanced Strong ancillary contribution Reducing costs to offset fuel 22
Slide 23: Fleet plan
Fleet plan 98% new* aircraft by Sep 06, average age just 2.2 years Owned/leased aircraft at financial year end 147 121 108 92 115 21 A319 55 86 33 737-700 32 38 737-300 32 21 3 32 Actual Expected Expected Expected Sep 2004 Sep 2005 Sep 2006 Sep 2007 * meaning either a A319 or 737-700 23
Slide 24: Capacity growth
Capacity growth Balanced growth Average owned/leased aircraft during financial year 132 114 100 85 11 A319 100 38 69 30 737-700 32 32 44 737-300 30 32 13 Seats flown + 22% + 17% + 18% Actual Expected Expected Expected FY 2004 FY 2005 FY 2006 FY 2007 2006 and 2007 assume no change in utilisation 24
Slide 25: Revenue environment
Revenue environment Competition – manageable but remains intense – European capacity higher than last summer, despite airline failures – Competition from other airlines on 115 out of 147 market pairs – At least one low-cost competitor on 80 out of 147 market pairs Own growth naturally dilutes year-o
Slide 26: Network development
Network development Network clean-up Basel to become 15th base and 5th outside UK Third of EU now lives within 1 hour of an easyJet airport Bases (ranked by departures per week) Routes from Basel 0 100 200 300 400 500 LTN STN LGW BFS GVA BRS LPL EDI SXF NCL ORY GLA EMA DTM Base defined as an airport
Slide 27: Network development
Network development 40 routes to/from Germany by Sep 05 – New route has been added every 2 weeks – Active management of route portfolio Awareness still building – Dedicated country manager – 100th aircraft celebrated in Berlin (not UK) Adapting business to local market – e.g. Additional payment opti
Slide 28: Customer focus
Customer focus The #1 travel website The Independent, 24 April 2005. 28
Slide 29: Customer focus
Customer focus New website live – Improved booking functionality – More payment methods and currencies – 15 languages – Dynamic packaging introduced – Promotes a wider variety of partners Customer friendly pricing – Group booking for up to 40 – Transparent pricing imminent More coming soon 29
Slide 30: Business traveller
Business traveller Passenger friendly product – No weight restriction for cabin baggage – Flexible bookings & earlier flight stand-by Self check-in – Includes hold baggage – Introduced in EMA, Geneva and Berlin BTI deal – Access to a new market – Limited additional cost – Expected to be live this su
Slide 31: Ancillary contribution
Ancillary contribution Better execution delivering results – Higher contribution from inflight – Excess baggage payment collection much improved Infant and sporting goods charges introduced Change fee increased to £15 (from £10) Dynamic packaging of insurance now live – Other services to follow New
Slide 32: Reducing costs - utilisation and productivity
Reducing costs - utilisation and productivity 5% more block hours per operational aircraft per day – Beating 2005 FY target of 4% 5% increase in productivity for operational crew – Adjusted for £3m of Airbus training costs in 2004 – Matching 2005 FY target 3% fall in ‘non-flying’ staff – Target of 1
Slide 33: Reducing costs – maintenance
Reducing costs – maintenance Fifth largest cost area (11% of cost base) Currently outsourced to SR Technics – Boeing fleet: long-term contract until 2011 – Airbus fleet: short-term contract until Sep 05 Competitive tender for long-term Airbus contract, awarded to SRT – Other finalist was Singapore T
Slide 34: Summary
Summary Strong passenger and ancillary revenue growth Profit in line with expectations Unit costs reduced despite fuel cost increases Strong cash generation Well positioned for continued balanced growth 34
Slide 35: Appendix
Appendix
Slide 36: Goodwill and accelerated depreciation
Goodwill and accelerated depreciation £m 2005 2004 PBT (underlying) (20) (15) Accelerated depreciation (3) (3) PBT (ex goodwill) (22) (19) Goodwill amortisation (9) (9) PBT (reported) (31) (27) 36
Slide 37: Fleet financing
Fleet financing Additional financing in place Long-term (post 2007) at least a third of fleet will be owned Mar 05 Sep 05 Sep 06 Sep 07 Owned 14 18 42 51 Leased 89 90 79 78 Flexible (all A319s) - - - 18 Total 103 108 121 147 37