easyJet best positioned to deliver what consumers want Most important factors for European consumers when choosing an airline 1. Price/value 1. Price/value 1. Price/value 1. Staff/service 1. Price/value 2. = Comfort 2. Safety 2. Reliability 2. Price/value 2. Staff friendliness /service 2. = Staff 3. Staff/service 3. Safety 3. Safety 3. Safety/security 4. Airport destination 4. Punctuality 4. Flight times 4. Comfort 4. Punctuality /convenience /cleanliness 5. Reliability/trust 5. Comfort 5. Airport destination 5. Punctuality 5. Flight availability / convenience /scheduling 6. Safety 6. Reliability 6. = Staff/service 6. Company 6. Reputation reputation 6. = Comfort 7. Punctuality 7. Flight times 6. = Punctuality 7. Reliability 11 11 Source: Millward Brown Brand Tracker 2014
Future growth opportunities Cath Lynn Group Commercial Director: Markets, Network & Pricing 12 12
Agenda - future profitable growth opportunities 1 • Quality of the network and how easyJet drives returns 2 • Opportunities available to easyJet 3 • Case study - France 13 13
easyJet has leading positions across European airports easyJet capacity easyJet’s #1 and #2 positions EDI Other 23% of LPL capacity easyJet No.1 STN LTN 17 million seats SEN 48% of LGW capacity CDG 35 million seats easyJet No.2 BSL 29% of GVA capacity LYS 21 million seats OLB ALC AGP Majority of easyJet’s capacity is in airports where it has leading positions many of which are slot constrained Slot constrained during peak times 14 14 Source: OAG
Convenient airports Paris Charles de Gaulle Large addressable market for easyJet Beau auvais ais • 4 th largest airport in • Over 300 million people live 60 Europe, c.45m seats a year minutes, or less, travelling • easyJet No.2 with 11% market share distance from an easyJet airport Orly Charles rles 13 th largest airport in • de Gaulle de lle Europe, c.29m seats a year • Leverage pan-European brand • easyJet No.2 with 12% with a broad and inter- market share Orly ly connected network to stimulate demand at both ends of routes Milan • Large, wealthy catchment areas Milan Malpensa Malpe lpensa which are under-supplied with • c.18m seats a year Bergamo amo low LCC penetration • easyJet No.1 with 40.5% market share Linate ate 15 15 Source: OAG
Strong market share delivers value for customers Great product • Range of destinations for business and leisure Great schedule • Frequencies • Choice of time of day 16 16 Source: Millward Brown Brand Tracker 2014
Strong market share delivers financial value easyJet generates highest returns where it hold a No.1 or No.2 network position Returns vs. network position • Strong correlation between market share and returns easyJet No.1 easyJet No2 Other • Scale at No.1 or No.2 positions delivers • Cost advantage • Procurement advantage • Strong network focus on • Maintaining industry 24 Returns leading load factors airports • 48% of capacity Sustaining high utilisation of assets 29 airports 87 29% of capacity airports 23% of capacity Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 0 15 30 45 60 Seats (millions) 17 17
Network structure delivers flexibility London • Base to base Luton flying Belfast • Revenue optimisation • No dead-legs • High asset utilisation Malaga 18 18
Compelling network positions take time to develop • Constraints London Gatwick - Market Share • Slot allocation FY 2006 vs. FY 2014 50% 2006 2014 • Timing of slots 40% • Airport capacity 30% • London, Paris, Milan, Berlin, Geneva, Rome attractive both outbound and 20% inbound 10% • Maximise revenue potential 0% • Significant amount of time to build strong positions at primary airports Geneva - Market Share Milan Malpensa - Market Share 50% FY 2006 vs. FY 2014 FY 2006 vs. FY 2014 60% 40% 2006 2014 2006 2014 50% 40% 30% 30% 20% 20% 10% 10% 0% 0% 19 19 Source: OAG
Rigorous capital allocation framework easyJet delivers superior returns by allocating assets in positions where it can leverage its sources of competitive advantage • Reposition • Opportunity to increase returns by reallocating assets to more profitable network areas, or reposition to drive higher returns • Invest • Invest in core high returning network positions • Grow • Invest in high returning network area with low level of capacity investment Decision process ensures capital is invested in most profitable parts of the network 20 20
Granular approach to route planning easyJet capacity increase on an individual route £9 0.6 • Dedicated business plan for every £8 0.5 Seat growth (million) route £7 £6 0.4 • Detailed financial and operational £5 Returns 0.3 analysis undertaken £4 £3 0.2 • Approach to route evaluation £2 0.1 • £1 Measure £- 0.0 • 2009 2010 2011 2012 2013 2014 Monitor Seats (right axis) Contribution • Action easyJet capacity increase on an individual route Seat growth (million) £7 0.3 • Focused, granular decision making £6 led by the Network Development Returns £5 Forum 0.2 £4 £3 0.1 £2 Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold £1 £- 0.0 2009 2010 2011 2012 2013 2014 Seats (right axis) Contribution Year 21 21
Low risk opportunities within the current network footprint Opportunity at easyJet’s top 20 airports easyJet Other 1. 1. 28 millio lion n seats on existing easyJet LCC airport pairs o Low risk opportunities to consolidate Non LCC transfer existing market positions by thickening (est.) Non LCC P2P routes (est.) 86m 2. 2. 33 33 millio lion n seats represents 2 . Opp ppor ortunity to opportunity to connect existing “join the dots” easyJet network points 33 million on seats o Join the dots o Leverage pan-European network 1 . Curren ent easyJet et 3 . Other er grow owth airpo port pairs 3. 3. 25 millio lion n seats opportunity 28 million on seats opp pportunities es o Able to expand existing network ‘Thicken routes’ 25 million on seats footprint o New network points o New bases Source: OAG scheduled data for the 12 months to 30 September 2014 22 22
Significant number of low risk opportunities for easyJet to pursue Granular approach to fleet planning Range of easyJet FY19 fleet size 3 2 2 350 3 1 Load factor: 90.3% 1 30-45 Average utilisation: 11 hours 300 2 / day 40-65 1 Number of aircraft 250 20-30 10-20 200 296- 304 316 226 204 150 356 100 50 3 0 Current Route Natural Invest in Growth FY19 easyJet Minimum easyJet FY19 Maximum easyJet fleet churn market existing opportunities opportunity easyJet base case 3 easyJet growth of network fleet 3 fleet 3 2.2% 2 • • • New bases • • Consolidate As at 30 Expected Forecast • New network passenger market September churn points growth 2 on position by 2014 FY14 – • New routes thickening easyJet FY19 routes current • Join the markets dots 1. 1. Rolling 12 months to 31 August 2014 23 23 2. 2. IATA, Eurocontrol, assumes GDP growth of 1.5% 3. Current fleet plan as at 18 September 2014
Time sensitive opportunities London Gatwick easyJet H1 2015 capacity growth • Switzerland +6.3% Netherlands +13.4% 9% capacity growth following purchase of Flybe slots United Kingdom +2.5% • Thickening routes such as Amsterdam, Inverness and Vienna Amsterdam France +4.6% • New base opening in Spring 2015 • New routes include Hamburg from November 2014 Spain -2.0% Hamburg • New base opened in 2014 • Now connecting 23 points of the easyJet network Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Italy +5.4% Germany +14.0% 24 24
Strong market share gives easyJet relevance • Local employment • Relationships with government and regulators • In-market management with good local knowledge • Airports like to work with easyJet: quality of network and sustainable partner Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold “easyJet is a loyal customer that flies to Schiphol since 1996. By opening a base, easyJet confirms this sustainable relationship that European destinations add to Schiphol 1 ” • 1. Schiphol CEO, Jos Nijhuis 25 25
Bringing it all together – easyJet Country Directors Local marketing Public Affairs / Relations Regulatory affairs Local sales (B2B) Employee / Industrial Customer Country Relations experience Director People management Airports Country performance Day-to-day Country plans operations Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold • Network, bases, airports, pricing • Sales & Marketing 26 26
Bringing it all together france Francois Bacchetta Country Director - France 27 27
easyJet in France – strong progress easyJet in France 2006 Jan 2012 2014 Routes 53 157 176 Market share 5% 12% 14% Business travel 17% 21% 24% Routes with min 2 dailies 6 17 24 Customer satisfaction 1 # 2 # 2 Since January 2012 investor day • Steady profitable growth: capacity increase of 5% • Business passenger continues to grow (up 3pp) Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold • 14% market share overall, clear number 2 position in the market 28 28 1. GSK, Millward Brown
easyJet has built a strong position in France Network built on No1 and No2 positions….. …delivering capacity growth and strong returns easyJet capacity in France Ranking – Capacity share 18 #2 – 18% 16 14 #2 - 16%* 12 #2 – 14% (seats million) 10 #2 - 13%* 8 6 4 2 #2 – 19% 0 #2 – 21% 2008 2009 2010 2011 2012 2013 #1 – 25% Over the last 5 years #11 – 2% • Capacity has increased by a CAGR of 11% #2 – 20% • Returns have increased by a CAGR of 13% Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold easyJet has a number 1 or 2 position in 8 out of 10 major French airports 1. Paris Capacity shares are given for short-haul addressable market (excluding Non open skies) and excluding 29 29 feeding traffic (30% in Charles De Gaule and 3% in Orly).
Significant market for easyJet easyJet network 1 European market Million seats Million seats % weight on 2014 (OAG) FY13 easyJet network 250 12% 12% 9 13% 8 11% 200 7 9% 6 150 7% 5 5% 5% 5% 5% 5% 4% 4% 4% 4 5% 100 3 3% 2 50 1% 1 210 205 169 136 133 0 -1% 0 Spain-UK UK- Dom Italy- Dom France- Dom France-UK France-Italy UK-Italy Swiss-UK Germany-UK UK-Nether UK Germany Spain Italy France Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Balanced traffic between outbound, inbound and domestic flows respectively sustained by an affluent population, tourism and business traffic 30 30 1. Source: Top 10 capacity flows of easyJet – millions of seats
Where is the future opportunity for easyJet “Be the c hallenger brand to Air France” Take advantage of main competitor restructuring and limited 1 presence of other low cost carriers Profitably grow market share over time by offering affordable 2 fares and reliable product Use the easyJet network to increase travel into France 3 Focus on business passengers, leverage France tourism 4 attractiveness and high income residents propensity to fly Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 5 Keep on building the brand and focus on customer experience 31 31
Respected in the French community Employ over 1,000 people Development of regions • • Under French pay system, paying Connecting France through French social service the network • Social responsibility Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 32 32
1 easyJet is the only significant competitor to Air France Full year 2014 – French market share (in seats) 1 100% Others 90% Vueling Airlines 21% 29% 34% Ryanair 80% 42% 2% 49% easyJet 7% 1% 70% 5% Air France 4% 60% 5% 21% 2% 20% 1% 10% 1% 50% 19% 40% 25% 30% 49% 47% 45% 20% 36% 25% 10% Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 0% PAR NCE TLS LYS BOD Paris Nice Lyon Toulouse Bordeaux 33 33 1 Time period: Oct 2013 – Sep 2014
2 Gaining market share 12% Capacity in France Market excl. easyJet LCC FSC Legacy easyJet 7.8% • Market capacity flat in FY14 driven 8% by Air France reduction 4.7% 4.5% 3.4% 3.2% 4% • LCC penetration in France lower 0.8% than Europe average 0% -0.8% • Increase in 2014 driven by easyJet and -1.1% -4% other LCCs 2013 2014 Other 20% easyJet progress AirFrance-KLM • Market share gain 42% • Build on successful start of Nice and Royal Air Marocco 2% Toulouse bases to establish strong Vueling 4% regional network IAG 4% Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold • Strengthen operations in Paris to Lufthansa consolidate No 2 position Group 7% easyJet 14% Ryanair 8% 34 34 Source OAG: Oct 2013 – Sep 2014
3 World’s leading tourist destination France is the leading tourist destination in the world • 85 million arrivals in 2013 1 : • 83% being from countries within easyJet network • Paris is the number one city in terms of visitors, with 32 million arrivals in 2013 • 38 easyJet network points connect with Charles de Gaulle • 19 easyJet network points connect with Orly • The number of inbound arrivals in France is expected to increase at a CAGR of 2%, rising to 90 million in 2017 Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 35 35 1 Source: Euromonitor, 2013
4 Business passenger opportunity in France Most popular business • Multiple frequencies to EU cities • Domestics routes (Paris to regions and inter regional network) Continue to increase share of business / high yield passengers through • Targeted deals with main TMCs and corporate accounts and develop GDS distribution • Product optimisation vs. competition and continuous operational excellence Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 36 36
5 Brand awareness industry leading in France Brand consideration closing gap with Air France and strengthening against competition First choice easyJet Air France Ryanair Vueling Would seriously consider Might consider Would not consider 21 19 9 5 54 6 4 58 • Brand awareness recovered 23 from a low level where education 30 31 31 43 42 was needed to change people’s mind-set about low-cost 32 • Consideration continues to build 29 46 37 36 36 by giving confidence to 26 26 11 customers as we continue to 9 make travel easy and affordable -10 -3 -13 -4 -25 -26 -27 -29 Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Q2 13 Q2 14 Q2 13 Q2 14 Q2 13 Q2 14 Q2 13 Q2 14 37 37 Source: Millward Brown
How we sell Peter Duffy Group Commercial Director: Customer, Product & Marketing
Agenda 1. Driving demand through brand and communication investment 2. Digital conversion 3. Highly differentiated revenue management system 4. Examples of revenue initiatives • Non-seat revenue (easyJet Holidays, in-flight) • Business passenger Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 39 39
Universal brand awareness in our key markets Awareness Serious Preference consideration 2014 (Q3) 2014 (Q3) 2014 (Q3) 98% 62% 15% 98% 66% 19% 91% 28% 5% 97% 68% 22% 100% 71% 40% Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 40 40 Source: easyJet Brand ranking study
Strong brand awareness delivers sales Passenger origination million 64 passengers easyJet Catchment database 300 million 22.6 million 57 bookings contacts million million 10.5 customers 41 41
Improving customer experience • Customer satisfaction improved • 56% of customers have now flown with us before • Average age of customers increasing Average age by market Average age at departure Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 42 42
Structured re-targeting • 57 million customers on the database • 41% marketable • Marketable customer base has increased three-fold since 2012 • Data driven creative approach • Customers in the contact programme are 33% more valuable than those who are not • Emailed customers book 24% more frequently than non-emailed customers Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 43 43
Digital strategy • +500 million visits • +26% - overall traffic increase (including mobile) • c.15% - step 1 web conversion improvement • 8.6% - mobile (% ecommerce bookings) Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 44 44
Pricing • Low fares offered across the entire network – c.45% of passengers pay under £50 per flight • Simple demand based system • Every flight to deliver positive contribution • Continued innovation • Allocated seating • Bag charges Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 45 45
Non-seat revenue • £64 million 1 • New deals with Europcar & Allianz • Leverage CRM platform to deliver sales • Significant Pan-European holiday options • Hotelopia – flight sales and holidays • Series seat sales • In-flight Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 1. Year ended 30 September 2013 46 46
Quality revenue streams - easyJet Holidays • Major opportunity for easyJet • 10 million European flight package bookings in UK - significant market in Germany, Switzerland & across Europe • New deal with Hotelopia Proposi ositio ion • Package holidays as beach, city and ski - full European coverage • Exclusive product range and prices Including branded 5 star properties • Fully protected (ATOL in UK) Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold • Segmented product to cater for specialist requirements 47 47
Quality revenue streams - Inflight • New differentiated award winning products • Best Airline - Inflight Retail and Food & Beverage • New products e.g. coffee sales up 17% • Margin improvements – up 9% • New brochure design from specialist consultant to Waitrose • Stock loss, wastage and accuracy improvements Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 48 48
Business travel Anthony Drury Director, Head of Business
Business journey Flexible corporate Travel agency fares agreements Inclusive fares +12 million business Allocated Dedicated sales team Fast track passengers and in core markets security seating growing Business easyJet plus cards Contracted orientated Corporate network Accounts Distribution Online booking 2014 “Business sense” agreements with Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold “Best short haul airline” tool integration campaign all major GDS’s Business travel awards 50 50
Delivering expected results • 12 million business passengers per YOY business passenger growth annum Millions 13 • 20% business passenger 12 penetration 11 • +280 corporate agreements 10 9 • +80 travel management companies 8 contracted 7 • Distribution agreements with all 6 major GDS and self booking tools Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 51 51
What is the future opportunity • EMEA short haul market opportunity is estimated at £20 billio lion pa (165 65 millio lion n seats) ts) European short haul market 1 • 35% of the short haul market is direct to 35% easyJet market easyJet market airline websites share across the share across the direct segment is managed segment is 15% 3% • 65% of the short haul market is through travel management companies 3% 3% 15% • easyJet overall market share is 8.3% 3% across Europe Direc ect • “Direct Business” market share is currently spend Direc ect 15% of the direct opportunity which is indexed opp pportunity spend TMC above our overall market share Manag aged ed 85% 5% Managed ged spend spend opp pportunity • “Managed Business” market share is currently 97% 3% of the managed opportunity which is indexed well below our overall market share • Opportunity exists across both segments with the “Managed Business” sector Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold highlighting the most opportunity 1. BCG analysis 2014 52 52
Seizing the opportunity • Market share growth opportunity across all markets • Focused strategy to capitalise on the Product Network opportunity across Europe through both the managed and direct channels Sales • Four strategic pillars supporting our sales approach Marketing Distribution Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 53 53
“Multi channel” sales approach • Contracted relationships • TMC supported (Online/Offline) • Dedicated stakeholder management Corporate • Savings / ROI value proposition Corporate spend contracts • Management reporting • Corporate discounts • Distribution channel Travel Management Company (TMC) • Middle market growth • SME channel Direct • www.easyjet.com Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Corporate accounts 54 54
Seamless distribution through all channels • GDS connectivity improvements across all channels • Self Booking Tool integration with consistent display • Flexibility to book direct • Supporting the TMC’s preferred booking channel across Europe Self booking tools • 100% YOY GDS penetration improvements Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold • Displayed similar to all other carriers • Leading the industry with flexible distribution standards 55 55
Delivering tailored business products • Tailored fares and products for the corporate customer • Fares distributed through the TMC’s GDS systems • Fares available online through all self booking tools • Fast track for Flexi fares & easyJet plus at more than 35 airports £ growth £ growth Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Inclusive Ticket Growth Flexi Ticket Growth 56 56
Building a stronger business network Presence in top 100 market pairs • Largest footprint in the largest Non primary airports 60 European markets 1 50 Number of market pairs operated 20 1 40 between 2 primary airports 30 - - 2 • - - Flying to more business friendly 20 - - 10 - primary airports 48 23 39 9 24 24 21 18 17 15 14 14 3 3 - • Multiple frequencies on top High Frequencies on key Business Routes Departures Business routes Daily 16 14 13 12 • 10 Maximising time and efficiency 11 10 10 8 9 9 through our business friendly 6 7 7 7 7 6 6 4 5 5 schedule 4 2 Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 0 57 57
Stakeholder focussed marketing campaigns • Targeted stakeholder advertising • Product re-enforcement • Leverage all media channels • Influencing behaviour • Brand awareness and perception • Educating the corporate traveller Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 58 58
Summary • Opportunity to grow market share across both managed and direct segments in all markets • Largest opportunity across the managed sector through TMC channel development • Marketing investment to increase consideration • On-going focus on evolving the suite of business products • Continue to develop and support Industry partners Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold • Business is part of our DNA 59 59
Low cost everyday Chris Kennedy Chief Financial Officer 60 60
Low cost everyday ork 1 Capac pacity ity deplo loyed d on easyJe Jet t networ Low cost t al allows lows eas asyJet Jet to to: easyJet Air France 60 Other airlines hold a Alitalia lower than Offer affordab able e fares British Airways 2.5% share KLM TAP Thomson Other Continue e to compete te success ssfu fully lly Cost t base allows ows easyJet et acces ess to the oppor portu tunity nity CASK( K( p)* Airport; ground handling, 8.0 navigation and en-route charges 6.0 4.0 Sustain in and grow 5.60 4.60 margins ins 2.0 3.11 2.94 2.14 1.65 65 0.99 0.0 250 500 Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold easyJet’s low cost base provides the platform to make travel easy and affordable 1. OAG full year 2014 – easyJet airport pairs capacity 61 61
easyJet lean will deliver £30 million - £40 million in sustainable savings per annum over the next 5 years easyJet lean has delivered c.£170 million ion in sustainab able le cost savings lean principle les: s: • Governance and milestones • Covers the total cost base • Long and short term savings • Embedded throughout easyJet Pipeline of sustainable cost savings culture 2015 2016 2017 2018 2019 Benchmarking ing process: Enginee eering g & Mainten enan ance Airpor ort deals als • Costs benchmarked against key Engine e selection competitors Up Up-ga gaugin ging • Revealed a further pipeline of A320 NEO’s saving initiatives Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold easyJ syJet et lean initiat ativ ives es easyJet lean will continue to deliver sustainable savings 62 62
Cost OPPORTUNITIES Warwick Brady Chief Operations Officer 63 63
Our operation in 2014 Flight Operations • 2,440 Pilots Cabin Services • 5,221 Cabin Crew Ground Operations • 704 routes across 134 airports in 32 countries Engineering & Maintenance • 226 aircraft • 6 maintenance bases • 27 line maintenance bases Operations Control • 26 aircraft/crew bases • c. 1,350 sectors/day Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 64 64
Leading asset utilisation On Time Performance Operatio ional al efficiency 100% 87.0% • Low overhead costs 80% 66.0% • Highest load factor 60% • Uses its aircraft efficiently 40% • Maintains industry leading on-time performance 20% 0% 2010 2013 90.3% Load factor 1 Innovate to m maintain in cost advantag age Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Industry leading asset utilisation 1. Rolling 12 months to 31 st August 2014 65 65
Maintaining cost advantage easyJ syJet t cost base se 1 Crew • Overall operational cost 13% Maintenance base of £3.5 billion £454m 6% £212m • Ex-fuel cost base of £2.4 Airports & ground handling billion 31% £1,078m • Ex-fuel costs are 67% of the overall operational cost base • easyJet has the ability to Fuel directly impact c.60% of the 33% Navigation £1,182m cost base 8% £294m Selling and Other costs Marketing 6% 3% £226m Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold £101m All based on single aircraft type which allows for scale and simplicity benefits in all cost and operational areas 1. Year end 30 September 2013 66 66
Pipeline of initiatives to maintain cost advantage Increased pipeline of initiatives • easyJet lean continues to deliver and develop significant cost reductions • Rolling 5 year plan to identify future initiatives across • Airport charges • Ground Handling • Navigation • Crew • Engineering and maintenance contract re-tender in 2015 • Continued benefit of up-gauging Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Size of savings per annum (larger circle means bigger saving opportunity) Long term Short term Medium term 4yrs> <2yrs 2 – 4 yrs 67 67
31% Airport costs: the facts • 80% are regulated airports • 20% are non-regulated • Price deals: • London Gatwick price cap over 7 years • Luton 10 year growth deal allowing doubling of passengers • Spain 10 year price freeze (18 Airports) • Copenhagen price increase capped for 4 years, low-cost terminal discount protected • Long term airport deals across Europe 68 68
31% Airport costs: delivering savings Airport deals Regulated airports • Deals recently completed: • Participate in price regulation process in major airports • Gatwick • Luton • Work with regulators to ensure a fair price setting • Bristol process is developed and adhered to • Develop relationships with airports to help deliver Airports • Push to have dual till pricing structures eliminated of the future program from the easyJet network • Efficient use of capital • Deals not reliant on regional subsidies or state aid Structure of charges Culture change • Ensure airport charges fairly reflect the easyJet product • Avoid any remaining bias towards legacy carriers • Charges should reflect the underlying cost of services • Develop relationships with regulators and work provided together to ensure fairness in cost structures • Pay per use • Develop relationships with airports to ensure • Recognition of higher load factor efficiency is rewarded and airports are customer • Recognition of fast turns & limited use of assets friendly and efficient • Avoid funding infrastructure that we do not use Continual focus to minimise price increases to below inflation 69 69
31% Ground handling costs: the facts • Over 50 handling partners across our network • Our top 10 partners handle c.80% of our turns • Menzies Aviation & Swissport are our biggest partners • 98% of our customers now use online Check-in • Misrouted bag rate of 0.4 per 1000 bags, one of the lowest in the industry • De-icing technologies reducing winter disruption • Deals signed this year: • 6 UK airports • Copenhagen • Geneva • Schönefeld & Hamburg 70 70
31% Ground handling costs: delivering savings To deliver an easy, efficient and friendly service at competitive prices Competitive market Leverage new contracts based Evolving airport processes on our volume • Online Check-in • Carry on bags Airports of the future Automation Making key airports customer Auto bag drop and auto gates friendly and efficient (e.g.: will drive efficiency across the Gatwick single terminal airport experience consolidation) External benchmarking confirms easyJet as one of the industry leaders in ground handling costs 71 71
13% Crew: the facts • 13% of cost base • Are represented by 16 recognised unions • Crew are rewarded on productivity and performance • e-Learning and bespoke training programs are offered that continually develop our crew • Our crew are a major reason why passengers enjoy flying and continue to fly with easyJet “I have no doubt in my mind that the quality and professiona onalism of the cabin n crew is a major reason why I will 1 continue to use easyJet.” 1. easyJet CSAT YTD July 2014 72 72
13% Crew: delivering a sustainable cost base T o deliver an easy, efficient and friendly service at competitive IT systems prices Industrial Relations Optimisation software Specialised employee relations ensures our crew are as team regularly liaises with our productive as possible 14 recognised unions Lifestyle options Pay deals Offer choices to enhance lifestyle - select between pay, Variant pay deals which are time off or part time competitive in each of our Growing network jurisdictions with rewards based on productivity and performance Improved flexibility through new entrant contracts & strategic flying from new bases (e.g.: Netherlands, Portugal) Crew cost per block hour is in line with low cost competitors 73 73
Fuel costs: the facts 33% • 33% of the cost base • easyJet’s single largest cost line • Since 2011 our baseline fuel initiatives have made savings of £22 million • A $10 movement per metric tonne impacts the 1 FY’14 fuel bill by +/ -$1.0 million 1. Q3 IMS, 24 July 2014 74 74
Fuel: delivering savings 33% What has been done so far Continuing to deliver savings • • Introduction of Sharklets for new Analysis tools to identify opportunities for deliveries since August 2013 cost savings • Retrofitted 6 additional Sharklet aircraft • Zonal drying trial • Aircraft weight reduction programme to • Delayed engine start remove unnecessary weight carriage • • Lightweight seats and lightweight trolleys Engine washing remove 600kg per aircraft • Fuel burn information shared with flight crew • Engine washing programme maximising • economy and minimising emissions One engine taxiing • Lightweight Electronic Flight Bag • Continuous improvement together with (removed paper charts) saving 25kg per manufacturers aircraft • Flap 3 landing (requires less engine power during descent) Pipeline of initiatives to continue to drive fuel efficiency savings 75 75
Disruption management Will Facey Head of Operations Control Centre 76 76
Role of the Operations Control Centre (OCC) • Deliver the daily network • Maintaining operational resilience • Mitigation of operational risk • Centralised network decision making • Crew support & co-ordination • Manage disruption • Communication flows • Crisis response Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Being on the front foot – anticipating, mitigating and controlling execution 77 77
OCC in disruption – considerations & outcomes Outcome OCC Role Action / Process Operational routines Increased customer satisfaction Business disruption teams Control Legal liabilities • Increased OTP and service completion rates Realistic and pre-emptive React to any situation decision making • High level of control and co ordination • Balance between customer value and cost Be open and honest with Open passengers communication • Consistent and pertinent communications Flight tracker • ‘..Doing the right thing..’ Higher propensity to fly with easyJet again E.g.: centralised hotel Centralised procurement booking Increased cost control E.g.: pre loaded cash card Innovative • Lower disruption cost technology refreshment vouchers Future cost initiatives / innovation • Seeking disruption solution optimisation Disruption cost per cancelled flight decrease Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold • Hotel procurement / pax self help 2012 – £3,718 2013 – £3,551 2014 – £3,403 78 78
Case study: disruption incident management Decis cision ion proces cess Considerations Bird strike ike Aircraft scheduled to travel too and Initial assessment return from BSL to Aircraft at LGW undertaken LGW suffers bird strike (LGW / BSL flight delayed) Quick decision required due to Basel curfew limited options to move passengers between UK / LGW / NCL rotation is Switzerland in the cancelled as Decision made to coming days passengers not at ground aircraft Operationally airport yet committed to move Swiss passengers Is there enough LGW / NCL Swiss passengers time to inform passengers informed moved in both NCL passengers of cancellation directions & NCL of cancellation (majority informed prior to passengers put on Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold and stop them arrival at airport and placed next on first flight next day) from travelling to the airport? Recovering well is the key to retaining the passenger 79 79
Engineering and maintenance Gary Smith Head of Powerplant and Fleet Transition 80 80
Background to E&M re-tender • ‘Vision 2015 – engineering – the future’ launch • Fleet selection announcement • GB Airbus and Boeing 737s • Significant lease extensions • Implementation of exited fleet beyond 12 years re-tender with • 11 year SRT contract signed – • New fleet evaluation • Engineering cost selected 6 year break clause launched benchmarking completed suppliers/network 2009 2011 2013 2015 2008 2010 2012 2014 • GB Airways integration • Insourcing complete • New fleet technical evaluation • Engineering and • Insourcing project underway • Current engineering team Maintenance re-tender completed launch formed • End-of-lease activity taken in- • Engine selection completed house Now Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 81 81
How the E&M cost base breaks down easyJet Engineering & Maintenance cost base Engineering by Category Primary Activity Description gines Engine maintenance Engine workshop visits, unscheduled and scheduled (every 9 years approx.) Engine Engine LLPs Cost of engine life limited parts, replaced at scheduled engine workshop visit Network wide repair and logistics management for over 30,000 component removal Component support transactions ts ents ponen Logistics and Warehousing Transportation and warehousing for components and consumables Compo Consumable parts Non-repairable parts consumed at line or heavy maintenance nce Hangar based maintenance – currently includes 6 and 12 year checks, end-of-lease nanc me Heavy maintenance frame maintenance and C-checks intena Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Airfr Line maintenance Line maintenance – network wide Main Equalised checks Overnight checks performed every 85-90 days on each aircraft 82 82
Implications of fleet transition on heavy maintenance Increase in maintenance volume gives opportunity to leverage cost • A320 family requires a heavy T ype of check maintenance check at 6 and 12 years 6 Years 8 Years 10 Years 12 Years 14 Years 16 Years (14 and 21 days downtime respectively) 94 100 • Beyond 12 years, aircraft require a 3 90 medium-maintenance check every 2 80 74 22 22 years, allowing opportunity to perform 4 70 64 reliability modifications 60 19 19 10 10 27 27 • Increased maintenance and larger fleet 48 50 39 5 provide significant leverage with 19 19 21 21 40 33 maintenance providers 8 17 17 1 23 23 30 9 20 1 • Predictable volume of the same aircraft 25 25 20 20 20 31 31 type offers opportunity to leverage ‘lean 25 25 24 24 10 20 20 20 20 9 9 principles’ and technology to improve 0 efficiency of maintenance 2014 2015 2016 2017 2018 2019 2020 Average age of fleet 1 Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Average age of fleet 1 5.8 6.2 6.7 7.1 7.2 7.5 8.0 1. Average age of fleet at end of respective financial year 83 83 Heavy maintenance demand forecast based on easyJet internal analysis: 2014-2020
Vision 2015 In spring 2013, easyJet engineering launched ‘Vision2015’ • Cost benchmarking exercise carried out by independent experts • Objective of delivering best-in-class engineering cost, reliability and safety • Implementation to coincide with exit points from existing contracts Outcome • easyJet engineering costs were benchmarked on a CASK basis • Considerable opportunities identified in: • Component repair, logistics and warehousing • Airframe heavy maintenance • Further opportunity identified in engine maintenance • Re-tender project was commenced to pursue the identified cost reduction opportunities within the engineering supply base Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold • Engine selection for A320neo would be leveraged to ensure best in class engine maintenance costs • Intention to implement new arrangements during FY2016 84 84
Significant opportunities Key areas of focus following the benchmarking exercise Categories Component Heavy Current aircraft Line support maintenance engine maintenance maintenance • Re-tender • Continue current • Re-tender • Current Strategy • Investigate dis- • Review strategy of maintenance aggregation of continuous re- maintenance contract in place contract tender programme until 2017 • Gatwick • New engine strategy configuration to selection to drive be reviewed cost reduction Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Largest opportunities in component support and heavy maintenance 85 85
Engine selection Rigorous, thorough and competitive process • CFM International selected to provide 270 engines to power 35 current generation A320s and 100 A320neos • Will also supply engines for any future exercise of the 100 purchase rights over new generation aircraft • The A320neos will be powered by the CFM LEAP-1A engines • expected improved aircraft fuel efficiency of 13-15% • reduce noise levels • The current generation A320 aircraft will be powered by CFM56-5B engines • Engine selection delivers easyJet’s cost reduction target Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Engine selection delivers future cost certainty and a significant improvement on current arrangements 86 86
Next steps Tod oday ay May 14 Jan 2014 March 14 April 14 June 14 July - Oct Oct-Dec Dec FY15 FY15-16 16 New contract ract(s) Supplier Broad Issue of Round 1 Supplier Round 2 Supplier Finalise Implementation meetings, supplier RFP bids meetings bids and selection Contract site visits, base down select Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 87 87
Goal of benchmarking exercise Engineering & Maintenance cost per seat CPS Up-gauging, fleet Engine E&M re- 2019e 2014 2019e increase management Selection tender Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold • Up-gauging, engine selection and • No management action would contract re-tender will result in lower result in material increase in E&M E&M cost per seat in 2019 than in 2014 cost per seat by 2019 88 88
Innovation driving cost reduction Ian Davies Head of Engineering 89
Continuous improvement by innovation • Eliminate operational disruption due to aircraft technical Objective defects by 2020 • Prevent events occurring by intelligent prediction • Mitigate or resolve impact of technical issues by the application of technology • Improved passenger experience and satisfaction Outcome • Eliminate costs of technical disruption • Implement a step-change in engineering efficiency • Motivated and engaged engineering team • Technological awareness – build an ‘ecosystem’ of Identifying innovation partners innovation • Academic relationships • Industry partners & suppliers 90 90
Development of bespoke software to drive efficiencies Rapid software change – Fan blades management • Development of bespoke apps to optimise existing processes • Fan blade management to help engineers replace damaged blades • More time efficient • Optimises selection of replacement blades reducing inventory • Apps co-developed with aviation software specialists • Software in use 91 91
Using technology to reduce delays Front line support – real time video transmission • Enable remote engineering teams to engage using virtual technology • Allows engineers to hold live video calls with front line engineers, workshops and manufacturers • easyJet flies to 138 airports Problems at remote o airports solved more quickly • Technology to reduce long delays • In development with Epson and Vuzix 92 92
Damage assessment time minimised Dent and buckle – augmented reality • Aircraft damage causes multiple delays per day, complex assessment processes • All damage has to be recorded and tracked for the life of the aircraft • Augmented reality allows pilots and engineers to see previous damage super- imposed onto the aircraft, minimising time taken to assess new damage 93 93
Drone and robotic technology Remote inspections - drones • Modify existing technology • Drones programmed to scan and assess any damage • Enhanced ability to undertake remote checks More time efficient o Greater accuracy o • In development with Coptercraft, Measurement Solutions and Bristol Robotics Laboratory • Trialling in coming months 94 94
What can prognosis do for us? • Prognosis systems can be used to send real time data of components (e.g. time to open and close, temperature, pressure) • Live data can be used to establish when a unit is about to fail • Ability to monitor each individual unit and predict a failure before it actually happens HOW IT would WORK… Data Snapshot ACARS A ir-ground Engineering datalink Processing Pattern Component Matching Engineering SITA Ground Rectification/ Dept. & MOC System Network Alert Removal Generation Costumer Notification Goal of prognosis is to minimise aircraft on the ground, standby aircraft, delays and passenger compensation 95 95
Summary • Innovation cost saving improvements in easyJet engineering is part of the Company’s DNA • Innovations are a mix of shorter term solutions which have already been implemented and longer term research projects • A focus on efficiency allows easyJet to ‘future - proof’ easyJet’s operation and leverage greater cost and efficiency savings as the fleet grows • Key driver behind easyJet innovation is to drive sustainable cost out of the business and improve operational efficiency 96 96
Capital discipline and returns Chris Kennedy Chief Financial Officer 97 97
Agenda 1 • Capital discipline has driven industry leading ROCE 2 • Strong balance sheet, prudent levels of liquidity and fleet flexibility are sources of competitive advantage 3 • Highly cash generative model delivers continuous and consistent dividends 4 • Clear set of financial policies and metrics in place 98 98
1. Capital discipline has driven industry leading ROCE Returns • Rigorous approach to allocation of capital • Network Development Forum • ROCE is now embedded through the organisation • Network decisions • Route planning Routes • Remuneration 12m to 30/6 /6/2 /2011 12m to 30/6 /6/2 /2014 12m to 30/6 /6/2 /2012 • Continued improvement in ROCE 12m to 30/6 /6/2 /2013 year after year Focus on capital discipline to deliver sustainable growth and returns 99 99
2. Strong balance sheet provides competitive advantage Between FY15-17, easyJet will target a gearing range of between 15% and 30% Adj. ROCE 1 Target range 30.0% easyJet historical gearing easyJet 25.0% 21.5% 33% 35% 20.0% 29% 28% 30% Ryanair 27% (historical Lufthansa 15.6% 25% 15.0% average) 11.6% 20% IAG 8.3% 10.0% 15% 10% 7% Air France Norwegian 5.0% 2.5% 5% 3.1% 0% 0.0% 2010 2011 2012 2013 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% Adj. Gearing - Data based on 12 month period ending 31 March 2014 100 100 - Includes capitalised leases capitalised at 7.0x - Bubble represents size of EBIT
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