full year results analyst and investor...
TRANSCRIPT
Full Year Results Analyst and Investor
Presentation
Tuesday 18 November 2014
Introduction
Carolyn McCall
Chief Executive Officer
3 3
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
Continued execution of the strategy
Profit per seat growth
Resilient operational performance
Top quartile ROCE
Strong revenue performance
6.9%
9.8% 11.3%
17.4%
20.5%
2010 2011 2012 2013 2014
£3.97 £4.81
£7.03
£8.12
7.2% 8.2%
11.2%
12.8%
0%
2%
4%
6%
8%
10%
12%
14%
£0
£2
£4
£6
£8
2011 2012 2013 2014
PB
T /
se
at P
BT
ma
rgin
1. At constant currency 2. Cost per seat excluding fuel at constant currency
0%10%20%30%40%50%60%70%80%90%
Overallsatisfaction
Satisfaction withpunctuality
On-timeperformance
2013 20141.9% 1.9%
0.6% 0.7%
0.0%
1.0%
2.0%
FY'14 H2'14
RPS CPS1 2
4
Financial review
Chris Kennedy
Chief Financial Officer
5 5
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
Profit before tax increased
0.37
0.100.44
0.040.16
1.02
0.201.20
8.12
7.03
FY 2014
FX A320 Mix easyJet lean
Disruption De-icing Costs Fuel Revenue
FY 2013
Profit per seat bridge Driven by impact of longer average sector length
6 6
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
Financial results
£m (reported) FY 2014 FY 2013 Change Change
Total revenue 4,527 4,258 269 6.3%
Fuel (1,251) (1,182) (69) (5.8%)
Operating costs excluding fuel (2,453) (2,365) (88) (3.7%)
EBITDAR 823 711 112 15.8%
Ownership costs (242) (233) (9) (4.2%)
Profit before tax 581 478 103 21.5%
EBITDAR margin 18.2% 16.7% 1.5ppt
Profit before tax margin 12.8% 11.2% 1.6ppt
£ per passenger (constant currency) FY 2014 FY 2013 Change Change
Total revenue per passenger 70.40 70.08 0.32 0.5%
Total cost per passenger (excluding fuel) (42.40) (42.75) 0.35 0.8%
7 7
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
Financial results: 114.5p EPS, 20.5% ROCE
£m FY 2014 FY 2013 Change
Profit before tax 581 478 21.5%
Tax charge (131) (80) (63.8%)
Profit after tax 450 398 13.1%
Effective tax rate 22.5% 16.7% (5.8ppt)
Earnings per share 114.5p 101.3p 13.0%
Ordinary dividend per share 45.4p 33.5p 35.5%
Special dividend per share - 44.1p
Return on capital employed* 20.5% 17.4% 3.1ppt
* Return on capital employed (ROCE) measure includes leases capitalised at 7 times The ROCE measure with target liquidity included is shown in the appendix
8 8
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
Fleet expenditure broadly in line with current levels
2005-2012 2013-14 2015-2017 2018-2022
Additional aircraft 49% 52% 66% 26%
Replacement aircraft
42% 28% 9% 45%
Maintenance 9% 20% 25% 30%
Total 100% 100% 100% 100%
Total expected fleet acquisition and overhaul expenditure as a % of easyJet revenue
18% 9% 11% 10% - 12%
Fleet acquisition and overhauls will be funded through a combination of easyJet’s internal resources, cashflow, sale and leaseback transactions and debt
9 9
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
H2 margins improved due to tight cost control
Reported £m H2 2014 H2 2013 Change
Total revenue 2,825 2,657 6.3%
Fuel (714) (686) (4.0%)
Operating costs (1,352) (1,323) (2.3%)
EBITDAR 759 648 17.3%
Ownership costs (125) (109) (16.0%)
Profit before tax 634 539 17.5%
PBT margin 22.4% 20.3% 2.1ppt
Seats (m) 40.5 38.0 6.3%
Constant currency £ per seat H2 2014 H2 2013 Change
Total revenue 71.15 69.82 1.9%
Fuel (18.01) (18.04) 0.2%
Operating costs (34.78) (34.76) (0.1%)
EBITDAR 18.36 17.02 7.9%
Ownership costs (3.10) (2.85) (8.8%)
Profit before tax 15.26 14.17 7.7%
10 10
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
Continuing revenue per seat growth
£m FY 2014 FY 2013 Change
Passengers (m) 64.8 60.8 6.6%
Load factor (%) 90.6% 89.3% 1.3ppt
Seats (m) 71.5 68.0 5.1%
Average sector length (km) 1,112 1,091 1.9%
Total revenue (£m) 4,527 4,258 6.3%
Total revenue per seat (£) 63.31 62.58 1.2%
At constant currency (£) 63.78 62.58 1.9%
11 11
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
63.31
0.460.54
0.65
62.58
FY 2014 FX Initiatives Underlying trading
FY 2013
easyJet strategy delivers further revenue growth
Year on year drivers of revenue per seat change (£/seat)
• Disciplined capital allocation • Revenue Management System
initiatives • Longer sector length • Increased load factor • Digital
• Business passenger • Allocated seating
12 12
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
Growth in RPS
£ per seat FY 2014 FY 2013 Change
At constant currency
Gross seat revenue 69.65 68.66 1.4% 2.2%
Passenger taxes (7.25) (7.02) (3.2%) (4.4)%
Net seat revenue 62.40 61.64 1.2% 2.0%
Non-seat revenue 0.91 0.94 (2.5%) (1.6%)
Total revenue 63.31 62.58 1.2% 1.9%
1.9%1.4%
2.7%
1.5%1.4%
5.1%5.8%
6.8%
3.0%
4.1%
Q4 Q1 Q3 Q2 FY
easyJet capacity growth
RPS growth at constant currency
Easter in Q3 for 2014
Continued strength
13 13
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
Favourable currency impact
Currency split – total costs Currency split – total revenue
8%
Sterling
Swiss Franc
Euro
Other
47%
3%
42% 34%
1%
25%
35%
FY 2014 currency impact favourable / (adverse) EUR CHF USD Other Total
£m
Revenue (23) (4) (3) (3) (33)
Fuel 2 - (1) - 1
Costs excluding fuel 40 5 5 - 50
Total 19 1 1 (3) 18
Average effective euro rate for revenue for FY 2014 was €1.21 (FY 2013: €1.19) Average effective euro rate for costs for FY 2014 was €1.22 (FY 2013: €1.19)
35%
5%1% Swiss Franc
Sterling
USD
Other
33% 26% Euro
14 14
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
1.1
1.12
1.14
1.16
1.18
1.2
1.22
1.24
1.26
1.28
1.3
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
FY 2013 FY 2014
Progressive weakening of the euro
GBP: euro rates (spot)
P&L impact shown after effects of hedging cashflows
Key booking period Peak
expenditure
Impact of €/£ rate on P&L
£m H1 H2
Revenue 17 (40)
Fuel (1) 3
Costs excluding fuel (6) 46
Total 10 9
• Progressive weakening of the euro versus sterling during FY 2014
• High level of forward bookings posted at around 1.20, cost incurred at better rate
15 15
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
Impact of fuel
FY 2014 FY 2013 Change B/(W)
Fuel $ per metric tonne
Market rate 973 992 19
Effective price 977 980 3
US dollar rate
Market rate 1.66 1.55 11 cents
Effective price 1.59 1.58 1 cent
Actual cost of fuel £ per metric tonne 614 619 5
Cost per metric tonne was broadly flat
16 16
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
Cost per seat excluding fuel - key drivers
Favourable/(adverse)
Cost per seat excluding
fuel £
Variance at constant currency
£
Variance at constant currency
%
Drivers
Airports and ground Handling
15.48 0.03 0.2%
• Lean initiatives savings • Decrease in de-icing costs following milder
winter weather conditions • Regulated airport charges • Cost impact of higher load factor
Crew 6.70 (0.12) (1.8%) • Pay increase broadly in line with inflation • Longer average sector lengths • Partially offset by lean initiative savings
Navigation 4.30 (0.11) (2.4%) • Longer average sector lengths • Inflationary increases
Maintenance 2.97 0.09 2.9% • One-off benefit of new engine deal • Increase in leased aircraft • Increase in average fleet age
Overheads 4.70 (0.11) (2.3%) • Higher employee performance-related pay • Continued IT and digital platform
development
Brand licence 0.16 (0.00) (1.2%)
Ownership 3.39 (0.02) (0.5%) • Annualised lease costs • Offset by ‘other financing’
Total CPS excluding fuel 37.70 (0.24) (0.6%)
NB: Foreign exchange gains and losses incurred in the prior year are included in calculating the year-on-year movement in “cost per seat excluding fuel
17 17
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
0.110.09
0.190.190.10
0.44
0.84
0.200.15
0.54
0.33
5 5 .19
5 5 .5 35 5 .5 5
FY 2014 Other Wet leasing
Load factor
Engine deal
A320 Mix easyJet lean
Before management
action
FX De-icing and
disruption
Fuel Inflation Regulated airports
FY 2013
Management actions taken to control costs
Cost per seat bridge
Including: Airports and ground handling – £0.26 Fuel and maintenance initiatives – £0.09
External factors Management action
18 18
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
Increasing proportion of A320s
FY 2014 FY 2013 Change
A319 (operating lease) 54 54 -
A319 (owned / finance lease) 99 99 -
A319 Total 153 153 -
A320 (operating lease) 18 18 -
A320 (owned / finance lease) 55 46 9
A320 Total 73 64 9
Total fleet 226 217 9
Unencumbered 94 82 12
Operating lease 32% 33% (1ppt)
Percentage of A320s in fleet 32% 29% 3ppt
19 19
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
Flexibility in fleet planning
Maximum, minimum and base case fleet size under the framework agreement
Flexible fleet arrangements to respond appropriately to market conditions
1. At the end of the relevant financial year 2. Based on fleet plan – base case 3. Maximum fleet does not include purchase rights
226 241
259
281 296
316 317 330 327
304 304 311 311
250 261
226
204 214
197 200
FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
Contracted Max Base Case Contracted Min
20 20
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
Strong balance sheet
*Gearing defined as (debt + 7 x annual lease payments – cash) divided by (shareholders’ equity + debt +7 x annual lease payments – cash)
£m FY 2014 FY 2013
Property, plant and equipment 2,542 2,280
Goodwill and other intangible assets 478 467
Other assets 477 428
Liabilities (excluding debt) (1,747) (1,716)
1,750 1,459
Debt 563 679
Cash and money market deposits (985) (1,237)
Net cash (422) (558)
Shareholders' equity 2,172 2,017
Capital employed 1,750 1,459
Gearing 17% 7%
21 21
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
Cashflow
1376
112
175
445
1336669
118
581
Capital expenditure
Ordinary dividend
Tax, net interest
and other
Net working capital
Depreciation and
amortisation
Operating profit
Sep 2013
1,237*
Sep 2014
985*
FX Other Borrowings Special dividend
* Includes money market deposits but excludes restricted cash
£m
Self funding ordinary dividend and capex
22 22
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
Fuel and foreign exchange hedging
Sensitivities
• $10 per tonne change in fuel price will impact the full year pre-tax result by +/- $3.5 million
• One cent movement in the £/$ will impact the full year pre-tax result by +/- £1.3 million
• One cent movement in the £/€ will impact the full year pre-tax result by +/- £1.1 million
Fuel requirement US dollar
requirement Euro surplus
Six months ending 31 March 2015
91% at $958 / metric tonne
91% at $1.60/£ 84% at €1.19/£
Full year ending 30 September 2015
80% at $944 / metric tonne
85% at $1.59/£ 77% at €1.18/£
Full year ending 30 September 2016
58% at $921 / metric tonne
55% at $1.64/£ 52% at €1.21/£
As at 14 November 2014
23 23
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
Progress against financial policies and metrics
Capital discipline
Capital structure
Liquidity
Dividend policy
Returns
+
+
+
=
Objectives • High asset efficiency • Maintain high level of fleet flexibility
• Ensure robust capital structure • Retain ability to invest in profitable
growth opportunities
• Maintain sufficient liquidity to manage through industry shocks
• Target consistent and continuous payments
• Return excess capital to shareholders
Metric
• Maintain industry leading returns • Top quartile ROCE
• Fleet size flexibility of between 204 and 316 aircraft by 2019
• Gearing: 15% to 30% • Moving to 80:20 ratio
on owned vs. leased aircraft
• £4 million cash per aircraft
• 40% ordinary dividend payout ratio
Gearing defined as net debt (adjusted by adding seven times aircraft dry leasing payments for the year) dividend by the sum of shareholders’ equity and adjusted net debt
Progress
• ROCE of 20.5%
• 226 aircraft with 11 hours asset utilisation
• Gearing: 17% • 32% leased
• £4.4 million cash per aircraft
• Ordinary dividend payment increased by 11.9 pence or 35.5% to 45.4 pence per share
Business review
Carolyn McCall
Chief Executive Officer
25 25
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
Industry-leading business model to drive returns
Proven strategy, execution and returns
easyJet will continue to deliver:
A. Future profitable growth
B. Industry leading return on capital employed and margins through revenue and cost initiatives
C. Cash returns for shareholders
• Flexible seat growth
between c.5% and c.8% per annum
• Maintain top quartile ROCE
• Ordinary dividend
increased to 40% of after tax profits
• Surplus cash to be
returned to shareholders
1. Build strong #1 and #2 network positions
2. Maintain cost advantage
3. Drive demand, conversion and yields across Europe
4. Disciplined use of capital
Leading business model Strategic drivers Growth and returns
26 26
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
Strong position built over time
Growing market share Sustaining unit cost performance
Financial strength Strong brand affinity
Sector-length adjusted CASK incl-fuel (CAGR Sep 2011-2014)
Fe
elin
g p
osi
tiv
e a
bo
ut
the
air
line
Source: Millward Brown Brand Tracker. Data not available for Norwegian in Switzerland, France, Germany and Italy and Vueling in the UK and Switzerland
*Vueling CASK CAGR is over the period Dec-10 to Dec-13 *Air Berlin as at 30 June 2014 **IAG Balance Sheet at Sep not available, therefore Average capital employed at June used in ROCE calculation & Gearing position is at 30 June 2014
-5%
0%
5%
10%
15%
20%
25%
-5% 15% 35% 55% 75% 95% 115%
Norwegian
easyJet
AF-KLM
Air Berlin*
IAG**
Lufthansa Group
Ryanair
RO
CE
Gearing
42%
25% 21%
32% 36%
47% 49%
29% 26%
40% 41%
52%
GatwickNo1
EdinburghNo1
NiceNo1
MalpensaNo1
GenevaNo1
BaselNo1
2011 market share
2014 market share
0%10%20%30%40%50%60%70%80%
easyJet Ryanair Vueling Norwegian
2.4%
4.9%
3.3%
4.5%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
easyJet Ryanair Norwegian Vueling*
27
0.6%
2.2%
3.7%
0.6%
5.0%
5.9%
3.5%
7.3%
Capacity on easyJet city pairs Capacity change total shorthaul market
easyJet capacity change Capacity on easyJet city pairs
Winter 13/14
Winter 14/15
Increasing capacity environment
Source: Market share data from OAG scheduled data, as at 30 October 2014, easyJet markets based on internal easyJet definition.
Capacity growth H1’15 vs. H1’14
Short-haul market easyJet city to city pairs
Flybe slots 1.5%
Capacity growth H2’14 vs. H2’13
easyJet city to city pairs
easyJet
Ryanair
BA
Vueling
Germanwings
Transavia
CityJet
Norwegian Other
28
United Kingdom +2.7%
France +4.1 %
Italy +5.2 %
Spain -2.2 % Switzerland +6.0%
Germany +15.1 %
Source : OAG, scheduled data and Internal easyJet projection November 2014. Country capacity growth is based on network touching seats.
Disciplined investment over Winter
Overall c. 3.5% capacity growth over Winter (before disruption)
2.7% 5.5%
2.9% 4.1%
5.4% 5.2%
-2.2% 5.8% 6.0%
4.0%
15.1%
5.9%
Market growth easyJet growth in the market
easyJet
Netherlands +13.3 %
10.3% 13.3%
Portugal +0.0%
13.9%
0.0%
29
Continuing to execute in 2015
Opening Amsterdam and Porto in 2015
31 new routes launched this year1
Opportunity to deepen existing traffic flows in core markets and develop new routes
easyJet lean pipeline of initiatives to deliver £30 million to £40 million savings per year
Fleet up-gauging with 20 A320s to be delivered in the year
Engineering & Maintenance re-tender
Airport deals – structure of contracts
Continuing to drive Innovation
Ordinary dividend payout ratio from one third to 40% of profit after tax
Industry leading margins will deliver strong future cash flows
Culture & people
Continued investment in talent development
Drive demand,
conversion and yields
New brand campaign
Personalisation and data mining
Product enhancements
• Passport scanning app
Continue to develop
• Business passenger opportunity
• Dynamic packaging
• Loyalty
#1 and #2 network
positions
Maintain cost
advantage
Disciplined use of
capital
Principles of easyJet lean and return on capital embedded throughout the organisation
Continued investment in our systems and digital platform
1. 2015 routes launched as at 18 November 2014
30 30
Opportunities across the network 1.
Network
This slide contains a selection of new routes
31
Strong position in London
Uniquely positioned Compelling network
“Serious consideration” by consumers
Source: Millward Brown. Brand scores for ‘Serious consideration’
63%
66%
50%
55%
60%
65%
70%
2013 2014
London
1. Network
Catchment size (millions) Market share
Gatwick 12 49%
Luton 11 44%
Stansted 10 15%
Southend 7 88%
Heathrow 14 N/A
108
48
25 12
0
20
40
60
80
100
120
Gatwick Luton Stansted Southend
Number of routes
32 32
Successful execution in Italy
Focus on higher yielding airports Opportunity
“Serious consideration” by consumers
1. Network
60%
55%
67%
63%
50%
55%
60%
65%
70%
Milan Rome
2013 2014
MXP
FCO
NAP
VCE
PSA
PMO
CIA
CTA
OLB
BRI
CAG
BDS
BLQ
VRN
LIN
SUF
GOA
TRN
AHO
REG
AOI
PSR
FLR
BGY
TRS
TPS
CRV
1. Build on strong market share in major catchment areas
2. Focus on business passengers and those with higher disposable incomes
3. Keep on building the brand and differentiating the product
Source: Millward Brown. Brand scores for ‘Serious consideration’
33 33
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
2. Cost
Advantage Maintaining the cost advantage
easyJet lean will deliver £30 million - £40 million in sustainable savings per annum over the next 5 years
Governance and milestones
Embedded throughout easyJet culture
Long and short term
savings
Covers the total cost
base
easyJet lean Capacity deployed on easyJet network(1)
(1) OAG full year 2014 – easyJet airport pairs capacity (2) IAG CASK includes Vueling, capacity excludes Vueling (3) CASK data for LTM to 31 December 2013
CASK graph: - Source: Airline Analyst - Data based on 12 month period ending 31 March 2014 - CASK converted using opening period fx rates
easyJet
Legacy carrier
Low cost carrier
Charter
0.0
2.0
4.0
6.0
2.94
0.99 1.65 1.98
5.60
3.11 2.14
4.60
500
Seats
(m)
CASK ex fuel, Airport; ground handling, navigation and en-route charges( p)
250 0
34 34
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
2. Cost
Advantage Pipeline of initiatives
Benchmarking process
Engineering & Maintenance
Fleet up-gauging and fuel savings
Savings across the cost base
• Costs benchmarked
against key competitors
• Revealed a further pipeline of saving initiatives
Engine selection
Engineering & Maintenance
Up-gauging
Airport deals
2015 2016 2017 2018 2019
easyJet lean initiatives will continue to deliver
• Airport deals • Ground Handling deals • Asset utilisation
35 35
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
Continuing to drive demand & conversion 3.
Demand
36 36
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
Continuing to drive demand & conversion 3.
Demand
37 37
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
Loyalty 3.
Demand
38 38
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
£46m £85m
£133m £180m
£150m
£175m
2010 2011 2012 2013 2014
Capital allocation continues to drive returns R
etu
rns
Routes
CPBH FY13
CPBH FY14
Improved returns year on year
ROCE for route performance and improved returns analysis defined as normalised profit after tax divided by average net debt plus average shareholders’ equity
4. Capital
Discipline
£769 million returned to shareholders
Top quartile ROCE
Special dividend (m)
Ordinary dividend (m)
6.9%
9.8% 11.3%
17.4%
20.5%
2010 2011 2012 2013 2014
39 39
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
H1 forward bookings
% seats sold *
H1 (October 2014 to March 20114) as at 12 November 2014
H1 bookings slightly ahead of prior year
FY’15 Outlook
89.1%
48.6%
90.9%
49.2%
Oct Nov Dec Jan Feb Mar H1
Winter 13/14
Winter 14/15
40 40
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
Outlook FY’15
Outlook
Capacity (seats flown)
• H1 c.+3.5% (before disruption)
• FY c.+5% (before disruption)
Revenue per seat (constant currency)
• H1: flat to very slightly up on the prior year
Cost per seat ex fuel (constant currency)
• H1 c.+2.5% (assuming normal disruption levels and constant load factors)
• FY c.+2% (assuming normal disruption levels and constant load factors)
FX
• H1: c.£5 million favourable movement from foreign exchange rates
• FY: c.£20 million adverse movement from foreign exchange rates
Fuel
• H1: unit fuel costs £12 million to £22 million favourable
• FY: unit fuel costs £22 million to £70 million favourable
Rates at 15 November 2014 £/USD: 1.5633; £/EUR: 1.2540 Unit fuel guidance based on Jet fuel trading range of $800 / metric tonne to $1,000 / metric tonne
easyJet is successfully executing its strategy of offering its customers low fares to great destinations with friendly service so that it will continue to win in a more competitive
market. This means easyJet is well placed to continue to deliver sustainable returns and growth for shareholders.
41 41
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
Industry-leading business model to drive returns
Proven strategy, execution and returns
easyJet will continue to deliver:
A. Future profitable growth
B. Industry leading return on capital employed and margins through revenue and cost initiatives
C. Cash returns for shareholders
• Flexible seat growth
between c.5% and c.8% per annum
• Maintain top quartile ROCE
• Ordinary dividend
increased to 40% of after tax profits
• Surplus cash to be
returned to shareholders
1. Build strong #1 and #2 network positions
2. Maintain cost advantage
3. Drive demand, conversion and yields across Europe
4. Disciplined use of capital
Leading business model Strategic drivers Growth and returns
Q & A
42
APPENDIX
43
44 44
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
H2 margins improved due to tight cost control
Reported £ per seat H2 2014 H2 2013 Change
Total revenue 69.85 69.82 -
Fuel (17.64) (18.04) 2.2%
Operating costs (33.44) (34.76) 3.8%
EBITDAR 18.77 17.02 10.3%
Ownership costs (3.11) (2.85) (9.1%)
Pre-tax profit 15.66 14.17 10.5%
45 45
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
ROCE Calculation – including 7x lease adjustment
Reported £m FY 2014 FY 2013
Earnings before interest and tax – reported 581 497
Interest element of operating lease payments 41 34
Earnings before interest and tax – adjusted 622 531
Tax 21% 23%
Normalised operating profit after tax (NOPAT) 492 409
Average shareholders’ equity – reported 2,095 1,906
Average net cash – reported (490) (242)
Average capitalised leases 791 690
Average capital employed 2,396 2,354
Return on capital employed – 7x basis 20.5% 17.4%
46 46
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
ROCE Calculation – NPV and target liquidity
Proforma £m FY 2014 FY 2013
Earnings before interest and tax – reported 581 497
Interest element of operating lease payments 25 31
Earnings before interest and tax – adjusted 606 528
Tax 21% 23%
Normalised operating profit after tax (NOPAT) 479 407
Average shareholders’ equity – reported 2,095 1,906
Adjustment to shareholders’ equity (25) (27)
Average shareholder’s equity – adjusted 2,070 1,879
Average net cash – reported (490) (242)
Increase in debt associated with capitalising leases 392 356
Target liquidity adjustment 886 862
Average net debt – adjusted 788 976
Average capital employed 2,858 2,855
Return on capital employed – NPV basis 16.8% 14.3%
47 47
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
RASK and CASK
FY 2014 FY 2013 Change
Total revenue per seat (£) 63.31 62.58 1.2%
At constant currency (£) 63.78 62.58 1.9%
RASK at constant currency (pence) 5.73 5.74 -
Total cost per seat excluding fuel (£) 37.70 38.17 1.2%
At constant currency (£) 38.41 38.17 (0.6%)
CASK excluding fuel at constant currency (pence) 3.45 3.51 1.3%
48 48
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
Aircraft cashflows including overhauls
Figures based on contracted fleet commitments
Aircraft FY 2015 FY 2014
Number of aircraft deliveries 20 9
Cashflows (USD) $m FY 2015 FY 2014
Final delivery payments 555 246
Pre delivery payments 110 290
Heavy maintenance - owned fleet 122 38
Total 787 574
Heavy maintenance - leased fleet 114 121
Total cash flows 901 695
Total cash flows (GBP) £564m £419m
49 49
Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold
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 performance, financial condition and business is or may be a forward-looking statement. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected or implied in any forward-looking statement. These risks and uncertainties include, among other factors, changing economic, financial, business or other market conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described in this presentation. As a result, you are cautioned not to place any reliance on such forward-looking statements. The forward-looking statements reflect knowledge and information available at the date of this presentation and the Company undertakes no obligation to update its view of such risks and uncertainties or to update the forward-looking statements contained herein. Nothing in this presentation should be construed as a profit forecast or profit estimate and no statement in this presentation should be interpreted to mean that the future earnings per share of the Company for current or future financial years will necessarily match or exceed the historical or published earnings per share of the Company.
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 bodies corporate, unincorporated associations and partnerships and trustees of high value trusts as described in Article 49(2) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001. Persons within the United Kingdom who receive this communication (other than those falling within (i) and (ii) above) should not rely on or act upon the contents of this communication. Nothing in this presentation is intended to constitute an invitation or inducement to engage in investment activity for the purposes of the prohibition on financial promotion contained in the Financial Services and Markets Act 2000.
This presentation has been furnished to you solely for information and may not be reproduced, redistributed or passed on to any other person, nor may it be published in whole or in part, for any other purpose.
This presentation does not constitute or form part of, and should not be construed as, an offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities of easyJet plc (“easyJet”) in any jurisdiction nor should it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. This presentation does not constitute a recommendation regarding the securities of easyJet. Without limitation to the foregoing, these materials do not constitute an offer of securities for sale in the United States. Securities may not be offered or sold into the United States absent registration under the US Securities Act of 1933 or an exemption there from.
easyJet has not verified any of the information set out in this presentation. Without prejudice to the foregoing, neither easyJet nor its associates nor any officer, director, employee or representative of any of them accepts any liability whatsoever for any loss however arising, directly or indirectly, from any reliance on this presentation or its contents.
This presentation is not being issued, and is not for distribution in, the United States (with certain limited exceptions in accordance with the US Securities Act of 1933) or in any jurisdiction where such distribution is unlawful and is not for distribution to publications with a general circulation in the United States.
By attending or reading this presentation you agree to be bound by the foregoing limitations.