Slide 1: Half Year Results Analyst and Investor Presentation
Half Year Results Analyst and Investor Presentation Tuesday 13 May 2014
Slide 2: Introduction
Introduction Carolyn McCall Chief Executive Officer
Slide 3: Strategy is delivering
Strategy is delivering Revenue performance in line with expectations Improving loss per seat and margins Relentless focus on maintaining 0 0% 2011 2012 2013 2014 cost advantage -1 -2% -2.04 -1.70 Continuing to develop customer -4% PBT / seat -2 -3.1% PBT margin -3.8% offering -3.87 -6% -3 -8%
Slide 4: Financial review
Financial review Chris Kennedy Chief Financial Officer 4
Slide 5: Loss before tax reduced
Loss before tax reduced Loss per seat bridge 0.38 -1.70 0.07 -2.04 0.07 0.45 0.93 0.29 0.83 1.60 H1 2013 Easter Revenue Fuel Costs De-icing FX easyJet A320 Mix H1 2014 and Lean disruption Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 5
Slide 6: Financial results
Financial results H1’14 H1’13 Change Total revenue 1,702 1,601 6.3% Fuel (537) (496) (8.3%) Operating costs excluding fuel (1,101) (1,042) (5.6%) EBITDAR 64 63 1.2% Ownership costs (117) (124) 6.1% Loss before tax (53) (61) 13.6% EBITDAR Margin 3.7% 3.9% (0.2ppt) Loss before tax margin (3.1%) (3.8%)
Slide 7: Financial results: Loss after tax reduced
Financial results: Loss after tax reduced £m H1’14 H1’13 Change Loss before tax (53) (61) 13.6% Tax charge 12 14 (20.2%) Loss after tax (41) (47) 11.5% Loss per share 10.4p 12.0p 13.3% Return on capital employed* (1.2%) (0.9%) (0.3ppt) Footer box on intersect of lines line h=8.03 9 and v=8.75 with f
Slide 8: Continuing revenue per seat growth
Continuing revenue per seat growth £m H1’14 H1’13 Change Passengers (m) 27.6 26.6 4.0% Load factor (%) 89.0% 88.6% +0.4ppt Seats (m) 31.1 30.0 3.6% Average sector length (km) 1,074 1,042 3.1% Total revenue (£m) 1,702 1,601 6.3% Total revenue per seat (£) 54.80 53.39 2.6% @ constant currency (£) 54.1
Slide 9: easyJet strategy delivers further revenue growth
easyJet strategy delivers further revenue growth Year on year drivers of revenue per seat change (£/Seat) 0.64 54.80 0.28 1.32 • Disciplined capital 53.39 0.83 allocation • Revenue Management System initiatives • Longer sector length • Increased load factor • Business • Digital Footer box on interse
Slide 10: Neutral currency impact
Neutral currency impact Currency split – total revenue Currency split – total costs Sterling Euro 26% 33%34% 35% Euro 44% 44% Sterling 5% Swiss Franc 1% 1% Other 1% 3% 8% 35% 25% USD Other Swiss Franc USD H1’14 currency impact favourable / (adverse) £m EUR CHF USD Total Revenue 17 3 - 20 Fuel (1)not
Slide 11: Impact of fuel
Impact of fuel H1’14 H1’13 Change B/(W) Fuel $ per metric tonne Market rate 994 1,041 47 Effective price 993 988 (5) US dollar rate Market rate 1.64 1.59 5 cents Effective price 1.58 1.61 (3 cent) Actual cost of fuel £ per metric tonne 629 613 (16) Cost per metric tonne is broadly flat, however chan
Slide 12: Cost per seat excluding fuel - key drivers
Cost per seat excluding fuel - key drivers £ var at % var at Favourable/ £ Cost per constant constant Drivers (Adverse) seat ex fuel currency currency • Decrease in de-icing costs following the milder weather conditions Airports and Ground 15.20 0.38 2.5% • Lean initiatives savings Handling • Annual
Slide 13: Management actions taken to control costs
Management actions taken to control costs Cost per seat bridge Airports & Ground Handling – £0.29 0.57 56.93 0.45 Fuel burn initiatives - £0.07 0.07 0.09 56.50 0.38 0.44 0.29 0.40 55.43 H1 2013 Regulated Inflation De-icing & Fuel FX Before easyJet Lean A320 Mix Other H1 2014 Airports disruption Mark
Slide 14: Increasing proportion of A320's
Increasing proportion of A320’s H1’14 H1’13 Change A319 (operating lease) 54 49 5 A319 (owned / finance lease) 99 105 (6) A319 Total 153 154 (1) A320 (operating lease) 18 14 4 A320 (owned / finance lease) 49 42 7 A320 Total 67 56 11 Total fleet 220 210 10 Operating lease 33% 30% 3ppt Percentage unen
Slide 15: Flexibility in fleet planning
Flexibility in fleet planning Maximum, minimum and base case fleet size under new framework agreement Contracted Max Base Case Contracted Min 303 300 289 290 269 263 284 284 248 272 277 239 263 269 226 248 239 234 238 235 226 191 187 177 173 170 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 Footer bo
Slide 16: Strong balance sheet, low gearing
Strong balance sheet, low gearing £m H1’14 H1’13 Property, plant and equipment 2,416 2,192 Goodwill and other intangible assets 477 456 Other assets 399 554 Liabilities (excluding debt) (2,080) (1,968) 1,212 1,234 Debt 620 761 Cash and money market deposits (1,069) (1,194) Net cash (449) (433) Share
Slide 17: Cashflow
Cashflow £m Self funding ordinary dividend and capex 457 42 133 218 175 1,237* 53 57 43 2 20 1,069* Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Sep 2013 Operating Depn & Net working Tax, net Ordinary CAPEX Special Borrowings Restricted FX Mar 2014 loss amo
Slide 18: Fuel and foreign exchange hedging
Fuel and foreign exchange hedging US dollar Fuel requirement Euro Surplus requirement Six months ending 30 80% @ $963 / September 2014 91% @ $1.58/£ 77% @ €1.20/£ metric tonne Full year ending 30 79% @ $980 / September 2014 89% @ $1.58/£ 78% @ €1.20/£ metric tonne Full year ending 30 67% @ $950 / Se
Slide 19: Business review
Business review Carolyn McCall Chief Executive Officer
Slide 20: Macro-economic environment in Europe is improving
Macro-economic environment in Europe is improving Real GDP Growth for easyJet markets Low-cost carriers European growth Scandinavia 4.0% (+3.3%) UK 2.9% CEE 2.5% Switzerland 2.2% Germany 2.0% 17 2% 2014 Eurozone 1.1% France LCC # Intra 0.7% Spain 0.6% European Italy 0.6% Seats (m) 124% 22% 6% 283 Sc
Slide 21: Structural growth opportunities remain available
Structural growth opportunities remain available Supply and demand in balance in European short-haul aviation • Currently in balance and Passengers on European short-haul 600 expected to remain so for some c.+3% time 400 (Million) • IATA forecast an incremental 60 200 and 70 million passengers by 0
Slide 22: easyJet is best positioned
easyJet is best positioned Market positions Asset utilisation No.1 No.2 Other 14 Load Factor Aircraft Utilisation 92% 90% 12 88% Aircraft utilisation2 Load factor 19m 10 86% 84% 27% 8 82% 33m 6 80% 78% 48% 4 76% 17m 2 74% 72% 24% 0 70% Majority of easyJet’s capacity is in airports where it has No.1
Slide 23: Capacity increasing but still disciplined
Capacity increasing but still disciplined Capacity growth H2’14 vs. H2’13 (OAG) + 3.0 ppt +3.0ppt 6.7% Summer 13 - 0.8 ppt 5.8% Q3 Summer 14 + 3.5 ppt +3.0ppt 5.0% Flybe slots 2.6% 4.1% 3.7% ++3.9ppt 3.9 ppt 2.9% 0.6% -1.0% Capacity change total Short easyJet capacity change Competitors on easyJet C
Slide 24: easyJet continues to make travel easy and affordable
easyJet continues to make travel easy and affordable Strategy relevant for current environment CAUSE Make travel easy & affordable 1. Build strong number 1 and 2 network positions 2. Maintain cost advantage 3. Drive demand, conversion and yield across Europe 4. Disciplined use of capital Footer box
Slide 25: Strength of the network - Gatwick Network
1. 1. Strength of the network - Gatwick Network easyJet’s performance at Gatwick provides clear evidence that a #1 position provides the platform to deliver growth and sustainable returns easyJet at Gatwick • Cost advantage vs. key competitors • Large and affluent core catchment area – • Slot portfo
Slide 26: Building presence - France
1. 1. Building presence - France Network easyJet has grown and transformed its presence and perception in France Strong public and political reputation • Built a strong presence in international and domestic market Opportunity • Outbound demand in regional France • Now operate 5 bases in France • Pa
Slide 27: New opportunities across Europe
1. 1. New opportunities across Europe Network Disciplined growth in core markets at the heart of easyJet’s strategy • Opportunities available in core markets for easyJet • Recent base openings in Opportunity Naples and Hamburg LCC • 2 aircraft in Naples and 2 in Hamburg • Now operate 3 bases in Ital
Slide 28: Investing for growth
1. 1. Investing for growth Network Other LCC EZJ 46m seats Overall c. 6.7% capacity growth over Summer 14 (before disruption) 51m seats Non-LCC transfer (est) 26m seats Non-LCC P2P (est) 86m seats Market growth Competitor growth on easyJet growth in easyJet’s markets the market United Kingdom +6.3 %
Slide 29: Maintain cost advantage - Airports
2. 2. Maintain cost advantage - Airports Cost Advantage Commercial deals at key airports • 7 year deal • 10% increase in traffic in next 12 months • 10 year growth deal • Double passengers using the airport to over 9 million per year • Long term growth deal • Ensuring price certainty over 5 year per
Slide 30: Maintain cost advantage - Fleet
2. Cost 2. Maintain cost advantage - Fleet Advantage Delivering sustainable cost savings Improving the fleet mix 300 • A320 aircraft providing a 7% - 250 8% cost per seat saving over 200 an A319 Fleet Size 150 • New generation A320neos to 100 enter the fleet in 2017 50 providing a further 4%-5% cost
Slide 31: Continuing to lead the way in Digital
3. 3. Continuing to lead the way in Digital Demand Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Delivering an enhanced customer experience 31
Slide 32: Developing the product
3. 3. Developing the product Demand Key partnerships helping develop the easyJet product • 7 new websites in key markets with extensive portfolio of hotels across the 7 countries • Large UK market of 24 million holidaymakers (9 million package) • Large European potential (85% of all European holiday
Slide 33: Continuing to drive Business travel
3. 3. Continuing to drive Business travel Demand • Enhanced route offerings including additions such as Gatwick to Network Brussels, Paris and Tel Aviv • Base openings at Hamburg and Naples, increasing capacity and adding new routes • All 3 GDS partners are actively driving adoption of their improve
Slide 34: Track record of disciplined use of capital
4. Capital 4. Track record of disciplined use of capital Discipline Route performance Improved returns year on year Age of routes < 3 Years H13 (12 m/e March 13) > 3 Years H14 (12m/e March 14) CPBH performance by route weighted by capacity - FY 2013-14 (rolling Returns 12m to Mar-14) ROCE 12% Routes
Slide 35: H2 forward bookings
H2 forward bookings H2 bookings slightly ahead of prior year % seats sold * 90% 87% Summer 13 Summer 14 50% 51% Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Apr May Jun Jul Aug Sep H2 H2 (Apr’ 14 to Sep‘14) as at 9 May 2014 35
Slide 36: Outlook
Outlook Capacity (seats flown) • H2 c.+6.7% (before disruption) Revenue per seat (constant currency) • H2: low single digits percentage increase Cost per seat ex fuel (constant currency) • H2 c.+ 2% (assuming normal disruption levels and constant load factors) FX • H2: £5 million to £10 million favo
Slide 37: Summary - growth opportunities available to easyJet
Summary - growth opportunities available to easyJet • Demand and supply in European short-haul aviation are in balance and expected to remain so for some time • easyJet’s strong #1 and #2 network positions continue to deliver sustainable returns • Disciplined growth at the heart of easyJet’s strateg
Slide 38: Q&A
Q&A 38
Slide 39: Appendix
APPENDIX 39
Slide 40: ROCE Calculation – including 7x lease adjustment
ROCE Calculation – including 7x lease adjustment Reported £m H1’14 H1’13 Earnings before interest and tax – reported (53) (40) Interest element of operating lease payments 20 16 Earnings before interest and tax - adjusted (33) (24) Tax 21% 23% Normalised operating profit after tax (NOPAT) (26) (19)
Slide 41: ROCE Calculation – NPV and Target liquidity
ROCE Calculation – NPV and Target liquidity Proforma £m H1’14 H1’13 Earnings before interest and tax – reported (53) (40) Interest element of operating lease payments 12 9 Earnings before interest and tax – adjusted (41) (31) Tax 21% 23% Normalised operating profit after tax (NOPAT) (32) (24) Averag
Slide 42: RASK and CASK
RASK and CASK £m H1’14 H1’13 Change B/(W) Total revenue per seat 54.80 53.39 2.6% at constant currency 54.16 53.39 1.5% RASK at constant currency (pence) 5.04 5.12 (1.6%) Total cost per seat ex fuel 39.20 38.89 (0.8%) at constant currency 39.09 38.89 (0.5%) CASK ex fuel at constant currency (pence)
Slide 43: Disclaimer
Disclaimer Certain statements in this presentation constitute or may constitute forward-looking statements. Any statement in this presentation that is not a statement of historical fact including, without limitation, those regarding the Company’s future expectations, operations, financial performanc