Year to 30 September 2011 Pre-close statement presentation/media/Files/E/... · EZYRIDER\Presentations\20110901 - Mgmt Strategy Presentation\Optimise returns MAIN - 190811 v 42.pptx

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EZYRIDER\Presentations\20110901 - Mgmt Strategy Presentation\Optimise returns MAIN - 190811 v 42.pptx

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easyJet plc Year to 30 September 2011

Pre-close statement presentation

EZYRIDER\Presentations\20110901 - Mgmt Strategy Presentation\Optimise returns MAIN - 07092011 v11.pptx

Driving performance

Re-build operational robustness

Complete and focused management team

Revenue; yield and ancillaries

Brand deals

2


Strong operational performance

No independent data for OTP available for Ryanair since May

3

30%

40%

50%

60%

70%

80%

90%

Jan

2010

Fe

b 2

010

Ma

r 20

10

Ap

r 201

0

Ma

y 2

010

Jun

2010

Jul 2010

Au

g 2

010

Se

p 2

010

Oct 201

0

Nov 2

010

Dec 2

010

Jan

2011

Fe

b 2

011

Ma

r 20

11

Ap

r 201

1

Ma

y 2

011

Jun

2011

Jul 2011

Au

g 2

011

On Time Performance

LGW Network


4 4 4

Current trading – better than expected Guidance for year to 30 September 2011

4

22nd July 2011 Q3 IMS 22nd Sept 2011

Revenue per seat

FY +2% to +3% +3%

H2 +4% to +5% +6%

FY Underlying cost per seat

ex fuel (constant currency)

-1% to -2%

-1% to -2%

Pre-tax profit £200m to £230m £240m to £250m

ROCE 10% to 12% >12%


5

Hedging update

Percentage of anticipated requirement hedged

Fuel requirement

US Dollar requirement

Euro surplus

sale

Full year ending 30 September 2012 73% 69% 71%

Rate $956MT $1.59 €1.13

Full year ending 30 September 2013 27% 32% 34%

Rate $1006/MT $1.62 €1.14

At current fuel and exchange rates* it is anticipated that easyJet’s 2012 fuel bill will increase

by around £220 million

As at noon 21.09.11 Jet CIF $1,009 per metric tonne

US $ to £ sterling 1.57 euro to £ sterling 1.15


6

Forward bookings and costs

83.7

52.6

24.9

84.8

53.2

24.9

September October November

2011 2010% seats sold *

As at 19.09.11

Third of F’12 seats now booked and total revenue per seat continues to show improvement

versus the prior years albeit at a lower rate of growth that the strong fourth quarter of F’11

Costs headwinds in F’12 from ETS and regulated airports in Spain, Italy and the UK


Agenda

1. Current trading

2. Strategic context

7


easyJet competitive advantage

8 8 8

Leading short-haul network in Europe

Leading presence on Top 100 routes

Strong positions in key markets

Good range of leisure and business

destinations

Low cost and efficient

Scale and cost advantage compared to carriers

flying to similar airports

High asset utilisation (average of 11 hours a

day)

Consistently industry leading load factors

Financial and balance sheet strength

* * Source: Deutsche Bank

44 42

12

41

2015 13 11 10

5

1

30

2

20

0

5

10

15

20

25

30

35

40

45

50

easy

Jet

BA /

Iber

ia

Rya

nair

Lufthan

sa G

roup

Air

France

KLM

Alit

alia

Air

Ber

lin-N

IKI

SAS

Norw

egia

n

Vuelin

g Airl

ines

0

2

4

6

8

10

12Other

Marketing

Ownership

Maintenance

Airport & ATC

Fuel

Crew

Cost per ask * * easyJet

has a

significant

cost

advantage

compared

to carriers

flying to

similar

airports

Excellent market positions and highly

attractive business model Non primary airports

Number of market pairs

operated between two

primary airports

4

2 6

1

0

4

1

1 2

Presence in top 100 market pairs *

* Source: OAG 12 months to Sep10, OAG market definitions

Primary airport = airport over 10 mppa or largest airport in market

Lufthansa Group includes Austrian, bmi, bmibaby, Brussels Airlines , germanwings, Swiss

C:\Documents and Settings\dasroh.FIRMWIDE\Desktop\UBS 02.pptx

DRAFT FOR DISCUSSION PURPOSES ONLY

STRICTLY PRIVATE AND CONFIDENTIAL

easyJet fleet dynamics Young fleet intrinsic to achieving high asset efficiency

9

Operating a young fleet is an intrinsic part of our business model

Maximises aircraft availability and hence utilisation

Minimises operating costs, especially maintenance

Specification of new aircraft improves over time and hence reliability

0 5 10 15 20 25

1,8

1,2

1,4

1,6

0,8

0,4

0,6

Age of Aircraft (years)

2,0

1,0

Cost per Flight Hour

Indexed

During first five years warranty terms reduce costs

After 12-15 years work is required to contain structural fatigue

Engine on-wing time at mature levels

Engine life-limited parts may reach their replacement lives

5 to 12 years, maintenance costs are fairly constant

Risk of maintenance costs rising due to increased unscheduled maintenance events

Source: easyJet


Background to capacity plan

July 2009:

Board incl. SHI agree a medium growth rate

November 2010:

Incoming CEO / CFO carry out rigorous independent strategic review:

1. Switch to focus on ROCE as the key metric

2. Reconfirm medium growth rate

3. Flexibility in capacity and fleet is critical

May 2011:

Board announced it was utilising flexibility to take a cautious approach to

capacity and in light of high cost of jet fuel and uncertain consumer

demand will cap the fleet at 204 aircraft for Winter 11/12 and 12/13

10


High degree of fleet flexibility

11

Required deliveries

FY11 H2 FY12 H1 FY12 H2 FY13 H1 FY13 H2 FY14 H1 FY14 H2 FY15 H1 FY15 H2

Min Fleet 16 3 17 5 2 1 3 1 3

Market Growth 16 3 17 5 5 3 6 7 9

Max Fleet 16 10 10 6 6 8 11 9 10

Fleet count if 15 aircraft had not been announced in Jan 2011

214 217 221

227

241

251

259

206 200 200

197 197 204 204

213

204

216 215 219 218

220

180

190

200

210

220

230

240

250

260

270

FY11 H2 FY12 H1 FY12 H2 FY13 H1 FY13 H2 FY14 H1 FY14 H2 FY15 H1 FY15 H2

Flee

t C

ou

nt

Max fleet

Min fleet

Fleet requirement for market growth of 3%


Framework for managing route performance

12

CPBH

1. CPBH or Contribution Per Block Hour expresses total contribution in terms of aircraft operating time, using the industry standard metric, namely "block hour". For a given level of capital employed, we

derive the direct contribution per block hour required to cover overhead and achieve a 12% ROCE

2. Analysis based on actual performance of the FY2011 route network up to July 2011(10 months) plus outlook for the remainder of FY2011

Source: easyJet management plan


Managing route performance Evolution of ROCE by route evolution (2009 routes)

13

10%

Routes

Track record of improving performance over time

FY2011 FY2010 FY2009




14

easyJet finance strategy

Ensure robust capital structure

Return excess capital to shareholders

Maintain sufficient level of liquidity to

manage through the cycle and industry

shocks

Targeting consistent and continuous

dividend payout

Return Targets

Capital

Structure And

Liquidity

Dividend Policy

Earn returns in excess of cost of capital

through the cycle

Invest in growth opportunities where returns are attractive

Aircraft

Ownership

Hedging

Maintain flexibility around fleet deployment

and size

Insulate short term operating performance

against adverse movements in fuel price

and exchange rates

Objectives

Maximum gearing of 50% *

Cap of GBP 10m adjusted net debt

per aircraft

Minimum GBP 4m cash per aircraft

5x cover, subject to meeting gearing and

liquidity targets

Annual payment based on full year PAT;

introduced for FY 2011, payable 2012

Consider returns over 5x cover to reduce

excess capital

Improve PBT per seat to GBP5

Post tax ROCE of 12% through the cycle

Target of 70% owned aircraft, 30% leased

aircraft

65%-85% of the next 12 months’

anticipated requirements

45%-65% of the following 12 months’

anticipated requirements

Measures

14 *Gearing defined as (debt + 7 x annual lease payments – cash) divided by (shareholders funds + debt +7

x annual lease payments – cash)




Capital allocation

Ordinary dividend:

5x cover or c. £40m or c. 9 pence per share based on current guidance

One-off capital return:

Board expects in November 2011 recommend a one-off capital return, of £150

million, likely to be in the form of a special dividend payable early calendar 2012

Capital expenditure:

1. Maintain fleet size (replacement of leased aircraft and engine overhaul)

2. New network opportunities; required to deliver on-target returns within a tight and

defined timescale

15




Capital cash flow including financing and overhauls

16

Total

Aircraft

Capex:

786m Total

Aircraft

Capex:

627m

Total

Aircraft

Capex:

401m

Source: easyJet management plan

1) Including $118m of proceeds from disposals and $101 additional cumulative capex

2) Capex is shown pre-financing – current plan is to maintain 70%/30% owned/leased mix

3) Shop visits are assumed at an engine life of seven years

$318m $431m

$590m

Assumes capacity growth in line with the market


Summary

Business continues to trade well

Board has committed to delivering returns in excess of the cost of

capital and returning excess capital to shareholders

easyJet has significant flexibility in its capacity and fleet planning

easyJet has a robust framework for allocating capital and will not

allocate new capital unless it will deliver target returns in a tight and

defined timescale

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