EasyJet Case

GGSB MBA - LONDON

3

Why easyJet

• easyJet shares skyrocketed from GBP 390 in January 2012 to GBP 1,770 in

April 2014; 4.54 times or 354% appreciation!

26

Continued opportunity for easyJet

Source:

Market share growth rates from OAG. easyJet routes based on internal easyJet definition. Based October download for the six months to 31

Capacity growth H1‘ F’14 (OAG)

Taking advantage of competitor restructuring, improving network

%of easyJet

capacity

touching

country

1.

Network

UK

33%

France

13%

Italy

12%

-9%

Switzerland

10%

Spain

9%

Germany

6%

2%

-4%

0%

-0%

-2%

-2%

2%

1%

-6%

-4%

3%4%

2%2%

4%

-4%

3%

Total capacity change - easyJet market s Competit ors on easyJet market s easyJet capacity change

March 2014. Adjustment made to forward looking easyJet capacity to reflect the latest view of fleet growth.

27

• 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

• Over 75% of our capacity is at airports where we have a leading position

Leading position in top market pairs

No.1

31m

46%

No. 2

21m

30%

Other

16m

24%

ea

syJe

t

Ryan

air

IAG

Lufth

an

sa

Gro

up

Air F

rance

-KLM

No

rwe

gia

n

Alita

lia

SA

S

Air B

erlin

-NIK

I

Vue

ling

Airlin

es

Turk

ish

Airlin

es

Presence in top 100 market pairs

1

Non primary airports

1

Presence in top 100 market pairs

Source: OAG, easyJet

Airports where easyJet has

number 1or 2 market share

48

18

37 Number of market pairs

operated between 2 primary

airports2

24 24

222119

17 16

14

3

8

Strong unit revenue growth

Source:

Competitor capacity from OAG using an easyJet definition of overlapping markets. This excludes charter capacity.

£m F '13 F '12 Change

Passengers (m) 60.8 58.4 4.0%

Load factor (%) 89.3% 88.7% +0.6ppt

Seats (m) 68.0 65.9 3.3%

Average sector length (km) 1,091 1,096 (0.5%)

Total revenue (£m) 4,258 3,854 10.5%

Total revenue per seat (£) 62.58 58.51 7.0%

@ constant currency (£) 62.65 58.51 7.1%

30

34

35

36

37

38

39

40

41

FY10 FY11 FY12 FY13

Source:

• Great service: surveys conducted by Millward Brown & GfK for 12months to end September 2013

UK

Spain

France

Germany

Italy

Switzerland

Portugal

Netherlands

Demand: Understanding evolving customer base

UK France Italy Switzerland Germany

Older passengers, higher disposable incomes

Average age

FY'10 FY'13

Increasingly pan-European customer base

FY’10 FY’13

Great service: “consider flying easyJet again?” Increased proportion customers re-booking

Customer

50% 45%

50%

55%

Volumes

New

Exising

UK47%

France

12%

Italy8%

Switzerland

7%

Other

26%

UK44%

France

14%

Italy13%

Switzerland

10%

Other19%

98%

• Other data from internal easyJet systems

95%96%

97%

96%

31

High volume

Conversion

focused

e-Commerce

engine

Demandbased

Pricing Model

Structured

re-targetting

customersand

prospects

Proposition

re-design and

segmentation

Marketing

Areas of focus

• Network optimisation

• Brand awareness

• Digital / Web

• Revenue management system

• Proposition redesign

Business

Allocated seating

Bag policy

Mobile boarding

On-line check-in

How we sell

33

Allocated seating has been a success

Most popular seats

Introduced variable pricing on allocated seating from start of November

H2 performance Allocated seating

Impact on revenue per seat c.62p increase

% of RPS growth c.+1 percentage point

Satisfaction with boarding

experience

+4.5 pp

Now 73%

37

CrewAirports

& groundhandling

Other &Fixed

Engineering

Fuelefficiency

Navigation

Ownership

Sales andmarketing

EasyJet Lean – lowest cost for our network

1. Areas of focus for FY’14

Innovative thinking to drive long-term, sustainable savings, benchmarked

against the best in class

• On-going delivery of key initiatives:

• Ground ops: ground handling &

non-regulated airports

• Crew settlements & flexibility

• Engineering

2. Longer term programmes

• Plans in place for significant longer

term deliverables:

• Fuel: sharklets, lightweight seats

• Navigation

• Engineering

easyJet

Lean

15

Increasing proportion of A320’s

F '13 F '12 Change

A319 (operating lease) 54 49 5

A319 (owned / finance lease) 99 111 (12)

A319 Total 153 160 (7)

A320 (operating lease) 18 6 12

A320 (owned / finance lease) 46 48 (2)

A320 Total 64 54 10

Total fleet 217 214 3

Operating lease 33% 26% 7ppt

Percentage unencumbered 36% 32% 4ppt

Percentage of A320s in fleet 29% 25% 4ppt

36

Lowest cost base

EBIT Cost perASK(excl. fuel) (1) easyJet cost advantage

• easyJet Lean

• Continued focus on on-time

performance and asset utilisation

• New fleet order

• Fuel efficiency

• new generation aircraft expected

to reduce today’s total cost per

seat by 4-5%(2)

Difficulties with comparisons

• Airport mix: primary vs. secondary

• Accounting treatment e.g. passenger

airport charges (3,4)

• Sector length

12m

end

31

Mar’

13

1. 12months to end of March 2013; CASK data and definitions sourced from the Airline Analyst

2. Cost saving for new generation aircraft assumes fuel at $1,100 / MT, compares current generation A320 aircraft vs. new generation A320neo aircraft

3. Differences in accounting treatment of per passenger airport costs as per accounting standard

4. easyJet believes its current reporting appropriately reflects its business model in relation to the standard

1.6

Ryanair 0 .8

2.0

2.1

3.1

2.8

4.4

4.5

easyJet

Vueling

Norwegian

IAG

Air Berlin

AF-KLM

LHA (Group)

Staf f , depreciat ion, maintenance, ownership, market ing, head off ice

Airport , ground handling, navigat ion en-route charges

13

Cost per seat excluding fuel - key drivers

Favourable/

(Adverse)

£ Cost per

seat ex fuel

£ var at

constant

currency

% var at

constant

currency

Drivers

Airports and Ground

Handling15.84 (1.14) (7.9%)

• Significant increases in airport charges in

Spain and Italy

• Increased de-icing related costs

Crew 6.68 (0.08) (1.1%)• Increase in salaries, offset by higher

proportion of A320s and shorter sector length

Navigation 4.33 0.02 0.5%• Price increases more than offset by higher

proportion of A320s and shorter sector length

Maintenance 3.11 - 0.2%• One-off items from last year not repeated,

offset by above inflation price increases and

increase in average fleet age

Overhead 4.64 (0.08) (2.1%)

• Higher disruption-related costs including

EU261claims, relating to prolonged winter

conditions and strike action

• Increase in performance related employee

costs

Brand licence 0.16 (0.08) (108.2%)• As per the amended brand license

agreement, now fixed percentage of revenue

Ownership 3.41 (0.05) (1.4%)

• Increased proportion of leased aircraft,

following new leases and sale and leaseback

transactions

• Savings on interest cost from paying off high

coupon debt

Total CPS excluding fuel 38.17 (1.41) (3.9%)

48

RASK and CASK

F '13 F '12 Change

Total revenue per seat 62.58 58.51 7.0%

at constant currency 62.65 58.51 7.1%

RASK at constant currency (pence) 5.74 5.34 7.6%

Total cost per seat ex fuel 38.17 36.25 5.3%

at constant currency 37.66 36.25 (3.9%)

CASK ex fuel at constant currency (pence) 3.45 3.31 (4.4%)

3

10 years share performance of easy Jet and its peers

3

easyJet revenue and earnings

3

easyJet EPS and dividends

3

Independent analysts forecasts

• Share price forecast. The 24 analysts offering 12 month price targets for easyJet plc have

a median target of 1,820. It represents a 18.95% increase.

• In 2013, easyJet plc reported a dividend of 0.34 GBP, which represents a 40.24%

increase over last year. The 19 analysts covering the company expect dividends of 0.37

GBP for the upcoming fiscal year, an increase of 11.04%

3

SWOT

Strengths Weaknesses Opportunities Threats

Strong position in

the key aviation

markets of

Europe

Lack of

geographic

diversification

Growing

international

tourism

Increasing

charges at

regulated airports

Robust capital

structure and

liquidity

Dispute between

the founder and

the board of

easyJet

adversely impact

the brand image

Network

expansion to

enhance

coverage and

drive growth

Intense

competition and

price discounting

Competitive and

flexible business

model

Key agreements

3

Strengths

•Strong position in Europe:

- Connect top 100 city to city market pairs than any other

airlines

- 4th largest short-haul carrier in Europe (8% MS)

- 31% MS in UK for intra-European market

-3rd most searched airlines, with 370M visits in 2013

•Financials (from 2012 to 2013):

-Revenue grew by 10.5%

-Operating profit grew by 50.2%

-Net profit grew by 56.1%

- ROCE grew by 6.1%

3

Weaknesses

• Lack of geographic diversification:

-Risk is born with the current political and economic

uncertainty of the European region which creates

challenges of regulation and government.

-Air traffic control costs are about double in Europe than

they are in the US

• Dispute between founder and the board:

- Sir Stelios (quit in 2010) raised dispute regarding the

strategy and threatened to sell shares if the company

buys more planes. Results, included drop in share

prices.

3

Opportunities

• Growing international tourism:

-2nd largest industry in the worls, recovered since

downfall of ‘08-’09 and European arrivals increased

by 5% in 2013

• Network expansion to enhance coverage and drive

growth:

- Launched 10 and 5 new routes in 2013 & 2014,

respectively.

3

Threats

• Increasing charges at regulated airports

- 70% of total airport costs comes from regulated

airports, as there have been above inflationary cost

increases in 2013-2014.

- Due to new and increased aviation taxes, 2%

increase costs per seat are projected.

Thank you!

Q & A

(Sustainability of easyJet)

3

Shareholders

3

Shareholders