H1 2020 results presentation
introduction Johan Lundgren – CEO
easyJet - Positioned to win
3
easyJet has been decisive in meeting the challenges of Coronavirus to ensure we can manage a prolonged grounding by:
1. Cutting costs
2. Delivering vastly reduced capex while retaining excellent fleet flexibility
3. Securing c.£2bn additional funding, in addition to the equity raise announced today
Strong liquidity position, testimony to the strength of easyJet + its investment grade balance sheet
easyJet will be leading the recovery:
1. Strong H1 performance prior to COVID impact
2. Trusted easyJet brand outperforms competitors in value for money and drives customer confidence
3. easyJet’s industry leading network of European primary airports
4. Cost-out programme to deliver sustainable cost savings
3
Competitively positioned as a more efficient airline to take advantage of opportunities in the European short haul market
Financial review Andrew Findlay – CFO
response to coronavirus
Maximise liquidity
Cost Reductions & Payment Terms
• c. 70% decrease in operating cost cash burn during grounding
• Payment term extensions negotiated with many of our major suppliers
Fleet Deferrals
• Deferred 24 aircraft deliveries to post 2025
• Increased short term flexibility
• Drove re-timing of pre delivery payments
Additional funding
• Delivered c.£300m from SLB transactions so far, with final transactions to leave us at the top end of the £500m-£650m range
• Accessed a further £1.4bn in funding through; CCFF, RCF & term loans
Current cash position
(as @ 22 June)
£2.4bn
5
Does not include funding from: • equity raise + £400m to £450m • SLB transactions still to complete
+ c.£300m
Scenario planning - Updated
Scenario assumptions:
• Refunds vs voucher/rebook ratios continue at a similar rate as those seen to date
• FX and fuel rates based on spot price as at 25th May ’20
• Assumes no material change to card acquirer arrangements
Total cash burn scenarios*
Highlights:
• Cash burn slightly better than April forecast:
• 3mth by c.£0.2bn, 6mth by c.£0.1bn, 9mth unchanged
• Cash contributing flying programme resumed after 11 weeks, ahead of our 3 month grounding base case scenario
• Additional sources of funds continue to be explored to further boost liquidity
• Additional management actions being undertaken including business wide cost out programme to improve free cashflow generation
6 months grounding
3 months grounding
Revenue/refunds
AP/AR unwind
Capital
Operating costs
9 months grounding
£1.0bn £2.1bn
£3.0bn
Total Capex (Inc fleet, other , IFRS16 & maintenance )
6 * Starting point of 1st April 2020
proposed equity placing
EQUITY PLACING
> Firm placing of up to 9.99% of issued share capital
> Additional placing of up to 5% of issued share capital, conditional on shareholder approval (ordinary resolution)
> Allocations expected to be split proportionally between the two placings
> Expected gross proceeds c.£400m - £450m
TIMING > Transaction launched 24 June after market close, settlement of firm placing 29 June (T+2)
> General meeting to be held 14 July, settlement of conditional placing 15 July (T+14)
JOINT GLOBAL COORDINATORS & JOINT BOOKRUNNERS
> BNP Paribas
> Credit Suisse Securities (Europe) Limited
EASYJET PLC SHARE LOCK-UP > 180 day post-admission share lock-up for the Company, subject to customary exceptions
• Proceeds will further enhance easyJet’s liquidity position and credit metrics, underpinning our balance sheet which is one of the strongest in the industry
• Expected cash balance following the equity placing and final SLB proceeds to be in excess of c.£3bn, providing significant liquidity buffer to navigate further grounding or protracted recovery scenarios
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Key performance indicators
H1 2020 H1 2019 Change*
Seats flown (m) 42.7 46.2 (7.6)%
Passengers (m) 38.6 41.6 (7.4)%
Load factor (%) 90.3% 90.1% +0.2ppt
Average sector length (km) 1,095 1,068 2.5%
Revenue per seat - reported currency (£) 55.60 50.71 9.6%
Revenue per seat - constant currency (£) 55.87 50.71 10.2%
Headline cost per seat incl fuel - reported currency (£) 59.75 56.66 (5.5)%
Headline cost per seat incl fuel - constant currency (£) 60.75 56.66 (7.2)%
Headline cost per seat excl fuel - reported currency (£) 47.24 43.64 (8.2)%
Headline cost per seat excl fuel - constant currency (£) 47.80 43.64 (9.5)%
*Favourable/(adverse)
Per seat metrics exclude easyJet Holidays
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Financial performance H1 2020 H1 2019 Change*
£ m £ m £m
Total revenue 2,382 2,343 39
Headline costs:
Headline costs excluding fuel (2,041) (2,016) (25)
Fuel (534) (602) 68
Headline loss before tax (193) (275) 82
Headline loss before tax at constant currency (224) (275) 51
Non-headline items:
Sale and leaseback gain 1 2 (1)
Brexit-related costs - (4) 4
Commercial IT platform - 2 (2)
Balance sheet foreign exchange gain 3 3 -
Fair value adjustment (164) - (164)
Total loss before tax (353) (272) (81)
*Favourable/(adverse)
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Revenue performance
£0.56
£1.01
£4.20
FX
(£0.61)
H1 2019 Reported Thomas Cook Administration
Underlying Trading
£50.71
H1 2020 @ CC
£55.60
H1 2020 Reported
(£0.27)
Coronavirus
£55.87
Ancillary
RPS @ CC +10.2%
Reported RPS +9.6%
+1.1%
+2.0%
+8.3% -1.2%
-0.6%
c.18k Flights cancelled in
March due to Coronavirus
c.£0.2bn Impact on total
revenue
Excludes easyJet Holidays
10
HEADLINE cost PER SEAT
* Operational price increases including unregulated airports, ground handling, navigation and crew costs
Excludes easyJet Holidays
11
Headline CPS ex fuel @ cc +9.5%, of which: c.5.0% underlying
• In line with guidance • Lower capacity growth
for the half • Ongoing, regulatory and
inflationary pressure • Ownership costs • Crew pay higher
retention levels
c.4.5% Coronavirus:
• Cancellations • Full pilot & crew rosters
through March
£1.22
£0.99
£0.66 £0.11 £0.15 £1.00
Navigation
£56.66
Airports, ground
handling and other operating
costs
P&L FX
£60.81
H1 2020 headline cost per
seat @ CC before fuel
variance
Fuel Maintenance Overheads and Other Income
H1 2020 headline cost per
seat
H1 2020 headline cost per
seat @ CC
£60.75
£59.75
Ownership
£0.06
£1.32
H1 2019 headline cost per
seat
Crew
Headline CPS ex fuel @ CC = 9.5%
Headline CPS @ CC = 7.2%
Impact of fuel & currency H1 2020 fuel impact H1 2020 H1 2019 Change*
Fuel $ per metric tonne
Market rate 563 650 87
Effective price 638 645 7
US dollar rate
Market rate 1.28 1.29 1 cents
Effective price 1.34 1.31 (3 cents)
Difference between market rate and effective rate 0.06 0.02
Actual cost of fuel £ per metric tonne 476 493 17
H1 2020 currency impact on headline PBT* EUR CHF USD Other Total
£m
Revenue (2) (1) - (10) (13)
Fuel 2 - 17 - 19
Headline costs excluding fuel 25 (3) 2 1 25
Total 25 (4) 19 (9) 31
*Favourable /(adverse)
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Cash FLOW bridge Net debt: £467m
(H1 19: £201m)
Cash generated from operations (excl. dividends): £472m
Investing and financing
13
173
262
365 18
20
174
114
452
111 19 Cash & MMC at 30 September
2019
FX Ordinary Dividend (FY19)
1,388
Other operating Net working capital
Tax paid
1,576
Restricted case, own shares and
net interest
Cash Capex Cash & MMD at 31 March 2020
1,854
Cash & MMDs post div & tax
paid
Depn & amort Operating loss Sale & leaseback proceeds
Repayment of capital element
of leases
2
balance sheet £m
31 March 2020
31 March 2019
30 September 2019
Goodwill and other intangible assets 613 551 561
Property, plant and equipment 4,823 4,286 4,661
Right of use assets 468 572 502
Derivative financial instruments (554) 48 63
Equity Investments 33 54 48
Other assets (excluding cash and money market deposits) 662 484 542
Unearned revenue** (974) (1,726) (1,069)
Trade and other payables (1,660) (817) (1,050)
Other liabilities (excluding debt) (852) (735) (947)
Capital employed 2,559 2,717 3,311
Cash and money market deposits* 1,388 1,280 1,576
Debt (excluding lease liabilities) (1,319) (858) (1,324)
Lease Liabilities (536) (623) (578)
Net debt (467) (201) (326)
Net assets 2,092 2,516 2,985
*Excludes restricted cash
**Unearned revenue relating to departing flights in April and May has been reclassified as trade and other payables
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Utilising flexibility in Fleet Current contractual Max
New Plan Min
1) 335 aircraft in 2020 new plan is subject to the sale/exit of 6 old aircraft 2) Chart shows contractual arrangements with Airbus and current lessors but excludes any future potential, opportunistic fleet additions
• Deferred 24 aircraft deliveries to beyond 2025
• Leads to re-timing of pre delivery payments
• Utilising flexibility of 24 operating leases due for renewal over the coming period
• Post completing SLB programme, around 50% of fleet still unencumbered, leaving further funding options available
15
326 328
350
305
327
337 3351
302
281 272
260
270
280
290
300
310
320
330
340
350
360
Current fleet 2020 2021 2022 2023
New Plan Max2
(excludes potential, opportunistic fleet additions)
Current plan expects easyJet will be at 302 aircraft by Y/E 2021.
As @ 16/4
0
200
400
600
800
1,000
1,200
1,400
HY'20 FY'21 FY'22 FY'23
New Aircraft Maintenance
Lease payments Other
Gross capital expenditure
16
£400m
£600m
Guidance range
H2’20
£900m
£1,400m
£600m £600m
Fuel and foreign exchange hedging
17
Fuel Hedging and Ineffectiveness
• Pre Covid-19 fuel was 71% hedged @ $654/MT for FY20 and 51% hedged for FY21 @ $638/MT
• At H1 FY20 a charge of £164m was recorded as hedge ineffectiveness largely driven by over hedged amounts on Jet Fuel and foreign exchange related to H2 FY20 period
• This will have a further impact in H2 2020
• Over-hedged amounts likely to cause degree of volatility in income statement until maturity and were included as part of our scenario planning
Current Hedge Position
• Additional Jet hedging temporarily paused for time periods from April 2020 through to October 2021
• Jet Fuel hedging continues for later time periods, to take advantage of the low-price environment.
• FY22 jet fuel requirement is currently 35% hedged @ $513/MT
ceo update Johan Lundgren – CEO
easyJet is back flying!
10
85
155 147
June September July August
Europe with confidence Expected ramp up for Summer 2020
Forecast Peak Operating Aircraft1
Early signatory to EASA’s Aviation Industry Charter for COVID-19:
• To ensure passengers are aware of measures taken
• To avoid people with symptoms arriving at airports
• To reduce the risk of transmission:
• Within airports
• At point of boarding
• Whilst on board
19
1) Equivalent aircraft operating based on average utilisation. Due to constraints in building the schedule, actual utilisation may be lower and require a higher number of aircraft to operate the equivalent schedule
easyJet’s first day back!
20
Safety is always our #1 priority
21
Safety for our crew & customers
Have implemented a number of Bio-security measures:
• Daily disinfection process which provides surface protection from viruses that lasts for at least 24 hours
• All passengers and crew required to wear masks onboard at all times
• Bistro and Boutique service will not be available on initial flights
easyJet aircraft are already fitted with state of art filtration technology, filters 99.97% of airborne
contaminants in the cabin including viruses & bacteria
easyJet - leading the recovery Worth– UK1
1) UK survey data- Worth is the proportion of survey respondents selecting “Worth more than it costs” .Price is the average score achieved on a 7 point scale converted to a percentage of the maximum score of 7 (Costs the most)
2) KPMG Nunwood Relationship survey we run weekly. This is up to 1st June 2020.
22
Price– UK1
63
Jet2
52
84
British Airways
Norweigan
58
easyJet Ryanair
57
Vueling
65
Lufthansa
73
Flybe
48 45
Wizz Air
60
Vueling
78
72
British Airways
73
Norweigan
69
76
Jet2
66
Lufthansa Flybe Wizz Air easyJet Ryanair
74
79 1. Short-haul recovery ahead of long-haul
• Lower government restrictions impact
• Greater consumer confidence to travel
• Leading network offer
2. Consumers will seek value in response to weaker economic conditions
• 2008/9 downturn showed a 9% shift in customers trading down to better value
• easyJet provides customers with the leading value versus the competition
3. Leisure travel to return before business
• 89% of consumers first trip will be for leisure2
• 68% of leisure customers expect to fly the same amount or more (versus 27% for business customers)
Our plan – delivering our strategy
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#1 or #2 in primary airports
Winning our customers’
loyalty
The right people
Innovating with data
Value by efficiency
Seamlessly connecting Europe with the warmest welcome in the sky
Market leading network
24
#1 or #2 in primary airports
2019 Top 50 European cities by GDP/capita1. Bubbles represent easyJet touching capacity3.
1) Source: Oxford Economics Global Travel Service city forecast CY2019 2) Source: CY 2019 actuals (TM1)
1 2 Other / Non base
Leading positions in major European cities
easyJet’s network provides a competitive advantage that can not
easily be replicated
Our scale in key cities across Europe can not be
matched
We will retain fleet flexibility to respond and
seek advantage
120
20
2.0
100
3.0
40
60
0.0
160
80
1.0 0.5 3.5 1.5 2.5 4.0
140
4.5 5.0 5.5 6.0 6.5 9.5 10.0 0
Hamburg
Milan
Geneva
Amsterdam
London
Zurich
Belfast
Lyon
Edinburgh
Stockholm
Paris
Glasgow
Basel
Vienna
Dublin
Berlin Warsaw
Manchester Nice
Rotterdam
Newcastle
Population (m)
Toulouse
Bristol
Frankfurt
GD
P/c
ap
ita
($
00
0s)
Prague Madrid
Base ranking
Sources: easyJet fleet plan and network base plan, FY21, Contribution based on YTD March 31st 2020
Network strength enables profitable flying #1 or #2 in
primary airports
Profitability by base The strong network enables easyJet to be efficient with its network choices, with an absolute emphasis on maximising returns
Competitors reducing capacity in key markets will present opportunities to improve performance
We retain the flexibility to respond and seek advantage
25
Base profitability rank
11 5 20 1 2 26 3 7 6 4 9 25 15 10 28 12 13 14 16 29 17 18 19 21 22 23 24 27 30 8
Co
ntr
ibu
tio
n p
er
blo
ck
ho
ur
by
ba
se
Scale allows capacity to be adjusted to match demand and opportunistic growth
Candidates for capacity reduction / closure
illustrative
1) PwC Traveller Sentiment Survey, May 2020, Base 1,005, Q. When planning to book your next flight / hotel, please rank the following factors based on importance to you, once the social distancing recommendations are lifted. 2) Trust survey 2020. % of respondents naming each airline as trustworthy
Winning our customers
loyalty easyJet – driving customer confidence easyJet is the leading low cost airline
in terms of trust by market2
26
”
Customers trust easyJet more than other low cost carriers
Factors important to booking the next flight after social distancing restrictions are lifted1.
29%
34%
Price
Brand trust
15%
Loyalty program
Flight schedule
Change policy
12%
11%
1st 2nd 3rd
UK
France
Switzerland
Germany
Italy
Netherlands
Portugal
As demand returns, consumers will move to trusted brands
+21 pts
+17 pts
+32 pts
+8 pts
+5 pts
tie
tie
27
Winning our customers
loyalty
• Positive impact of easyJet actions
o Cost focus at the airline creates value in Holidays
o Provides customers with confidence to travel
• No capacity constraints from cuts at airline
• Variable cost base
o Very low fixed costs
o No commitments
• We have seen a significant shift in hoteliers seeking a relationship with easyJet
• Position of financial strength, particularly relative to other tour operators and OTA’s
W’20, launched March
• Added Egypt for winter sun
S’21, launched March
• Initial indications are positive
c.65% of disrupted pax
rebooking vs refund
Easyjet holidays
28
Value by efficiency
* Assumes – No further spike of COVID-19 across EU, - Airline only
Value by efficiency
A major cost-out program has been launched to respond to COVID19 to:
• Drive cash generation
• ensure easyJet emerges with a cost competitive position
• Tactical and sustainable cost savings across the entire business
• Delivered over 18-24 months
Cost-out Programme Driving operational efficiency
• Swift action in March / April to reduce operational cash burn
• Proposed staff reduction by up to 30%
• Simpler airport handling to drive lower costs
• Bringing some maintenance in-house at lower cost
• Accelerating lease returns with MRO deals done
• Fuel efficiency program driven by sustainability
• Focus to make Gatwick London’s best product
Target of delivering around
FLAT CPS ex fuel @ cc* FY’21 vs FY’19
Leading Sustainability position
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Tackling carbon emissions easyJet were the world’s 1st major airline to operate net zero carbon flights across our entire network, by offsetting the carbon emissions from the fuel used for all of our flights. We continue to work to minimise the carbon impact of our operations
40%
58%
2%
Thinking about sustainability the SAME as before
Thinking about sustainability MORE than before
Thinking about sustainability LESS than before
> The importance of sustainability has increased following the pandemic, with 98% thinking about the environment /
sustainability the same or more than before
Sustainability front of mind for customers
*Publicis sapient survey, sample size
Forward looking
30
• Q4 2020 capacity – c.30%:
• Encouraging booking numbers for easyJet holidays
• easyJet expects to deliver c. FLAT CPS ex fuel at cc in FY’21 vs FY’19
• At this stage, given the level of continued uncertainty, it is not possible to provide financial guidance for the remainder of the FY20 financial year.
Decisive action undertaken as soon as the crisis began:
• Minimised cash burn
• Maximised liquidity with cost reductions, fleet deferrals and additional funding
• Equity raise under way
Investment-grade balance sheet, one of the strongest in the industry
easyJet leading the recovery:
• Strong H1 performance
• Trusted easyJet Brand drives confidence in European travellers
• easyJet’s industry leading network of primary airports allows a disciplined approach to delivering profitable flying
• Cost-out programme to deliver around Flat CPS ex Fuel @cc in FY’21 vs FY19
easyJet will be leading the post COVID-19 recovery
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easyJet - Positioned to win
Q&a
appendix
Loss after tax £ m H1 2020 H1 2019 Change*
Headline loss before tax (193) (275) 29.8%
Headline tax (charge)/credit (1) 54 (101.8%)
Headline loss after tax (194) (221) 12.2%
Total loss before tax (353) (272) (29.8%)
Total tax credit 29 54 (46.3%)
Total loss after tax (324) (218) (48.6%)
Total effective tax rate 8.3% 19.7% 11.4ppt
* Favourable/(adverse)
34
Revenue total and per seat
*Favourable/(adverse)
Total Group reported
H1 2020 H1 2019 Change*
Passenger revenue 1,833 1,824 0.5%
Ancillary revenue 549 519 5.7%
Total revenue 2,382 2,343 1.7%
£ Airline per seat Airline
H1 2020 H1 2019 Change*
Passenger revenue 42.93 39.48 8.7%
Ancillary revenue 12.67 11.23 12.8%
Total revenue 55.60 50.71 9.6%
£ Airline per seat @CC Airline
H1 2020 H1 2019 Change*
Passenger revenue 43.15 39.48 9.3%
Ancillary revenue 12.72 11.23 13.3%
Total revenue 55.87 50.71 10.2%
35
Headline cost per seat
Cost per seat excluding
fuel £
Variance at constant currency*
£
Variance at constant currency*
%
Weighted variance at constant currency*
%
Drivers
Airports and ground handling 16.65 (0.11) (0.6%) (0.3%) • Annualised increases in charges at regulated and non regulated airports • Annualised ground handling contract in the UK
Crew 9.32 (0.66) (7.5%) (1.5%) • Pay increases • Low attrition • Low productivity in March 2020
Ownership 6.58 (0.99) (17.8%) (2.3%) • Increase in depreciation due to new aircraft purchased
Overheads & other income 6.65 (1.32) (24.7%) (3.0%) • Increased disruption costs • Loss on sale of EU ETS allowances
Navigation 3.57 0.15 4.1% 0.4% • Decrease in rates from Eurocontrol
Maintenance 4.47 (1.22) (36.8%) (2.8%) • Engine provision catch up • Increase in base maintenance
Total Headline CPS excluding fuel 47.24 (4.15) (9.5%) (9.5%)
Fuel 12.51 0.07 0.5%
Total Headline CPS 59.75 (4.08) (7.2%)
*Favourable/(adverse)
36
Fleet breakdown H1 2020 FY 2019 Change
A319 (Leased) 64 56 8
A319 (owned) 59 69 (10)
A319 Total 123 125 (2)
A320 (Leased) 43 43 0
A320 (owned) 160 157 3
A320 Total 203 200 3
A321 (owned/Total) 11 6 5
Total fleet 337 331 6
Leased 107 99 8
Number unencumbered 230 232 (2)
Percentage of A320s in fleet 60% 60% 0ppt
Average seats per aircraft 176 175 1%
37
Return on Capital Employed H1 2020 H1 2019
Headline loss before interest and tax (174) (255)
UK corporation tax rate 19% 19%
Normalised headline operating loss after tax (NOPAT) (141) (207)
Average shareholders’ equity 2,539 2,849
Average net debt 397 168
Average adjusted capital employed 2,936 3,017
Headline Return on capital employed (4.8)% (6.8)%
38
Non-headline items H1 2020 H1 2019 Change* Description
£ m £ m £ m
Sale and leaseback gain 1 2 (1) The sale and leaseback of 10 A319 aircraft in both years resulted in a profit on disposal of the assets.
Brexit-related costs - (4) 4 Cost of establishing a multi-AOC post-Brexit structure following the UK’s referendum vote to leave the European Union (‘EU’).
Commercial IT platform - 2 (2) Release of the unused FY’18 provision for the write-down of IT assets under development which will no longer be utilised by the business.
Balance sheet foreign exchange loss 3 3 - Foreign exchange gains or losses arising from the retranslation of foreign currency monetary assets and liabilities held in the statement of financial position.
Fair value adjustment (164) - (164) Due to the full grounding of the fleet and the lower capacity expected for several months thereafter, easyJet is in a significantly over-hedged position from both a jet fuel and FX perspective.
Total non-headline items (160) 3 (163)
*Favourable/(adverse)
39
Currency impact Revenue Costs
H1 2020 H1 2019 H1 2020 H1 2019
Sterling 42% 41% 33% 32%
Euro 48% 48% 32% 37%
US dollar 1% 1% 28% 24%
Other (principally Swiss franc) 9% 10% 7% 7%
Average effective Euro rate for revenue for H1 2020 was €1.14 (H1 2019: €1.13)
Average effective Euro rate for costs for H1 2020 was €1.17 (H1 2019: €1.14)
40