H1 2016 Analyst & investor presentation Tuesday 10 May 2016 - PowerPoint PPT Presentation

H1 2016 Analyst & investor presentation Tuesday 10 May 2016

Introduction Carolyn McCall Chief Executive Officer

easyJet’s resilient model continues to deliver  Robust performance despite the impact from external shocks  Continued focus on building strong network positions  Increased revenue and passenger growth at stable load factors  Strong cost performance secured flat PBT and PBT margin at constant currency  Capital structure review delivers proposed 50% payout ratio Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Strong H1 performance despite shocks 3 3 3

Financial review Andrew Findlay Chief Financial Officer

Financial performance H1 2016 H1 2015 Change* Change* £m £m £m £m % % @ CC Total revenue 1,771 1,767 0.3% 2.9% Fuel (462) (516) 10.5% 9.7% Costs excluding fuel (1,333) (1,244) (7.2%) (7.9%) (Loss) / profit before tax (24) 7 ** Profit before tax at constant currency 5 7 EBITDAR 111 130 (14.8%) 9.3% EBITDAR margin 6.2% 7.3% Earnings per share (pence) (5.1) 1.3 Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold *Favourable / (adverse) 5 5 5 ** Profit before tax at constant currency after balance sheet revaluations

Revenue performance H1 2016 H1 2015 Change* Seats flown (m) 34.5 32.2 7.4% Load factor (%) 89.7% 89.7% 0.0ppt Passengers (m) 31.0 28.9 7.4% Average sector length (km) 1,054 1,072 (1.7%) Total revenue - reported (£m) 1,771 1,767 0.3% Total revenue - constant currency (£m) 1,817 1,767 2.9% Total revenue per seat - reported (£) 51.29 54.91 (6.6%) Total revenue per seat - constant currency (£) 52.62 54.91 (4.2%) Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold * Favourable / (adverse) 6 6 6

Resilient revenue performance Revenue per seat bridge 1.48 54.91 91 (2.7%) 0.72 (1.3%) 1.04 0.47 1.33 52.62 (1.9%) (0.9%) 0.48 (0.9%) 51.29 H1 2015 Paris Sharm el-Sheikh Underlying Easter Other Before ore FX FX H1 2016 softness Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 7 7 7

A strong focus on costs • Total cost per seat bridge Total cost per seat at constant currency: 4.3% decrease • Cost per seat ex fuel at constant currency: 0.5% increase 0.77 56.42 0.38 0.39 0.13 0.72 0.28 0.54 54.93 2.47 54.70 0.48 51.98 98 H1 201 015 Regulated Disruption Balance Inflation* Before A320 mix Lean Other cost Before Fuel P&L H1 201 016 airports sheet management engineering savings movement in FX Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold inflation revaluations action contract fuel and FX External factors Management action * Operational price increases including unregulated airports, ground handling, navigation and crew costs 8 8 8

Impact of fuel & currency Change H1 2016 fuel impact favourable / (adverse) H1 2016 H1 2015 Fuel $ per metric tonne Market rate 409 707 298 Effective price 786 925 139 US dollar rate Market rate 1.48 1.55 (7 cents) Effective price 1.61 1.59 2 cents Actual cost of fuel £ per metric tonne 489 581 92 H1 2016 currency impact favourable / (adverse) EUR CHF USD Other Total £m £m Revenue (47) 2 1 (2) (46) Fuel - - 4 - 4 Prior year balance sheet revaluations (3) 1 (2) - (4) Costs excluding fuel and prior year balance sheet 18 (2) (2) (1) 13 Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold revaluations Total (32) 1 1 (3) (33) 9 9 9

Strong cash generation Cash flow bridge • Net cash: £296m (FY15: £435m) • Adjusted net debt: £474m (FY15: £363m) 215 45 Cash generated from operations 314 (excl dividends): £461m 12 392 41 1,276 219 21 1,057* 80 939* 23 Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 1 October Operating Depn & Net working Other Increased Tax paid CAPEX Other FX Before Ordinary 31 March 2015 loss amort capital operating borrowings dividend dividend 2016 *Includes money market deposits but excludes restricted cash 10 10 10

Strong balance sheet £m £m H1 2016 H1 2015 Goodwill and other intangible assets 501 476 Property, plant and equipment 3,089 2,720 Derivative financial instruments (338) (281) Other assets (excluding cash and money market deposits) 367 355 Unearned revenue (1,080) (1,091) Other liabilities (excluding debt) (883) (856) Capital employed 1,656 1,323 Cash and money market deposits 1,057 976 Debt (761) (560) Net cash 296 416 Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Net assets 1,952 1,739 11 11 11

Gross capital expenditure £1,000m c.£900m c.£850m c.£800m c.£650m £556m c.£550m £536m £500m £449m £421m £392m Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold £0m FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 - Assumes base case fleet plan 12 12 12

Capital Structure Review • The scope pe of the revie iew entai aile led: d: Liquidity buffer Gearing Residual Values Dividend Policy Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold A strong balance sheet is a core part of easyJet’s strategy and is fully aligned with shareholder interests 13 13 13

Capital Structure Review – Key Changes Curren ent Posit ition ion Upda date ted d Posit ition ion Liqu quidi dity buffer ffer Cash position of £4 million per aircraft Liquidity buffer including cash and revolving credit facility Cover peak unearned revenue Minimum position of £2.6 million per 100 seats Mortgage funding secured on aircraft Unsecured funding via EMTN programme Fund nding Mortgage funding secured on aircraft Revolving credit facility to support liquidity Gearing Target gearing between 15% and 30% No specific gearing target Intend to maintain current credit rating (subject to events outside easyJet’s control) Residu dual al Value Downside flexibility through leasing arrangements Rolling sale and leaseback programme on A319 fleet Move from 70/30 owned vs leased split to 80/20 to No material change to 80/20 fleet mix outcome reduce ownership costs Downside flexibility maintained Semi-active fuel and foreign exchange hedging No change Hedg dging Simple forward contracts Divide vidend 40% payout ratio of post-tax income Increase in payout ratio to 50% of post-tax income Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Board to keep Balance sheet under review 50% PAT dividend ratio 14 14 14

Business Review Carolyn McCall Chief Executive Officer

Europe’s most successful airline Market leading network Customer excellence 50 Numbe mber of market et pairs flown Custome omer 50 74% of easyJet et passen enger ers have e 74% 40 betwee een primar ary airpor orts loyalt alty flown with us prev eviou ously 30 33 30 27 27 Custom omer er 20 8/10 custome omers say we are great at value 80% satisfact action on 20 18 16 16 10 13 - Leadin ding g 9/10 con onsumer ers con onsider er easyJet et in trav avel el plan ans 90% bran and Balance sheet strength 1 Top quartile operational excellence Air Berlin 130% 110% Asset utilisat atio ion AF-KLM 90% 11.1 hou ours per day 2 ng Average ge turn ti time ring Norwegian 70% Geari IAG 29 min 50% easyJet et OTP 30% Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold Lufthansa 82% 10% Ryanair ity (TDR 3 ) Reliabil ility -10% -5% 0% 5% 10% 15% 20% 25% 30% 99.3 .3% ROCE 1. Source: Airline Analyst. AF KLM and Norwegian had negative EBIT during the last 12 months to September 2014. Air Berlin had negative EBIT in both periods , 12 months to 30 Sep 2015 16 16 2. FY 2015 16 3. Technical dispatch reliability

easyJet - Delivering growth and returns to shareholders • Passenger growth of 7%-8% CAGR Growth • Stable margin Margin • Strong cost underpin • T op quartile ROCE Returns • 50% PAT pay-out ratio Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 17 17 17

Growth Resilient H1 trading T rading by traffic flow Flow ow Trad ading UK- Beach Paris touching Sharm el Sheikh touching UK – Ski City – City Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 18 18 18

Growth Investment in the network in H1 7.4% easyJet capacity growth over winter Market share on easyJet routes Market growth easyJet growth in the market Netherlands +27% 27% 7% +9.4 .4% United Kingdom 9% 7% Germany +7 % 7% 5% France +6.5 .5 % 7% 4% easyJet Air France Switzerland +8.1% Ryanair KLM 8% Spain +4.5% 5% Vueling British 12% 5% Thomson Monarch Italy 11.7% * Alitalia other Portugal +21.3 .3% Footer box on intersect of lines line h=8.03 9 and v=8.75 with font 10pt Arial not bold 12% 9% 21% 12% Source : OAG, scheduled data and Internal easyJet projection April 2016. Country capacity growth is based on network touching seats. 19 19 * Excludes Rome capacity 19