easyJet plc · LSE:EZJ
easyJet — FY2007 Earnings Presentation
33 slides from easyJet's earnings presentation, Nov 20, 2007
Slide 1: Preliminary Results
20th November 2007 «x x me * Preliminary aK Results +x = Turning Europe orange easyJet con * « *
Slide 2: Highlights
Highlights Strong improvement in underlying financial performance 4 Revenue + 11 % 4 Profit before Tax + 48 % 4 PBT Margin + 2.7 pp 4 Earnings per Share + 50 % 4 Return on Equity + 3.5 pp 4 Net cash flow from operating activities + 20 % 2
Slide 3: Highlights
Highlights 15.0% 200 PBT (£m) ROE % 191 13.6% 12.0% 150 9.0% 10.1% 129 100 6.0% 7.2% 7.1% 6.4% 79 83 69 50 3.0% 0 0.0% 1905 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 1905 2003 2004 2004 2005 2005 2006 2006 2007 2007 Profit and return on equity momentum continues 3
Slide 4: Highlights – Turning Europe Orange
Highlights – Turning Europe Orange 4 Fleet Growth 4 20 A319s delivered in the year 4 14% capacity growth (flown seats) 4 137 aircraft at 30 September, 107 A319s; 30 737-700s 4 European network optimisation 4 Opened 17th base at Madrid 4 19 routes culled, 46 new routes launched 4 Flying 289 routes th
Slide 5: Profit performance
Profit performance £m 2007 2006 Change Total revenue 1,797 1,620 + 11% Operating costs (1,499) (1,341) + 12% EBITDAR 298 279 + 7% Finance and ownership (107) (150) -29% Underlying profit before tax 191 129 +48% NATS / Airline Group 11 Profit before tax 202 129 + 56% Margin (underlying) 10.6% 7.9% +2
Slide 6: Passenger revenue
Passenger revenue 2007 2006 Change Passengers (m) 37.2 33.0 + 13% Load factor 83.7% 84.8% -1.1pp Seats (m) 44.5 38.9 + 14% Ticket revenue (£m) 1,626 1,488 + 9% Per seat £36.57 £38.28 - 4.5% Revenue per pax £43.67 £45.17 -3.3% Gross Revenue per pax £47.87 £47.71 +0.3% Yields impacted by doubling of A
Slide 7: Ancillary revenues
Ancillary revenues 2007 2006 Change Ancillary revenue (£m) 171 131 +30% Per seat £3.85 £3.38 +14% Change per seat 2007 4.00 Per seat (£) Card fees - 1% 3.85 3.50 Fees & Charges (incl. + 26% 3.38 3.00 Speedy Boarding) Partner + 20% 2.50 2.51 Baggage / Sporting + 31% 2.00 2.14 2.14 goods 1.50 In-fligh
Slide 8: Cost per seat
Cost per seat Cost/seat Change vs Change vs 2007 2006 2006 Ownership £ 2.40 - 37% - £1.44 Maintenance £ 2.21 - 22% - £0.61 Better Overheads £3.77 - 9% - £0.35 Fuel £ 9.57 - 4% - £0.41 Airports / handling £ 10.39 + 0% + £0.04 Worse Navigation £ 3.19 + 2% + £0.07 Crew £ 4.59 + 12% + £0.47 Total £ 36.1
Slide 9: Aircraft ownership
Aircraft ownership Change in cost per seat £0.50 £- -£0.50 -£1.00 - 144p -£1.50 -£2.00 2003 2004 2005 2006 2007 4 Improving fleet mix 4 A319s represent 78% of fleet (71% last year) 4 737-300s returned with lower than expected cost 4 Reducing financing cost 4 Benefit from weaker USD (effective rate $
Slide 10: Maintenance
Maintenance Change in cost per seat £0.25 £- -£0.25 -£0.50 - 61p -£0.75 2003 2004 2005 2006 2007 4 Benefit from new GE engine maintenance deal 4 One off catch up at new rates 4 On going savings 4 Benefit from the elimination of B737-300s from fleet and mix change to owned A319s 4 Benefit from weaker
Slide 11: Airports and ground handling
Airports and ground handling Change in cost per seat £1.50 £1.00 £0.50 + 4p £- -£0.50 2003 2004 2005 2006 2007 4 Effect of STN increased rates from April 2007 4 Adverse mix variance with more flying to primary airports (CDG, AMS and MAD) 4 Full year benefits from ground handling savings in Spanish a
Slide 12: Crew
Crew Change in cost per seat £0.50 £0.25 + 47p £- -£0.25 -£0.50 2003 2004 2005 2006 2007 4 Higher than normal winter recruitment and training costs to address Summer 2006 crew shortages 4 Net increase in headcount by 363 pilots 4 Flight deck and cabin crew pay deals add 17 pence per seat Opportuniti
Slide 13: Overheads
Overheads Change in cost per seat £0.50 £- - 35p -£0.50 -£1.00 -£1.50 2003 2004 2005 2006 2007 4 Hangar 89 move completed on time and on budget 4 Reduction in insurance rates, 14 pence per seat 4 Call centre outsourcing, one off costs taken in 2007 Maintain overhead costs at current levels to levera
Slide 14: Net income, EPS and ROE
Net income, EPS and ROE £m 2007 2006 Change Pre-tax profit 202 129 + 56% Tax 50 35 + 41% Effective rate 25% 27% Net profit 152 94 + 62% EPS 36.6p 23.2p + 58% ROE 14.3% 10.1% +4.2pp * Underlying 15% ROE 13.6% Pre-tax profit 191 10% 10.1% Net profit 145 7.2% 7.1% 5% EPS 34.8p 0% ROE 13.6% 2004 2005 20
Slide 15: Strong balance sheet
Strong balance sheet £m Sep 07 Sep 06 Fixed Assets 936 696 Cash & money market deposits 913 861 Goodwill 310 310 Other assets 357 322 Total assets 2,516 2,189 Debt 519 480 Other liabilities 845 726 Shareholders’ funds 1,152 983 Total equity and liabilities 2,516 2,189 Gearing* 20% 31% *Gearing defin
Slide 16: Good cash generation
Good cash generation 1,200 £69m (£17m) 1,100 £66m £34m 1,000 £172m (£272m) 900 £913m £861m 800 Cash EBIT Depn / Wk Tax, Net Financing Net capex Cash & 9/06 amort capital int. & Money Other Mkt Deps 9/07 10 aircraft cash acquired in the year to September 2007 16
Slide 17: Aircraft financing
Aircraft financing Fleet Ownership Sep 2005 Sep 2006 Sep 2007 B737-700 Op. Leased 32 32 30 B737-300 Op. Leased 22 3 - A319 Op. Leased 37 43 46 Fin. Leased - 6 6 Owned 18 38 55 Mortgage Debt 18 35 42 Cash Acquired - 3 13 Total A319 55 87 107 Total Fleet 109 122 137 Operating Leases 83% 64% 55% Owned
Slide 18: Jet hedging summary – FY08
Jet hedging summary – FY08 Jet Hedging Position Oct 07 to Sep 08 820 Price 780 Hedge 40% Hedged @ max $735 740 T 700 USDperM 660 620 580 540 Oct- Dec- Feb- Apr- Jun- Aug- Oct- Dec- Feb- Apr- Jun- Aug- 06 06 07 07 07 07 07 07 08 08 08 08 4 Average effective cost per metric tonne $688 in 2007, up 4.4%
Slide 19: FX hedging summary – FY08
FX hedging summary – FY08 Forex Hedging Position Oct 07 - Sep 08 2.20 Rate Hedge 2.10 USDper MT 2.00 68% Hedged @ 1.95 1.90 1.80 Oct- Dec- Feb- Apr- Jun- Aug- Oct- Dec- Feb- Apr- Jun- Aug- 06 06 07 07 07 07 07 07 08 08 08 08 4 Average USD rate in 2007 was $1.89, up from $1.79 in 2006 4 Around 40% of
Slide 20: Business Review
Business Review 20
Slide 21: Turning Europe Orange
Turning Europe Orange 4 Fleet Growth 4 120 A319 orders with 88 options 4 Medium term organic growth at 15% 4 GB Airways introduces additional gauges, A320 and A321 4 European network optimisation 4 Announced doubling of French capacity; CDG and LYS bases 4 GB Airways builds presence at Gatwick 4 Pan
Slide 22: Fleet growth
Fleet growth 250 216 Year End Fleet Size 200 190 164 GB 150 137 A319 122 109 B700 100 92 B300 74 50 0 2003 2004 2005 2006 2007 2008 2009 2010 4 Capacity growth 2007/08 4 Seats +12% (+18% with GB Airways) 4 ASKs +16% (+30% with GB Airways) 4 Average age of fleet 2.7 years 4 GB Airways; 9 A320s and 6
Slide 23: European network - today
European network - today 4 30% of our total network capacity is now deployed at our mainland European bases (up from 23% in 2006) 4 Developing a unique pan - European network which appeals to all key customer segments Need BSL 4 4 Low fares 4 Convenient airports 4 Quality schedule 4 Performance Mana
Slide 24: European network - customers
European network - customers Business VFR & Short breakers Long breakers people Commuters Low fares Low fares Low fares Low fares Convenient Convenient Convenient Convenient airports airports airports airports Right times of day Right times of day Right times of day Right times of day Range of Range
Slide 25: European network - competition
European network - competition * Using scheduled capacity market share from CAA and OAG data UK market share 18%; Continental Europe market share 2% 25
Slide 26: European network – quality focus
European network – quality focus London GB Airways takes easyJet to 24% of Gatwick slots After 6 years, number 1 at Gatwick with over 8m passengers and 33 aircraft (inc 13 GB Airways) Milan 7 aircraft based at Malpensa after 18 months, commitments to increase to 15 aircraft by end of 2008 Weak legac
Slide 27: European network - coverage
European network - coverage 300 289 Consumers (m) 273 250 240 226 200 194 150 161 100 easyJet Ryanair KLM Air France Lufthansa British Airways 289m consumers within 60 minutes drive time of an easyJet airport – Europe’s number 1 transport network 27
Slide 28: Understanding the network strategy
Understanding the network strategy Legacy airline easyJet now easyJet future Hub-dependent Base-dependent Independent routes: routes routes More customer choice, at lowest cost (highest aircraft utilisation, lowest crew cost) 28
Slide 29: GB Airways purchase
GB Airways purchase 4 LGW: 4 easyJet’s largest base 4 attractive yields 4 large, high income catchment area 4 slot constrained 4 GB: 4 profitable, well-run airline, albeit with margins constrained by franchise relationship 4 high overheads and high aircraft ownership costs 4 already transitioning to
Slide 30: Improving margins - cost opportunities
Improving margins - cost opportunities 31.00 Cost per seat excl. fuel (£) 30.76 30.03 29.00 28.78 28.36 27.00 26.55 25.00 2003 2004 2005 2006 2007 4 Fleet mix and financing: 30 x 737-700 returns and increasing on balance sheet financing 4 Ground handling efficiencies to offset Airport inflation 4 Ne
Slide 31: Improving margins - initiatives
Improving margins - initiatives 4 Speedy boarding 4 Successful roll-out across whole network 4 FY08 check-in enhancement at selected airports 4 First bag charge launched for flying from 1 October 2007 4 Dynamic packaging of hotels and easyJet Holidays site launched June 2007 4 GDS agreement announce
Slide 32: Outlook
Outlook 4 This winter we expect total revenue per seat to be broadly in line with last year 4 For summer 2008 we expect the effect of annualising APD, checked bag charges and growing ancillary revenues to result in total revenue per seat being slightly ahead of the previous year 4 High fuel costs wi
Slide 33: This communication is directed only at investment professionals
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