Slide 1: H1 2016 Analyst & investor presentation
H1 2016 Analyst & investor presentation Tuesday 10 May 2016
Slide 2: Introduction
Introduction Carolyn McCall Chief Executive Officer
Slide 3: easyJet's resilient model continues to deliver
easyJet’s resilient model continues to deliver Robust performance despite the impact from external shocks Continued focus on building strong network positions Increased revenue and passenger growth at stable load factors Strong cost performance secured flat PBT and PBT margin at constant cur
Slide 4: Financial review
Financial review Andrew Findlay Chief Financial Officer
Slide 5: Financial performance
Financial performance H 1 2016 H 1 2015 Change* Change* £m £m % % @ CC Total revenue 1,771 1,767 0.3% 2.9% Fuel (462) (516) 10.5% 9.7% Costs excluding fuel (1,333) (1,244) (7.2%) (7.9%) (Loss) / profit before tax (24) 7 Profit before tax at constant currency 5 7 ** EBITDAR 111 130 (14.8%) 9.3% EBITD
Slide 6: Revenue performance
Revenue performance H 1 2016 H 1 2015 Change* Seats flown (m) 34.5 32.2 7.4% Load factor (%) 89.7% 89.7% 0.0ppt Passengers (m) 31.0 28.9 7.4% Average sector length (km) 1,054 1,072 (1.7%) Total revenue - reported (£m) 1,771 1,767 0.3% Total revenue - constant currency (£m) 1,817 1,767 2.9% Total rev
Slide 7: Resilient revenue performance
Resilient revenue performance Revenue per seat bridge 54.91 1.48 (2.7%) 0.72 (1.3%) 1.04 0.47 52.62 1.33 (1.9%) (0.9%) 0.48 (0.9%) 51.29 H1 2015 Paris Sharm el-Sheikh Underlying Easter Other Before FX FX H1 2016 softness Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial
Slide 8: A strong focus on costs
A strong focus on costs Total cost per seat bridge • Total cost per seat at constant currency: 4.3% decrease • Cost per seat ex fuel at constant currency: 0.5% increase 0.77 56.42 0.38 0.39 0.13 0.72 0.28 0.54 54.93 2.47 54.70 0.48 51.98 H1 2015 Regulated Disruption Balance Inflation* Before A320 mi
Slide 9: Impact of fuel & currency
Impact of fuel & currency H 1 2016 fuel impact favourable / (adverse) H 1 2016 H 1 2015 Change Fuel $ per metric tonne Market rate 409 707 298 Effective price 786 925 139 US dollar rate Market rate 1.48 1.55 (7 cents) Effective price 1.61 1.59 2 cents Actual cost of fuel £ per metric tonne 489 581 9
Slide 10: Strong cash generation
Strong cash generation Cash flow bridge • Net cash: £296m (FY15: £435m) • Adjusted net debt: £474m (FY15: £363m) 215 45 Cash generated from operations 314 (excl dividends): £461m 392 12 41 1,276 219 21 1,057* 80 939* 23 Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial n
Slide 11: Strong balance sheet
Strong balance sheet £m H 1 2016 H 1 2015 Goodwill and other intangible assets 501 476 Property, plant and equipment 3,089 2,720 Derivative financial instruments (338) (281) Other assets (excluding cash and money market deposits) 367 355 Unearned revenue (1,080) (1,091) Other liabilities (excluding
Slide 12: Gross capital expenditure
Gross capital expenditure £1,000m c.£900m c.£850m c.£800m c.£650m £556m £536m c.£550m £500m £449m £421m £392m Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold £0m FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 - Assumes base cas
Slide 13: Capital Structure Review
Capital Structure Review • The scope of the review entailed: Liquidity buffer Gearing Residual Values Dividend Policy Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold A strong balance sheet is a core part of easyJet’s strategy and is fully aligned with sharehol
Slide 14: Capital Structure Review – Key Changes
Capital Structure Review – Key Changes Current Position Updated Position Liquidity buffer Cash position of £4 million per aircraft Liquidity buffer including cash and revolving credit facility Cover peak unearned revenue Minimum position of £2.6 million per 100 seats Funding Mortgage funding secured
Slide 15: Business Review
Business Review Carolyn McCall Chief Executive Officer
Slide 16: Europe's most successful airline
Europe’s most successful airline Market leading network Customer excellence 50 50 Number of market pairs flown Customer 40 74% of easyJet passengers have 74% between primary airports loyalty flown with us previously 30 33 30 20 27 27 Customer 8/10 customers say we are great value 80% 20 18 satisfact
Slide 17: easyJet - Delivering growth and returns to shareholders
easyJet - Delivering growth and returns to shareholders Growth • Passenger growth of 7%-8% CAGR • Stable margin Margin • Strong cost underpin • Top quartile ROCE Returns • 50% PAT pay-out ratio Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 17 17
Slide 18: Resilient H1 trading
Growth Resilient H1 trading Trading by traffic flow Flow Trading UK- Beach Paris touching Sharm el Sheikh touching UK – Ski City – City Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 18 18
Slide 19: Investment in the network in H1
Growth Investment in the network in H1 7.4% easyJet capacity growth over winter Market share on easyJet routes Market growth easyJet growth in the market Netherlands +27% 27% 7% United Kingdom +9.4% 9% 7% Germany +7 % 7% 5% France +6.5 % 7% 4% easyJet Air France Switzerland +8.1% 8% Ryanair KLM Spai
Slide 20: Depth in high GDP markets
Depth in high GDP markets Growth - Number 1 or 2 position in the primary airport in 12 of Europe’s top 25 catchment areas by GDP1 easyJet network Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 1) Catchment areas defined as population living within 50km of air
Slide 21: A network that is difficult to replicate
A network that is difficult to replicate Growth Strong positions at key airports Increasing frequencies Current morning easyJet touching Airport For flights previously with at least a daily frequency, peak utilisation? 1 aircraft2 easyJet added YoY on average 1.2 frequencies per 6 week. London Gatwi
Slide 22: Investing in our network
Growth Investing in our network Deepening the network New bases London Luton Venice Marco Polo Amsterdam Schiphol Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 22 22
Slide 23: Leading in digital
Growth Leading in digital Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 23 23
Slide 24: Leading in data
Growth Leading in data FLIGHT CLUB 25m marketable customers 74% returning customers 41.5 Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold average age 24 24
Slide 25: Grow revenue
Growth Grow revenue Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 25 25
Slide 26: Cost review delivers flat CPS target
Cost review delivers flat CPS target Margin Relentless Embed Lean focus on an programme efficient cost across all base functions Lean programme offsets inflation CPS ex fuel Lean Principles Efficient and effective cost base Continue to Innovation led maintain 2015 2019 approach to industry lean savi
Slide 27: Strong pipeline of cost saving initiatives
Strong pipeline of cost saving initiatives Margin Focus area Savings* Porto Barcelona Airports & ground handling (eg: LGW) £££ Supplier relationship management ££ Maintenance efficiency £££ Fleet up-gauging £££ Lean bases & smart scheduling ££ Maintenance Invest in people £ Detailed focus on overhea
Slide 28: Up-gauging our fleet
Margin Up-gauging our fleet New A320 cabin, 186 seats Up-gauging delivering CPS savings 13% -14% Current New generation generation A319 A320neo Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 156 seats 186 seats - CPS savings based on fuel price quoted in orig
Slide 29: Operational excellence
Operational excellence Margin Greater operational efficiency Increased customer satisfaction Delivering cost savings (single ground handling fleet) Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 29 29
Slide 30: Outlook in 2016
Outlook in 2016 Capacity (seats flown) • H2 c.+6.5% (before disruption) • FY c.+7% (before disruption) Revenue per seat at constant currency • Q3 revenue per seat: down c. 7% • H2 revenue per seat: down low to mid single digits Cost per seat at constant currency • FY cost per seat excluding fuel: do
Slide 31: easyJet is a structural winner
easyJet is a structural winner • Europe's best network that is difficult to replicate • Best customer proposition • Constant innovation to drive demand and loyalty • Cost plan to deliver flat CPS ex-fuel • 50% profit after tax pay-out ratio Footer box on intersect of lines line h=8.03 9 and v=8.75 w
Slide 32: Q&A
Q&A
Slide 33: Appendix
appendix
Slide 34: Fuel and foreign exchange hedging
Fuel and foreign exchange hedging Fuel US dollar Euro surplus CHF surplus requirement requirement Six months ending 87% at $793/ 30 September 2016 76% at $1.61/£ 79% at €1.25/£ 73% at CHF1.46/£ metric tonne Full year ending 87% at $814/ 30 September 2016 80% at $1.62/£ 86% at €1.23/£ 81% at CHF1.46/
Slide 35: H2 forward bookings
H2 forward bookings H2 bookings in line with prior year % seats sold * Summer '15 Summer '16 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 (April 2016 to September 2016) as at 6 May 2016 35 35
Slide 36: Competitive capacity environment in H2
Competitive capacity environment in H2 7.6% split by carrier 8.2% Summer 15 Summer 16 7.6% Other easyjet 6.5% 6.4% 6.3% 6.3% AF-KLM 5.6% BA 5.4% Vueling Ryanair Capacity change total SH easyJet capacity change Competitors on easyJet Capacity Change easyJet Market Footer box on intersect of lines lin
Slide 37: Investment in the network
Investment in the network Overall c. 6.6% capacity growth over summer Market growth easyJet growth in the market United Kingdom +6% 8% 6% Netherlands +21% 21% 7% France +10 % 10% Germany +2 % 5% 5% 2% Spain +6% Switzerland +5% 10% 6% 5% 0% Portugal +15% Italy 0% 14% 15% 6% Footer box on intersect of
Slide 38: Profit before tax
Profit before tax Profit before tax per seat bridge 0.48 0 .21 0.16 0.85 0.69 2.20 2.47 1.04 0.47 0.54 0.28 0.13 0.72 0.39 0.77 0.38 H1 2015 Easter Paris and Underlying Other Regulated Disruption Balance Cost A320 Mix Lean Other cost Fuel H1 2016 P&L H1 2016 Sharm Footer box onrevenue softness inter
Slide 39: Loss after tax
Loss after tax £m H1 2016 H1 2015 Change (Loss) / profit before tax (24) 7 (31) Tax credit / (charge) 4 (2) (6) (Loss) / profit after tax (20) 5 (25) Effective tax 18.1% 20.4% 2.3ppt Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 39 39
Slide 40: Revenue per seat
Revenue per seat £ per seat H1 2016 H1 2015 Change Seat revenue 50.39 54.05 (6.8%) Non-seat revenue 0.90 0.86 4.6% Total revenue 51.29 54.91 (6.6%) Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 40 40
Slide 41: Fleet flexibility
Fleet flexibility Extra aircraft allows greater flexibility in fleet planning 400 Contracted Max 359 Downside case 346 350 333 357 Base Case 335 303 300 312 301 277 250 257 250 223 227 219 200 Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 150 FY16 FY17 FY18
Slide 42: Cost per seat excluding fuel - key drivers
Cost per seat excluding fuel - key drivers Cost Variance at Variance at Weighting of per seat constant constant variance Drivers excluding fuel currency currency £ £ % % • Efficiency gained from upgauging our fleet from an average of 164 to 166 seats per aircraft Crew 7.25 0.12 1.6% 0.3% • Decrease
Slide 43: Increasing proportion of A320's
Increasing proportion of A320’s H1 2016 H1 2015 Change A319 (operating lease) 45 50 (5) A319 (owned / finance lease) 99 99 0 A319 Total 144 149 (5) A320 (operating lease) 18 18 0 A320 (owned / finance lease) 85 63 22 A320 Total 103 81 22 Total fleet 247 230 17 Percentage unencumbered 52% 44% 8ppt Pe
Slide 44: Currency impact
Currency impact Revenue Costs H 1 2016 H1 2015 H 1 2016 H1 2015 Sterling 47% 46% 29% 27% Euro 41% 43% 33% 31% US dollar 1% 1% 32% 35% Other (principally Swiss franc) 11% 10% 6% 7% Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Average effective Euro rate for
Slide 45: 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