Easyjet Plc · LSE:EZJ
Easyjet — Investor Day (January 2012)
145 slides from Easyjet's investor day presentation, Jan 31, 2012
Slide 1: 2012 Investor Day
2012 Investor Day 31 January 2012 1
Slide 2: Agenda
Agenda Time Content Who Page 10:00 • Welcome and introduction Carolyn McCall 3 10:20 • Capital Allocation • Introduction Chris Kennedy 8 • Network development and optimisation Alan McIntyre 16 • Fleet strategy Chris Essex 32 • Panel Q&A 11:40 • Customer • Marketing Peter Duffy 44 • Customer and reve
Slide 3: Welcome and Introduction
Welcome and Introduction Carolyn McCall Chief Executive 3
Slide 4: Today's themes
Today’s themes • Absolute focus on driving improvement in ROCE • Delivery of consistent returns to shareholders • Sustainable cost advantage • Europe‟s leading short haul network • Strong brand and consumer appeal • Opportunity to grow revenues across both business and leisure segments • Focused cou
Slide 5: This is our cause
THIS IS OUR CAUSE PASSION We're passionate about connecting people by making travel easy and affordable. PE@IPLE We're on our customers’ side and our people make the difference. /\MBITION We have a big ambition, to be Europe's preferred short-haul airline, delivering market-leading returns.
Slide 6: Agenda
Agenda Time Content Who Page 10:00 • Welcome and introduction Carolyn McCall 3 10:20 • Capital Allocation • Introduction Chris Kennedy 8 • Network development and optimisation Alan McIntyre 16 • Fleet strategy Chris Essex 32 • Panel Q&A 11:40 • Customer • Marketing Peter Duffy 44 • Customer and reve
Slide 7: Capital Allocation
Capital Allocation 7 7
Slide 8: Introduction
Introduction Chris Kennedy Chief Financial Officer 8 8 8
Slide 9: Clear set of financial objectives and measures
Clear set of financial objectives and measures Objectives Measures • Earn returns in excess of cost of capital • Improve PBT per seat to GBP5 Return Targets through the cycle • Post tax ROCE of 12% through the cycle • Invest in growth opportunities where returns are attractive • Ensure robust capita
Slide 10: ROCE – aim to be transparent & to cover WACC
ROCE – aim to be transparent & to cover WACC 12.7% 11.7% 9.7% 8.3% 8.1% 8.1% 1.1% 0.7% 8.4% 7.0% 7.6% (0.1)% (0.1)% (0.1)% WACC ROCE WACC ROCE WACC ROCE Unadjusted Lease Adjusted – Multiple Method* Lease Adjusted – NPV Method Weighted cost of equity Weighted cost of net debt Weighted cost of leases
Slide 11: Focus on margins is key to improving ROCE
Focus on margins is key to improving ROCE CFROI drivers – 2010 0.8x Median: 13.1% Low-cost carriers Network carriers Asset efficiency (Sales/Invested capital)(2) easyJet 0.7x Lufthansa 0.6x Air France-KLM 0.5x Air Berlin (3) Norwegian Median: 0.45x IAG 0.4x Vueling Ryanair 0.3x 8.0% 10.0% 12.0% 14.0
Slide 12: Capital allocation process
Capital allocation process • Set strategic direction • Focus markets Strategic • Scenario planning Plan • Portfolio review of network performance • Asset allocation • ROCE performance by route vs. budget Weekly route Capital management • Competitor activity meeting • Pricing and Allocation promotion
Slide 13: High degree of flexibility in current fleet plan
High degree of flexibility in current fleet plan Fleet Count 270 261 260 253 259 Max Fleet 250 24 5 235 Fleet required for 240 24 0 5% capacity growth 230 224 232 233 221 227 220 225 213 219 219 210 214 213 212 203 Fleet required for 200 204 204 203 0% capacity growth 203 202 199 190 197 196 194 Min
Slide 14: Profitable opportunities remain in slowing market
Profitable opportunities remain in slowing market Reduction in GDP growth, infrastructure constraints, markets maturing EU27 + Swiss capacity growth & GDP growth Opportunity for easyJet 30% • Focus on markets where 25% LCC growth LCC penetration is low 20% Legacy growth • Retrenchment of weaker 15%
Slide 15: Building a sustainable model
Building a sustainable model easyJet five year plan 2011 to 2015 Maintenance Growth Replacement Cash generated Special dividend Ordinary dividend Expenditure on Sale and Lease Debt reduction Free cash from Operations £150m (March @20% payout engine Back 2012) maintenance and aircraft 15
Slide 16: Network Development and Optimisation
NETWORK DEVELOPMENT and OPTIMISATION Alan McIntyre Head of Network Development & Scheduling 16 16
Slide 17: easyJet's network uniquely positioned
easyJet’s network uniquely positioned • Pan European network focused around primary markets • Route portfolio and network flexibility ensures broad appeal across consumer types • Absolute focus on ROCE and continual performance management of the network • Strong platform gives easyJet significant po
Slide 18: Strengthening position in key European markets
Strengthening position in key European markets easyJet market share and ranking 2011 2006 60% 1 easyJet share rank (1-4) 1 50% 1 40% 1 30% 1 1 2 2 2 2 1 2 1 1 20% 3 2 2 3 2 2 2 10% 4 4 3 4 3 0% • easyJet has strong and strengthening positions across key cities in Western Europe • This enables us to
Slide 19: Strong slot position at key airports
Strong slot position at key airports Percentage of capacity in Level 3 Summer „12 Gatwick departures co-ordinated airports 0600-0855 80% 70% Others, 6% 70% easyJet, 45% Aer Lingus, 4% 60% 50% Flybe, 6% 41% 40% Thomas Cook, 30% 6% 20% Monarch, 7% 10% 0% Thomson, 11% British easyJet Ryanair Airways, 1
Slide 20: Leading position on top European markets
Leading position on top 100 European markets 50 4 Presence in top 100 market pairs 29 2 1 Non primary airports 40 Number of market pairs operated 30 between 2 primary airports 2 45 20 39 39 10 21 19 13 15 15 0 Alitalia Ryanair easyJet Air Berlin-NIKI Norwegian Air France-KLM Lufthansa Group IAG • ea
Slide 21: Multiple base strategy enables network optimisation
Multiple base strategy enables network optimisation AMSSXF SXFGVA SXFGVA GVAORY SXF GVA GVAORY Example of network optimisation Capital discipline STN ORY CDGVCE CDGVCE CDG AMSPRG AMSPRG 21
Slide 22: Focus on network quality and trading the network
Focus on network quality and trading the network % of year-round capacity replaced during peak summer Allocation of new capacity FY 12 40% New 35% points, 12% 30% 25% Join the 20% dots, 16% 15% Frequency 10% increase, 72% 5% 0% FCO BSL ORY MXP CDG GVA BER MAD NCL LTN LGW • We adjust frequency to sui
Slide 23: Range of schedules to suit all customer types
Range of schedules to suit all customer types • Schedule flights to optimise gains from business and leisure mix • Use of triangle patterns and multiple bases to hit most appropriate times for different customer types • e.g. Luton – Belfast - Malaga 07.55 LTN - BFS 07.00 BFS - LTN 09.40 BFS - AGP 08
Slide 24: Absolute focus on ROCE
Absolute focus on ROCE FY11 route performance Mature Immature ROCE 12% • Routes below 12% must perform a role in the portfolio: • Support corporate strategy and provide product range • Competitive battles • Retain strategic slots or achieve volume deals at high performing airports • Complete high pe
Slide 25: We manage and churn the network portfolio
We manage and churn the network portfolio • Evaluate network performance against ROCE targets and churn • Target churn (route drops / “thinning”) of 5%-10% of capacity • Churn provides first option for incremental capacity & new routes Route dropped in following year % of network capacity Route capa
Slide 26: Focus on ROCE has delivered changes in network
Focus on ROCE has delivered changes in network • Markets culled • e.g. Helsinki, Gothenburg, Madrid-Morocco • Capacity reallocated • e.g. London-Milan, London- Barcelona, Paris-Milan • Profitable opportunities • e.g. growth at Gatwick, Geneva, Basel • New bases e.g. Toulouse and Nice 26
Slide 27: New route selection process
New route selection process Market Attractiveness • New route process looks at areas of strategic focus Competitive Bilateral • Detailed financial and operational Environment Constraints evaluations carried out Detailed financial evaluation • All short listed routes require AMB sign-off before launc
Slide 28: Continuous performance management of the network
Continuous performance management of the network Weekly • Trading meeting Monthly • Country and route review meeting • Review of performance against ROCE targets • Review of best and worst performing routes with CFO Quarterly • Network forum with CEO and CFO Seasonal • Planning review meeting with C
Slide 29: easyJet can still penetrate core markets further
easyJet can still penetrate core markets further 14% Country share of intra EU capacity FY11 12% Share of intra EU capacity 10% easyJet share Share of total EU 8% 6% 4% 2% 0% Germany Sweden Netherlands Switzerland Greece Kingdom Norway France Spain Italy Turkey United • easyJet has c. 7.6% of Europe
Slide 30: Potential for future profitable growth
Potential for future profitable growth 30% Unsized potential growth due: 25% a) competitor withdrawals b) yield improvement Capacity growth 20% c) expansion into other geographical territories 18% 15% 16% 16% 15% 14% Defined potential growth 10% Target net growth rate in plan 5% 0% 2011 2012 2013 20
Slide 31: easyJet's network uniquely positioned
easyJet’s network uniquely positioned • Pan European network focused around primary markets • Route portfolio and network flexibility ensures broad appeal across consumer types • Absolute focus on ROCE and continual performance management of the network • Strong platform gives easyJet significant po
Slide 32: Fleet strategy
Fleet strategy Chris Essex Head of Central & Fleet Procurement 32
Slide 33: Fleet strategy
Fleet strategy Integrated approach required to deliver lowest fleet cost across the lifecycle Fleet plan flexibility Lowest life cycle cost • Network requirements • Business case driven decisions define capacity needs • Negotiate fleet transactions • Short lead times for • with range of suppliers –
Slide 34: Economic justification for new aircraft acquisition
Economic justification for new aircraft acquisition Rationale Justification easyJet example 1. Economic • end of useful economic life Aug-98: obsolescence • new technology available e.g. order for 15 B737-700s • improved fuel efficiency 2. Deliver profitable • reduce unit costs e.g. Oct-02: high gro
Slide 35: A young fleet is an outcome of fleet evolution
A young fleet is an outcome of fleet evolution No target fleet age: development of fleet has resulted in low average age currently c.4yrs Total fleet Boeing Airbus Avg age (right axis) Avg age 220 11 200 10 Go GB 180 9 acquisition acquisition 160 8 140 7 120 6 100 5 80 4 60 3 40 2 20 1 0 0 1997 1998
Slide 36: Fleet status
Fleet status Fleet and financing strategies have created flexibility and a mix of types, ages and ownership profile Fleet at 31-Dec-11 Owned* Leased Total A319 111 56 167 A320 29 6 35 Total fleet 140 62 202 70 / 30 owned* / leased mix target Ownership profile Age profile Owned * Leased No. aircraft
Slide 37: Airbus contract
Airbus contract • Airbus contract announced in 2002 for deliveries until 2014* • Provides strategic framework for A320 family pricing for up to 315 aircraft of which 242 have been ordered to date in five transactions • Transaction in January 2011 for 15 aircraft • 207 aircraft delivered by end 2011
Slide 38: New technology
New technology Airframe First delivery / Fuel First firm airline order saving* Airbus A320neo family 2015 / Virgin America 15% Boeing 737 MAX family 2017 / Southwest 16% Bombardier CSeries 2013 / Lufthansa (for Swiss) 20% Engine Available on aircraft family P&W PurePower • Airbus A320neo PW1000G • B
Slide 39: Future fleet evaluation
Future fleet evaluation Technical Economic Business case Decision performance performance Sep‟11 - Jan‟12 Feb‟12 - Mar‟12 Apr‟12 – Jun‟12 Q4 FY12 Relative economics Ability to operate Phasing / speed of of new types Enhances premium competitively on transition and compared to existing of ROCE over W
Slide 40: Summary
Summary • Fleet strategy based on key principles • Inherent flexibility in fleet plan • Fleet changes driven by business cases • Low average age is an outcome of fleet strategy • Airbus deal has provided competitive advantage • Future fleet structure under evaluation 40
Slide 41: Panel Q & A
Panel Q & a 41 41
Slide 42: Agenda
Agenda Time Content Who Page 10:00 • Welcome and introduction Carolyn McCall 3 10:20 • Capital Allocation • Introduction Chris Kennedy 8 • Network development and optimisation Alan McIntyre 16 • Fleet strategy Chris Essex 32 • Panel Q&A 11:40 • Customer • Marketing Peter Duffy 44 • Customer and reve
Slide 43: Customer
Customer 43 43
Slide 44: Marketing
Marketing Peter Duffy Marketing Director 44 44
Slide 45: Objectives
Objectives • Hit yield and volume targets • Improve brand perception • Increase marketing spend effectiveness • Marketing cost per seat from £0.84 (2011) to £0.81 (2012) 45
Slide 46: Web facts
Web facts • easyJet is a leading search term for travel across Europe • In 2011 easyJet.com had 364 million visits (+6.5% YoY) and 213 million unique visitors (+8.5% YoY) • On the final day of the 2012 January sale, easyJet.com had 2.2 million visits • easyJet supports 14 languages with their own we
Slide 47: Personalised web environment
Personalised web environment • Defaults to „flying‟ airport • Remembers last search • Links to email for personalised experience • Supports third party dynamic content • Switches to „non-seat‟ post purchase • Deep link from Google search • Raft of usability improvements to improve conversion rates 4
Slide 48: Personalised email environment
Personalised email environment Repeat purchase by market • Increase sales from internal media • Switch from campaign to trigger/journey based approach • Abandoned basket • Ancillary upsell • Flight minus days • Research and resale 48
Slide 49: Personalised mobile environment
Personalised mobile environment • Sales and servicing platform • Key source of customer contact during journey • Disruption management including change flight/refund • Mobile boarding • Upsell capability core 49
Slide 50: Brand
Brand • Strong brand awareness across Europe • Preference key to driving conversion • Maintain strategy for UK, France & Switzerland • Improve position for Italy, Spain and Germany • Primarily known for price • Limited understanding of destination range and choice 50
Slide 51: Demographics - customers age profile
Demographics - customers age profile Percentage Total of bookings France Germany Italy Spain Switzerland UK Up to 25 25-34 35-44 45-54 55-64 65+ 51
Slide 52: Average booking value by age band
Average booking value by age band Average Total booking France revenue Germany Italy Spain Switzerland UK Under 18 18-24 25-34 35-44 45-54 55+ 52
Slide 53: UK socio-economic profile
UK socio-economic profile 53
Slide 54: Connecting Europe
Connecting Europe • Europe by easyJet positioning 54
Slide 55: Europe by easyJet
Europe by easyJet • Europe by easyJet positioning • Price driven resonant advertising 55
Slide 56: Europe by easyJet
Europe by easyJet • Europe by easyJet positioning • Price driven resonant advertising • Transparent pricing 56
Slide 57: Europe by easyJet
Europe by easyJet • Europe by easyJet positioning • Price driven resonant advertising • Transparent pricing • Build understanding of range and choice 57
Slide 58: Europe by easyJet
Europe by easyJet • Europe by easyJet positioning • Price driven resonant advertising • Transparent pricing • Build understanding of range and choice • More focused use of tactical promotion 58
Slide 59: Europe by easyJet
Europe by easyJet • Europe by easyJet positioning • Price driven resonant advertising • Transparent pricing • Build understanding of range and choice • More focused use of tactical promotion • Focus on business 59
Slide 60: Web share for January
Web share for January *% 1 Selected Websites in Aviation - Commercial Airlines by [Visits Share ] — flythomascook.com w — Thomson Airways ~ —Jet2.comw —bmibaby ~ —Flybe w — Virgin atlantic w —easyJet.com 7 —— Monarch.co.uk © —~ Ryanair » — British Airways » 24% ' Source: Experian Hitwise UK | 18% 12
Slide 61: Brand research
Brand research Message take-out: positive but different Call to action: Impact of ad on likelihood to book with easyJet 100 Much more likely A little more likely 80 83 10 35 60 Old 63 66 40 52 20 0 New 22 38 Old New Old New 0 20 40 60 80 100 Left me with good Fits with my image of feeling about easy
Slide 62: Summary
Summary • Focus on digital efficiency • Maximise value of internal media • Targeted use of third party media • Overall increased Marketing spend effectiveness resulting in reducing YOY marketing cost per seat 62
Slide 63: Customer and Revenue: Focus on Leisure
Customer and Revenue: Focus on Leisure Cath Lynn Customer & Revenue Director 63
Slide 64: Customer and revenue team
Customer and revenue team Making travel easy and affordable Customer • Customer Experience - putting the customer at the heart of everything we do, whilst remaining low cost • Customer Operations - driving service efficiency in our contact centre operations • Network and Schedule Development – optim
Slide 65: Building on our strength in Leisure
Building on our strength in Leisure • Leisure is the foundation of our profitability Affordable • Carried approximately 45million Welcoming leisure passengers in FY11 ~ c. 80% in-flight From any channel experience of our business • Recognised for offering a Making leisure travel competitive leisure
Slide 66: Who are our Leisure customers?
Who are our Leisure customers? Our Families travelling with children Visiting friends and family, regular of all ages, at peak times links across Europe Our retired /elderly customers have the luxury of time and desire to travel Our Groups normally travelling for occasions, for example hen & stag, g
Slide 67: Leisure drives profitability
Leisure drives profitability • Price sensitive leisure passengers travel off peak enabling us to fully utilise our aircraft assets • Retired market is growing • Higher yields and loads are obtained at the weekend where the demand for Leisure travel is high Yield Load • Leisure demand complements our
Slide 68: Leisure delivers premium yielding passengers
Leisure delivers premium yielding passengers • Premiums from leisure passengers at peak are high Summer • Weekend breaks Christmas Easter Half-Term Half-Term • School Holidays Half-Term • Bank/religious holidays • Ski • Families travelling on beach routes at peak holiday periods 68
Slide 69: The easyJet leisure experience - making it easy
The easyJet leisure experience - making it easy • Self help tools online helping prepare for travel and online check-in and manage your booking facility • Trusted reliability and on time performance • Welcoming and friendly in flight experience CSAT +90% • New communication channels with real time i
Slide 70: Business Travel
Business Travel Andy Hodges Director of Sales, Distribution and Business 70 70
Slide 71: Our Goal
Our Goal • Realise “fair share” of business travel market • Translates to £100m incremental margin pa • Delivery requires a behaviour change within mid to large corporates – so will take time • But a value message has resonance in today‟s market 71
Slide 72: How we get there
How we get there • Optimise our product & pricing Be flexible • Re-position our brand through targeted advertising Access On time the best • Adapt our distribution fares channels to match our Making customers‟ needs business travel easy • Create a small but effective and affordable At the From any s
Slide 73: A winning formula
A winning formula # Business Traveller Preference Competitive • Schedule advantage? 1 Network • OTP 2 Punctuality • Value 3 Frequent flyer programme • Reputation 4 Offered lowest fare • Flexibility 5 Airline reputation 6 Best for my connecting flight n/a 7 Value for money 8 Airport conve
Slide 74: Enhancing our proposition: value
Enhancing our proposition: value We are cheaper than our competitors*: Standard fares easyJet £100 more • standard fares - on 80% of occasions £ 50-100 more (by more than £100 on 55% of flights) £ 20-50 more £ 0-20 more • flexible fares - on 92% of occasions £ 0-20 cheaper (by more than £100 on 65%
Slide 75: Enhancing our proposition: schedule
Enhancing our proposition: schedule Europe‟s number 1 air travel network Breadth Depth Delivery Flightstats.com – OTP 3 months to end December 2011 89 87 85 79 77 77 76 70 67 66 67 65 Source: Seabury Group YTD FY12 YTD FY11 easyJet Ryanair KLM Lufthansa Air France British Airways 75
Slide 76: Enhancing our proposition: flexibility
Enhancing our proposition: flexibility Feature eJ New Legacy Flex Fare Flex Fare Flexibility Within 4 Any date weeks No. of changes Unlimited Unlimited No extra fees Refundable x Free hold bag Priority boarding / allocated seats Points / miles x Flex Volume Free lounge x Sales supp
Slide 77: Balanced distribution strategy
Balanced distribution strategy PUSH TRAVEL MGT. COMPANIES PULL GDS AGGREGATORS 77
Slide 78: Push: Business Sense, not Business Class
Push: Business Sense, not Business Class advocates for common sense smart business value reliability decisions in innovation fairness general easyJet efficiency is the smarter flexibility travel choice entrepreneurial agility spirit Promotions that challenge perceptions of easyJet: any person with ‘
Slide 79: Push: stronger relationship with corporates
Push: stronger relationship with corporates • Become short haul carrier of choice • Multiple stakeholders: • Policy makers • Buyers • Bookers • Travellers • Tailored messages through different media • Clear targeting by market • Range of products & channels to suit different needs 79
Slide 80: Driving the potential of indirect channels
Driving the potential of indirect channels Business travellers • Indirect channels drive margin for eJ (volume for legacies) • Costs recovered through POS • eJ.com always cheapest • Better terms with the GDSs: • greater commercial freedom Leisure travellers • improved technical performance Source: P
Slide 81: Pull: Partnerships with TMCs
Pull: Partnerships with TMCs • Targeted incentives that drive incremental yield, not volume • Standard approach, tailored by market • Supplemented with limited number of pan-European deals • Managed by local sales teams • Supplements direct corporate partnerships • Simplified back-office payment 81
Slide 82: Summary
Summary • Leverage network strength • Enhance the product • Deliver through the right channels • Partner with corporates, TMCs & distributors – on our terms • Target advertising & promotion • Don‟t break the model….. retain great value Business sense, not business class 82
Slide 83: Panel Q & A
Panel Q & a 83 83
Slide 84: Agenda
Agenda Time Content Who Page 10:00 • Welcome and introduction Carolyn McCall 3 10:20 • Capital Allocation • Introduction Chris Kennedy 8 • Network development and optimisation Alan McIntyre 16 • Fleet strategy Chris Essex 32 • Panel Q&A 11:40 • Customer • Marketing Peter Duffy 44 • Customer and reve
Slide 85: Costs
Costs 85 85
Slide 86: easyJet lean: maintaining our cost advantage
easyJet lean: maintaining our cost advantage Chris Kennedy Chief Financial Officer 86 86
Slide 87: easyJet's low cost base a significant advantage
easyJet’s low cost base a significant advantage easyJet lean aims to protect and enhance this advantage Key areas of focus: • airports and ground handling • crew Cost/ASK 10.0 Catering costs € cents Other non specified costs 8.0 Commercial cost Airport and handling charges Route charges 6.0 Aircraft
Slide 88: easyJet lean targets supported by benchmarking
easyJet lean targets supported by benchmarking Efficiency CASK ex-fuel Business model opportunity Mid size A319 Airbus Scale Specifics of easyJet easyJet Other best in capacity contract Advantage easyJet lean current class LCC model unit cost 88
Slide 89: Inherent cost advantage in easyJet's model
Inherent cost advantage in easyJet’s model Legacy A319 easyJet A319 easyJet A320 124 seats 156 seats 180 seats (source: Airbus) 70.1% load factor 87% load factor 87% load factor (source: AEA Europe figure Jan - Dec 2010) (2010) (2010) 84 passengers 136 passengers 156 passengers Fewer passengers 56%
Slide 90: easyJet lean – lowest cost for our network
easyJet lean – lowest cost for our network • Programme with governance Fuel efficiency and milestones Airports & (28%) • Aimed at both long term and ground Crew handling short term (13%) (29%) • Embedding a lean culture and continuous improvement Sales and Other & • Covers whole cost base marketing
Slide 91: Focus areas
Focus areas • Airports and Ground Handling • Driving down margins • Working to develop a more appropriate and consumer friendly regulatory environment • Encouraging efficient airport capital expenditure • Encouraging pay per use charging structures • Crew: increasing flexibility and robust managemen
Slide 92: easyJet lean governance and project plans
easyJet lean governance and project plans • Key easyJet lean statistics Example of easyJet lean project tracking report • Programme Management Office to provide clear support and accountability • Bimonthly AMB Programme Steering Group • Eight main workstream programmes – bimonthly project boards • T
Slide 93: On target to deliver £90m of savings in FY12
On target to deliver £90m of savings in FY12 easyJet lean initiatives Engineering and Maintenance FY12 Shop visit timing In progress • Minimising impact of Line maintenance contracts Delivered LLP pre-purchase Delivered controllable inflation Wheels & Brakes contract Delivered Crew • Delivered £19m
Slide 94: Summary
Summary • easyJet lean is fully embedded • Programme plans are fully formed • Clear targets and milestones have been set across the business • FY12 is already delivering well and is set to meet plan of £90m 94
Slide 95: Delivering cost advantage through an efficient operation
Delivering cost advantage through an efficient operation Warwick Brady Chief Operations Officer 95
Slide 96: Operations at 49 of top 100 European airports
Operations at 49 of top 100 European airports Turning Europe Orange Flight Operations Our operation is large-scale and Pan-European • 1,900 Pilots Cabin Services Legend • 4,300 Cabin Crew Ground Operations • 611 routes across 130 airports in 30 countries Engineering & Maintenance • 204 aircraft • 5
Slide 97: Efficient operation drives superior ROCE
Efficient operation drives superior ROCE Areas of focus Outcome: FY11 Operations KPIs • Safety is our number one priority • On time performance up 13ppts • On time performance • Cost per seat (excl. fuel) • Smart cost management down 1.6% • Simple schedule and operation • Aircraft utilisation exempl
Slide 98: What gets measured gets done
What gets measured gets done • 5 daily operations calls, (E&M, OCC, Ground Ops, IT, Executive) covering operational issues and successes • Daily, weekly and monthly Operations reports • Identifying trends, issues and problematic areas / bases • Total clarity around financial objectives and KPIs Roll
Slide 99: OTP integral to driving customer satisfaction
OTP integral to driving customer satisfaction Improvement in OTP has helped push up customer satisfaction 100 Actual OTP - % within 15 minutes Journey satisfaction on this occasion* 90 Overall impression of easyJet* 80 % 70 60 50 Oct-Dec 09 Jan-Mar 10 Apr-Jun 10 Jul-Sep 10 Oct-Dec 10 Jan-Mar 11 Apr-
Slide 100: Ground handling costs reducing
Ground handling costs reducing • Airports & Ground handling is 44% of cost base (excl. fuel costs) • Costs down despite inflation (-0.5 FY09 to 5.2% FY11) Turn time success • Improved efficiency 70% 72% 69% 74% 66% 66% • New world contract 58% • Focus on short shipped bags • Increased internet check
Slide 101: Driving ground handling efficiencies
Driving ground handling efficiencies Ground handling cost/turn • Strategy review £544 £538 £538 • Internal cost benchmarking £517 • Identify opportunities • Support negotiations FY08 FY09 FY10 FY11 • Ensure robust plans developed for key negotiations FY11 ground handling cost breakdown Others 11% •
Slide 102: Utilising technology to drive improvements
Utilising technology to drive improvements • Improve uptime and resilience of Engineering & Maintenance cost all systems per block hour £257 £250 • Connecting crew • Capturing and exploiting our £235 operational data • Drive down our fuel burn FY09 FY10 FY11 • Safety net • Analysis and optimisation
Slide 103: Sensible approach to crew costs
Sensible approach to crew costs • Crew costs are 20% of cost base (excl. fuel) • Recruiting a mix of experience levels in pilot community • Improved flexibility • Improved management of pay negotiations across business • Competitive on cost • Aim is to offer lifestyle choices - select between pay, t
Slide 104: Operations control centre
Operations control centre Minimising risk, cost and impact of disruption • Nerve centre of our day-to-day OTP (Dec-11 v Dec-10) Dec-10 100% Dec-11 operations – drives our OTP 90% • Optimisation tools for network % flights on time 80% disruption management 70% • New Ops Control Centre 60% • Cost effi
Slide 105: Range of fuel management initiatives
Range of fuel management initiatives • One engine taxiing • Pilot engagement • Delayed engine start • Continuous improvement together with manufacturers • Engine washing • Cost management evident from flat • Fuel burn information shared with cost rate FY09-11 flight crew • Review contingency fuel, t
Slide 106: Summary
Summary • Strong improvement in operational performance over last 12 months • Continued ability to deliver low cost & efficient operation in highly congested, high utilisation, slot constrained airports • Pipeline of initiatives to deliver future ROCE • Clear measurement framework in place to track
Slide 107: Case Study: Engineering & Maintenance Cost Performance
Case Study: Engineering & Maintenance Cost Performance Ian Davies Head of Engineering & Maintenance 107
Slide 108: Engineering & Maintenance "Did we deliver?"
Engineering & Maintenance “Did we deliver?” The promise in 2008 was… • Highest standards of safety through SMS System • High reliability of A319, A320 fleet & Boeing sub-fleet • Continued focus on maintenance cost management • Contract renegotiation using leveraged position • In-source Fleet Technic
Slide 109: Maintaining reliability and reducing cost
Maintaining reliability and reducing cost 99.7 % easyJet Technical Dispatch Reliability % 2009 - 2011 99.6 99.5 99.4 99.3 99.2 99.1 99.0 01.2009 04.2009 07.2009 10.2009 01.2010 04.2010 07.2010 10.2010 01.2011 04.2011 07.2011 10.2011 World Fleet easyJet fleet Linear (easyJet easyJet fleet ) fleet tre
Slide 110: Cost Distribution and Initiatives
Cost Distribution and Initiatives Contract re-negotiation in Remaining cost base progress or completed targeted for re-negotiation • Reserves 11% • Wheels Brakes & Tyres • Components • Modifications • Line maintenance • Interiors 89% • Consumables • Exteriors • Logistics • Line maintenance tenders K
Slide 111: Did we deliver? Yes we did!
Did we deliver? Yes we did! • Improved operational performance at lower cost • Exceeded original CPS target by 63% • Full control of maintenance services and activities • In-sourced projects delivered on budget Going forward… • Engineering & Maintenance championing easyJet lean • Training other area
Slide 112: The future
The future • Operational restriction resolution with Airbus & vendors • 2012 cost reductions remaining stations line maintenance • Gatwick Maintenance Base Option in house • Examine options for 2015 with SRT contract • Spares and logistic control in-source • No increase in overhead up to 250 aircraf
Slide 113: Panel Q & A
Panel Q & a 113 113
Slide 114: Agenda
Agenda Time Content Who Page 10:00 • Welcome and introduction Carolyn McCall 3 10:20 • Capital Allocation • Introduction Chris Kennedy 8 • Network development and optimisation Alan McIntyre 16 • Fleet strategy Chris Essex 32 • Panel Q&A 11:40 • Customer • Marketing Peter Duffy 44 • Customer and reve
Slide 115: Bringing it all together
Bringing it all together Case studies: Switzerland and France 115 115
Slide 116: How we secured a winning position in the Swiss market
How we secured a winning position in the Swiss market Thomas Haagensen, Country Director Switzerland & Germany 116 116
Slide 117: 15 years in Switzerland
15 years in Switzerland 1997 1998 1999 2003 2005 Launch LON- TEA acquisition From TEA to EZS, From B737 to BSL base GVA in BSL GVA based A319 opening 2012 2nd national • 19 aircraft Switzerland (incl. 3 A320s) airline • Number 1 in Geneva (35.8%) and Basel (47.6%) • 7.8M passengers in 2011 • Positiv
Slide 118: Swiss route network
Swiss route network GVA BSL 118
Slide 119: How we have achieved our winning position
How we have achieved our winning position Close to 8m passengers annually Focus on profitable growth Indexed contribution and capacity growth 145 Contribution (excl. fuel at FY12plan rates) 140 Capacity 135 130 125 120 115 110 105 100 FY09 FY10 FY11 Base year: 2009 • Costs – lowest unit costs in mar
Slide 120: Cost - LCC approach that delivers a quality product
Cost - LCC approach that delivers a quality product • Ground handling • Initial self handling broke cartel • Crewing • High flexibility • Lower aircraft costs • Single type of aircraft concept • A320s mix enables short and mid-haul flights • High utilisation of each aircraft • Operational efficiency
Slide 121: Network - Successful regionalised approach
Network - Successful regionalised approach • Network mirrors the mobile, high earning, multinational customer base • French and German “domestics” • VFR routes to Italy, Kosovo, Portugal & Spain BSL • Summer and Winter-sun leisure flights to counter seasonality • Business routes with high frequencie
Slide 122: Brand – strong recognition in Swiss market
Brand – strong recognition in Swiss market Building on strong awareness and consideration in Switzerland • Overall strong top of mind brand awareness (close to 100% including prompted) • Fine tuning media mix to ensure continuous Brand Awareness improvement in all regions • Sales manager and busines
Slide 123: Brand - Continuing to grow and innovate
Brand - Continuing to grow and innovate 1997 Today 123
Slide 124: France's low cost carrier
France’s low cost carrier Francois Bacchetta, France Country Director Steve Azevedo Taverney Taverney, Regional General Manager – Operations France 124 124
Slide 125: France: Land of opportunity!
France: Land of opportunity! Strong foundations • Lowest cost operator at airports we operate from • Low fare penetration in France is half of the EU average • Average easyJet fare is 50% lower than Air France • 2nd airline considered after Air France, before any other airline (source Gfk survey) •
Slide 126: easyJet – "The alternative to Air France"
easyJet – “The alternative to Air France” easyJet in France 2006 Now Routes 53 157 Market share 5% 12% Business travel 17% 21% Routes with min. 6 17 2 dailies • Steady profitable growth: traffic doubled since 2006 • Even growth across the country: number two in eight out of ten major French airports
Slide 127: easyJet: only significant competitor to Air France
easyJet: only significant competitor to Air France Major French markets Air France easyJet Ryanair Vueling Airlines Others 2011 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% PAR NCE LYS TLS BOD NTE Source: OAG 127
Slide 128: We are number 2 in 8 out of 10 major French airports
We are number 2 in 8 out of 10 major French airports BVA PARIS CDG/ORY #2 MULHOUSE NANTES #1 #2 LYON #2 BORDEAUX #2 NICE #2 TOULOUSE Marseille #2 128
Slide 129: In five years we have doubled customers
In five years we have doubled customers Since 2006 we have doubled conversion (from 10 to 20%) while maintaining awareness Awareness Customer Customer in the last 12 months 93 94 93 92 92 91 87 88 88 88 88 83 Since 2006 we doubled conversion (from 10 to 20%) while maintaining awareness % 34 31 30 33
Slide 130: Winning in Paris
WINNING IN PARIS Steve Azevedo Taverney Regional General Manager – Operations France 130 130
Slide 131: VIDEO: easyjet in Paris
VIDEO: easyjet in Paris Link 131
Slide 132: Driving operational excellence in Paris
Driving operational excellence in Paris Operations in Paris – what we‟ve done • CDG/ORY - £3 million cost savings • Move from Terminal 3 to 2B increased passenger numbers • 4.8 million passengers (2010/2011) • Using walk-in walk-out and steps (reducing air-bridges) What we are going to do • Full wal
Slide 133: Improving customer experience
Improving customer experience OTP within 15 minutes – CDG/ORY 85% 86% 77% 73% 63% 58% OTP % CDG ORY SEP'10 SEP'11 YTD Month 133
Slide 134: Summary
Summary • Good relationship with Aeroport de Paris (AdP) • First airline for walk-in walk-out • First airline for Fast Track Speedy Boarding • easyJet branded and dedicated check in area • easyJet logo on AdP signage • Improving customer service • Make the handler walk in customer shoes 134
Slide 135: France: Making the most of the opportunity
France: Making the most of the opportunity 135
Slide 136: Taking easyJet to the next level
Taking easyJet to the next level • First ever national TV campaign broadcasted in January 2012 on main media e.g. TF1 • New growth opportunities in Nice and Toulouse as of March 2012 • Paris is our 2nd largest network point, but we have only 10% market share • Business travel: sales force in place •
Slide 137: Agenda
Agenda Time Content Who Page 10:00 • Welcome and introduction Carolyn McCall 3 10:20 • Capital Allocation • Introduction Chris Kennedy 8 • Network development and optimisation Alan McIntyre 16 • Fleet strategy Chris Essex 32 • Panel Q&A 11:40 • Customer • Marketing Peter Duffy 44 • Customer and reve
Slide 138: Wrap up & Close
Wrap up & Close Carolyn McCall Chief Executive 138 138
Slide 139: Q&A
Q&a 139 139
Slide 140: Conclusion
Conclusion Robust operation Low cost and Engaged efficient team Sustainable returns to shareholders Driving Strong revenue product Customer satisfaction 140
Slide 141: Presenters
Presenters 141 141
Slide 142: Presenters
Presenters Carolyn McCall, OBE – Chief Executive Carolyn McCall joined easyJet on 1 July 2010 as Chief executive. Carolyn previously was Chief Executive of Guardian Media Group plc. Carolyn was non-executive director of Lloyds TSB (from 2008–2009) and was a non-executive director of Tesco Plc (2005-
Slide 143: Presenters
Presenters Peter Duffy – Marketing Director Peter joined easyJet in February 2011 as Marketing Director. He joined from Audi in the UK where he was Marketing Director and oversaw a period of rapid and profitable growth. Prior to that, Peter was Marketing Services Director at Barclays. Cath Lynn – Cu
Slide 144: Presenters
Presenters Thomas Haagensen – Country Director Switzerland & Germany Thomas has been with easyJet since March 2008, based in Geneva. Prior to that he spent 12 years at Tetra Pak in various roles including production management, new business development, and marketing and sales responsibility for Leb
Slide 145: 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