Driving returns and profitable growth in European aviation 10 September 2013 1
Agenda Introduction Carolyn McCall, CEO Build No.1 and No.2 network positions Carolyn McCall, CEO Maintain cost advantage Warwick Brady, Chief Operations Offi cer Drive demand, conversion and yield Peter Duffy, Group Marketing Director Capital discipline Chris Kennedy, CFO Summary Carolyn McCall, CEO 2 2
Europe's leading short haul air travel network • 60.5m passengers, 67.8m seats flown load factors 89.2% (1) • fleet of 212 aircraft with an average fleet age of 4.9 years • leading presence on Europe’s top 100 routes • over 612 routes across more than 30 countries • strong position in key markets: No.1 in London Gatwick, Milan, Geneva • employs over 8,000 people including 2,000 pilots and 4,500 cabin crew • 300 million people live within a one hour drive of an easyJet airport 3 3 (1) As at 31 August 2013 or 12 months to 31 August 2013
Delivering returns and profitable growth Growing returns ROCE incl. lease adjustments 16% 11% 10% 7% Competitive advantages 4% 1. Efficient, low cost model 2009 2010 2011 2012 Mar'13 (annualised) 2. Strong network and market positions Profit per seat and margin growth c.11% 1% 8 3. easyJet.com and brand 7 >£6 >£6 8.2% 6 7.2% 5 6.3% 4. Strong balance sheet PBT / seat 4.81 4 3.97 3 3.36 2 1.6% 1 0.83 0 2009 2010 2011 2012 2013 consensus PBT / seat PBT margin Year Source: Bloomberg consensus profit before tax of £470m for the financial year ending 30 September 2013. Data as at 6 September 2013 4 4
Evolving industry dynamics Competition Consumers & supply • Continue to value low • Restructuring fares and convenience and • Price, frequency and consolidation availability are key • Legacy losses • Convergence of well models positio ioned • New fleet to be a a orders from successful structural al airlines winner Government • Rising airport charges and taxes • Infrastructure projects need funding 5 5
easyJet’s competitive position On an airport pairs basis, easyJet’s main competitors are the legacy carriers 60% IAG 50% Air France KLM 40% % Overlap on a city basis Ryanair 30% Network / legacy carriers Low-cost competition Lufthansa Grp 20% Alitalia Charter carriers Size of bubble reflects market share TUI 10% Air Vueling Berlin in European short haul market Monarch Thomas Cook Jet2 Wizz 0% Norwegian % overlap on an airport pairs basis -10% 0% 5% 10% 15% 20% 25% 30% 6 6 Source: easyJet analysis using OAG
Structural advantage against legacies On-going cost advantage Typical A320 aircraft easyJet Typical Legacy against legacies and Seats 180 156 charter airlines Load factor 90% 70% • Seat density Passengers / flight 162 109 • Load factors Daily sectors 5.45 4 • Point to point vs. feeder Revenue / a.c.per day £278k £278k • Fleet Ave fare £68/pax £136/pax • Pensions / crew costs Source: Redburn, 13 March 2013 • Overheads Legacy gacy would d have e to charge ge double ble easyJ syJet et fare e to gener nerat ate e same e revenue ue per aircraft aft Cost advantage and ability to offer affordable fares allows easyJet to continue to grow profitably and to take share from legacies 7 7
Winning against low-cost competition London Gatwick arrival / departures slots • Strength of network 0600-0855 Summer ‘13 • Pan-European network and market presence Other Norwegian 12% 4% • No. 1 or 2 positions at primary airports Thomas Cook 4% easyJet • Peak slots Monarch 41% 6% • Strong balance sheet FlyBE • Scale and purchasing power 8% • Pan-European brand TUI 8% British Airways • easyJet.com 17% • Friendly service easyJet has strong positio ion in London Gatwick first wave – enables large ge portfo foli lio o of business friendly ly timings Source: 8 8 ACL (Airport Coordination Limited) https://www.online-coordination.com
Strategy to drive growth and returns Leverage easyJet’s cost advantage, leading market positions and brand to deliver point-to-point low fares with operational efficiency and friendly service for our customers 1. Build strong number 1 and 2 • Sustainable growth network positions • slightly in excess of market c. 3% to 5% per annum 2. Maintain cost advantage • Improved returns 3. Drive demand, conversion • Tangible and regular cash and yield across Europe returns via 3x cover dividen d 4. Disciplined use of capital 9 9
Building strong no 1 and no 2 Network positions Carolyn McCall Chief Executive Officer 10
European airport landscape Capacity across all European airports Slot constrained airports • easyJet has c.70% of its capacity at ‘Level 3’ slot constrained airports Top 20 • ‘Level 3’ airports are slot airport ports constrained airports where c.40% airlines are allocated slots and fines are incurred by Remaining ing airlines for not using them 531 airport orts • e.g. London Gatwick – up to c.60% 52 slots an hour • easyJet’s slot portfolio has taken over 15 years to build easyJet is present in all but 6 of Europe’s top 20 airports 11 11 Source: OAG
easyJet has strong positions in key cities Milan Paris Beauvais Malpensa Bergamo Charles de Gaulle Linate Orly Milan Malpensa • Largest airport in Milan with c.17m passengers Charles de Gaulle a year • 3rd largest airport in Europe • Attractive catchment area, also near Italy’s 4 th • c.43m seats a year largest city Turin • easyJet #2 with 10.7% market share • easyJet #1 with 40.5% market share Orly • easyJet’s 2nd largest base • c.28m seats a year Milan Linate • easyJet #2 12.4% market share • c.13m passengers 12 12
Leading positions across Europe easyJet capacity easyJet’s #1 and #2 positions EDI Other 16m 24% LPL No.1 STN LTN SEN 31m LGW 46% CDG BSL GVA No. 2 LYS 21m 30% OLB ALC AGP • Majority of easyJet’s capacity is in airports where it has leading positions 13 13 Source: OAG
Leading position on top 100 European markets Presence in top 100 market pairs 50 45 1 Non primary airports 40 35 30 16 25 45 2 20 33 15 24 22 21 10 20 18 16 15 14 5 3 - • easyJet has a strong position across much of Europe on the top 100 markets • From all the EU city pairs, the top 100 routes have a 24% capacity share • easyJet’s capacity share of the top 100 is 12.4% • 35% of easyJet’s overall capacity is on the top 100 routes 14 14 Source: OAG, easyJet
easyJet is the No.1 airline at Geneva Increase in capacity… …has delivered sustainable returns easyJet Lufthansa Grp Seats Air France-KLM Grp IAG Seats Seats Returns Returns 8 £2,500 7.5 7 Millions Millions 6 £2,000 6.0 5 £1,500 4.5 4 3 £1,000 3.0 2 £500 1.5 1 0 £0 0.0 2006 2007 2008 2009 2010 2011 2012 2013 FY08 FY09 FY10 FY11 FY12 Market characteristics Geneva catchment area • Network mirrors the mobile, high earning, multinational customer base • Business routes with high frequencies • Key gateway to ski breaks • Visiting friends and relative routes to Italy, Portugal and Spain • 5.6m passengers in 2012 with and easyJet has c.40% market share Year 15 15 Source: OAG, easyJet
easyJet is the No.1 airline at London Gatwick Increase in capacity …. …driving returns at London Gatwick easyJet British Airways Monarch Seats Seats Returns Seats Returns Norwegian Ryanair £1,800 18 18 £1,600 16 Millions 16 14 £1,400 14 Millions 12 £1,200 12 10 £1,000 10 8 £800 8 6 £600 6 4 £400 4 2 £200 2 0 £0 0 2006 2007 2008 2009 2010 2011 2012 2013 FY08 FY09 FY10 FY11 FY12 Market characteristics London Gatwick catchment area • Large and affluent core catchment STN / LTN area - 12.2m passengers LTN / STN • London Gatwick serves both the LHR Core (LTN) STN Core leisure and business markets LTN Core LHR / LTN • Increasing frequencies in Summer STN / LGW 2013 LHR Core LGW / STN (LTN/LGW) LGW • Amsterdam – 5 to 6 daily Core LHR / LGW • Nice – 4 to 5 daily Year 16 16 Source: OAG, easyJet
Many further opportunities in core markets Share of traffic at Growth in existing markets easyJet’s top 20 airports • easyJet has approximately 22% share e of capac acity ity at its top 20 airpor ports ts – equating to around 46m seats ts EZJ 46m seats • Other LCC Other low cost carriers (LCCs) have 51m seats ~25% share • Non-LCCs account for 53%, with 12% Non-LCC estimated to be for connections to transfer (est) 26m seats long-haul flights Non-LCC P2P (est) • 41% or 86m seat ats s oppo portu rtunity nity within 86m seats easyJet’s top 20 airports A further 41% or 86m seats opportunity within easyJet’s top 20 airports Source: 17 17 Market size sourced from OAG data based on easyJet definition of short-haul routes; estimates of transfer traffic obtained from airport and company external announcements. P2P = point to point; LCC = Low-cost carrier.
Maintain cost advantage Warwick Brady Chief Operations Officer 18
Recommend
More recommend
