Year to 30 September 2011 Pre-close statement presentation/media/Files/E/... ·...
Transcript of 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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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
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EZYRIDER\Presentations\20110901 - Mgmt Strategy Presentation\Optimise returns MAIN - 07092011 v11.pptx
Strong operational performance
No independent data for OTP available for Ryanair since May
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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
EZYRIDER\Presentations\20110901 - Mgmt Strategy Presentation\Optimise returns MAIN - 07092011 v11.pptx
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Current trading – better than expected Guidance for year to 30 September 2011
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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%
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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
EZYRIDER\Presentations\20110901 - Mgmt Strategy Presentation\Optimise returns MAIN - 07092011 v11.pptx
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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
EZYRIDER\Presentations\20110901 - Mgmt Strategy Presentation\Optimise returns MAIN - 07092011 v11.pptx
Agenda
1. Current trading
2. Strategic context
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easyJet competitive advantage
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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
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DRAFT FOR DISCUSSION PURPOSES ONLY
STRICTLY PRIVATE AND CONFIDENTIAL
easyJet fleet dynamics Young fleet intrinsic to achieving high asset efficiency
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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
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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
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High degree of fleet flexibility
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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%
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Framework for managing route performance
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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
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Managing route performance Evolution of ROCE by route evolution (2009 routes)
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10%
Routes
Track record of improving performance over time
FY2011 FY2010 FY2009
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DRAFT FOR DISCUSSION PURPOSES ONLY
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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)
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DRAFT FOR DISCUSSION PURPOSES ONLY
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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
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DRAFT FOR DISCUSSION PURPOSES ONLY
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Capital cash flow including financing and overhauls
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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
EZYRIDER\Presentations\20110901 - Mgmt Strategy Presentation\Optimise returns MAIN - 07092011 v11.pptx
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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