1 1 1
Interim results Analyst and investor presentation
10 May 2011
Introduction Carolyn McCall
Chief Executive
2 2
Making progress despite tough environment
First half pre-tax loss of £153 million in line with guidance
Net cash improved by £148 million to £230 million
On target against all capital structure metrics
Improved position in Mainland Europe in line with plans:
easyJet capacity grew 17.9% versus market growth of 2.1%*
Management actions delivering:
Benefits from amended brand licence
Recovery in ancillary revenues
Improved operational performance
Good progress on delivery of strategic initiatives
3 3
*source OAG
Finance review Chris Kennedy
Chief Financial Officer
4 4
Financial results
5 5
£m H1’11 H1’10 Change
B/(W)
Total revenue 1,266 1,171 8.1%
Fuel (383) (305) 25.6%
Operating costs excluding fuel (928) (843) 10.1%
EBITDAR (45) 23 (295.7)%
Ownership costs (108) (102) 5.9%
Loss before tax (153) (79) (93.7)%
Margin (12.1)% (6.7)% (5.4)ppt
Seats (million) 28.1 25.3 11.1%
Total revenue per seat 45.11 46.35 (2.7)%
Total cost per seat excluding fuel (36.94) (37.37) 1.2%
Fuel cost per seat (13.64) (12.09) (12.8)%
Loss before tax per seat (5.47) (3.11) (75.9)%
Financial results
6
£m H1’11 H1’10 Change
B/(W)
Loss before tax (153) (79) (93.7)%
Tax credit 39 20 96.7%
Loss after tax (114) (59) (93.2)%
Loss per share 27 pence 14 pence (92.9)%
Return on capital employed (7.5)% (3.7)% (3.8)ppt
Return on equity (7.5)% (4.4)% (3.2)ppt
Effective Tax Rate is expected to be 26% in F’11
-1.55-0.27
Loss per seat
7 7
-3.20
-3.40
-3.60
-3.80
-4.00
-4.20
-4.40
-4.60
-4.80
-5.00
-5.20
-5.40
-5.60
-5.80
H1 2011
0.00
Other
costs
+0.20
Crew Disruption
+0.13
Fuel (inc fx) Revenue
-5.47
FX (ex fuel)
+0.11
H1 2010
-3.11
-3.00
-0.98
Currency impact
8 8
Currency split - total costs Currency split - total revenue
Swiss Franc
Sterling 47%
Euro
Other
2%
35%
24%
34%
Swiss Franc
Sterling
6%
US Dollar Euro
Other
1%
H1 2011 currency impact favourable / (adverse)
EUR USD
Revenue (13) -
Fuel - (27)
Costs excluding fuel 23 (5)
-4.5%
0.3%
6.1% 3.6%
2.4%
-0.4%
7.7% 9.8%
6.0%
Continued strong load factors
9 9
H1 ‘11 H1 ‘10 Change
Passengers (m) 23.9 21.5 11.6%
Load factor (%) 85.4% 85.0% 0.4ppt
Seats (m) 28.1 25.3 11.1%
Sector length (km) 1,069 1,072 (0.3)%
Total revenue (£m) 1,266 1,171 8.1%
Total revenue per seat (£) 45.11 46.35 (2.7)%
@ constant currency (£) 45.37 46.35 (2.1)%
Q2’11
84.1%
14.6%
Q1’11
86.7%
Q4’10
90.9%
7.0%
Q3’10
86.1%
1.7%
Q2’10
84.2%
Q1’10
85.8%
Load factor
Capacity growth
Total revenue per seat at constant currency
Passenger and ancillary revenues
10 10
H1 ‘11 H1 ‘10 Change
Passenger revenue (net of passenger taxes) (£m) 980 913 7.5%
Gross passenger revenue per seat (£) 40.69 41.22 (1.3)%
Net passenger revenue per seat (£) 34.91 36.12 (3.3)%
Ancillary revenue incl. checked bag (£m) 286 258 10.4%
Ancillary revenue per seat (£) 10.20 10.23 (0.3)%
£ change in ancillary revenue per seat vs H1 2010
Bag charging (0.33)
Fees and charges 0.64
Partner and In–flight revenues (0.34)
Total (0.03)
Low single digit growth in UK unit revenues offset by investment in
mainland Europe
10
Revenue per seat
11 11
46.40
46.20
46.00
45.80
45.60
-0.76
FX
-0.26
H1 2010
+46.35
Other routes Ancillary
revenue
Investment
routes*
-0.87
+45.11
H1 2011 Passenger
taxes
0.00
44.60
45.00
44.80
45.20
45.40
Impact of fuel
12
H1 ‘11 H1 ‘10 Change B/(W)
Fuel $ per metric tonne
market rate 850 662 (188)
effective price 769 744 (25)
US dollar rate
market rate 1.59 1.60 (1 cent)
effective price 1.60 1.74 (14 cents)
Actual cost of fuel £ per metric tonne 481 429 (52)
12 12 12 12
£52 per metric tonne increase equal to £43m cost or £1.55 per seat,
volume impact is additional £34m
Impact of disruption
3,477 sectors lost due to snow and
external strike action
Total impact in H1 of £31million
Additional cost £24m
Lost contribution £7m
Actions in place to offset most of
the £31m impact
Reduction in cost per incident of
10% compared to H1‟10
Planned recovery of H1 disruption cost by end of FY2011
£m
Contribution from
additional
revenue activities
17
Cost savings 11
28
• 3 extra peak lines of flying
• Fees & charges price changes
• Distribution channels
• Bag pricing on longer sectors
• • Merchant fees
• Engineering
• Airports
13
Cost per seat - key drivers
14 14 14 14 14
Favourable/(Adverse)
£ cost per
seat ex fuel Reported
Constant
Currency Drivers
Ground Operations 14.38 2.8%
1.1% Procurement and efficiency initiatives
offsetting price inflation and mix
Crew 6.58 (6.2)% (6.8)% Planned investment in crew to ensure
capacity and robustness ahead of
summer
Navigation 4.28 4.2% (0.3)% Regulatory price increase offset by
savings from careful route planning and
weight management
Maintenance 3.02 1.8% 2.4% Benefit of SRT deal and ongoing
savings initiatives
Overhead 4.75 3.7% 2.6% Tight control of overheads and
improvement in disruption cost per
incident
Brand Licence 0.07 nm nm New brand licence royalty
Ownership costs 3.86 1.2% 5.4% Higher proportion of A320s and return of
more expensive Boeing and ex GB
aircraft
Total cost (ex fuel) 36.94 1.2% 0.2%
Fuel and foreign exchange hedging
Sensitivities:
$10 movement per mt impacts F‟11 second half PBT by $3.4m
One cent movement in £/$ impacts F‟11 second half PBT by £0.8m
15 15
Fuel requirement US dollar
requirement
Euro surplus
Six months ending 30 September 2011 64% at $755/tonne 80% at $1.60/£ 64% at €1.10/£
Full year ending 30 September 2011 70% at $734/tonne 76% at $1.60/£ 64% at €1.10/£
Full year ending 30 September 2012 41% at $909/tonne 71% at $1.59/£ 55% at €1.13/£
Fleet
16 16 16 16
Mar 2011 Sept 2010 Change
A319 (operating lease) 61 46 15
A319 (finance lease) 6 6 -
A319 (owned) 95 107 (12)
A320 (operating lease) 6 6 -
A320 (finance lease) 5 2 3
A320 (owned) 18 15 3
Main fleet 191 182 9
B 737-700 (operating lease) 7 8 (1)
GB Airways A320 (operating lease) 1 2 (1)
GB Airways A321 (owned) - 4 (4)
Sub-fleet * 8 14 (6)
Total fleet 199 196 3
Owned or finance lease 62% 68% (6)%
Operating lease 38% 32% 6%
* Four aircraft in the sub-fleet were returned to lessors during April 2011
Owned / Leased – target 70:30 mix
17
March - 11 May - 11 July - 11
Target
Leased
Owned
Continued strong cash generation
18 18 18 18 18 * Includes money market deposits but excludes restricted cash
+43
+362
+292
1,500
(204)
1,100
Capex
1,350
March
2011*
1,250
1,300
Financing Tax,net int,
fx & other
(84)
Net working
capital
1,150
Operating
profit
(144)
September
2010*
+1,172
March
2010*
1,650
1,600
1,200
1,400
0
1,450
1,050
1,550
+1,358
+1,437
Depn &
amort
Strong balance sheet
19 19 19 19 19 19
£m Mar ‘11 Mar ‘10
Sept ’10
Fixed assets 1,932 1,739 1,928
Cash and money market deposits 1,437 1,358 1,172
Goodwill and other intangible assets 451 450 452
Other assets 568 585 451
Total assets 4,388 4,132 4,003
Debt 1,217 1,276 1,212
Other liabilities 1,662 1,514 1,290
Shareholders‟ equity 1,509 1,342 1,501
Total equity and liabilities 4,388 4,132 4,003
Gearing* 26% 33%** 33%**
*Gearing defined as (debt + 7 x annual lease payments – cash) divided by (shareholders funds + debt +7
x annual lease payments – cash)
**Prior Year gearing restated for current year methodology (i.e. excluding restricted cash)
20
Business review Carolyn McCall
Chief Executive
20
Fix operational performance
Fix On Time Performance
Focus on first wave and turnaround
Better supervision and partnership of ground handling and airport agencies
Get Gatwick back on track
Fix crew
Rosters tested early
Training schedule aligned to demand
Mitigate ATC and airport industrial action:
Firebreaks in schedule
Improved disruption management; localised decision making
21 21 21
Result: robust, reliable and punctual operation
Improved operational performance
Improved On Time Performance
across the network
Gatwick OTP returned above
network average
Improved customer satisfaction -
up 8% to 82% in the quarter to
March 2011
OTP back in line with competitors
22 22 22
78
80
82
84
76
74
72
70
68
66 2
0
Avg YTD 10
73 68
75
84
74 73
Avg YTD 11
73 74 75
82 78
76
Lufthansa
British Airways
Ryanair
KLM
Air France
easyJet
Flightstats.com - 6 months to end March
2011
22
Amended brand licence
Approved by EGM December 2010
Royalty payment to easyGroup IP of
0.25% of total revenue
Capped at £3.95 million in F‟11 and
£4.95 million in F‟12
Benefiting easyJet:
Nectar deal – access to 17 million
consumers and marketing support
e.g. TV advertising
VisitBritain partnership – £9m
benefit to easyJet over 3 years
Unlock Tourist Boards
23 23
Delivering against our objectives
To grow fares through continued network optimisation and
driving the business traveler proposition harder;
To grow ancillary revenues through both yield management of
fees and charges and partner and in-flight revenues through
better execution and innovation; and
Smart cost management by reducing complexity and disruption
costs in the business and continuing to drive procurement
initiatives in airports, ground handling and maintenance.
24 24
Targets: 12% Return on Capital employed through the cycle;
£5 PBT per seat
November 2010 results statement:
Robust business model
25 25 25
Financially strong
£220million net cash
Un-drawn facilities of $0.5bn
Strong consumer appeal
Across leisure and business
Leading short-haul network
Leading presence on Top 100 routes
Strong positions in key markets
Good range of leisure and business
destinations
Low cost and efficient
Scale and cost advantage
High asset utilisation (average of 11 hours a
day)
Consistently industry leading load factors
Clear strategy to improve margins
easyJet strongly positioned to adjust over time to higher fuel costs
Industry leading load factors
* Source gfk
0%
10%
20%
30%
40%
50%
60%
Would strongly
recommend
Would recommend
Unsure Unlikely to recommend
Definately would not
recommend
BA Ryanair easyJet
Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11
Strong consumer appeal
Strategy implementation update
1. People
2. Network
3. Passengers travelling on business
4. Ancillary revenues
5. Cost management
26
CEO
Europe Customer &
Revenue Marketing Operations Finance
Support Function
Mike
Campbell
Cath
Lynn
Peter
Duffy
Warwick
Brady
Chris
Kennedy
Carolyn McCall
People and strategy aligned
AMB rebuilt and focused on customers, people, cost and OTP
Bonus targets aligned across the business
Targets set for: OTP, customer satisfaction, cost per seat and PBT
Longer term incentives aligned to ROCE
Structure better aligned to strategy and business deliverables
Flat and lean organisation
Improved focus on mainland Europe, Brand and Customer
27 27 27
28
Network optimisation
Progress H1:
Invested frequency on key business routes
e.g. London to Amsterdam, Paris to Toulouse
Launched new leisure routes e.g. Bristol to
Fuerteventura
Gained valuable peak time slots and
improved position in mainland Europe
Underperforming routes exited – more than 20
routes cut from network in F‟11
Focus H2:
Optimise profitability shift capacity in July and
August from Business to leisure
Focused growth in mainland Europe
Continued investment in frequency
Goal: To improve underlying ROCE of the network through optimisation
of schedule and route portfolio
Daily freq A/B routes June 2nd week
0
5
10
15
20
25
30
1 2 3 4 5 6
count of routes
daily rotations
2009 2010 2011
* A and B routes are those to locations suitable
for passenger travelling on Business i.e.day or
short trips.
28
Targeted growth in key markets
29 29 29 29
Spain
+4%
Italy
+6%
France
+11%
UK +4%
Switzerland +14%
Source: OAG Figures
Netherlands
+24%
Mainland
Europe
up 10%
easyJet „scheduled‟ capacity up 6% in H2*
* Schedule capacity equate to OAG i.e. planned
capacity before any cancellations due to volcano or
ATC issues
Investments drive improved unit revenues
Unit revenues influenced by market capacity:
Step 1 – easyJet investment
Step 2 – competitor capacity reduction
Step 3 – market capacity reduction and unit revenue improvement
30
Route 2 Route 1
2005 2006 2007 2008 2009 2010
Capacity RPS
Year
RPS Comp cap EZY cap total cap
2005 2006 2007 2008 2009 2010
Capacity
Year
RPS Comp cap EZY cap total cap
RPS
Passengers travelling on business
Progress H1:
Punctuality improved
Frequency increase on key business routes
London-Amsterdam up to 13 a day
Milan-Paris up to 8 a day
Flexible fare tested on GDS
Sales force recruitment underway
Focus H2:
Operational robustness
Build frequency on key routes
Flexi-fare rollout on easyJet.com
TMC‟s negotiation
31 31
Goal: To drive additional contribution of by delivering improvements in
product and distribution for passengers travelling on business
easyJet markets
easyJet capacity
* A and B routes are those to locations suitable
for passenger travelling on Business i.e.day or
short trips.
90
markets 370
markets
56%
44%
Passengers travelling on business
32
Building blocks for business proposition
Improve punctuality
Build product
- Increased frequency
- Launch Flexi Fare
Recruit Salesforce
Distribution
- TMC Incentives
- Payment Settlement Solutions
- Industry Standard Booking Process
FY 11 FY12
Improve punctuality
Build product
- Increased frequency
- Launch Flexi Fare
Recruit salesforce
Distribution
- TMC Incentives
- Payment settlement solutions
- Industry standard booking process
FY13
Marketing / CRM
Ancillary revenues back on track
Progress in H1:
Bag pricing increased – bags back
on track
Booking fee increased to £8 from
£5.50
Improved online merchandising
Focus H2:
Re-negotiation of car partnerships
Refreshed in-flight range launched
in April
33 33
Q4 2010 Q3 2010
-0.5%
Q2 2011 Q1 2011
Per seat yoy change in ancillary revenues
Goal: To grow ancillary revenues through yield management of fees
and charges and better execution of partner and in-flight
Maintaining easyJet’s cost advantage
Progress H1:
Unit costs ex fuel fell across all
categories apart from Crew
Improved operational resilience
Disruption costs 10% lower per incident
Implemented plans to increase
number of lower cost A320
Focus H2:
Focused easyJet leans projects
sponsored by CFO
Improve fuel burn
Fair and realistic pay settlements in
light of fuel price escalation
Tight control of overheads
34 34
Cost ex fuel per ask*
Goal: To maintain cost advantage by ensuring below inflation unit cost
movement through procurement, crew flexibility and operational excellence
easyJet has a significant cost advantage
compared to carriers flying to similar airports
* Source: Deutsche Bank
Case study: maintenance costs
Leverage existing contracts
by renegotiation
Move Base maintenance to a
lower cost location
Increased utilisation of Luton
Facility
In source end of lease activity
35
Maintenance cost per seat reducing despite
strengthening of the dollar
£3.06
2009 2011 F
Reduce maintenance costs without compromising
safety or operational performance
Flexible approach to capacity
Phase 1 - Summer 2011
8% planned growth in seats flown
Investing to support strategy, 64% hedged at $755 a metric tonne
Phase 2 – October 2011 onwards
Aim to use flexibility to keep the fleet size at c. 204 for Winter 11/12 and Winter
12/13
Conservative approach to capacity growth
Focus on maturing existing investments whilst market adjusts to higher fuel
costs
Phase 3 – medium term 2013 onwards
Continue to believe in the mid-term growth opportunities for easyJet that we
outlined in November 2010
36 36 36 36 36 36
294
239
Forward bookings in line
37
Second half bookings in-line with prior year
May distorted by impact of volcano (seats and loads)
Nearly half of available summer seats now sold
37
May June July August September
F'11 F'10
37 37 37
% seats sold *
* As at 6th May 2011
Outlook
Capacity (seats flown)
FY +11% reported, +9% ex volcano
H2 +12% reported, +8% ex volcano
Revenue per seat (constant currency)
FY broadly flat
H2 slightly ahead of prior year
Cost per seat ex fuel (constant currency)
FY down 2% (assuming no further significant disruption)
Dividend in line with policy of cover of 5 x
38
“Based on our performance in the first half, the impact of the strengthening of
the euro on our cost base, which has been largely offset by a compensating
benefit on revenues and current yield trends, the outlook for the full year
remains in line with expectations at current fuel and exchange rates.”
Summary
Doing what we said we would do
Fixed punctuality and reliability
Fixed crew numbers
Customer satisfaction improving
Team in place
Good progress on cost
Strategy implementation on track
Challenging environment but easyJet strongly positioned
Advantaged network
Strong consumer appeal
Well financed; low cost and efficient
Committed to delivering ROCE of 12% through the cycle
Maintain strong balance sheet
Formulaic dividend policy - 5 times cover
39 39
40 40 40 40
Q&A
41 41 41
Appendix
Fleet plan
42 42 42 42 42 42
294
239
30 Sept 2011 30 Sept 2012 30 Sept 2013
A319 167 158 153
A320 35 55 66
A321 1
B737 2 - -
Total 204 213 220
Net increase in fleet size 8 9 7
4% 4% 3%
Net capital expenditure $249m $400m $600m
RASK and CASK
43 43
H1 ‘11 H1 ‘10 Change B/(W)
Total revenue per seat 45.11 46.35 (2.7)%
at constant currency 45.37 46.35 (2.1)%
RASK at constant currency (pence) 4.24 4.32 (1.8)%
Total cost per seat ex fuel 36.94 37.37 1.2 %
at constant currency 37.30 37.37 0.2%
CASK ex fuel at constant currency (pence) 3.49 3.49 flat
44 44
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 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.
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