Slide 1: Preliminary results
Preliminary results 18 November 2008
Slide 2: Introduction
Introduction Andy Harrison Chief Executive Officer
Slide 3: Highlights
Highlights 4 Full year profit before tax of £123million*; equivalent to £2.37 per seat 4 Good second half performance in challenging market 4 Revenue up 15.2% per seat partially offset £5.61 per seat increase in fuel resulting in second half pre tax profits decrease of 18% or £2.63 pr seat 4 GB Airw
Slide 4: Managing in tough and uncertain times
Managing in tough and uncertain times 4 Proactive risk management 4 Hedging policy; fuel and currency 4 Reduced capacity growth in F’09 4 12 aircraft held for sale 4 Deferred 4 aircraft from delivery in 2010 4 Rigorous performance management of the network 4 Clear targets for cost reduction – £125m
Slide 5: Finance review
Finance review Jeff Carr Group Finance Director
Slide 6: Underlying profit performance
Underlying profit performance £m F ‘08 F ‘07 Change Total revenue 2,363 1,797 32% Fuel (709) (426) (67)% Operating costs ex fuel* (1,392) (1,073) (30)% EBITDAR* 262 298 (12)% Finance and ownership* (139) (107) (30)% Pre-tax profit* 123 191 (36)% Margin* 5.2% 10.6% (5.4)ppts Fuel cost per seat - £ 13
Slide 7: Change in pre tax profit per seat build up
Change in pre tax profit per seat build up Pence per seat 900 294p 800 700 600 (149)p Pence per Seat 70p 500 430p 400 300 237p 200 (408)p 100 0 2007 Profit per FX impact Total Revenue Costs excl Fuel Fuel (incl fx) 2008 Profit per Seat * (excl fuel) seat * Sector length grew by 10% in the year, (4%
Slide 8: Good second half revenue performance
Good second half revenue performance £m H2 ‘08 H2 ‘07 Change Total revenue 1,471 1,078 36% Fuel (445) (240) (85)% Operating costs* (775) (579) (34)% EBITDAR* 251 259 (3)% Finance and ownership* (80) (51) (57)% Pre-tax profit* 171 208 (18)% Margin * 11.7% 19.3% (7.6)ppts Fuel cost per seat - £ 15.50
Slide 9: Growth in total revenue per seat
Growth in total revenue per seat F ‘08 F ‘07 Change Passengers (m) 43.7 37.2 17.3% Load factor (%) 84.1% 83.7% +0.4ppts Seats (m) 51.9 44.5 16.8% Total revenue (£m) 2,363 1,797 31.5% Total revenue per seat £45.51 £40.42 12.6% @ constant exchange £43.36 £40.42 7.3% Total revenue per seat quarterly tr
Slide 10: Passenger and ancillary revenues
Passenger and ancillary revenues F ‘08 F ‘07 Change Passenger revenue (£m) 1,996 1,626 23% per seat £38.44 £36.57 5% Ancillary revenue (£m) 367 171 115% per seat £7.07 £3.85 84% Change per seat vs 2007 Baggage / sporting goods 412% Speedy boarding and other 25% discretionary charges Card fees 13% Pa
Slide 11: Cost per seat performance
Cost per seat performance F ‘08 F ‘07 Change Total cost per seat* £43.14 £36.12 (19.4)% Cost per seat ex fuel* £29.49 £26.55 (11.1)% At constant currency (5.6)% Excluding impact of GB Airways fleet (4.3)% Cost per ASK ex fuel (constant 3.7% currency) Sector length mostly impacts crew and navigation
Slide 12: Cost per seat – key drivers at constant currency
Cost per seat – key drivers at constant currency F’08 change Drivers Overheads £3.40 8% Continue to leverage scale Airports / handling £11.74 (4)% Airport price increases e.g. Gatwick Additional charges e.g. PRM Capacity expansion at more expensive airports Navigation £3.77 (4)% Longer sector length
Slide 13: GB Airways gives significant benefits
GB Airways gives significant benefits 4 easyJet now the leading airline at Gatwick 4 Higher revenues and loads at LGW compared to the easyJet average 4 F’08 – savings of over £25m achieved on an annualised basis 4 Elimination of BA franchise fee c.£10m 4 Reduction of ground handling costs 4 Gatwick
Slide 14: Jet hedging position for F‘09
Jet hedging position for F‘09 US$ 1400 per tonne 1300 4 Put forward curve on 66% Forwards $1,146 this charts 1200 1100 Historical monthly prices 1000 900 800 700 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 4 Average effective fuel cost per metric tonne for F‘08 was $948 compared t
Slide 15: US$ hedging position for F‘09
US$ hedging position for F‘09 US$:£ 2.15 4 Put forward curve on this charts 2.05 66% Forwards $1.96 1.95 1.85 5% Collars $1.73 - $1.86 1.75 1.65 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 4 Average effective USD rate was $1.96 in F’08; up from $1.89 in F‘07 4 F’09 cover of requir
Slide 16: Euro hedging position for F‘09
Euro hedging position for F‘09 €:£ 1.50 4 Put forward curve on this charts 1.40 1.30 81% Forwards €1.24 1.20 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 4 Average Euro rate was €1.32 in FY ’08; down from €1.48 in FY ‘07 4 FY ’09 cover of anticipated surplus 81% with forwards at €1
Slide 17: Net income, EPS, ROE
Net income, EPS, ROE £m F ‘08 F‘07 Change Pre-tax loss profit (underlying) 123 191 (36)% One-off acquisition costs (13) - - Airline Group reversal of impairment - 11 - Pre-tax profit (reported) 110 202 (46)% Tax (27) (50) (46)% Net profit 83 152 (45)% EPS (basic) underlying 19.8p 36.6p (46)% ROE und
Slide 18: Modern, fuel efficient fleet
Modern, fuel efficient fleet Sep ’08 Sep ‘07 Change B 737-700 (operating lease) 29 30 (1) A 319 (operating lease) 46 46 - A 319 (finance lease) 6 6 - A 319 (owned) 68 55 13 120 107 13 GB Airways A320 (operating lease) 9 - 9 GB A321 (owned) 7 - 7 16 - 16 Total fleet 165 137 28 Owned or finance lease
Slide 19: Good cash generation
Good cash generation £m £67m £15m (£118m) 1,300 £148m (£300m) 1,200 £47m 1,100 £91m 1,000 £913m* £863m* 900 800 700 600 s ex g * t. r it 7* l ta he ay of in or 8 '0 ap pi '0 nc pr am ot rw ca p c p na Se g .& Ai Se et in & g Fi B N in nt at h n h G k as ep i r as pe or et C D C w ,n O et x Ta N F’09
Slide 20: Strong balance sheet
Strong balance sheet £m Sep ‘08 Sep ‘07 Fixed assets 1,103 936 Cash and money market deposits 863 913 Goodwill and other intangible assets 440 311 Other assets 690 356 Total assets 3,096 2,516 Debt 627 519 Other liabilities 1,191 845 Shareholders’ funds 1,278 1,152 Total equity and liabilities 3,096
Slide 21: Financially resilient
Financially resilient 4 Cash and money market deposits of £863m* 4 Significant financing available at excellent rates (<100bp’s above LIBOR) broadly spread amongst counterparties 4 2006 standby facility $250m 4 December 2007 un-drawn facilities $885m 4 No MAC or financial covenants 4 Facilities avai
Slide 22: Business review
Business review Andy Harrison Chief Executive Officer
Slide 23: Continued focus on the key value drivers
Continued focus on the key value drivers 4 European network development 4 Convenient airports 4 Focus on growing in key markets 4 Broad customer base both geographic and customer type gives resilience 4 Fleet 4 Flexible fleet plan; underpinned by financial resilience 4 Focus on margins 4 Reduce cost
Slide 24: Europe’s No 1 Air transport network
Europe’s No 1 Air transport network 4 Leading presence on the top 100 routes 45 40 2 Number of market pairs Operated between 2 35 4 Gatwick No.1 30 primary airports Other Market pairs 4 Milan No.1 25 20 19 6 1 39 4 Geneva No.1 15 10 29 23 19 17 15 17 13 11 13 4 Paris No.2 5 0 4 No.1 consumer reach l
Slide 25: Network – winter growth focused on key markets
Network – winter growth focused on key markets Rest of UK Paris - 14% +28% Gatwick +20% Milan +91% Stansted Madrid -23% +17% Mainland Europe + 19% Capacity winter 2009, similar to winter 2008 25
Slide 26: Italy – strong opportunity
Italy – strong opportunity Top easyJet routes easyJet load Competing 4 easyJet is the largest airline at from Milan factor airline* load factor Malpensa Average Jan – Average Jan – Aug ’08 Aug ’08 4 15 based aircraft Paris CDG 88% 56% 4 3.2 million passengers London 86% 65% 4 Expanding network Naple
Slide 27: Spain – market improving at Madrid
Spain – market improving at Madrid 4 Capacity reducing minus 13% vs Load factor Winter ‘09 (6 mth average 4 Spanair, Iberia reductions Mar – Aug ’08) 4 Consolidation evident; Vueling, easyJet 83% clickair Iberia 80% Ryanair 78% 4 Improvement in easyJet load Spanair 71% factor and revenue per seat Vu
Slide 28: France – continued progress
France – continued progress Top easyJet easyJet load Competing 4 Growth in Paris routes from Lyon factor airline* load factor 4 28% growth in passengers (Summer Average Average 2008 vs Summer 2007) Apr– Oct ’08 Apr– Oct ’08 4 10 based aircraft Bordeaux 67% 55% 4 11 new routes: 9 leisure and 2 busine
Slide 29: UK – focusing growth in key markets
UK – focusing growth in key markets. Top easyJet easyJet load Competing 4 Growing at Gatwick plus 20% routes from Belfast factor airline load factor 4 Building on market leadership (6 mth average (6 mth average 4 Growing to 36 based aircraft Apr – Aug ’08) Apr – Aug ’08) 4 4 new business routes this
Slide 30: Flexible fleet plan
Flexible fleet plan 4 Current plan is for 77 deliveries over the next three years 4 50% are replacement for expensive aircraft exiting the fleet 4 Sale of seven A321 and five A319 progressing but financing market difficult 4 Growth flexible beyond F’09 4 Up to 50% of orders can be deferred for 2 yea
Slide 31: Focus on margins – reduce costs
Focus on margins – reduce costs 4 Headwinds from airport charges, wage inflation and GB ownership costs 4 Aggressive approach to cost management to drive savings of £125million p.a Ownership 4 Higher cost aircraft exit 4 Target £40m p.a. by F’11 Maintenance 4 In sourcing programme to drive savings 4
Slide 32: Focus on margins – maximise revenue
Focus on margins – maximise revenue Performance manage the network - limit downside; capture opportunities 4 24 routes added (4 new network points) 4 8 Italian routes from Milan and Rome 4 5 Paris including Orly to Budapest 4 5 Scandinavian routes added 4 24 non-performing routes culled 4 6 Dortmund
Slide 33: Focus on margins – maximise revenue
Focus on margins – maximise revenue 4 Winter capacity continues to reduce: 4 Air France minus 3.6% 0% 4 Alitalia minus 21.9% -1% Total Europe easyJet routes Comps on easyRoutes 4 BA minus 7.3% (4.2)% -2% (4.9)% 4 Clickair minus 25.1% 4 easyJet – flat overall (some winter months negative) -3% (7.2)%
Slide 34: Forward bookings currently ahead of prior year
Forward bookings currently ahead of prior year F'09 F'08 % seat sold 80 70 60 50 40 30 20 10 0 November December January February March Total revenue per seat currently slight ahead of prior year 34
Slide 35: Outlook
Outlook 4 In order to limit margin dilution over the winter from the impact of higher fuel costs easyJet has withdrawn lower yielding flights, and as a result aircraft utilisation this winter will fall to an average 9 hours a day from 11.6 hours in the previous winter. 4 easyJet’s capacity for the w
Slide 36: Summary
Summary 4 2009 will be tough and uncertain 4 Very weak consumer environment 4 Uncertainty over scale and timing of competitor reductions 4 Volatility of fuel and US dollar 4 easyJet strongly positioned 4 Strong, low cost highly efficient organisation with scale benefits 4 Europe’s No.1 air transport
Slide 37: Disclaimer
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
Slide 38: Questions and answers
Questions and answers
Slide 39: Appendices
Appendices
Slide 40: Cost per seat analysis
Cost per seat analysis £ per seat Change vs F’07 F ‘08 Reported Constant currency Overheads 3.40 10% 8% Airports / handling 11.74 (13)% (4)% Navigation 3.77 (18)% (4)% Crew 5.07 (10)% (8)% Maintenance 2.84 (29)% (26)% Ownership 2.67 (11)% (13)% Fuel 13.65 (43)% (41)% Total * 43.14 (19)% (15)% Total
Slide 41: Key measures per ASK
Key measures per ASK pence F ‘08 F ‘07 Change Reported Constant currency Total revenue 4.24 4.13 3% (2)% Fuel (1.27) (0.98) (30)% (28)% Costs ex fuel* (2.75) (2.71) (1)% 4% Profit 0.22 0.44 (50)% (58)% Average sector length (km) 1,073 978 9.6% * Excludes £12.9m of one-off integration costs for GB Ai