2006 Interim Results. 03 May 2006

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Joshua Dorsey
5 years ago
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1 2006 Interim Results 03 May

2 Unlocking our potential Strong foundation Powerful business model Great brand Strong market presence and scale The key to the future Building a strong leadership team Clarity of customer proposition and network Rigorous detailed management on individual route performance and costs Encouraging early signs 2

3 Priorities and focus Revenue Costs People Network Rigorous detailed review of individual route performance and cost management 3

4 Highlights Good first half performance despite high fuel costs: pre-tax loss better than expectations at 40m Cost reduction momentum continues: cost per seat ex-fuel down 6% in H1 Revenue performance better than expected: passenger revenue -1.5% per seat, flat adjusting for Easter; ancillary revenue growth excellent +31% per seat Detailed review underway of network development and yield management Guidance upgraded with full year pre-tax profit growth now projected at 10% - 15% 4

5 Profit and loss account m H H Change Total revenue % Operating costs (602) (520) + 16% EBITDAR % Finance and ownership (68) (55) + 22% Pre-tax loss (40) (22) + 86% Margin (6.4%) (3.9%) -2.5pp Encouraging H1 but impact of fuel & Easter resulting in margin dilution 5

6 H Profit build-up: contribution per seat ( 22m) ( 3m) -60 ( 5m) 6 Fuel m 14m 76p 19m 102p 20m 112p ( 9m) (47p) (28p) ( 55m) (301p) ( 40m) H Volume Pax rev Ancil rev Ops cost Overhead Ownership

7 Passenger revenue: Easter impact largely offset H H Change Passengers (m) % Load factor 81.8% 83.8% -2.0pp Seats (m) % Pax revenue ( m) % Per seat % 7

8 Ancillary revenues: strong performance H H Change Ancillary revenue ( m) % Per seat % Partner revenues show significant improvement Change per seat H Card fees + 15% Change fees / Rescue fees + 27% Partner + 70% Excess baggage / Sporting goods + 64% In-flight - 8% Ancillary revenue per seat in order of revenue contribution 8

9 Cost per seat: falling costs amid significant fuel rise Better Worse Cost/seat H Change vs H Change vs H Other costs % Maintenance % Selling % Airports / handling % Navigation % Crew % Ownership % Fuel % Total % Total (ex fuel) %

10 Managing costs: selling and other Change in selling and other cost per seat H Q1 restructuring completed: 10% fall in head office headcount Continued benefit from reduced rates for aircraft insurance Reduction in consultancy costs of 3m compared to H Focus on efficient low cost head office 10

11 Managing costs: maintenance Change in maintenance cost per seat p H SRT contract delivering significant savings on A319 maintenance Reduction in fleet mix of s continuing: all 300s will have left the fleet by early FY 2007 Higher proportion of owned A319s reduces maintenance reserves Engine maintenance contracts being reviewed 11

12 Managing costs: airports Change in airport / handling cost per seat p H Continued efforts to offset inflation at airports Volume and growth discount savings at Geneva and Basel Progress made on self-handling in Spain: currently self-handling in Asturias and Almeria; Palma, Malaga and Alicante self-handling will commence in H2 Focus on quality of contribution going forward 12

13 Managing costs: crew Change in crew / training cost per seat p H Crew pay deal underway: above inflation increases offered reflecting productivity improvements and market adjustments Proposed 2 year deal will increase unit costs 11p / seat over term: impact of this in H1 offset by efficiency improvements Pilot and cabin crew pay negotiations continuing 13

14 Managing costs: aircraft ownership Change in aircraft ownership cost per seat p H p from increase in US interest rates and strengthening USD Improved financing and fleet mix helping to offset Better end of lease management delivering further savings Increase in owned A319s from 18 to 26 (17% to 23%); 3 A319s funded from operating cashflow Ongoing challenge to optimise fleet mix and financing 14

15 Managing costs: fuel hedging Jet A1 price per tonne (US$) Collar ceiling weighted averages H2 $676 / mt H2 $603 / mt Collar floor weighted averages Amount hedged: H2 44% 250 Oct 04 Jan 05 Apr 05 Jul 05 Oct 05 Jan 06 Apr 06 Jul 06 15

16 Managing costs: US$ hedging US$: Collar ceiling weighted averages H2 $ H2 $1.78 Collar floor weighted averages 1.60 Amount hedged: H2 80% 1.50 Oct 04 Jan 05 Apr 05 Jul 05 Oct 05 Jan 06 Apr 06 Jul 06 16

17 Net income and EPS m H H Change Pre-tax loss (40) (22) + 86% Tax % Net loss (29) (15) + 87% EPS (fully diluted) (7.2p) (3.9p) + 86% Full year effective tax rate 28% FY

18 Strong balance sheet m Mar 06 Sep 05 Aircraft (inc. deposits) Cash Goodwill Other assets Total assets 1,851 1,630 Debt Other liabilities Shareholders funds Total equity and liabilities 1,851 1,630 Gearing 32% 31% Gearing defined as (debt + 7 x annual lease payments cash) divided by (shareholders funds + debt + 7 x annual lease payments cash) 18

19 Good cash generation* m m 11m 126m 8m ( 107m) 726m 550 ( 47m) Cash 9/05 EBIT Depn / amort Wk capital Tax / interest Financing Net capex Cash 3/06 * March 2006 and September 2005 cash balances are shown as reported under IFRS. 19

20 Conclusion Encouraging performance for H1 Excellent progress on ancillary revenues Relentless approach to costs now and going forward Fuel exposure continues; 44% H2 cover but limited cover beyond Balance sheet and cash flow remain strong 20

21 Business Review Andy Harrison 21

22 Priorities and focus: network Revenue Costs People Network Rigorous detailed review of individual route performance and cost management 22

23 Network development: capacity growth Aircraft owned / leased at end of financial year Seats flown + 15% + 15% + 15% Actual Expected Expected Expected FY 2005 FY 2006 FY 2007 FY

24 Network development: operated fleet by base Base 9/05 9/06 Base 9/05 9/06 Gatwick Belfast 5 Luton Dortmund Stansted 13 Basel Bristol Glasgow Berlin Edinburgh 3 Liverpool E Midlands 3 Newcastle 6 Malpensa + 3 Paris Orly 5 Tactical 7-1 Geneva Total

25 Network development: European expansion continues Base opened March

26 Network development: new non-eu routes Seats on sale from March

27 Network development: key priorities network development concentrated on new airports: looking forward we expect a higher proportion of growth through added frequencies and depth to the existing network Ongoing review looking at quality of schedule and active management of route by route performance Focus on managing the diversity of the network: primary airports, secondary airports, sun and ski routes 100% 80% 60% 40% 20% 0% 4% New Capacity Growth 2003 and % 41% 69% 43% 16% Frequency increase Join the dots New airports 27

28 Priorities and focus: revenue Revenue Costs People Network Rigorous detailed review of individual route performance and cost management 28

Revenue: attractive options for business Internet check-in: No charge Hand baggage only Straight to security At gate 15 minutes before flight Apr 2006

29 Revenue: attractive options for business Internet check-in: No charge Hand baggage only Straight to security At gate 15 minutes before flight Apr 2006 available on 50% of departures Unlimited hand luggage allowance Change to earlier flight for free Fixed rescue fee with automatic transfer to next flight 29

before category A Freedom to choose your seat Uptake at point of sale

30 Revenue: product innovation Speedy boarding trial: started March 2006, extended to 10 new routes from May return to board before category A Freedom to choose your seat Uptake at point of sale or through manage my booking Small scale early trial demonstrating potential 30

Revenue: maximising ancillaries Dynamic packaging resulting in year on year improvement to conversion rates: insurance conversions up significantly since spring 2005 car conversions doubled in

31 Revenue: maximising ancillaries Dynamic packaging resulting in year on year improvement to conversion rates: insurance conversions up significantly since spring 2005 car conversions doubled in same period Improved collection process throughout the network: excess luggage change fees rescue fees Addressing in-flight Introduction of debit card charge in line with other low cost carriers 31

32 Revenue: fare optimisation In absolute terms fares remain low: median 38, mean 45 Low pricing optimised by route Increasing resource focused on yield management Route by route reviews Typical Fare Average Fare Median Mean easyjet Fare: Apr 05 - Mar 06 32

33 Priorities and focus: people Revenue Costs People Network Rigorous detailed review of individual route performance and cost management 33

34 People: a key point of difference 34

35 2006 outlook Passenger revenue: we now anticipate full year passenger revenue per seat to be broadly in line with 2005 Ancillary revenue: continued focus and new initiatives should result in around 20% growth per seat for the full year Cost ex-fuel: down by approximately 5% per seat Fuel: we assume the price of Jet fuel will stay around current levels Profit before tax: we expect pre-tax profit growth for the full year to be in the range of 10% to 15% 35

36 Appendix

37 Operating statistics H H Change Seats (m) % Load Factor (%) pp Passengers (m) % ASKs (m) 16,672 14, % RPKs (m) 13,642 12, % Stage Length (km) % Sectors 118, , % 37

38 Calculated amounts H H Change Total Revenue per pax ( ) % Cost / ASK (p) % Cost / ASK (ex fuel) (p) % 38

39 H profit & loss: summary IFRS adjustments* m UK GAAP Change IFRS Total revenue Operating costs (516) + 3 (519) EBITDAR Finance and Ownership (60) - 5 (55) Pre-tax loss (31) + 9 (22) Margin (5.6%) 1.7pp (3.9%) Elimination of goodwill amortisation is the key difference * Further details of the changes under IFRS are given in the full accounts and in the 20 January 2006 release Explanation of the financial impact following adoption of International Financial Reporting Standards ( IFRS ) 39

40 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 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 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 therefrom. 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. 40

2006 Preliminary Results. 14 November 2006

2006 Preliminary Results. 14 November 2006 2006 Preliminary Results 14 November 2006 1 Business highlights Record profit before tax of 129 million Passenger numbers up 11.5% to 33 million Fleet increased to 122 aircraft, new order announced today