easyjet plc Year to 30 September 2011 Pre-close statement presentation

Transcription

1 EZYRIDER\Presentations\ Mgmt Strategy Presentation\Optimise returns MAIN v 42.pptx easyjet plc Year to 30 September 2011 Pre-close statement presentation 1

2 EZYRIDER\Presentations\ Mgmt Strategy Presentation\Optimise returns MAIN v11.pptx Driving performance Re-build operational robustness Complete and focused management team Revenue; yield and ancillaries Brand deals 2

3 Jan 2010 Feb 2010 Mar 2010 Apr 2010 May 2010 Jun 2010 Jul 2010 Aug 2010 Sep 2010 Oct 2010 Nov 2010 Dec 2010 Jan 2011 Feb 2011 Mar 2011 Apr 2011 May 2011 Jun 2011 Jul 2011 Aug 2011 EZYRIDER\Presentations\ Mgmt Strategy Presentation\Optimise returns MAIN v11.pptx Strong operational performance 90% 80% 70% 60% 50% 40% 30% On Time Performance LGW Network No independent data for OTP available for Ryanair since May 3

4 EZYRIDER\Presentations\ Mgmt Strategy Presentation\Optimise returns MAIN v11.pptx Current trading better than expected Guidance for year to 30 September 2011 Revenue per seat FY Underlying cost per seat ex fuel (constant currency) 22nd July 2011 Q3 IMS 22nd Sept 2011 FY +2% to +3% +3% H2 +4% to +5% +6% -1% to -2% -1% to -2% Pre-tax profit 200m to 230m 240m to 250m ROCE 10% to 12% >12% 4

5 EZYRIDER\Presentations\ Mgmt Strategy Presentation\Optimise returns MAIN v11.pptx Hedging update Percentage of anticipated requirement hedged Fuel requirement US Dollar requirement Euro surplus sale Full year ending 30 September % 69% 71% Rate $956MT $ Full year ending 30 September % 32% 34% Rate $1006/MT $ At current fuel and exchange rates* it is anticipated that easyjet s 2012 fuel bill will increase by around 220 million As at noon Jet CIF $1,009 per metric tonne US $ to sterling 1.57 euro to sterling

6 EZYRIDER\Presentations\ Mgmt Strategy Presentation\Optimise returns MAIN v11.pptx Forward bookings and costs % seats sold * September October November Third of F 12 seats now booked and total revenue per seat continues to show improvement versus the prior years albeit at a lower rate of growth that the strong fourth quarter of F 11 Costs headwinds in F 12 from ETS and regulated airports in Spain, Italy and the UK As at

7 EZYRIDER\Presentations\ Mgmt Strategy Presentation\Optimise returns MAIN v11.pptx Agenda 1. Current trading 2. Strategic context 7

8 EZYRIDER\Presentations\ Mgmt Strategy Presentation\Optimise returns MAIN v 42.pptx easyjet competitive advantage Excellent market positions and highly attractive business model Leading short-haul network in Europe 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 compared to carriers flying to similar airports High asset utilisation (average of 11 hours a day) Consistently industry leading load factors Financial and balance sheet strength Presence in top 100 market pairs * easyjet BA / Iberia Ryanair Lufthansa Group 41 Air France KLM Cost per ask * * Alitalia 1 20 Air Berlin-NIKI SAS Norwegian Vueling Airlines Other Marketing Ownership Maintenance Airport & ATC Fuel Crew Non primary airports Number of market pairs operated between two primary airports 1 2 easyjet has a significant cost advantage compared to carriers flying to similar airports * Source: OAG 12 months to Sep10, OAG market definitions Primary airport = airport over 10 mppa or largest airport in market Lufthansa Group includes Austrian, bmi, bmibaby, Brussels Airlines, germanwings, Swiss * * Source: Deutsche Bank 8

9 C:\Documents and Settings\dasroh.FIRMWIDE\Desktop\UBS 02.pptx easyjet fleet dynamics Young fleet intrinsic to achieving high asset efficiency Operating a young fleet is an intrinsic part of our business model Maximises aircraft availability and hence utilisation Minimises operating costs, especially maintenance Specification of new aircraft improves over time and hence reliability 2,0 1,8 1,6 1,4 1,2 1,0 0,8 Cost per Flight Hour Indexed Risk of maintenance costs rising due to increased unscheduled maintenance events After years work is required to contain structural fatigue Engine on-wing time at mature levels Engine life-limited parts may reach their replacement lives 5 to 12 years, maintenance costs are fairly constant 0,6 0, Age of Aircraft (years) Source: easyjet During first five years warranty terms reduce costs 9

10 EZYRIDER\Presentations\ Mgmt Strategy Presentation\Optimise returns MAIN v11.pptx Background to capacity plan July 2009: Board incl. SHI agree a medium growth rate November 2010: Incoming CEO / CFO carry out rigorous independent strategic review: 1. Switch to focus on ROCE as the key metric 2. Reconfirm medium growth rate 3. Flexibility in capacity and fleet is critical May 2011: Board announced it was utilising flexibility to take a cautious approach to capacity and in light of high cost of jet fuel and uncertain consumer demand will cap the fleet at 204 aircraft for Winter 11/12 and 12/13 10

11 EZYRIDER\Presentations\ Mgmt Strategy Presentation\Optimise returns MAIN v11.pptx Fleet Count High degree of fleet flexibility Max fleet Fleet requirement for market growth of 3% Min fleet FY11 H2 FY12 H1 FY12 H2 FY13 H1 FY13 H2 FY14 H1 FY14 H2 FY15 H1 FY15 H2 Fleet count if 15 aircraft had not been announced in Jan 2011 Required deliveries FY11 H2 FY12 H1 FY12 H2 FY13 H1 FY13 H2 FY14 H1 FY14 H2 FY15 H1 FY15 H2 Min Fleet Market Growth Max Fleet

12 EZYRIDER\Presentations\ Mgmt Strategy Presentation\Optimise returns MAIN v 42.pptx Framework for managing route performance CPBH Source: easyjet management plan 1. CPBH or Contribution Per Block Hour expresses total contribution in terms of aircraft operating time, using the industry standard metric, namely "block hour". For a given level of capital employed, we derive the direct contribution per block hour required to cover overhead and achieve a 12% ROCE 2. Analysis based on actual performance of the FY2011 route network up to July 2011(10 months) plus outlook for the remainder of FY

13 EZYRIDER\Presentations\ Mgmt Strategy Presentation\Optimise returns MAIN v 42.pptx Managing route performance Evolution of ROCE by route evolution (2009 routes) Track record of improving performance over time Routes FY2009 FY2010 FY % 13

14 C:\Documents and Settings\dasroh.FIRMWIDE\Desktop\UBS 02.pptx easyjet finance strategy Objectives Measures Return Targets Earn returns in excess of cost of capital through the cycle Invest in growth opportunities where returns are attractive Improve PBT per seat to GBP5 Post tax ROCE of 12% through the cycle Capital Structure And Liquidity Ensure robust capital structure Return excess capital to shareholders Maintain sufficient level of liquidity to manage through the cycle and industry shocks Maximum gearing of 50% * Cap of GBP 10m adjusted net debt per aircraft Minimum GBP 4m cash per aircraft Dividend Policy Targeting consistent and continuous dividend payout 5x cover, subject to meeting gearing and liquidity targets Annual payment based on full year PAT; introduced for FY 2011, payable 2012 Consider returns over 5x cover to reduce excess capital Aircraft Ownership Maintain flexibility around fleet deployment and size Target of 70% owned aircraft, 30% leased aircraft Hedging Insulate short term operating performance against adverse movements in fuel price and exchange rates 65%-85% of the next 12 months anticipated requirements 45%-65% of the following 12 months anticipated requirements *Gearing defined as (debt + 7 x annual lease payments cash) divided by (shareholders funds + debt +7 x annual lease payments cash) 14

15 C:\Documents and Settings\dasroh.FIRMWIDE\Desktop\UBS 02.pptx Capital allocation Ordinary dividend: 5x cover or c. 40m or c. 9 pence per share based on current guidance One-off capital return: Board expects in November 2011 recommend a one-off capital return, of 150 million, likely to be in the form of a special dividend payable early calendar 2012 Capital expenditure: 1. Maintain fleet size (replacement of leased aircraft and engine overhaul) 2. New network opportunities; required to deliver on-target returns within a tight and defined timescale 15

16 C:\Documents and Settings\dasroh.FIRMWIDE\Desktop\UBS 02.pptx Capital cash flow including financing and overhauls Assumes capacity growth in line with the market $318m $431m $590m Total Aircraft Capex: 786m Total Aircraft Capex: 627m Total Aircraft Capex: 401m Source: easyjet management plan 1) Including $118m of proceeds from disposals and $101 additional cumulative capex 2) Capex is shown pre-financing current plan is to maintain 70%/30% owned/leased mix 3) Shop visits are assumed at an engine life of seven years 16

17 EZYRIDER\Presentations\ Mgmt Strategy Presentation\Optimise returns MAIN v11.pptx Summary Business continues to trade well Board has committed to delivering returns in excess of the cost of capital and returning excess capital to shareholders easyjet has significant flexibility in its capacity and fleet planning easyjet has a robust framework for allocating capital and will not allocate new capital unless it will deliver target returns in a tight and defined timescale 17