FY 2016 Analyst & investor presentation Tuesday 15 November - PowerPoint PPT Presentation

FY 2016 Analyst & investor presentation Tuesday 15 November 2016

Introduction Carolyn McCall Chief Executive Officer

Proven business model in all market conditions • Strong performance in a tough year • Purposeful and disciplined growth; reinforcing our market positions • Revenue and network differentiate easyJet and drive RPS • Strong cost performance • Strong balance sheet to support strategy which delivers dividend. Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 3 3 3

Financial review Andrew Findlay Chief Financial Officer

Financial performance FY 2 2016 FY 2 2015 Change* Change* £ m £ m % % @ C CC Total revenue 4,669 4,686 (0.4%) (0.9%) Fuel (1,114) (1,199) 7.1% 7.4% Costs excluding fuel (3,060) (2,801) (9.2%) (5.3%) Profit before tax 495 686 Profit before tax at constant currency 576 686 ** EBITDAR 770 940 (18.0%) (9.0%) EBITDAR Margin (%) 16.5% 20.0% (3.5ppt) Earnings per share (pence) 108.4 139.1 (22.1%) Dividend per share (pence) 53.8 55.2 (2.5%) Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Return on capital employed (%) 14.6% 22.2% (7.6ppt) *Favourable / (adverse) 5 5 ** Profit before tax at constant currency including balance sheet revaluations 5

Revenue performance FY 2 2016 FY 2 2015 Change* Seats flown (m) 79.9 75.0 6.5% Load factor (%) 91.6% 91.5% +0.1ppt Passengers (m) 73.1 68.6 6.6% Average sector length (km) 1,098 1,118 (1.7%) Total revenue - reported (£m) 4,669 4,686 (0.4%) Total revenue -constant currency (£m) 4,644 4,686 (0.9%) Total revenue per seat - reported (£) 58.46 62.48 (6.4%) Total revenue per seat - constant currency (£) 58.16 62.48 (6.9%) Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold c.35% of the decrease in RPS can be attributed to the immediate impact of post terrorist incidents in Sharm el Sheik, Paris, Brussels, Nice and Turkey *Favourable / (adverse) 6 6 6

A strong focus on costs Total cost per seat bridge • Total cost per seat at constant currency: 4.6% decrease • Cost per seat ex fuel at constant currency: 1.1% decrease 0.10 0.13 0.59 0.10 54.62 0.40 1.41 0.30 0.53 53.33 0.09 1.96 52.81 52.26 1.32 Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold FY 2015 Regulated Disruption Inflation* HPT blades Reduced FY 2015 Before A320 mix Other Cost post Balance Fuel P&L FY 2016 airports sector Eurocontrol Mgmt savings Mgmt sheet FX inflation length settlement action including actions revaluations lean *Operational price increases including unregulated airports, ground handling, navigation and crew costs 7 7 7

Impact of fuel & currency FY 2016 6 fuel l impact* FY 2016 FY 2015 Change* e* Fuel $ p per metric c tonne Market rate 415 619 204 Effective price 754 872 118 US dolla lar rate Market rate 1.41 1.54 (13 cents) Effective price 1.57 1.58 (1 cent) Actual cost of fuel £ per metric tonne 479 553 74 FY 2016 6 currency cy impact ct* EUR CHF USD Other Total £m £m Revenue 8 10 4 2 24 Fuel - - (3) - (3) Prior year balance sheet revaluations (3) 1 (5) - (7) Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Costs excluding fuel and prior year balance sheet (84) (13) (3) (2) (102) revaluations Total (79) (2) (7) - (88) *Favourable / (adverse) 8 8 8

Strong cash generation Cash flow bridge • Net cash: £213m (FY15: £435m) • Adjusted net debt: £508m (FY15: £363m) Cash generated from operations (excluding dividends): £724m 22 35 Investing and financing 169 99 139 498 1,345 219 106 969 939 6 586 22 19 Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Cash & Operating Depn & Net working Other Tax paid Ordinary Cash & Increased CAPEX Own shares Restricted Net interest FX Cash and MMDs at profit amort capital operating dividend MMDs borrowings cash MMD’s @ 1 October post div & 30 Sep ’16 2015* tax paid *Includes money market deposits but excludes restricted cash 9 9 9

Strong balance sheet £m £m FY 2 2016 FY 2 2015 Goodwill and other intangible assets 517 492 Property, plant and equipment 3,252 2,877 Derivative financial instruments 98 (297) Other assets (excluding cash and money market deposits) 324 348 Unearned revenue (568) (619) Other liabilities (excluding debt) (1,124) (987) Capital employed 2,499 1,814 Cash and money market deposits 969 939 Debt (756) (504) Net cash 213 435 Net assets 2,712 2,249 Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Liquidity ity is support rted by the 5 500 millio ion US dollar ar Revolving ing Credit Facility ity that has no financial al covenants or draw-stops ops 10 10 10

Gross capital expenditure £1,100 ,100 £1,0 ,050 50 • Incremental capex in FY18 & FY19 driven by replacement £650 50 £600 00 expenditure • Unit cost savings of 13-14% are anticipated from up-gauging to 186 seat A320 Neo’s • Maintenance capex is projected to remain stable FY16 FY17 FY18 FY19 over the next 3 years Replacement Retrofit Maintenance/other Growth Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold - Figures in graph quoted in millions 11 11 - Assumes base case fleet plan 11

Fleet flexibility Extra aircraft allows greater flexibility in fleet planning 375 358 345 350 Base Case 357 331 Contracted Max 325 335 Contracted Min 302 312 300 301 279 275 257 250 257 239 225 234 222 200 Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 175 FY16 FY17 FY18 FY19 FY20 FY21 12 12 12

Business Review Carolyn McCall Chief Executive Officer

easyJet delivers returns in all market conditions & Purposeful network strategy Differentiated proposition + Capital Discipline + T ough on cost Supported by Strong balance sheet = 50% dividend payout Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold & Long term shareholder returns 14 14 14

Strong underlying demand in our markets Expected passenger growth CAGR, 2016-21 3.5% 3.6% Netherland nds United King ngdom om 3.1% 3.2% Germany ny 3.8% France Switzerland nd 3.2% 2.4% Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Spain n & Portug ugal Italy Passenger forecasting undertaken at city level and aggregated up to countries 15 15 15

Purposeful growth with a significant opportunity Purposeful to secure long term returns Growth Purposeful growth Build & strengthen No1 positions UK, Switzerland Take advantage of growth opportunities France Target specific catchment areas Eg: Amsterdam, Venice, Berlin Invest in lean bases Eg: Barcelona Disciplined capital allocation • Portfolio management: sustained short term returns & investment for future • Allocating aircraft and churning routes to maximise returns • Leverage lean bases to access markets cost-efficiently Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Opportunities to support profitable growth of up to 9% per annum 16 16 16

Purposeful Purposeful allocation of capacity Growth Returns driven by strong network positions at primary airports…. • Leverage, build and strengthen The sweet eet spot is being ing No1 at the High ghly airpo port rt and No1 • Strong positions profit ofitab able behind legacy on the route te carriers • Build or churn • Lean basing Profi ofitab able Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold #1 #2 Other easyJet position at airport Graph not to scale 17 17 17

Purposeful Focused investment to drive the highest returns Growth easyJet’s 2016 capacity split 15% 2017 7 new capac pacit ity y grow owth th - 5.5 5 millio ion n seats ts into to No 1 posit ition ions Number 1 - 1.6 6 millio ion n seats ts into to No 2 posit ition ions Number 2 - Flat at seat t growth owth in othe her Other 83% ▪ 98% of capacity touches a number 1 or ▪ Focussed capacity deployment in FY17 to number 2 position airport. invest in number 1 positions Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold ▪ easyJet has a high share of capacity at ▪ Purposeful investment to develop other number 1 positions driving premium returns airports to become no 1 or 2 18 18 Source : easyJet internal plan for 2017 data. Departing capacity 18