H1 2020 results presentation introduction Joh ohan an Lundgr - - PowerPoint PPT Presentation

H1 2020

results presentation

introduction

Joh

• han

an Lundgr dgren en – CE CEO

easyJet - Positioned to win

3

 easyJ

syJet et has been en decisiv cisive e in meeti eting ng the challe lenge nges s of Coronavi viru rus s to ensur ure e we can manage ge a a prolo longe nged d groundin nding g 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

• ng liquid

uidity ity positi ition,

• n, test

stim imon

• ny

y to the streng ength th of easyJet yJet + its investmen estment t grade ade balan ance ce shee eet

 easyJ

syJet et will be leadi ading ng the recovery: ry:

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

• f opportunities in the European short haul market

Financial review

Andr drew ew Findlay dlay – CF CFO

response to coronavirus

Maximise liquidity

Cost t Redu duction tions & Pay aymen ment t Terms rms

• c. 70% decrease in operating cost

cash burn during grounding

• Payment term extensions

negotiated with many of our major suppliers

Fleet eet Defer eferrals ls

• Deferred 24 aircraft deliveries to

post 2025

• Increased short term flexibility
• Drove re-timing of pre delivery

payments

Addi ditional tional fund nding ing

• 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 t include lude fun unding ding from

• m:

:

• equity raise + £400m to £450m
• SLB tran

• mplet

Scenario planning - Updated

Scenario io assumptio ions:

• 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

T

• tal cash burn scenarios*

Highli lights: s:

• 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

£1.0bn

bn

£2.1bn

bn

£3.0bn

bn

6

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

7

Key performance indicators

H1 2020 H1 2019 Chang ange* e* 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)%

8

Financial performance

H1 2020 H1 2019 Chang ange* £ m £ 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 adline loss befor

• re tax

ax (193 93) (275) 75) 82 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 tal loss befo fore e tax (3 (353 53) (272 72) (81 81)

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Revenue performance

RPS PS @ CC +10. 0.2% Reported ported RPS S +9.6 .6%

• 1.2%
• 0.6%

c.18k Flights cancelled in March due to Coronavirus c.£0.2bn Impact on total revenue

10

HEADLINE cost PER SEAT

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Head adlin ine CPS S ex fuel el @ cc +9.5%, .5%, of which ich:

• 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

• perating

Headline adline CPS S ex fuel el @ CC = 9.5% 5% Headline adline CPS S @ CC = 7.2%

Impact of fuel & currency

H1 2020 fuel l impac act H1 2020 H1 2019 Chang ange* e* Fuel el $ per metric ic tonn nne Market rate 563 650 87 Effective price 638 645 7 US dolla lar rate te 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 curren ency y impac act t on headline adline PBT* EUR UR CHF USD Othe her Total tal £m £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

12

Cash FLOW bridge

Net debt: bt: £467m 7m (H1 1 19: : £201m) 01m) Cash generated from operations (excl. dividends): £472m Investing and financing

13 173 262 365 18 20 174 114 452 111 19

1,388 388

1,576 576

• wn shares and

1,854 854

• f leases

2

balance sheet

£m £m

31 March h 2020 2020 31 March h 2019 30 Sept ptember mber 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) 6) Net assets 2,092 2,516 2,985

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Utilising flexibility in Fleet

Current contractual Max New Plan Min

• Deferred 24 aircraft deliveries

to beyond 2025

• Leads to re-timing of pre delivery

payments

• Utilising flexibility of 24
• perating leases due for

renewal over the coming period

• Post completing SLB

programme, around 50% of fleet still unencumbered, leaving further funding options available

15

260 270 280 290 300 310 320 330 340 350 360

Current fleet 2020 2021 2022 2023 New Plan Max2

• pportunistic fleet additions)

As @ 16/4

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 H Hedging ing 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
• n 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 Positio ion

• 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

Joh

• han

an Lundgr dgren en – CE 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

easyJet’s first day back!

20

Safety is always our #1 priority

21

Safety for our crew & customers

Have e implemen lemented ed a number ber of Bio-se secu curity rity measur sures es:

• Daily disinfection process which provides

surface protection from viruses that lasts for at least 24 hours

• All passengers and crew required to wear masks
• nboard at all times
• Bistro and Boutique service will not be available
• n initial flights

easyJ syJet et aircraft ft are alread eady fitted ted with state te of art filtrat ation

• n techno

hnology, logy, filters ers 99.97% 7% of airbo borne rne contamin minan ants ts in the cabin n includin uding g viruses uses & bacte teria ria

easyJet - leading the recovery

Worth– UK1

22

Price– UK1

1. 1. Short rt-hau haul l reco covery ry ahead ad of long-hau aul

• Lower government restrictions impact
• Greater consumer confidence to travel
• Leading network offer

2.

• 2. Consumers

mers will seek ek value e in respo sponse nse to weake ker econo nomi mic c condit ition ions

• 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.

• 3. Leisu

isure travel el to retu turn rn bef efor

• re business

iness

• 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 ary airport

• rts

• p 50 Europe

• uching

Leading positions in major European cities easyJet’s netw twork

• rk

provides

• vides a

a compet petitive itive ad advan antage ge that at can an not eas asily ily be replicate plicated Our ur scal ale e in key y citi ties es ac acros

• ss

s Europe rope can an not be mat atched hed We will ll reta tain in fleet leet flex lexibili bility to respond spond an and seek k ad advan antage age

Network strength enables profitable flying

#1 or #2 in primary ary airport

• rts

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

• pportunities to improve

performance

• We retain the flexibility to

respond and seek advantage

25

Winning ing our customers

• mers

loyalty lty

easyJet – driving customer confidence

easyJet is the leading low cost airline in terms of trust by market2

26

”

Custome stomers rs trust st eas asyJet Jet more e than an other er low

• w cost car

arri rier ers

• okin

29% 34%

15%

12% 11%

1st

2nd

3rd

UK France Switzerland Germany Italy Netherlands Portugal

As demand returns, consumers will move to trusted brands

+21 pts +17 7 pts +32 pts +8 pts +5 pts tie tie

27

Winning ing our customers

• mers

loyalty lty

• Positive impact of easyJet actions
• Cost focus at the airline creates value in Holidays
• Provides customers with confidence to travel
• No capacity constraints from cuts at airline
• Variable cost base
• Very low fixed costs
• No commitments
• We have seen a significant shift in hoteliers

seeking a relationship with easyJet

• Position of financial strength, particularly relative to
• ther tour operators and OTA’s

W’20, launched March

• Added Egypt for winter

sun

S’21, launched March

• Initial indications are

positive

c.65%

65%

• f disrupted pax

rebooking vs refund

Easyjet holidays

28

Value by efficiency

Value by efficiency

A major cost-ou

• ut

t progr gram m has been en launched ched to respo spond nd to COVID19 ID19 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
• perational 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

FL FLAT CPS ex fuel

el @ @ cc*

FY’21 vs FY’19

Leading Sustainability position

29

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

• perations

58%

> The import

• rtance

ance of sustain ainabilit ability y has increa rease sed following the pandemic, with 98% thinking about the environment / sustainability the same or more than before

Sustainability front of mind for customers

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.

Decisiv

cisive e ac action

• n under

dertaken en as as soon n as as the crisi isis s began gan:

• Minimised cash burn
• Maximised liquidity with cost reductions, fleet deferrals and additional funding
• Equity raise under way

Invest

estmen ment-gr grade de bal alance nce sheet, eet, one of the strongest

• ngest in the indu

dust stry ry

eas

asyJet Jet lead ading ng the reco cover ery:

• 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

31

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

34

Revenue total and per seat

• tal

• up repo

35

Headline cost per seat

• Annualised increases in charges at regulated and non

• Annualised ground handling contract in the UK

• Pay increases
• Low attrition
• Low productivity in March 2020

• Increase in depreciation due to new aircraft purchased

• Increased disruption costs
• Loss on sale of EU ETS allowances

• Decrease in rates from Eurocontrol

• Engine provision catch up
• Increase in base maintenance

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 A320 (owned) 160 157 3 A320 Total 203 200 3 A321 (owned/Total) 11 11 6 5 Total fleet 337 337 331 331 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% Normali alise sed headline ine operat ating ing loss after tax (NOPAT) T) (141) (207) Average shareholders’ equity 2,539 2,849 Average net debt 397 168 Average ge adjusted capital al employed 2,936 3,017 Headli line Return on c capital al employed (4.8)% 8)% (6.8)% )%

38

Non-headline items

• (4)

• 2

• Foreign exchange gains or losses arising from the retranslation of

• f financial position.

• (164)

• ver-hedged position from both a jet fuel and FX perspective.

• tal

• n-hea

39

Currency impact

Reven enue ue Costs ts H1 2020 H1 2019 H1 2020 H1 2019 Sterling 42% 41% 33% 33% 32% Euro 48% 48% 32% 37% US dollar 1% 1% 1% 28% 24% Other (principally Swiss franc) 9% 10% 7% 7%

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