Half Year Results Analyst and Investor presentation Wednesday 15 May 2013 1 1 1
Introduction Carolyn McCall Chief Executive Officer 2 2 2
Key messages 1. easyJet’s competitive advantages means it continues to be a structural winner in the European short-haul market despite a difficult economic environment 2. Significantly improved winter performance 3. Strategy is delivering strong results and returns for shareholders Reducing winter losses, down over 45% Improving loss per seat and margins 0 0% 2011 2012 2013 2011 2012 2013 -2% -1 -2.04 -4% -2 PBT margin Loss before tax PBT / seat -61 61 -6% -3.8% -3 -8% -3.87 -4 -112 112 -10% -7.6% -5 -5.47 -12% -153 -12.1% -6 -14% Loss / seat PBT margin 3 3
Finance review Chris Kennedy Chief Financial Officer 4 4 4
Management action taken to offset headwinds Loss per seat bridge £ per seat -2.04 0.35 0.83 -3.87 0.10 2.44 3.50 1.34 0.83 H1 Fuel per Seat Cost FX excl Fuel Easter Revenue easyJet lean A320 Mix H1 2012 increase per Seat incremental 2013 5 5
Financial Results £m H1’13 H1’12 Change B/(W) Total revenue 1,601 1,465 136 Fuel (496) (483) (13) Operating costs excluding fuel (1,042) (982) (60) EBITDAR 63 - 63 Ownership costs (124) (112) (12) Loss before tax (61) (112) 51 EBITDAR margin 3.9% 0.0% 3.9ppt Loss before tax margin (3.8%) (7.6%) 3.8ppt 6 6
Financial results £m H1’13 H1’12 Change Loss before tax (61) (112) 45.5% Tax credit 14 22 (36.6%) Loss after tax (47) (90) 47.8% Effective tax rate 23% 20% 3ppt Loss per share 12.0p 21.2p (43.4%) Return on capital employed* (0.9%) (2.8%) 1.9ppt Notes: 7 7 Return on capital employed (ROCE) measure includes leases capitalised at 7 times The ROCE measure with target liquidity included is shown in the appendix
Improved revenue performance £m H1’13 H1’12 Change Passengers (m) 26.6 25.2 5.3% Load factor (%) 88.6% 86.9% 1.7ppt Seats (m) 30.0 29.0 3.3% Average sector length (km) 1,042 1,061 (1.8%) Total revenue (£m) 1,601 1,465 9.3% Total revenue per seat (£) 53.39 50.47 5.8% @ constant currency (£) 54.80 50.47 8.6% Revenue per seat at constant currency easyJet capacity growth Competitor capacity on easyJet markets 9.2% 8.0% 7.5% 6.7% 5.2% 5.0% 4.7% 1.5% -2.3% -2.4% -3.3% -3.6% Q3’12 Q4’12 Q1’13 Q2’13 8 8 Source: Competitor capacity from OAG using an easyJet definition of overlapping markets. This excludes charter capacity.
Revenue improvement driven by initiatives Year on year drivers of revenue per seat change (£/Seat) 0.83 0.59 3.23 0.09 53.39 1.64 50.47 H1 2012 Revenue New Route Non-seat Easter FX and H1 2013 Actual initiatives maturity hedge Actual 9 9
Currency impact Currency split Currency split – total costs – total revenue US Dollar Euro 31% 37% Euro 44% Sterling 45% 1% Other 6% Swiss Franc 3% 25% 8% Other Sterling Swiss Franc H1‘13 currency impact favourable / (adverse) EUR CHF USD Other Total Revenue - Euro rate € 1.22 (2012: € 1.16) (36) (6) - (1) (43) Fuel 3 - 4 - 7 Costs excluding fuel - Euro rate € 1.22 (2012: € 1.18) 3 1 (1) (1) 2 Total (30) (5) 3 (2) (34) 10 10
Timing of Euro: Sterling movement drove adverse fx GBP: Euro rates: 1.30 1.25 1.20 1.15 1.10 FY'12 FY'13 1.05 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Sharp decline in value of Sterling to Euro in January 2013 High level of forward bookings posted at above 1.20, cost incurred at lower rate 11 11
Impact of fuel H1'13 H1'12 Change B/(W) Fuel $ per metric tonne Market price 1,041 1,028 (13) Effective price 988 972 (16) US dollar rate Market rate 1.59 1.59 - Effective rate 1.61 1.60 1c Actual cost of fuel £ per metric tonne 613 608 (5) Year on year drivers of £ £(13) 3)m m fuel cost t increase • £(2)m from £5 per metric tonne increase in fuel price, ETS and fx movements • £(14)m volume related: increased sectors and load factor partially offset by reduced sector length • £3m saving from increased proportion of A320 aircraft 12 12
Cost per seat – key drivers H1’13 vs. H1’12 £ cost £ var at % var at Favourable/ per seat Constant Constant Drivers (Adverse) ex fuel Currency Currency • Steep increase in airport charges in Spain & Italy Ground 15.47 (1.57) (10.9%) • Increase in de-icing costs due to adverse weather Operations conditions in winter 2012 (2.1%) • Pay increase of 1.8% & changes to performance related Crew 7.17 (0.15) bonus schemes • Increase in regulated charges • Navigation 4.07 0.03 0.9% Offset by cost savings achieved through fleet mix change & reduction in average sector length • Underlying maintenance costs broadly flat • Maintenance 2.99 0.28 8.3% One off adjustment to leased engine maintenance provision in H1 2012 (not repeated in H1 2013) • Increase in disruption costs Overhead 4.89 (0.06) (1.2%) • Investment in IT development resources • Increase in proportion of performance-related pay • Royalty fee increased from £2.5m to £4.8m due to the Brand Licence 0.16 (0.07) (88.2%) change from fixed royalty payments to a percentage of revenue • Decrease in interest cost due to repayment of more expensive debt Ownership Costs 4.14 0.28 7.1% • Decrease in lease costs due to lower average fleet lease mix Total cost (ex fuel) 38.89 (1.26) (3.4%) 13 13 Variances shown: red & bracketed = negative or an increase in cost, black = favourable or decrease in cost
Increasing proportion of A320’s Mar‘13 Mar‘12 Change A319 (operating lease) 49 55 (6) A319 (owned / finance lease) 105 111 (6) A319 Total 154 166 (12) A320 (operating lease) 14 6 8 A320 (owned / finance lease) 42 32 10 A320 Total 56 38 18 Total fleet 210 204 6 Percentage of operating leases 30% 30% - Percentage unencumbered 40% 21% 19ppt Percentage of A320s in fleet 27% 19% 8ppt 14 14
Seasonal working capital benefit from summer bookings £m 390 34 85 36 1,194 97 131 239 193 56 883 40 Sep 2012 * Operating Depn & Net Tax, net int Ordinary CAPEX Borrowings Sale & Restricted FX Mar 2013 Loss amort Working & other dividend Leaseback Cash Capital paid 15 15 * Includes money market deposits but excludes restricted cash
Strong balance sheet £m Mar ‘13 Mar ‘12 Property, plant and equipment 2,192 2,193 Goodwill and other intangible assets 456 452 Other assets 554 591 Liabilities (excluding debt) (1,968) (1,772) 1,234 34 1,464 464 Debt 761 1,169 Cash and money market deposits (1,194) (1,211) Net debt / (cash) (433) (42) Shareholders’ equity 1,667 1,506 Capit pital al emplo loye yed 1,234 34 1,464 464 Gearing* 11% 31% 16 16 *Gearing defined as (debt + 7 x annual lease payments – cash) divided by (shareholders’ equity + debt +7 x annual lease payments – cash)
Fuel and foreign exchange hedging Euro Fuel US Dollar requirement requirement surplus Six months to 30 September 2013 83% 80% 85% Average rate $980/ tonne 1.60 1.18 Full year ending 30 September 2013 85% 82% 85% Average rate $983/ tonne 1.60 1.18 Full year ending 30 September 2014 67% 62% 71% Average rate $984/ tonne 1.58 1.20 Sensitivities • $10 movement per metric tonne impacts F’13 PBT by +/ -$1.3m • One cent movement in £/$ impacts F’13 PBT by +/ -£0.9m • One cent movement in £/ € impacts F’13 PBT by +/ -£0.4m Rates as at 13 May 2013: Euro to sterling 1.18; US$ to sterling 1.54; Jet fuel cif US$923 per metric tonne . 17 17 FX sensitivities shown relate to the impact of changes in the fx rate on the unhedged element of currency over and away from the outlook statement and the rates shown above
Forward bookings H2 bookings in line with prior year % seats sold * 89% 87% FY'12 FY'13 49% 49% Apr May Jun Jul Aug Sep H2 Easter Impact H2 (Apr‘13 to Sept‘13) 18 18 * As at 6 May 2013
Outlook Capaci city y (seats s flown) • Q3: c. +4% (before disruption) • H2: c.+3.5% (before disruption) Revenue per seat (constan ant currency) • H2: c.+4% Cost per seat ex fuel (constan ant currency) • H2: c.+4% (assuming normal disruption levels and constant load factors) Second half results • H2: £5 million to £10 million further adverse movement from foreign exchange rates (including those related to fuel). • H2: With fuel remaining within its recent $900/MT to $1,000/MT trading range, constant currency fuel costs for the second half would be up to £10 million favourable. “Whilst there is always the potential for unexpected events to impact short term financial performance, the outlook for the second half of the financial year combined with the strong reduction in first half losses means that easyJet expects to deliver improved returns and profitability for the year ending 30 September 2013.” 19 19 Rates as at 13 May 2013: Euro to sterling 1.18; US$ to sterling 1.54; Jet fuel cif US$923 per metric tonne .
Business Review Carolyn McCall Chief Executive 20 20 20
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