Easyjet Plc · LSE:EZJ
Easyjet — FY2023 Earnings Presentation
38 slides from Easyjet's earnings presentation, Nov 28, 2023
Slide 1: 28 November 2023
28 November 2023
Slide 2: Today's agenda
Today’s agenda: > Key messages > FY23 financial performance > easyJet’s strategic focus > FY24 outlook & summary 2
Slide 3: Key messages
Key messages Strong FY23 financial performance > Group headline PBT £455m, £633m YoY improvement > Record H2 Headline PBT of £865m > easyJet holidays FY PBT of £122m > FY Group PBT per seat of £4.91 > Dividends reinstated Positive outlook for FY24 > October RPS +12%, profit growth YoY > Q1 RPS expec
Slide 4: Medium term targets: ambition to deliver >£1bn PBT
Group PBT1 per seat of High teen ROCE2 £7-£10 Holidays PBT1 to Disciplined capacity >£250m growth c.5% CAGR3 Ambition to deliver >£1bn PBT 1) Headline result before non-headline items 2) ROCE is calculated by taking headline profit/loss before interest and tax, applying tax at the prevailing UK corp
Slide 5: Kenton Jarvis – CFO
Kenton Jarvis – CFO FY22 Results
Slide 6: FY23 key performance metrics
FY23 FY22 Change1 Capacity (m) 92.6 81.5 14% Passengers (m) 82.8 69.7 19% Load factor (%) 89% 86% 3ppt Average sector length (km) 1,224 1,193 3% Airline revenue per seat: (£) 79.84 66.23 21% Airline RASK (p) 6.52 5.54 18% Fuel cost per seat: (£) (21.95) (15.68) (40%) Airline headline cost per seat e
Slide 7: Group income statement
FY23 FY22 Change1 £m £m Passenger revenue 5,221 3,816 37% Ancillary revenue 2,174 1,585 37% Holidays revenue2 776 368 111% Group revenue 8,171 5,769 42% Headline costs: Airline EBITDAR costs ex fuel (4,347) (3,596) (21%) Fuel (2,033) (1,279) (59%) Holidays EBITDAR costs2 (661) (325) (103%) Group hea
Slide 8: Revenue per seat and yields
Reported RPS 21% FY23 FY22 % Var RPS @ CC3 19% Ticket Yield1 £63.09 £54.75 15% Ancillary Yield2 £26.27 £22.73 16% Total Yield £89.36 £77.48 15% > Primary network delivers ticket yield uplift +15% YoY, demonstrating: ▪ Strength of network ▪ Aircraft reallocation with routes maturing > Ancillary yield
Slide 9: Headline cost per seat ex fuel
FY23 vs FY22 Available seat kilometres (m) 113,334 17% Average sector length (km) 1,224 3% Headline CPS ex. fuel @ CC = 2% Headline CASK ex. Fuel @ CC = 0% 1) FY 2022 headline CPS (£68.88) + balance sheet revals (£0.77) = FY headline cost per seat excl. balance sheet revals (£68.11). 2) Other includ
Slide 10: Fuel, currency and carbon hedging
Jet Fuel H1’24 H2’24 H1’25 Hedged position 76% 51% 25% Average hedged rate ($/MT) 867 823 832 Current spot ($/MT) at 27.11.23 c.900 USD H1’24 H2’24 H1’25 Hedged position 76% 53% 27% Average hedged rate (USD/GBP) 1.22 1.24 1.24 Current rate (USD/GBP) at 27.11.23 c.1.25 Lease payments and Capex > US d
Slide 11: Cash generation and financing
Net cash outflow from financing Cash generation activities £(1,116)m £569m Movement in working capital1 1) Excluding movements in unearned revenue and derivative financial instruments. FY22 Results 11
Slide 12: Balance sheet and credit ratings
£m 30 Sep-23 30 Sep-22 Goodwill and other intangible assets 641 582 Property, plant and equipment (including RoU) 4,864 4,629 Derivative financial instruments 153 442 Equity investments 31 31 Other assets (excluding cash and money market deposits) 1,159 1,022 Unearned revenue (1,501) (1,043) BBB/Baa
Slide 13: Fleet flexibility and industry supply constraints
Fleet flexibility Industry supply constraints – easyJet well positioned 395 373 > Airbus & Boeing not meeting their projected supply 370 • easyJet FY23 deliveries accelerated ahead of plan 346 358 • Expect 16 deliveries in FY24 & 19 deliveries in FY25 336 337 338 > easyJet unaffected by GTF challeng
Slide 14: Gross capex and fleet ownership
Gross Capex – base fleet plan > Airbus firm orders provide c£1.9bn • 16 deliveries in FY24 c£1.5bn • 19 in FY25 c£1.3bn • 27 in FY26 > All FY24 deliveries planned to be purchased through free cash flow > Gross capex can be funded through a number of options: FY24 FY25 FY26 • Free cash flow Aircraft
Slide 15: Johan Lundgren – CEO
Johan Lundgren – CEO FY22 Results
Slide 16: Creating value for our shareholders
Building Europe’s best network Transforming Europe’s most revenue loved airline – Making winning for low-cost Delivering our customers, travel easy ease and reliability shareholders and our people Driving our low-cost model Creating value for our shareholders FY22 Results 16
Slide 17: Network wins
Network wins KEY Leadership position1 in 8 of > >80 new routes launched by easyJet in FY23 Europe’s 30 largest airports > Wizz removed 25% of H2H routes in peak summer Leadership position1 in 13 fully constrained airports > Air France removed 6% of H2H routes in peak summer Industry capacity constra
Slide 18: Applying data science & improved product offering
Applying data science & improved product offering £23.47 £13.10 £19.43 > Inflight retail £0.60 profit per seat – target £1 per seat Ticket RPS > Gauge optimisation delivered £0.24 per seat benefit Ancillary RPS £56.37 £47.71 £46.80 > Further enhancements being implemented FY19 FY22 FY23 Ancillary 22
Slide 19: easyJet holidays business model
Business model that cannot be replicated £122 million PBT in FY23 Confident to deliver >£250m PBT > 77% customer growth YoY Business developments > 221% profit growth YoY > Expect UK Market share to rise from 5% to 7% in FY24 > 19% gross margin – 1 ppts growth YoY > Launching French and German sourc
Slide 20: Customer experience and operational performance
Delivered #1/2 OTP in top 10 airports through FY23 Customer experience Investment to drive OTP & reduce disruption costs > 79% customers self serving ▪ Using technology to reduce time to resolve queries > Resilience actions into summer‘24 > Food & beverage stock optimisation > Navigating the wider e
Slide 21: Improved or maintained all ESG ratings
Improved or maintained all ESG Ratings Included B AA 25.4 in As of Dec 22 As of July 23 As of Sep 23 Tracking ahead of plan on net zero pathway SAF supply secured to 2028 Delivered fuel efficiencies ahead of plan Continued fleet modernisation Momentum building around hydrogen for aviation 21
Slide 22: Cost actions delivering
Cost actions delivering – FY23 CASK ex fuel flat YoY Cost advantage on easyJet’s primary airport network > Annualised benefit in FY24 from FY23’s actions; easyJet FY’23 CASK (excl. fuel) (pence) ▪ Fuel saving initiatives ▪ Insourcing line & base maintenance at Berlin - 38% saving per aircraft visit
Slide 23: Near-term outlook and positive H2'24 outlook
Strong October, with near term impact from Positive outlook for H2’24 conflict in the Middle East > October RPS +12%, profit growth YoY > Limited competitor growth ▪ P&W engine challenges impacting competitors > Israel, Jordan & Egypt: 4% of planned H1 capacity, 10% ASKs ▪ OEM supply restricted > In
Slide 24: Outlook, value creation and medium term targets
Outlook Value creation Medium term targets > FY24 Capacity: +9% YoY > Clear strategy Group PBT per seat of £7-£10 ▪ H1’24, c. 42m seats, +11% YoY > Capital allocation framework ▪ H2’24, c.59m seats, +8% YoY High teen ROCE > Disciplined capacity growth > All four quarters RPS positive YoY > Balance s
Slide 25: FY22 Results
FY22 Results
Slide 26: Appendix
easyJet APPENDIX
Slide 27: Medium term targets and drivers
Group PBT1 per seat of Holidays PBT1 to Disciplined capacity High teen ROCE2 £7-£10 >£250m growth c.5% CAGR3 Targeting high teen Airline EBITDAR Margins > Reducing winter losses ▪ Profitable restoration of winter capacity driving productivity and utilisation gains > Upgauging ▪ >£3 per seat cost sav
Slide 28: Capital discipline, structure and shareholder returns
Objective Metrics FY23 Progress > High asset efficiency > Aircraft utilisation >10 hours a day > 9.1 hours asset utilisation, +15% YoY Capital discipline > Maintain fleet flexibility > Capacity growth c.5% CAGR1 > 14% capacity growth from 5% fleet growth to 336 aircraft > Maintain robust Balance She
Slide 29: Cost per seat drivers
vs FY22 at constant Cost per seat FY23 Drivers H1’24 Direction currency1 £ £ % • Inflation at regulated airports with RPI/CPI linked contracts partially • Increased load factors Airports and ground handling (19.44) (1.29) (7%) • Inflation at regulated airports with RPI/CPI linked contracts offset by
Slide 30: Debt maturity profile
1,400 1 IFRS16 Lease Liability Medium Term Notes 1,200 1,000 €500m Eurobond repaid in Oct 23 800 600 400 200 FY24 FY25 FY26 FY27 FY28 FY29 1) Based on current lease commitments. FY22 Results 30
Slide 31: Airline and Holidays income statement
Intra-group £m Airline Holidays Group transactions Passenger revenue 5,221 - - 5,221 Ancillary revenue 2,174 1,047 (271) 2,950 Total revenue 7,395 1,047 (271) 8,171 Fuel (2,033) - - (2,033) Airports and ground handling (1,800) - - (1,800) Holidays direct operating costs - (842) 260 (582) Crew (941)
Slide 32: Headline profit and tax
£m FY23 FY22 Change1 Headline profit/(loss) before tax 455 (178) 356% Headline tax (charge)/credit (114) 31 (468%) Headline profit/(loss) after tax 341 (147) 332% Non-Headline items (23) (30) 23% Non-Headline tax credit 6 8 (25%) Total profit/(loss) after tax 334 (169) 292% Effective tax rate (25)%
Slide 33: Group revenue and revenue per seat
Group revenue, £m FY23 FY22 Change1 Airline passenger revenue 5,221 3,816 37% Airline ancillary revenue 2,174 1,585 37% Holidays revenue2 776 368 111% Total revenue 8,171 5,769 42% Airline revenue per seat, £ FY23 FY22 Change1 Passenger revenue 56.37 46.80 20% Ancillary revenue 23.47 19.43 21% Total
Slide 34: Fleet by aircraft type
FY23 FY22 Change A319 (leased) 66 59 7 A319 (owned) 29 35 (6) A319 Total 95 94 1 % of fleet 28% 29% (1)pts A320 (leased) 69 62 7 A320 (owned) 103 105 (2) A320 Total 172 167 5 % of fleet 51% 52% (1)pts A320neo (leased) 7 7 - A320 neo (owned) 47 37 10 A320 neo Total 54 44 10 % of fleet 16% 14% 2pts A3
Slide 35: Non-headline items
FY23 FY22 Change1 Description £m £m £m Sale and leaseback loss - (21) 21 • Nil impact from 8 aircraft sale and leasebacks (2022: £21 million loss from 10 aircraft sale and leasebacks). Adjustment to Right of Use (19) - (19) • Correction of an historic non-cash foreign currency translation error to r
Slide 36: Fuel and currency impact
Fuel impact FY23 FY22 Change1 Fuel $ per metric tonne Market price 897 1063 166 Effective price 867 705 (162) US dollar rate Market price 1.23 1.24 (1) cents Effective price 1.24 1.33 (9) cents Actual cost of fuel £ per metric tonne 697 532 (31)% FY23 currency impact on headline PBT2 EUR CHF USD Oth
Slide 37: Revenue and headline costs by currency
Revenue Headline Costs FY23 FY22 FY23 FY22 Sterling 55% 51% 32% 32% Euro 35% 38% 35% 37% US dollar 1% 1% 27% 25% Other (principally Swiss franc) 9% 10% 6% 6% Average effective Euro rate for headline income statement for FY23 was €1.15 (FY22: €1.18). Average effective US dollar rate for headline inco
Slide 38: Monthly passengers and load factor
July 2023 2022 Change Passengers (‘000) 8,831 8,137 8.5% Load Factor 93% 93% -ppt August 2023 2022 Change Passengers (‘000) 8,945 8,310 7.6% Load Factor 93% 93% -ppt September 2023 2022 Change Passengers (‘000) 8,412 7,824 7.5% Load Factor 90% 91% (1)ppt FY22 Results 38