easyJet plc · LSE:EZJ
easyJet — H1 2010 Earnings Presentation
36 slides from easyJet's earnings presentation, May 11, 2010
Slide 1: Interim results
Interim results 11 May 2010
Slide 2: Introduction
Introduction Andy Harrison Chief Executive Officer
Slide 3: Strong performance despite disruption
Strong performance despite disruption Improvement in revenue, margins and cash Continued network improvement has driven better than expected revenue performance +0.8% per seat at constant currency Underlying yields steadily improving Passenger numbers grew by 10.6%; load factor improved by 2.1
Slide 4: Strong performance despite disruption
Strong performance despite disruption First half snow disruption caused additional cost and lost contribution of £25m; 2,938 flights cancelled affecting 380,000 passengers Volcanic disruption to date; 6,512 flights cancelled affecting 850,000 passengers 200,000 stranded passengers repatriated
Slide 5: Finance review
Finance review Mark Adams Chief Financial Officer
Slide 6: Financial results
Financial results £m H1 '10 H1 '09 Change Total revenue 1,170.7 1,032.8 13.3% Fuel 305.4 356.5 14.3% Operating costs excluding fuel 842.5 717.2 (17.5)% EBITDAR 22.8 (40.9) 155.7% Finance and ownership (101.5) (88.9) (14.1)% Pre-tax loss (underlying) (78.7) (129.8) 39.4% Margin* (6.7)% (12.6)% 5.9ppt
Slide 7: Net income, EPS, ROE
Net income, EPS, ROE £m H1 '10 H1 '09 Change Pre-tax loss (underlying) (78.7) (129.8) 39.4% Profit on sale of aircraft - 13.3 - Pre-tax loss (reported) (78.7) (116.5) 32.5% Tax credit 19.8 30.6 (35.3)% Net loss (58.9) (85.9) 31.4% Loss per share (basic reported) (13.9) pence (20.4) pence 31.5% ROE %
Slide 8: Change in pre-tax result per seat
Change in pre-tax result per seat 2009 loss Currency Revenue Costs ex Weather Interest Fuel 2010 loss per seat * ex fuel fuel & Disruption income per seat* interest income Pence 314p per seat (311)p 37p (68)p 89p (82)p (47)p (554)p * Underlying number; finance and ownership excludes a £13.3m profit
Slide 9: Disruption
Disruption Snow Volcano* Period of impact H1 ‘10 H2 ‘10 Sectors cancelled 2,938 6,512 Passengers disrupted 380,000 850,000 Lost contribution £4m £20m Additional cost (contact centre, de-icing costs) £10m £10m Customer compensation £11m £20m to £45m Total profit impact £25m £50m to £75m *Figures corr
Slide 10: Impact from currency
Impact from currency Currency split - total revenues Currency split - total costs other 2% US dollar 33% euro 34% euro 47% sterling 44% other 1% swiss franc swiss 4% franc 6% sterling 28% Effective rates: dollar - H1’10 1.72 v H1’09 1.82; euro - H1’10 1.12 v H1’09 1.20 H1 '10 H1 '09 Change Total rev
Slide 11: Strong growth in total revenue per seat
Strong growth in total revenue per seat H1 '10 H1 '09 Change Passengers (m) 21.5 19.4 10.6% Load factor (%) 85.0 82.9 2.1ppt Seats (m) 25.3 23.4 7.9% Sector length (km) 1,072 1,057 1.4% Total revenue (£m) 1,170.7 1,032.8 13.3% Total revenue per seat £ 46.35 44.12 5.1% @ constant currency 44.49 44.12
Slide 12: Passenger and ancillary revenues
Passenger and ancillary revenues H1 '10 H1 '09 Change Passenger revenue (£m) 912.4 819.2 11.4% per seat £36.12 £35.00 3.2% Ancillary revenue incl. checked bag (£m) 258.3 213.6 20.9% per seat £10.23 £9.12 12.1% Ancillary revenue excl. checked bag (£m) 150.6 123.3 22.1% per seat £5.96 £5.27 13.2% Chan
Slide 13: Cost per seat analysis
Cost per seat analysis £ per seat Change vs H1’09 H1 '10 Reported Constant currency Maintenance 3.08 -5.0% -6.0% Ownership 4.02 +5.8% -1.2% Crew 6.20 +0.6% -1.2% Navigation 4.47 +6.9% +2.0% Airports / handling 14.79 +7.8% +4.2% Overhead & other costs 4.82 +44.9% +48.7% Total (ex fuel)* 37.38 +8.6% +
Slide 14: Cost per seat - key drivers at constant currency
Cost per seat - key drivers at constant currency change** drivers Maintenance -6.0% Benefiting from new arrangements with SRT and fewer leased aircraft Ownership -1.2% Exit of Boeing 737-700 from fleet offsetting reduction in interest income of £11million Crew -1.2% Crew productivity initiative
Slide 15: Fuel and currency impact
Fuel and currency impact H1 '10 H1 '09 Difference Fuel $ / tonne * market rate 662 646 16 effective price 744 1,003 (259) US dollar rate market rate 1.60 1.55 5 cents effective price 1.74 1.82 (8) cents Actual cost of fuel £/ tonne 429 552 (123) £123 per tonne is equivalent to £80 million benefit v
Slide 16: F'10 hedging positions and sensitivities
F’10 hedging positions and sensitivities Hedging position: 62% of anticipated US dollar requirement hedged using forwards at $1.70 78% of anticipated fuel requirement hedged using forwards at $743/MT 83% of anticipated euro surplus hedged using forwards at €1.15 Sensitivities*: $10 move in u
Slide 17: F'11 hedging position and sensitivities
F’11 hedging position and sensitivities Hedging position: 42% of anticipated US dollar requirement hedged using forwards at $1.62 41% of anticipated fuel requirement hedged using forwards at $740/MT 52% of anticipated euro hedged using forwards at €1.09 Sensitivities*: $10 move in un-hedged
Slide 18: Net increase of eight aircraft in the fleet
Net increase of eight aircraft in the fleet March ‘10 Sept ‘09 Change B 737-700 (operating lease) 11 17 -6 A319 (operating lease) 46 46 - A319 (finance lease) 6 6 - A319 (owned) 97 88 +9 A320 (operating lease) 5 - +5 A320 (owned) 16 15 +1 170 155 +15 GB Airways A320 (operating lease) 4 5 -1 GB A321
Slide 19: Good cash generation
Good cash generation £m £205m (£246m) 1,600 1,500 £34m £318m £1,358m 1,400 1,300 £1,131m £1,075m 1,200 £(66)m 1,100 £38m 1,000 900 ex r g ss t. * * l 09 ta he 09 in or 10 ap lo pi 20 nc ot am 20 20 ca g C na & h in p c & h g t Se x Fi ar ra c in .f n ar M k pe ep nt h or M as h ti O D w as h ne C as
Slide 20: Strong balance sheet
Strong balance sheet £m Mar ‘10 Sep ‘09 Fixed assets 1,739 1,612 Cash and money market deposits 1,358 1,075 Goodwill and other intangible assets 450 447 Other assets 585 539 Total assets 4,132 3,673 Debt 1,276 1,121 Other liabilities 1,514 1,245 Shareholders’ funds 1,342 1,307 Total equity and liabi
Slide 21: Business review
Business review Andy Harrison Chief Executive Officer
Slide 22: Continued focus on drivers of margin
Continued focus on drivers of margin Yield Focus on asset allocation to build a quality network Continual route performance management and network optimisation Underlying fares showing steady improvement Ancillaries Potential for continued growth albeit some headwinds Cost Drive cost
Slide 23: Clear leadership in key primary airports
Clear leadership in key primary airports No.1 or 2 positions in primary airports located in the top 100 markets easyJet Lufthansa 18 SAS 16 15 Air France Ryanair 13 Alitalia 11 11 Air Berlin 9 9 9 9 9 9 Iberia 8 8 8 8 7 7 7 7 British Airways 6 6 6 Vueling 5 5 5 4 3 2 2 FY07 FY08 FY09 23
Slide 24: Lowest fares to the most convenient airports
Lowest fares to the most convenient airports Proportion of total capacity touching Geographic origination of revenue H1‘10 constrained airports Northern Europe Other Other Northern Europe 17% 17% 1% 1% 84% UKUK 45% 81% 45% 77% SouthernSouthern Europe Europe 37% S08 S09 S10 37% Increasing presence
Slide 25: Targeted summer growth
Targeted summer growth Focus on Gatwick and Mainland Europe France Rest of UK +16% -3% Germany +24% Gatwick Italy +11% +16% Spain +7% Mainland Europe +15% easyJet capacity up 10%, competitor capacity growth on easyJet routes is up 2% Source: OAG Figures pre volcanic ash disruption 25
Slide 26: Network – continual improvement
Network – continual improvement Focus on driving up RoE by optimising asset allocation and route performance Summer season * Closed East Midland base 60.0% Focus on optimising peak summer by 50.0% redeploying capacity from business routes to sun markets) 40.0% 73 new routes added for S10 30.
Slide 27: Ancillaries potential for further growth
Ancillaries potential for further growth Targeting 50 pence per seat growth per annum: Hotels and car hire currently impacted by macro factors Insurance revenues impacted by recent legislation In-flight and Speedy Boarding revenue growing Modest increases in indirect pricing Strong track rec
Slide 28: Good progress on cost reduction initiatives
Good progress on cost reduction initiatives Target savings p.a. by F’12 Ownership - exit expensive aircraft from fleet £30m Maintenance - in-sourcing, SRT deal & further contract £35m renegotiation, efficiency projects Overheads - leverage scale £10m Airports & Handling – handing & volume deals, che
Slide 29: Efficient fleet management
Efficient fleet management 31 March 2010 30 Sept 2010 30 Sept 2011 30 Sept 2012 A319 149 159 163 173 A320 21 23 35 35 A320 GB spec 4 2 - - A321 GB spec 4 - - - B737 11 8 2 - Total 189 1 192 200 208 Flexible fleet plan Anticipated average annual growth rate of 7.5% per annum Fleet plan can be a
Slide 30: Forward bookings
Forward bookings % seats sold * F'10 F'09 May June July August September 47% of second half seats sold, slightly ahead of same point in the prior year Slow incremental improvement in underlying fares ahead of volcanic disruption Growth in second half total revenue per seat at constant currency
Slide 31: Outlook
Outlook Capacity, measured in seats flown, for the second half of the year, is expected to increase by 7%, giving an increase of around 7.5% for the full year compared to 2009. This is lower than the planned 10% growth due to the impact of volcanic ash related disruption. The majority of the growt
Slide 32: Summary
Summary easyJet continues to trade well Economic environment and unexpected events present challenges easyJet strongly positioned Europe’s No.1 air transport network Strong, focused organisation to deliver cost savings Financially resilient Medium term - focused growth with margin impr
Slide 33: Questions and answers
Questions and answers
Slide 34: Appendices
Appendices
Slide 35: Key measures per ASK
Key measures per ASK pence H1 '10 H1 '09 Change Reported Constant currency Total revenue 4.32 4.17 +3.6% -0.5% Fuel 1.13 1.44 -21.7% -27.6% Costs ex fuel* 3.49 3.26 -7.0% -4.3% Underlying loss* (0.29) (0.52) -44.6% -45.0% Average sector length (km) 1,072 1,057 1.4% - * Underlying number; operating c
Slide 36: Gearing analysis
Gearing analysis 31 Mar 30 Sept 2010 2009 £m £m Debt (1) 1,276 1,121 Cash (1,358) (1,075) Restricted cash (101) (72) Total cash (2) (1,459) (1,147) Previous 12 months lease cost 105.7 116.2 Lease costs x 7 (3) 740 813 Net debt (D) (1) + (2) + (3) 557 787 Equity (E) 1,342 1,307 Gearing (D/D+E) 29.4%