Q1 2021 analyst & investor presentation - 28 January 2021
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Q1 2021 analyst & investor presentation 28 January 2021
positioned for recovery > Q1 financials in line with management expectations > Demand uncertainty driven by government travel restrictions > Decisive actions have put easyJet in strong position Further funding activity and re-profiling of debt Cost programme delivering & on track to improve margins Fleet deliveries re-profiled whilst maintaining flexibility Smooth Brexit transition > Set up for recovery Competitive landscape improving Customer satisfaction scores increasing Brand scores maintained and strong easyJet is operationally ready New ancillary products launched easyJet holidays well positioned to take share 2
Q1 2021 key stats
Q1 ‘21 Q1 ’20 Change
Favourable/(adverse)
Passengers (thousand) 2,858 22,192 (87.1%)
Seats flown (thousand) 4,350 24,308 (82.1%)
Load factor 65.7% 91.3% (25.6 ppts) Yield
Passenger revenue (£ million) discipline
118 1,124 (89.5%)
Ancillary revenue (£ million) 47 301 (84.4%)
Total revenue (£ million) 165 1,425 (88.4%)
Total group headline cost (£ million) (588) (1,429) 58.9%
Accurate & disciplined capacity forecasting has allowed for strong cost control
3 3
Decisive funding action underpins liquidity
CCFF
£0.6bn
Access to
RCF
£0.4bn
SLBs
£1.4bn
c£2.5bn
unrestricted
Over £4.5bn liquidity1
total
liquidity
raised
UKEF - £1.4bn
Term loans - Reprofiles existing debt
£0.4bn - c.£600m undrawn
- Commercial terms Investment grade credit
Equity
placing - Lower collateral requirements ratings maintained
£0.4bn
4 1) As at 25 January 2021, following repayment of Revolving Credit Facility and Term Loans 4
Cost-out programme delivering & on track
> H1 and FY on track for internally targeted cost savings
> Will re-set the cost base, increase margins and further improve cost position relative to other airlines
> Fixed cost & capex cash burn in a fully grounded scenario reduced to c£40m per week Permanent
savings1
> UK – c1400 employees have left, c75% of UK pilots now on seasonal contracts, furlough arrangements
in place
> Germany – Majority of redundancies issued, extended long-term furlough in place
PEOPLE > Spain, Portugal, Netherlands – restructuring, pay freezes agreed, furlough in place
> Switzerland – reached long term agreement, including pay freezes, furlough in place
> France, Italy – on track, furlough arrangements in place
AIRPORTS & > New ground handling contracts concluded at LGW, all of Switzerland, all of Spain
GROUND > Airports deals resized to reflect new demand outlook with traffic recovery deals agreed or under
HANDLING negotiation. Airports and tourist boards keen to incentivise traffic to regions reliant on tourism
> Bringing line maintenance in-house at 3 UK bases
MAINTENANCE
> Renegotiating contracts for heavy maintenance
FUEL > Around 1.5% savings from fuel efficiency initiatives
5 1) Excludes furlough arrangements, which are not considered to be permanent savings 5
H1 outlook - continued capacity discipline
> Based on current travel restrictions in the markets in which we operate, easyJet expects to fly no
more than c.10% of Q2 2019 capacity levels for Q2 2021
Winter’20/21: Temporary waiver of the EU’s 80:20 slot rules enables easyJet to best match capacity against
the lower demand that currently exists, minimising losses and cash burn
Summer ’21 : EC and UK proposals for revised waiver under discussion
> easyJet retains disciplined focus on operating lines of flying which are expected to generate a
positive contribution
> Flexibility retained to ramp up capacity quickly when we see demand return
> At this stage, given the continued level of short-term uncertainty, it would not be appropriate to
provide any further financial guidance for the 2021 financial year
> Customers are booking later and visibility remains limited
6
Set up for recovery
Positive indications for demand
> Short haul leisure flying expected to recover first
> Despite later bookings, consumer research1 evidences pent-up
leisure demand:
65% of consumers have booked or intend to book holidays abroad in 2021
Of which only 14% have booked already, indicating pent up demand to come
For easyJet customers the likelihood increases from 65% to 74%
> Vaccine rollout progressing well:
Key to unwinding travel restrictions as vulnerable groups are protected and
pressure on health systems eases
UK has by far the fastest vaccination rollout so far amongst G20 nations2
Key European markets catching up fast (Germany, Italy, Spain)
> Testing costs anticipated to reduce
> Government decisions on travel restrictions a key driver
8 1) Kadence propensity to travel survey, January 2021, 1,000 respondents per market (UK, FR, DE, IT CH). 2) Cumulative Covid-19 vaccination doses
administered per 100 people https://ourworldindata.org/covid-vaccinationsEurope competitor capacity outlook
Capacity share on easyJet markets and routes1
% of capacity on easyJet markets (city pairs) and routes FY19
> Legacy (and holiday charter) are the main
315m seats 221m seats
100%
competitors on the routes we operate, with 71m
seats vs easyJet’s 105m in FY19
Legacy 32% > Anticipate significant reductions in legacy carrier
+ 40%
Charter capacity to open up opportunities for easyJet
> Competitor fleet reductions:
21%
Lufthansa grounding c.300 aircraft across the Group
LCC 27% BA suspended flying from LGW in S20-W20, with S21 under
review
Alitalia shrinking to c.50% of their fleet
48% TAP expected to cut c.20% of fleet with potential further
easyJet 33%
structural downsizing
Swiss retiring some older narrowbody aircraft
Market Route
(city pair)
9 1) OAG capacity, easyJet operated city pairs and routes onlyUniquely positioned for demand recovery
easyJet first choice brand vs nearest LCC1 A strong brand
easyJet > Remains first choice LCC in UK, France, Switzerland and Berlin1
44% nearest LCC
39% > Best value airline in UK and France ahead of LCCs and legacies2
% of respondents
> Best value LCC in Italy, Switzerland and Berlin2
25% 24%
21%
15% 17%
12% 13% A loyal customer base
2% > More loyal – 82.1% of seats booked by returning customers, up 1.4ppts
UK FR CH IT Berlin
vs Q1’203
> Increased CSAT – 83% rating, up 5.8ppts vs Q1’20
A trusted brand
> Leading the industry on customer drivers of choice
> Only major airline to offset the carbon from its operations on behalf of
its customers
> Protection Promise enables customers to make plans with confidence
by providing risk-free booking and an enhanced policy for customers
affected by lockdowns4
1) 1) Millward Brown brand tracker Oct ’20 – Dec ’20. 2) Worth perceptions by market as % of consumers where worth is defined as number of respondents selecting “Worth more than it costs”. 3) Returning customers
10 definition based on customers that have booked in q1 2021 and at any point in the customer’s history with easyJet . 4) Kadence travel intent research Jan 2021. 50% of customers said flexible booking policies is most
important factor when booking.Operational flexibility in place
> Flexibility to ramp up quickly
> Growing at London Gatwick, our largest base
Additional 4 based aircraft, bringing total to 71
Slot trade with Norwegian
New routes Aberdeen, Bilbao, Cagliari + more frequencies
on existing routes
> New seasonal bases in Malaga and Faro
Greater flexibility
Cost efficient
New revenue and route opportunities
Increases margins
11Evolving products – driving Ancillaries
Standard Plus Fare
> New fare class
> Includes Up front seating, Speedy Boarding, cabin
bag
> Launches today
Cabin Bags
> Sold as a bundle with premium seating
> 42-63 premium seats available per flight
> Improve boarding efficiency and OTP
> Dynamically priced
> Launch February 2021
Significant ancillary revenue opportunities increase margins
12Easyjet holidays – well positioned for recovery > Optimal business model for the prevailing market Leading low fixed cost base – currently 93% variable No commitments or bed inventory risk c75% of our holidays are cheaper than our competition1 4/5 star hotels now 70% of all holidays sold Fast technology delivery – newest technology with unmatched agility > Industry leading customer protection and choice Protection Promise – industry leading and unique customer protection Europe’s leading leisure network, combined with trusted quality hotels > Resilient demand and taking market opportunities Summer ‘21 bookings significantly ahead of last year Secured c35 Flagship hotels, previously exclusive with competitors Early W21 launch performing above expectations 13 1) On like-for-like searches
ready for recovery > Liquidity & balance sheet robust > Cost base reset, delivering and on track > Unmatched network with share gain opportunities > Leading value credentials and trusted brand > Operationally flexible > Ancillaries & holidays revenue opportunities > Ready for pent-up demand once government travel restrictions removed 14
appendix
Q1 Passenger Statistics
October 2021 2020 Change
Passengers (k) 1,708 8,787 (80.6)%
Load Factor 68.8% 91.6% (22.8) ppt
November 2021 2020 Change
Passengers (k) 322 6,165 (94.8)%
Load Factor 61.5% 90.8% (29.3) ppt
December 2021 2020 Change
Passengers (k) 827 7,240 (88.6)%
Load Factor 61.6% 91.3% (29.7) ppt
16easyJet’s Debt maturity profile1
800
700
600
500
400
300
200
100
-
FY21 FY22 FY23 FY24 FY25 FY26
Debt maturity profile optimised, further undrawn liquidity available
17 1) Debt maturities include the CCFF, UKEF facility, IFRS lease liabilities, outstanding Eurobonds and JOLCOsUtilising flexibility in Fleet
> Continued flexibility to
370 Current contractual Max expand/contract fleet size
353 Deferral of 22 aircraft from
350 342 FY22-24 to FY27-28
Delivery dates of 15 aircraft
within FY22-24 moved to more
330 325 closely match seasonal
318 requirements
310 302 FY21 Base Plan > Pre-agreed pricing
302 > No change to total size of order
290
book
285
270 276 > Excludes any potential
Current contractual Min
opportunistic fleet additions,
250 which are not included in the
FY2020 FY2021 FY2022 FY2023 302 base plan for 2021
1) Chart shows contractual arrangements with Airbus and current lessors; 2) Reduction to 302 is dependent on commercial negotiations currently in progress; 3) At FY2021,
18 easyJet will be storing up to an additional eight operating leases on behalf of their respective lessors. These are held at zero rent unless flown and excluded from the 302.Fuel and foreign exchange hedging
Current Hedge Position
> Jet hedging for time periods through to October 2021 has been paused
> USD and jet fuel hedging continues for later periods
> Excluding any ineffective hedges:
• FY21 Jet fuel requirement is currently c.77% hedged @ $603/MT
• FY22 Jet fuel requirement is currently c.46% hedged @ $486/MT
19 19You can also read
