Slide 1: easyJet FY 2018 Results Presentation
easyJet FY 2018 RESULTS PRESENTATION
Slide 2: Introduction
Introduction Johan Lundgren - CEO
Slide 3: 2018 – building on strong foundations
2018 – building on strong foundations Structural advantages deliver strong performance New initiatives to drive margins and returns > Headline PBT growth of 41% > Holidays, Business, Loyalty, Data > Strong revenue, up 17% > Operational Resilience Programme RPS Up 4.7% (@cc) Investing in people A
Slide 4: Financial review
Financial review Andrew Findlay - CFO
Slide 5: Performance highlights
performance highlights FY 2018 FY 2017 Change* Seats flown (m) 95.2 86.7 9.8% Passengers (m) 88.5 80.2 10.2% Load factor (%) 92.9% 92.6% +0.3ppt Average sector length (km) 1,101 1,105 (0.4%) Revenue per seat - reported currency (£) 61.94 58.23 6.4% Revenue per seat - constant currency (£) 60.96 58.2
Slide 6: Financial performance
Financial performance FY 2018 FY 2017 Change* £m £m Total revenue 5,898 5,047 851 Headline costs: Headline costs excluding fuel (4,136) (3,577) (559) Fuel (1,184) (1,062) (122) Headline profit before tax 578 408 170 Headline ROCE – including 7x lease 14.4% 11.9% 2.5ppt Headline diluted EPS (pence) 1
Slide 7: Revenue performance – ex-Tegel
Revenue performance – ex-Tegel RPS bridge +8.3% +1.6% £63.09 +6.7% +1.0% £0.95 £62.14 +2.3% £0.59 £1.34 +3.4% 12% growth in £1.98 ancillary RPS versus 2017 £58.23 FY 2017 Monarch exit Ancillary Passenger FY 2018 FX FY 2018 Ryanair cancellations revenue revenue @ CC FR industrial action 7
Slide 8: Controlled costs in a disrupted year
Controlled costs in a disrupted year Headline CPS bridge (ex-Tegel) > Ex-Tegel headline cost per seat at constant currency: 2.0% increase > Ex-Tegel headline cost per seat ex fuel at constant currency: 3.8% increase CPS ex fuel increased by 1.1% (in-line with original guidance) £0.53 £0.29 £0.88 £55
Slide 9: Tegel operation
Tegel operation FY 2018 > Recruitment and training executed to plan Seats flown (m) 4.9 > Now 23 easyJet aircraft based at Tegel: Passengers (m) 3.9 Replacing wet-leases with own fleet Load factor (%) 80.6% Average sector length (km) 836 > As at 30 September 2018, 665 pilots and cabin crew were wo
Slide 10: Impact of fuel & currency
Impact of fuel & currency FY 2018 fuel impact FY 2018 FY 2017 Change* Fuel $ per metric tonne Market price 664 501 (163) Effective price 590 596 6 US dollar rate Advantaged Market price 1.34 1.27 7 cents hedge Effective price 1.36 1.45 (9 cents) Difference 0.02 0.18 Actual cost of fuel £ per metric
Slide 11: Strong cash generation
Strong cash generation Cash flow bridge > Net cash: £396m (FY’17: £357m) > Adjusted net debt: £738m (FY’17: £413m)* Cash generated from operations (excluding dividends): £1,215m Investing and financing 151 326 106 74 2,307 Growth 35 162 64 214 460 Replacement / other 17 1,373 1,328 977 4 41 Cash & M
Slide 12: Strong balance sheet Baa1 / BBB+
Strong balance sheet Baa1 / BBB+ £m 30 September 2018 30 September 2017 Goodwill and other intangible assets 546 544 Property, plant and equipment 4,140 3,525 Derivative financial instruments 364 92 Other assets (excluding cash and money market deposits) 541 356 Unearned revenue (877) (727) Other li
Slide 13: Fuel and foreign exchange hedging
Fuel and foreign exchange hedging Fuel requirement US dollar requirement Euro surplus Six months ending March 2019 69% @ $567/MT 70% @ 1.31 69% @ 1.14 Full year ending 30 September 2019 65% @ $571/MT 66% @ 1.33 68% @ 1.13 Full year ending 30 September 2020 45% @ $654/MT 46% @ 1.38 47% @ 1.10 As at 3
Slide 14: Utilising flexibility in fleet planning
Utilising flexibility in fleet planning 395 Fleet announcement 385 Max fleet plan • Exercise of purchase rights to firm orders 375 367 for 17 A320neo 355 359 • Deferral of delivery dates of 18 A320neo aircraft by up to 24 months; and 352 335 329 338 • Conversion of 25 purchase rights for A320neo int
Slide 15: Gross capital expenditure
Gross capital expenditure c. £1,000m c. £1,000m c. £1,000m Fleet capex c. £800m Owned maintenance & Other FY’19 FY’20 FY’21 FY’22 - Not including impact from IFRS 16 accounting standard 15
Slide 16: 2019 forward bookings
2019 forward bookings 93% 91% 86% 82% FY18 FY19 Would be in-line with H1’17 when excluding 60% Tegel & 2018 one-offs 55% 51% 50% 22% 21% 11% 11% 7% 8% Oct Nov Dec Q2 H1 Q3 H2 H1 2019 (October 2018 to March 2019) as at 16 November 2018 (Including Tegel bookings) 16
Slide 17: H1'19 market capacity outlook
H1’19 market capacity outlook 15.0% H1 FY18 H1 FY19 7.5% 7.8% 6.1% 6.0% 4.3% 3.2% 0.6% Capacity change total SH Market Competitors on easyJet markets Capacity Change easyJet markets easyJet capacity change H1 2019 (October 2018 to March 2019) as at 7 November 2018 – Source OAG 17
Slide 18: H1'19 easyJet growth
H1’19 easyJet growth 7.0% 15.0% 4.9 Non-flying growth 1.0% 3.0% 1.9% Organic growth Strategic growth 1.1% 8.0% 4.0% 4.9% Annualisation & Winter’17 Up-gauging Manchester Tegel Winter’18 underlying growth Cancellations growth capacity growth H1 2019 (October 2018 to March 2019) 18
Slide 19: 2019 Outlook
2019 Outlook Capacity (seats flown) > FY c.+10% increase; H1 c.15% increase FX / Fuel* > FY: c.£10 million adverse movement from Revenue per seat at constant currency foreign exchange rates on headline PBT > H1 revenue per seat performance: Down low to mid single digits > FY: unit fuel costs £50 mil
Slide 20: Strategic review
strategic review Johan Lundgren - CEO
Slide 21: Our plan
Our plan Our purpose Seamlessly connecting Europe with the warmest welcome in the sky #1 or #2 in Winning our Value by The right Innovating primary airports customers’ loyalty efficiency people with data Giving customers the Making it easy, enjoyable We are low cost, driving Creating an inclusive an
Slide 22: Our priorities – evolution not revolution
Our priorities – evolution not revolution #1 or #2 in Winning our Value by The right Innovating primary airports customers’ loyalty efficiency people with data Giving customers the Making it easy, enjoyable We are low cost, driving Creating an inclusive and Using the millions of data- leading offer
Slide 23: #1 or #2 in primary airports
#1 or or#2 #2ininprimary primaryairports airports 1 New number 1 positions Leading network of No 1 & 2 positions Delivering increasing returns Number 1 position Number 2 position FY’2018 CPBH FY’2014 CPBH 1 1 1 Ave CPBH increased by 11 1 11 Split c.20% over the cycle 33% increase in capacity 2014 20
Slide 24: Much more to go for
Much moretotogogoforfor Much more Legacy carriers remain No 1 & 2 positions – Market share on easyJet routes easyJet’s main competitors Number 1 positions include > London Gatwick > Nice > Geneva > Berlin No 1 & 2 Airports > Basel > Venice Legacy / other, > Edinburgh > Belfast easyJet , 44% 36% 60m
Slide 25: Winning our customers' loyalty
Winning our customers’ loyalty Much more Great Offer Leading Brand Loyal Customers to go for > Leading network Leading airline for value > Affordable fares for money > 2x Holidays > Continual innovation Rank: 1st More valuable > Customer focused Leading LCC for Serious Higher yield Business > Th
Slide 26: easyJet holidays
easyJet holidays What we have today The Opportunity > 500k bookings Under-invested > Despite 20m easyJet passengers booking 20m People who flew with easyJet for leisure and accommodation elsewhere booked accommodation elsewhere Market leading Brand Leading network for Sub-optimal > Lack of functiona
Slide 27: Holidays - delivering the benefits
Holidays - delivering the benefits Booking Targets / Key dates Offer Flight Destination experience From > Flight focused > Two paths > Great customer > Limited offer of 2019 > No hotel > Non-differentiated offer add-ons > Launch easyJet Holidays in relationships offers > Focus of easyJet > No effort
Slide 28: easyJet business
easyJet business What we have today The Opportunity 17% of total > 15m passengers in 2018 £40.2bn passengers > 17% growth vs 2017 Total business travel market just in the UK* Comparable offer to Market leading primary legacy carriers, at a airport network in Basic Loyalty > easyJet Plus lower price
Slide 29: Business - delivering the benefits
Business - delivering the benefits Booking Targets / Key dates Procurement Flight Support experience 2019 From > Relationship with > Limited channels > #1 and #2 airports > No post-travel tools > Schedule optimisation leading companies > Same as leisure > “one-size fits all” > No loyalty offer > Lau
Slide 30: easyJet loyalty
easyJet loyalty What we have today The Opportunity > 66% of seats in FY18 were booked by customers who had also booked with easyJet in the previous 2 years > Return customers buy twice as many flights per year than first timers > easyJet Plus and Flight Club consistently drive incremental YOY revenu
Slide 31: Loyalty - delivering the benefits
Loyalty - delivering the benefits Reward Targets / Key dates Recognise loyalty Redemption Engagement easyJet flying From > Flight Club > Ad-hoc on board > easyJet Plus 2019 > Enhance easyJet Plus and Flight Club > Loyalty technology > Programme partnerships > Define member experience > Launch pr
Slide 32: Value by efficiency
Value byefficiency Value by efficiency Delivering £££ savings Up-gauging – c. 1% CPS saving per year A319 CEO – 156 seats Over £500m in cost reductions delivered since 2011 A320 CEO – 180 / 186 seats > £107m savings in FY 2018 A320 NEO – 186 seats > Drives operational excellence A321 NEO – 235 seats
Slide 33: Disruption – an industry wide issue
Disruption Disruption – –ananindustry industry wide wide issue issue > Airspace operating environment is increasingly constrained Network delay growth – All airlines1 > Under resourced ATC across Europe 5.8% CAGR 11.7 Departure delay (mins/flight) 11.3 10.5 9.3 9.7 > Limited change to ATC and airpor
Slide 34: Disruption – an opportunity for CSAT & Cost
Disruption – an opportunity for CSAT & Cost easyJet Operational Resilience Programme Current actions being implemented: Build: • Standby Aircraft Task Force: Invest intelligently in schedule, aircraft and o New standby aircraft demand forecasting to inform crew to enable a resilient operation that i
Slide 35: The right people
The right people > Industry leading crew A good place to work. Overall > New leadership team to deliver Our Plan engagement > Higher retention score > Industry leading experts • 6.5% - total turnover 8/10 • 4.9% - pilot turnover Cabin Crew eNPS 8.9 high engagement score for Tegel 41 4.2 cc 6.6 Growt
Slide 36: Innovating with data
Innovating with data Becoming the most data driven airline in the world Enhancing all aspects of the business Web based Improve customer Marketing & Drive revenue Campaigns Operation experience Optimisation Disruption Management DATA Automation Pricing and Market Improve operational Forecast Reduce
Slide 37: Better prepared for Brexit (1)
Better prepared for Brexit (1) 1. Structure and flying rights: • Robust post Brexit structure o Three airlines in place: United Kingdom, Austria, Switzerland • Had confirmation that as long as the UK reciprocates the EU will allow UK carriers to fly to and from the EU • The majority of our network w
Slide 38: Better prepared for Brexit (2)
Better prepared for Brexit (2) 3. Ownership: • 47% EEA ownership at present • Articles of Association allow the Board to take action to satisfy ownership and control requirements • Including the right to suspend voting rights and/or forcing shareholders to sell their shares • easyJet has no current
Slide 39: Our priorities – delivering shareholder value
Our priorities – delivering shareholder value #1 or #2 in Winning our Value by The right Innovating primary airports customers’ loyalty efficiency people with data Giving customers the Making it easy, enjoyable We are low cost, driving Creating an inclusive and Using the millions of data- leading of
Slide 40: Appendix
Appendix
Slide 41: Adoption of IFRS 15
Adoption of IFRS 15 Change in accounting: • Revenue recognition from certain revenue streams, principally administration and change fees, will be recognised on the date of flight rather than the date of booking. • Some of the compensation payments made to customers (in respect of flight delays), pre
Slide 42: Adoption of IFRS 16
Adoption of IFRS 16 Change in accounting: • All aircraft operating leases will be capitalised on the balance sheet as a right-of use asset with a corresponding lease liability representing easyJet’s obligation to make lease payments. Lease costs previously recognised within the Income Statement will
Slide 43: Profit after tax
Profit after tax £m FY 2018 FY 2017 Change* Headline profit before tax 578 408 41.4% Headline tax charge (112) (83) (33.3%) Headline profit after tax 466 325 43.5% Total profit before tax 445 385 15.5% Total tax charge (87) (80) (9.0%) Total profit after tax 358 305 17.3% Effective tax rate 19.7% 20
Slide 44: EPS, Dividends and ROCE
EPS, Dividends and ROCE FY 2018 FY 2017 Change* Headline basic earnings per share (pence) 118.3 82.5 43.4% Headline diluted earnings per share (pence) 117.4 81.9 43.3% Total basic earnings per share (pence) 90.9 77.4 17.4% Total diluted earnings per share (pence) 90.2 76.8 17.4% Dividend per share (
Slide 45: Headline cost per seat – ex-Tegel
Headline cost per seat – ex-Tegel Weighted Variance Cost per seat variance at excluding (ex fuel) at constant Key drivers fuel constant currency* £ currency* £ % > Annualised increases in charges at regulated airports and increased de-icing costs Airports and ground handling 17.07 (0.14) (0.3%) > In
Slide 46: Revenue
Revenue Total reported FY 2018 FY 2017 Change* Passenger revenue 4,688 4,061 15.4% Ancillary revenue 1,210 986 22.7% Total revenue 5,898 5,047 16.8% £ per seat FY 2018 FY 2017 Change* Passenger revenue 49.23 46.85 5.1% Ancillary revenue 12.71 11.38 11.7% Total revenue 61.94 58.23 6.4% * Favourable/(
Slide 47: Increasing proportion of A320 aircraft
Increasing proportion of A320 aircraft FY 2018 FY 2017 Change A319 (operating lease) 53 54 (1) A319 (owned / finance lease) 79 89 (10) A319 Total 132 143 (11) A320 (operating lease) 37 18 19 A320 (owned / finance lease) 144 118 26 A320 Total 181 136 45 A321 Total (owned) 2 - 2 Total fleet 315 279 36
Slide 48: Currency impact
Currency impact Revenue Costs FY 2018 FY 2017 FY 2018 FY 2017 Sterling 45% 46% 29% 30% Euro 44% 41% 39% 37% US dollar 1% 1% 26% 26% Other (principally Swiss franc) 10% 12% 6% 7% 48 Average effective Euro rate for revenue for FY 2018 was €1.14 (FY 2017: €1.18) Average effective Euro rate for costs fo
Slide 49: ROCE calculation – including 7x lease adjustment
ROCE calculation – including 7x lease adjustment Reported £m FY 2018 FY 2017 Earnings before interest and tax – reported 460 404 Interest element of operating lease payments 54 37 Earnings before interest and tax - adjusted 514 441 Tax 19% 19% Normalised operating profit after tax (NOPAT) 416 357 Av
Slide 50: Headline ROCE calculation – including 7x lease adjustment
Headline ROCE calculation – including 7x lease adjustment Reported £m FY 2018 FY 2017 Headline earnings before interest and tax – reported 592 428 Interest element of operating lease payments 51 37 Headline earnings before interest and tax - adjusted 643 465 Tax 19% 19% Normalised headline operating