Full year results analyst and investor presentation Tuesday 17 November 2015
Introduction Carolyn McCall Chief Executive Officer
easyjet strategy delivers record results Profit before tax has increased for the fifth consecutive year Passengers + 6.0% 69 million Revenue + 3.5% 4,686m Profit before tax + 18.1% 686m PBT margin +1.8ppts 14.6% EPS + 21.5% 139.1p Operating cash flow + 12.9% 895m DPS + 21.6% 55.2p ROCE + 1.7ppt 22.2% TSR +28% 3 3
Financial review Andrew Findlay Chief Financial Officer
Strong financial performance FY 2015 m FY 2014 m Change % Change % @ CC Total revenue 4,686 4,527 3.5% 6.5% Fuel (1,199) (1,251) 4.2% 4.6% Costs excluding fuel (2,801) (2,695) (3.9%) (8.7%) Profit before tax 686 581 18.1% 20.2% Profit before tax margin 14.6% 12.8% 1.8ppt EBITDAR 940 823 14.1% 16.7% EBITDAR margin 20.0% 18.2% 1.8ppt Earnings per share 139.1 114.5 21.5% Dividend per share 55.2 45.4 21.6% Return on capital employed 22.2% 20.5% 1.7ppt 5 5
Profit before tax increased 18% Profit/(loss) bridge 800 159 (38) 750 (68) 700 686 12 698 650 52 686 600 581 0 FY 2014 Fuel Revenue Crew Other Costs FY 2015 resilience, de-icing and disruption Fx FY 2015 @ CC 6 6
Revenue performance m FY 2015 FY 2014 Change Passengers (m) 68.6 64.8 6.0% Load factor (%) 91.5% 90.6% +0.9ppt Seats flown (m) 75.0 71.5 4.9% Average sector length (km) 1,118 1,112 0.5% Total revenue - reported ( m) 4,686 4,527 3.5% Total revenue - constant currency ( m) 4,821 4,527 6.5% Total revenue per seat - reported ( ) 62.48 63.31 (1.3%) Total revenue per seat - constant currency ( ) 64.28 63.31 1.5% RPS growth at constant currency easyjet capacity growth 3.7% 2.9% 4.3% 4.7% 3.2% 7.0% 1.4% 1.5% 4.9% Q1 Q2 Q3 Q4 FY -2.8% 7 7
A strong focus on costs Total cost per seat bridge Cost per seat ex-fuel: -0.9% Cost per seat ex-fuel @ constant currency: +3.6% 0.58 56.71 0.25 0.12 0.12 0.16 0.36 56.50 1.53 0.43 0.13 0.38 55.19 1.64 53.33 FY 2014 Regulated De-icing and Eurocontrol Other Before A320 mix Crew Load factor FY 2014 Net other airports disruption settlement inflation management resilience engine deal cost savings inflation Footer box on intersect of lines action line h=8.03 9 and v=8.75 with font 10pt Arial not bold Before movement in fuel and FX Fuel FX FY 2015 External factors Management action 8 8
Impact of fuel & currency FY 2015 fuel impact favourable / (adverse) FY 2015 FY 2014 Fuel $ per metric tonne Market rate 619 973 Effective price 872 977 US dollar rate Market rate 1.54 1.66 Effective price 1.58 1.59 Actual cost of fuel per metric tonne 553 614 Change B/(W) 354 105 (12 cents) (1 cent) 61 FY 2015 currency impact favourable / (adverse) EUR CH F USD Other Total m Revenue (131) (1) 4 (7) (135) Fuel 0 0 (6) 0 (6) Costs excluding fuel 127 (3) 5 0 129 Total (4) (4) 3 (7) (12) 9 9
Strong cash generation underpins dividend policy and fleet growth 138 50 98 536 688 92 21 6 16 615 180 422* 435* Net cash Sep 2014 Operating profit Depn Footer & box on Net intersect of Tax lines line CAPEX h=8.03 9 and Own v=8.75 Restricted with font 10pt Arial FX not bold Other amort working shares cash capital Net cash before dividend Dividend paid Net cash Sep 2015 *Includes money market deposits but excludes restricted cash 10 10
Strong balance sheet m FY 2015 FY 2014 Goodwill and other intangible assets 492 478 Property, plant and equipment 2,877 2,542 Derivative fiancial instruments (297) (21) Other assets 348 388 Other liabilities (excluding debt) * (1,606) (1,637) Capital employed 1,814 1,750 Cash and money market deposits 939 985 Debt (504) (563) Net cash 435 422 Net assets 2,249 2,172 Gearing ** 14% 17% * Other liabilities (excluding debt) includes unearned revenue of 619m (FY 2014 : 572m). ** Gearing is defined as (debt + 7 x annual lease payments cash) divided by (shareholders equity + debt + 7 x annual lease 11 payments cash) 11
Future capital investment FY15 FY16 FY17 FY18 2019-2022 Additional aircraft 55% 58% 73% 53% 37% Replacement aircraft 18% 14% 4% 29% 43% Maintenance 27% 28% 23% 18% 20% Total 100% 100% 100% 100% 100% Total expected fleet acquisition and overhaul expenditure as a % of easyjet revenue 11% 11% 13% 17% 12% Fleet acquisition and overhauls will be funded through a combination of debt, easyjet s strong cash flow and sale and leaseback transactions 2015, based on actual revenue for the 2015 Financial Year Future years based on estimated revenue 12 12
Debt repayment profile Total debt: 504 million 200 182m 150 100 50 88m 74m 60m 54m 46m 0 FY16 FY17 FY18 FY19 FY20 FY21 13 13
Outlook Capacity (seats flown) H1 c.+8.0% (before disruption ) FY c.+7% (before disruption) Revenue per seat (constant currency) H1: Slight decline (assuming normal levels of disruption and constant load factors) Cost per seat including Fuel (constant currency) FY c.-1% (assuming normal levels of disruption and constant load factors) Cost per seat ex fuel (constant currency) FY c.+2% (assuming normal levels of disruption and constant load factors) Weighted towards first half FX H1: c. 15 million adverse movement from foreign exchange rates FY: c. 40 million adverse movement from foreign exchange rates Fuel H1: unit fuel costs 75 million to 85 million favourable FY: unit fuel costs 140 million to 160 million favourable Rates at 13 November 2015 /USD: 1.522; /EUR: 1.4106 Unit fuel guidance based on Jet fuel trading range of $450 / metric tonne to $550 / metric tonne 14 14
Initial thoughts and areas of focus Initial Thoughts: Great people with passion and commitment to the business An enviable customer proposition A strategy that continues to deliver sustainable shareholder returns Significant opportunities for growth Areas of focus for me: Reinforce our cost focus Review of capital structure to balance risk and efficiency whilst maximising returns 15 15
Business Review Carolyn McCall Chief Executive Officer
Continuing to win easyjet has delivered another record performance in 2015 Delivering through the cycle favourable trends will support strong demand for easyjet Future growth and returns drivers Network offers significant opportunity Best customer proposition and sector-leading digital offering Operational excellence to deliver stable margins Capital discipline and strong financial footing Delivering sustainable shareholder returns 17 17
Real GDP Growth YoY (%) Consumer Confidence Index, standardised Favourable economic trends Positive outlook across key markets Recovery in consumer confidence 2.7 2.3 2.2 1.5 1.2 2.5 2.0 1.7 1.8 1.2 1.1 1.1 0.8 0.5 1.6 1.7 1.5 1.5 UK France Spain Italy Switzerland Germany 2.5 2.0 1.5 1.0 0.5 0.0 (0.5) (1.0) (1.5) (2.0) (2.5) 2000A 2002A 2004A 2006A 2008A 2010A 2012A 2014A 2016E 2015 2016 2017 UK France Spain Italy Switzerland Germany Business model outperforms through the cycle Source: IMF, Euromonitor, Capital IQ, Bloomberg as at 07-Oct-2015 18 18
2015 outperformance in a competitive market FY15 easyjet constant currency RASK vs median Sector RASK, year on year change % rev. change Market capacity growth (%) 4 3.7 6.0 2.4 2 1.8 5.5 0 5.0-2 -0.7 4.5-0.8-1.9 4.0-4 -3.9 3.5-6 -4.8 3.0 Q1 Q2 Q3 Q4 Sector RASK growth easyjet Market capacity increase/(decrease) Note: RASK at constant currency. Sector median RASK includes IAG, LHA, AF-KLM, Ryanair & Norwegian. Note that Ryanair and Norwegian do not report constant currency, therefore reported data used 19 19
Exciting initiatives underway Embedded (with more to chase) Launch in FY2016 Launch in FY2017 Revenue - Business passenger - Base openings (Amsterdam, Naples) - Base in Venice - New leading edge website - New call centre online - Flight Club launch - New base openings - Continue RMS and Network optimisation development Cost - AJW maintenance agreement - Gatwick long term deal - CFM engine deal - New crew portal - New components supplier - New maintenance hanger - Gatwick consolidation - ADP passenger charges - 1st 186 seat A320-1st A320 NEO delivered Both - Oporto base opening - Mobile platform - Rome base closure - Barcelona base opening - Begin retrofit of extra 6 seats - Leading edge commercial platform - Based on easyjet financial year, October to September 20 20
easyjet operates in the right airports and markets Best Network - Number 1 or 2 position in the primary airport in 12 of Europe s top 25 catchment areas by GDP 1 easyjet network 1) Catchment areas defined as population living within 50km of airports within the market and ranked according to GDP for that area; 2) Rank of short haul capacity for the 12 months to September 2015; 3) Manchester catchment includes Liverpool airport; 4) Dusseldorf catchment includes Cologne, Dortmund, Friedrichshafen, Nuremburg and 21 Paderborn; 5) Zurich catchment includes Basel 21
Seats No 1 European network Positions built over time Strong share at key airports Best Network +38% +34% +14% easyjet has grown capacity by over 7m seats with a CAGR of c.5% at our top 10 airports over the past 5 years % growth in seats 2011-15 +16% LGW GVA MXP LTN SXF CDG AMS BSL BFS BRS 2011 easyjet Capacity 2015 easyjet Capacity Other +23% +4% +32% +68% No.1 & 2 positions drive returns easyjet No.1 +23% +10% Airport Market Share 1 easyjet No.2 Based aircraft Touching aircraft LGW 48% 61 61 GVA 40% 14 23 MXP 47% 18 22 LTN 41% 18 18 SXF 58% 9 15 CDG 11% 9 14 AMS 11% 3 14 BSL 54% 9 13 BFS 84% 5 13 EDI 28% 7 11 1. easyjet capacity as a % of total short haul capacity at airport % of easyjet capacity currently holding a No.1, No.2 or other market share position Source: OAG 22 22
Returns Profitably growing our network Best Network easyjet capacity growth Market capacity growth ROCE 2013 3.3% 1.3% 17.4% 2014 5.1% 4.3% 20.5% 12% ROCE 2015 4.9% 5.4% 22.2% Routes CPBH FY13 CPBH FY14 CPBH FY15 Improving returns in all market conditions 23 23
CPBH [ /BH] Seats [Millions] CPBH ( /BH) CPBH [ /BH] Seats [Millions] Profitably deepening our network Best Network Increasing share drives higher returns 1 Adding frequency increases contribution 2 Progression of returns with increased share over time (base illustration) 2011 2012 2013 2015 2014 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500-5,000 4,000 Route A 2011 2012 2013 2014 2015 Route B 3,000 2,000 1,000 Market share (%) - 2011 2012 2013 2014 2015 Seats (right axis) CPBH Increasing share and frequencies delivers higher returns 1. Based on performance of 2 easyjet bases through 2015 2. Based on the performance of 2 easyjet routes 24 24
We make rational capital allocation decisions Best Network Madrid Rome MXP 8 NAP 8 Madrid-based aircraft were moved to other bases Delivered an incremental network contribution of c. 25m We expect a similar outcome from reallocating the aircraft based in Rome FCO easyjet disciplined allocation of capital delivers higher returns 25 25
Much more to go for Best Network Portugal 13% Significant number of low risk opportunities to pursue 87% Number of aircraft 400 2 3 35-50 331-396 Range of easyjet FY20 fleet size Netherlands 9% 91% 350 300 50-80 335 346 Germany 4% 96% 250 25-35 241 10-20 227 Italy 12% 88% 200 Switzerland 23% 77% 150 100 France 14% 86% 50 3 UK 20% Market share 80% 0 Current easyjet fleet Route churn Natural market growth Invest in existing network Growth opps FY20 easyjet opportunity Minimum easyjet fleet easyjet case FY20 Maximum easyjet fleet easyjet share Other airlines (opportunities to grow) - As at 30 September 2015 - Expected churn FY15 FY20 - Forecast passenger growth on easyjet current markets - Thickening routes - Join the dots - New bases - New network points - New routes 26 26
Utilising flexibility to take market opportunities Best Network Extra aircraft allows for greater flexibility in fleet planning 359 358 355 330 305 280 255 230 205 New base case seat capacity Old base case seat capacity 346 333 346 347 335 312 303 311 311 304 304 280 294 Contracted Max Base Case 257 Contracted Min 241 Previous Base Case 239 212 227 233 221 2015 Footer box on intersect 2016 of lines line 2017 h=8.03 9 and v=8.75 2018 with font 10pt 2019 Arial not bold 2020 2021 2022 4.9% 7.1% 8.7% 7.9% 6.3% 7.9% 6.0% 2.5% 4.9% 7.1% 8.7% 7.5% 5.3% 3.1% 2.1% 2.4% 27 27
% Consumer Ave spend by age Average booking value Favourable easyjet customer trends Customer proposition Increasing propensity to spend Customers spending more time online 25,000 20,000 15,000 10,000 5,000 easyjet Ave booking age 2010 easyjet Ave booking age 2015 Consumer Ave spend easyjet Ave booking value 300 250 200 150 100 50 100% 90% 80% 70% 60% 50% 40% Purchased Something on the Internet the last 12 Months, UK 16-24 25-34 35-44 All 92 90 88 87 88 86 84 82 83 83 78 79 78 79 79 77 75 74 72 68 65 0 18 23 28 33 38 43 48 53 58 63 68 73 0 30% 2008 2009 2010 2011 2012 2013 2014 easyjet customers have higher propensity to spend Source: BLS, Association of National Advertisers, Barkley, SMG, BCG, Yupe, IPG Media Labs, ONS 28 28
Digital Leadership Customer proposition Over 500m visits across platforms in FY15 Value of Mobile YOY Mobile Revenue Global Recognition 83% Best Mobile Travel & Tourism Winner Innovation in direct marketing easyjet Mobile app 14.3m Downloads to date CRM increases customer value 32% Customers in CRM are of Footer box on intersect of lines line h=8.03 increasing 9 and v=8.75 value with to easyjet font 10pt Arial not bold Best Passenger Assistance Initiative Best Airline in Mobile New website launch in 2016 29 29
Number of seats % from Returning customers Strengthening our customer relationships Customer proposition % seats booked by returning customers Brand consideration New Existing % Existing 80% 68% 69% 70% 72% 73% 74% 75% 70% 65% Value perceptions 60% 30 55% 10 11 12 13 14 15 50% Growth coming from valuable repeat customers Source: easyjet customer database Source: Millward Brown brand tracker FY15 vs FY13) 30 30
Rewarding our loyal customers Customer proposition FLIGHT CLUB Aim to recognise and retain our high frequency and loyal customers Simple and low cost to administer Will continue to encourage customer loyalty Hundreds of thousands of passengers to be part of flight club 31 31
Business opportunity continuing to develop Customer proposition TMC GDS sales grew 32% YOY Business fares grew at 58% YOY Average 38% Saving on top Business Routes Increased focus on FTSE/CAC & DAX companies Award winning Business Program Business Sense Marketing Campaign Increase in business passengers of 25% over next 3 years 32 32
Leisure leadership Customer proposition Launched almost 60 new leisure routes in 2016 easyjet holidays revenue per seat increased by 144% in summer 2015 easyjet has launched around 60 new leisure routes in the 2016 schedule. 33 33
Mix of fleet (%) 110m opportunity from up-gauging by 2021 Cost Fleet up-gauging easyjet fleet mix Up-gauging delivering CPS savings 13% -14% 100% 90% 80% 70% 60% 50% 39% 3% 44% 33% 19% 8% 53% 18% 51% 24% 26% 26% 47% 46% 45% 71% A320 s 40% 30% 20% 10% 0% 61% 52% 47% 39% 32% 29% 28% 28% FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 A319 A320 A320 '186 A320 NEO Current generation A319 New generation A320neo 156 sets 186 seats 1. At the end of the relevant Financial Year 2. Based on fleet plan base case 34 3. Maximum fleet does not include the purchase rights 34
easyjet lean c. 50 million savings in 2016 Cost Increased pipeline of initiatives easyjet lean continues to deliver and develop significant cost reductions across Maintenance : AJ Walters Airports/Handling: deals, automation, structure of charges Navigation - SESAR Process and efficiency savings enabled by Technology Productivity savings enabled by scale in our bases Short term <1yrs Medium term 2 4 yrs Long term 4yrs> Size of savings per annum (larger circle means bigger saving opportunity) 35 35
Operational excellence Cost 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% easyjet network OTP 2010 2011 2012 2013 2014 2015 Building increased resilience 1. Network remains robust Gatwick north terminal consolidation 2. Gatwick improving 3. Opportunity for step change in operational excellence at Gatwick airport 36 36
What does this mean for our shareholders? Expected passenger growth of 7% - 8% CAGR Stable margins over the cycle Strong EPS growth 40% annual dividend payout 37 37
easyjet is a structural winner Europe's best network of primary airports Best customer and digital proposition Constant innovation to drive demand and loyalty Cost discipline, up-gauging will deliver savings of 110 million by 2021 Strong balance sheet 38 38
Q & A
appendix
Fuel and foreign exchange hedging Fuel requirement US dollar requirement Euro surplus CHF surplus Six months ending 31 March 2016 Full year ending 30 September 2016 Full year ending 30 September 2017 Sensitivities FY16 85% at $852 / metric tonne 83% at $830 / metric tonne 60% at $664 / metric tonne 89% at $1.62/ 75% at 1.20/ 69% at CHF1.46/ 81% at $1.63/ 80% at 1.22/ 67% at CHF1.46/ 61% at $1.55/ 54% at 1.33/ 51% at CHF1.43/ $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 +/- 1.5 million One cent movement in the / will impact the full year pre-tax result by +/- 0.7 million One cent movement in the /CHF will impact the full year pre-tax result by +/- 0.4 million As at 13 November 2015 41 41
H1 forward bookings H1 bookings in line with prior year % seats sold * 93% 91% Winter '15 Winter '16 49% 49% Oct Nov Dec Jan Feb Mar H1 H1 (October 2015 to March 2016) as at 13 November 2015 42 42
Profitably growing our business in 2016 Overall c. 8.0% capacity growth over winter United Kingdom c. +9% Netherlands c. +27% France c. +6% Germany c. +7% Spain c. +4% Switzerland c. +8% Portugal c. +21% Italy c. +3% Source : OAG, scheduled data and Internal easyjet projection September 2015. Country capacity growth is based on network touching seats. 43 43
Capacity environment H1 2016 7.4% split by carrier Winter 14/15 Winter 15/16 Other 7.0% 7.8% 7.7% 6.8% 6.8% 7.4% Vueling easyjet BA 5.2% 3.7% Ryanair Capacity change total SH Market easyjet capacity change Competitors on easyjet markets Capacity Change easyjet markets Short-haul market easyjet city to city pairs Source: Market capacity data from OAG scheduled data, as at 6 September2015 easyjet markets based on internal easyjet definition. 44 44
Profit after tax m FY 2015 FY 2014 Change Profit before tax 686 581 18.1% Tax charge (138) (131) (5.3%) Profit after tax 548 450 21.8% Effective tax rate 20.1% 22.5% 2.4ppt 45 45
Revenue per seat per seat FY 2015 FY 2014 Change Seat revenue 61.54 62.40 (1.4%) Non-seat revenue 0.94 0.91 2.2% Total revenue 62.48 63.31 (1.3%) 46 46
Revenue, profit and margin growth in H2 Reported m H 2 2015 H 2 2014 Change Total revenue 2,919 2,825 3.3% Fuel (683) (714) 4.3% Operating costs (excluding fuel) (1,426) (1,352) (5.5%) EBITDAR 810 759 6.6% Ownership costs (131) (125) (3.4%) Pre-tax profit 679 634 7.2% PBT margin 23.3% 22.4% 0.8ppt Seats (m) 42.8 40.5 5.9% Constant currency per seat H 2 2015 H 2 2014 Change Total revenue 70.35 69.85 0.7% Fuel (15.68) (17.64) 11.1% Operating costs (excluding fuel) (34.98) (33.44) (4.6%) EBITDAR 19.69 18.77 4.9% Ownership costs (3.14) (3.11) (1.0%) Pre-tax profit 16.55 15.66 5.6% 47 47
Cost per seat excluding fuel - key drivers Cost per seat excluding fuel Variance at constant currency Variance at constant currency % Weighted variance at constant currency Airports and ground handling 14.96 (0.37) (2.4%) (1.0%) Drivers Regulated airport charges Impact of higher load factor Increase in de-icing costs due to colder weather Offset by savings of new contracts Overhead 5.06 (0.30) (7.3%) (0.7%) Higher disruption costs including FCO fire Crew 6.73 (0.25) (3.8%) (0.7%) Navigation 4.17 (0.22) (5.1%) (0.6%) Pay increase broadly in line with inflation Early recruitment in winter to meet summer demand Inflationary increases Settlement of the historic Eurocontrol dispute Maintenance 3.06 (0.11) (3.8%) (0.3%) One-off benefit of new engine deal in FY 2014 Ownership 3.46 (0.02) (0.4%) (0.0%) Depreciation on new aircraft purchased Offset against decreasing lease costs 37.44 (1.27) (3.4%) (3.3%) Net Exchange (gains)/losses (0.09) (0.10) 100.0% (0.3%) Effect of movements in foreign exchange rates on Balance sheet revaluation Total CPS excluding fuel 37.35 (1.37) (3.6%) (3.6%) 48 48
Increasing proportion of A320 s FY 2015 FY 2014 Change A319 (operating lease) 49 54 (5) A319 (owned / finance lease) 99 99 0 A319 Total 148 153 (5) A320 (operating lease) 18 18 0 A320 (owned / finance lease) 75 55 20 A320 Total 93 73 20 Total fleet 241 226 15 Operating lease 28% 32% (4ppt) Number unencumbered 114 94 20 Percentage of A320s in fleet 39% 32% 7ppt 49 49
Currency impact Revenue Costs FY 2015 FY 2014 FY 2015 FY 2014 Sterling 49% 47% 27% 26% Euro 40% 42% 32% 33% US dollar 1% 1% 35% 35% Other (principally Swiss franc) 10% 10% 6% 6% Average effective Euro rate for revenue for H1 15 was 1.24 (H1 14: 1.19) 50 Average effective Euro rate for costs for H1 15 was 1.30 (H1 14: 1.20) 50
ROCE calculation including 7x lease adjustment Reported m FY 2015 FY 2014 Earnings before interest and tax reported 688 581 Interest element of operating lease payments 38 41 Earnings before interest and tax - adjusted 726 622 Tax 20% 21% Normalised operating profit after tax (NOPAT) 581 491 Average shareholders equity reported 2,211 2,095 Average net cash reported (429) (490) Average capitalised leases 833 791 Average capital employed 2,615 2,396 Return on capital employed 7x basis 22.2% 20.5% 51 51