TIDMEZJ
RNS Number : 9028H
easyJet PLC
29 November 2022
29 November 2022
easyJet plc
Results for the twelve months ending 30 September 2022
easyJet achieves record bounce back delivering best ever
headline EBITDAR for Q422 through the airline's focused network
allocation, much improved revenue capability and financial strength
- all of this provides the platform to deliver strong shareholder
returns
- Achieved record headline EBITDAR in Q4 of GBP674 million (Q4 2021: GBP82 million profit)
- FY22 headline loss before tax of GBP178 million (Reported loss before tax of GBP208 million)
- Operational performance in Q4 better than Q4 2019, with fewer on the day cancellations
- Financial strength - GBP0.7bn net debt with GBP3.6bn in cash and money market deposits
- Business transformation delivering:
o holding more slots than ever where returns are highest
o delivering on destination base strategy - 21 aircraft now
based in destination
o enhanced ancillaries delivered 59% yield uplift vs FY19
o easyJet holidays delivers GBP38 million profit before tax
- Q123 RPS growth expected to be >20% YoY
Commenting on the results, Johan Lundgren, easyJet Chief
Executive said:
"easyJet has achieved a record bounce back this summer with a
performance which underlines that our transformation is delivering.
The summer saw easyJet achieve its highest ever earnings for a
single quarter with headline EBITDAR of GBP674 million, ancillaries
up by 59% on FY19 and easyJet holidays well on its way to its
GBP100m target.
"easyJet does well in tough times. Legacy carriers will struggle
in this high-cost environment. Consumers will protect their
holidays but look for value and across its primary airport network,
easyJet will be the beneficiary as customers vote with their
wallets.
"Over the next year, we are targeting customer growth and are
well placed to drive returns and margins while maintaining a
rigorous focus on cost. With one of the strongest balance sheets in
European aviation, we are ready to take opportunities as they
present themselves.
"We have a clear strategy to drive returns for our shareholders
and have significant confidence in our plan today and that it will
deliver going forward."
Overview
easyJet, alongside the whole industry, has faced multiple
headwinds throughout the 2022 financial year from Omicron, the
impact of Russia's invasion of Ukraine, and operational challenges
as demand returned at scale following the widespread removal of
travel restrictions across Europe. Despite this, easyJet has
delivered a significantly improved performance with headline EBIT
profit of GBP3 million (2021: GBP1,036 million loss) which includes
incremental disruption costs of GBP78 million compared to FY19. The
headline loss before tax in the year was GBP178 million (2021:
GBP1,136 million) which includes a GBP64 million loss from balance
sheet revaluations.
The business transformation is delivering with easyJet achieving
a record headline EBITDAR of GBP674 million in Q4 2022 with load
factors returning to 92% and seat capacity to 26 million. Ancillary
products and easyJet holidays are fully embedded and delivering
incremental returns to the business.
easyJet is continuing to allocate aircraft to the markets where
demand is strongest enabled by slot growth at primary airports.
Over the past 12 months we have seen growth at Gatwick, Porto,
Lisbon and the Greek islands. Each of these airports has delivered
returns above the network average in FY22.
For winter, which is typically a loss-making period, easyJet is
investing in building additional resilience. This investment allows
for summer 23 preparations to start earlier in response to the
tight labour market, where we have already begun our seasonal
recruitment campaign. Alongside this, we now have a dedicated team
in place to process employment reference checks as efficiently as
possible. easyJet, like all airlines, is seeing cost pressures
including fuel, strengthened US dollar and wage inflation.
Peak holiday weeks this winter, such as October half term and
Christmas week in the UK, are back to normal levels of volume.
Through these key periods, ticket yields are showing strength on
the prior year, with the Christmas period's ticket yield currently
up c. 18%. Visibility over bookings in the second half remains low,
however Easter booked ticket yields are strong and booked load
factors for Easter are ahead of the prior year.
easyJet goes into the 2023 financial year with one of the
strongest balance sheets in European aviation. This financial
strength, combined with our leading low-cost proposition at primary
airports provides a key differentiator for customers, making it
easy for customers to switch towards value. easyJet's historic
performance in a challenging economic environment where the
consumer was squeezed has been strong, as evidenced in 2008/09
during the global financial crisis when easyJet delivered increased
margins(1) as well as capacity growth.
Financial Summary
- Headline loss before tax of GBP178 million (2021: GBP1,136 million loss)
o Total revenue increased by 296% to GBP5,769 million (2021:
GBP1,458 million) predominantly due to the increase in capacity
flown and ancillary products continuing to deliver incremental
revenue.
o Group headline costs increased by 129% to GBP5,947 million
(2021: GBP2,594 million), primarily due to the increase in flown
capacity.
- Reported loss before tax of GBP208 million (2021: GBP1,036 million loss).
o Non-headline loss of GBP30 million (2021: GBP100 million
gain). Non-headline items consist primarily of losses from the sale
and leaseback of aircraft and the return of slots in the year at
Berlin Brandenburg airport following the right-sizing of our
operations from 18 to 11 aircraft.
2022 2021 Change
favourable/(adverse)
---------------------------------------- ------- -------- --------------------------
Capacity(2) (millions of seats) 81.5 28.2 189%
Passengers(3) (millions) 69.7 20.4 242%
Load factor(4) (%) 85.5 72.5 13ppts
Average sector length (km) 1,193 1,184 1%
Total revenue (GBP million) 5,769 1,458 296%
Headline EBITDAR (GBP million) 569 (551) 203%
Headline EBIT (GBP million) 3 (1,036) 100%
Headline loss before tax (GBP million) (178) (1,136) 84%
Reported loss before tax (GBP million) (208) (1,036) 80%
Airline revenue per seat (GBP) 66.23 50.54 31%
Airline revenue per seat at constant
currency(5) (GBP) 67.33 50.54 33%
Airline EBITDAR cost ex fuel per seat
(GBP) 44.09 56.62 22%
Airline EBITDAR cost ex fuel per seat
at constant currency(5) (GBP) 44.38 56.62 22%
Airline headline loss before tax per
seat (GBP) (2.65) (39.87) 93%
Holidays contribution (GBPm) 38 (12) 417%
Headline EBITDAR Margin (%) 9.9 (37.8) 48ppts
Headline ROCE (%) 0.1 (25.5) 26ppts
---------------------------------------- ------- -------- --------------------------
Outlook
- Based on current trading, easyJet expects the following over the 2023 financial year:
- Q1 RPS growth expected to be up >20% YoY
- Q1 load factor growth c.+10 ppts YoY
- Earlier summer 23 ramp up for resilience
- H1 fuel price up >50% YoY
- Market wide inflationary pressure
- H2 early bookings look positive with Easter ticket yields showing strength YoY
- Capacity
o H1 c.38m seats, c.25% increase YoY
o H2 c.56m seats, c.9% increase YoY
o Q4 capacity around pre-pandemic levels
- easyJet holidays targeting >30% customer growth YoY
Fuel & FX Hedging:
Jet Fuel H1'23 H2'23 H1'24 USD H1'23 H2'23 H1'24
Hedged position 74% 51% 25% Hedged position 77% 54% 27%
----- ----- ----- ----- ----- -----
Average hedged rate
($/MT) 814 903 922 Average hedged rate (USD/GBP) 1.29 1.24 1.19
----- ----- ----- ----- ----- -----
Current spot ($/MT) c.1,000 Current spot (USD/GBP) c.1.21
at 28.11.22 at 28.11.22
------------------- -------------------
Carbon obligation 100% covered for CY22 at EUR17/MT and 77%
covered for CY23 at EUR31/MT
USD Lease payments hedged for the next three years at 1.33
Capex hedged for the next 12 months in EUR & USD
For further details please contact easyJet plc:
Institutional investors and analysts:
Michael Barker Investor Relations +44 (0) 7985 890 939
Adrian Talbot Investor Relations +44 (0) 7971 592 373
Media:
Anna Knowles Corporate Communications +44 (0)7985 873 313
Edward Simpkins FGS Global +44 (0)7947 740 551 / (0)207 251
3801
Dorothy Burwell FGS Global +44 (0)7733 294 930 / (0)207 251
3801
Conference call
There will be an analyst presentation at 09:00am GMT on 29
November 2022 at Nomura, One Angel Lane, London, EC4R 3AB.
Alternatively, a webcast of the presentation will be available
both live and for replay (please register on the following link):
https://stream.brrmedia.co.uk/broadcast/635fec3ac1db5d073071cde5
Alternatively dial in details are as follows: 0808 109 0700/+44
(0) 33 0551 0200 quoting easyJet when prompted.
Revenue
Total revenue increased by 296% to GBP5,769 million (2021:
GBP1,458 million) in line with capacity increasing to 81.5 million
seats (2021: 28.2 million), due to the relaxation of
pandemic-related travel restrictions relative to the prior year,
strong growth in the easyJet holidays business and the step change
in our ancillary offering.
Passenger revenue increased by 282% to GBP3,816 million (2021:
GBP1,000 million) as we flew increased levels of capacity compared
to the same period last year. Passenger RPS increased by 32% to
GBP46.80 (2021: GBP35.48) as demand returned, with travel
restrictions easing through the year and easyJet's primary airport
network driving yield growth.
Group ancillary revenue increased by 326% to GBP1,953 million
(2021: GBP458 million) as capacity increased and as easyJet
holidays continues its rapid growth. Airline ancillary revenue per
seat also increased by 29% to GBP19.43 (2021: GBP15.06) as we
continue to see incremental benefits from ancillary products which
have been launched since H1 of FY21.
Costs
Group headline costs excluding fuel and FX gains increased by
106% to GBP4,604 million (2021: GBP2,233 million), driven by an
increase in capacity flown as well as incremental disruption costs
of GBP78 million compared to FY19 and one-off resilience actions
taken in order to ensure a stable operation during the fourth
quarter.
easyJet recorded a GBP64 million loss from foreign exchange on
balance sheet revaluations (2021: GBP10 million gain), related to
the impact of a weaker sterling on our net foreign
currency-denominated liabilities.
Airline headline cost per seat at constant currency decreased by
25% to GBP68.11 (2021: GBP90.73). Headline Airline cost per seat
excluding fuel at constant currency decreased by 32% to GBP52.66
(2021: GBP77.57).
Non-headline Items
Non-headline items are those where, in management's opinion,
separate reporting provides a better understanding to users of the
financial statements of easyJet's underlying trading performance,
and which are significant by virtue of their size and/or nature.
These costs are separately disclosed and further detail can be
found in the notes to the financial statements. A Group
non-headline loss before tax of GBP30 million (FY 2021: GBP100
million gain) was recognised in the financial year. The significant
items consisted of a GBP21 million loss as a result of the sale and
leaseback of 10 aircraft and a GBP10 million loss from returning
slots in the year at Berlin Brandenburg airport following the
rightsizing of the operations from 18 to 11 aircraft.
Balance Sheet
During FY22 easyJet repaid GBP300 million of commercial paper,
clearing the final balance under the CCFF scheme. $100 million was
also voluntarily repaid on the UKEF in April ahead of its maturity
in FY26. As at 30 September 2022 our net debt position was GBP0.7
billion (30 September 2021: GBP0.9 billion) including cash and cash
equivalents and money market deposits of GBP3.6 billion (30
September 2021: GBP3.5 billion).
Fleet
easyJet's total fleet as at 30 September 2022 comprised 320
aircraft (excluding three A319 aircraft held on a zero rent basis)
(30 September 2021: 308 aircraft excluding 12 aircraft held on a
zero rent basis). The increase was driven principally by nine
aircraft ending their zero-rental period and re-entering the
operational fleet, delivery of eight new A320neo family aircraft,
and seven lease additions while 12 aircraft left the fleet, as
easyJet continues its journey of retiring older aircraft and
benefitting from the A320neo family of aircraft with their superior
fuel efficiency and greater number of seats.
We have an agreed order book consisting of 168 firm orders, 135
for A320neo aircraft and 33 A321neo aircraft. This includes the
aircraft purchase approved earlier this year, securing 56 aircraft
deliveries with the conversion of 18 A320neo's into A321's for
delivery between FY26 and FY29. In order to meet our long-term
fleet requirements, we will continue to keep all options under
review going forward.
The average gauge of the fleet is now 179 seats per aircraft,
compared to 178 seats at 30 September 2021. The average age of the
fleet increased to 9.3 years (30 September 2021: 8.6 years).
Fleet as at 30 September 2022 (excluding aircraft on a zero-rent
basis)
Changes
% of since Future Purchase Purchase
Owned Leased Total fleet Sep-21 deliveries options rights
A319 35 59 94 29% (3) - - -
A320 105 62 167 52% 7 - - -
A320 neo 37 7 44 14% 7 135(a) - 3
A321 neo 4 11 15 5% 1 33(a) - -
----------------- ------ ------- ------- ------- -------- ------------ --------- ---------
181 139 320(b) 168 - 3
Percentage
of total fleet 57% 43%
a) easyJet retains the option to alter the aircraft type of
future deliveries, subject to providing sufficient notification to
the OEM.
b) At 30 September 2022, easyJet was storing three operating
leased aircraft which have been acquired for future operations.
These are held at zero rent and are excluded from the fleet
numbers.
Our flexible fleet plan allows us to expand or contract the size
of the fleet depending on the demand outlook.
Number of aircraft FY22 FY23 FY24 FY25
------------------------- ---- ----- ----- -----
Current contractual
maximum - 336 336 346
Actual aircraft 320 - - -
Current contractual
minimum - 333 318 308
-------------------------- ---- ----- ----- -----
New aircraft deliveries - 7 21 23
-------------------------- ---- ----- ----- -----
Capital Expenditure
Over the next three years easyJet's gross capital expenditure is
expected to be as follows:
FY23 FY24 FY25
------------------------------- ------ -------- --------
Gross capital expenditure (GBP c.900 c.1,500 c.1,600
million)
------------------------------- ------ -------- --------
Capex is comprised of new fleet delivery payments, maintenance
related expenditure as well as lease payments and other capital
expenditure such as IT development. Our capex projections assume 7
deliveries in FY23, 21 deliveries in FY24 and 23 deliveries in
FY25.
Strategy Update
easyJet has refined its strategy to drive our purpose of making
low-cost travel easy. Our strategy has four strategic priorities
that will build on our structural advantages in the European
aviation market, helping easyJet move closer towards its
destination of being Europe's most loved airline, winning for
customers, shareholders and our people. Our strategic priorities
are set out below:
-- Building Europe's best network
-- Transforming our revenue capability
-- Delivering ease and reliability
-- Driving our low-cost model
Building Europe's best network
easyJet has a strong network of leading number one and number
two positions in primary airports, which has proven to be amongst
the highest yielding in the market, as demonstrated this summer.
This enables us to be efficient with our network choices, with an
emphasis on maximising returns.
easyJet continues to optimise its network to ensure capacity is
deployed in the markets where we see the strongest demand and
returns. This was done throughout FY22 where 2.1 million seats were
re allocated around the network, and in Q4 delivered a 10% uplift
on contribution per block hour compared to Q4 19.
We will seek to strengthen our position in key markets as the
competitive landscape evolves. This has been demonstrated at Lisbon
where we won a further 9 daily slot pairs, making us the second
largest airline at the airport from this Winter. This adds to slot
additions at Gatwick, Porto and the Greek Islands, which all
returned greater than the network average return in FY22.
Our focused network strategy can be summarised as follows:
1. Lead in our Core Markets
easyJet prioritises slot-constrained airports as these are where
customers want to fly to and from and as a result have superior
demand and yield characteristics. In our core markets, we are able
to achieve cost leadership and preserve scale. We provide a
balanced network portfolio across domestic, city and leisure
destinations. Our scale enables us to provide a market leading
network and schedule.
2. Investment in Destination Leaders
We will build on our existing leading positions in Western
Europe's top leisure destinations to provide network breadth and
flexibility. This will also unlock cost benefits, enabling us to
manage seasonality and support the growth of easyJet holidays. It
also ensures that easyJet remains top of mind for customers and is
seen as the 'local airline' for governments and hoteliers.
3. Build our network in Focus Cities
easyJet is building a network of key cities, broadening our
presence across Europe. This is a low-risk way of serving large
origin markets. We will base assets in Focus Cities where it makes
sense from a cost perspective.
Transforming our revenue capability
easyJet recognises that the continued evolution of our product
portfolio represents a significant opportunity to build on spend
per customer, delivering enhanced sustainable returns.
Airline Ancillaries:
Cabin bags and our leisure fare, amongst other ancillary
products, have continued to deliver incremental revenue through the
period. During the year we also launched inflight retail, our new
retail brand & proposition, with September being its first full
month of operation. This has resulted in direct sourcing and
contracting for our on-board retail offering and is tailoring the
product offering to our customers.
Further opportunities have been identified internally as easyJet
continues to maximise unit revenues. In FY23 we will implement
closed loop Wi-Fi on all of our aircraft. This will facilitate
enhanced marketing revenue generation through our partners, as well
as enabling order to seat - which is planned to be launched later
in the 2023 financial year. easyJet also plans to launch pre-order
capability, and our duty-free proposition during the coming
year.
We are partnering with Datalex, a leading provider of
omnichannel airline retail solutions, to enable us to realise the
benefits of total basket optimisation from FY24.
easyJet holidays:
easyJet holidays continues its rapid growth, becoming a major
player within the sector and delivering customer growth of 83% vs
FY19 and profit before tax of GBP38 million in FY22. The business
is targeting customer growth of >30% for the coming year and
remains on track to deliver the medium-term target of GBP100
million plus profit before tax.
As the holidays business grows in scale, we plan to make
targeted investments to strengthen the business. We will
continually optimise our yields on packages sold, whilst developing
the cities proposition - allowing easyJet holidays to reduce the
cyclical disparity of a traditional tour operator. We will also
unlock the technology supporting the business to allow for new
source markets at the appropriate juncture. We expect these
investments to be fully embedded within the business by FY24.
Delivering ease and reliability
easyJet aims to deliver a seamless and digitally enabled
customer journey at every stage and is continuously working to
enhance the customer experience. During the year, easyJet launched
its twilight bag drop allowing customers to drop hold baggage off
the evening before their flight, removing a part of the journey on
the day of travel.
During the second half of the year, easyJet took action to
alleviate the pressure on our operations and improve the
operational performance of the airline, resulting in on the day
cancellations in the fourth quarter being below that of the same
period in FY19. Over the fourth quarter easyJet took the position
as the number 1 most preferred airline brand in the UK, with number
2 positions in key markets such as France, Switzerland and
Italy.
There has been a significant focus on improving the control and
decision making we have across our operations, namely through the
addition of terminal and fleet manager roles at London Gatwick,
enabling quick and agile decisions to be made in the airport, where
staff are closer to and more informed of the operations.
We continue to see the return of business travel and easyJet's
business travel on domestic routes reached 95% of FY19 capacity in
Q4. This was due to the quicker return to business travel by SME's,
which account for 75% of easyJet's business travel, compared to
larger corporates. easyJet's high frequency, primary airport
focussed, network remains well positioned to service business
travel as we see demand continue to increase.
Driving our low-cost model
easyJet has a cost advantage over its major competitors on the
primary network that it operates. The current inflationary
environment will impact all airlines and therefore is not expected
to affect easyJet's ability to retain our historical cost
advantage. Alongside cost actions, a focus on margins through
network optimisation, effective pricing management and ancillaries
driving yields higher all help to offset inflation.
easyJet has delivered a number of cost actions:
-- Seasonality focus:
o A proportion of pilots have voluntarily moved to seasonal
contracts, reducing the fixed cost overheads in this area of the
business.
o The growth of our seasonal bases has resulted in 21 aircraft
operating for 8 months of the year, removing the cost of operating
through winter.
-- Insourcing of line maintenance: line maintenance has been
insourced at LGW, BER, GLA, EDI, and BRS; enabling easyJet to have
greater control over the maintenance, reducing the cost incurred
and improving on the quality of maintenance fulfilled.
-- Collective labour agreements: 80% of pilot and 60% of crew
agreements have all been renewed during the 2022 financial
year.
-- Major hedging position built: easyJet's hedging positions for
fuel, FX, and ETS, are significant and at very favourable rates to
the current spot rates.
Cost remains a core focus of the business with a number of areas
of focus for the coming year:
-- Achieving fuel savings: unlocking descent profile
optimisation across the majority of our fleet through the use of
upgraded technology.
-- Completion of labour agreements: several pilot and cabin crew
labour agreements are in negotiation across the network.
-- Increasing automation of self-service management: thereby
increasing digitalisation of customer flows and reducing the need
for contact centre support.
-- Up-gauging of the fleet: efficiency benefits will be unlocked
as A319s leave the fleet, being replaced by A320 family aircraft.
Around 40% of the 94 A319s currently in the fleet will be replaced
over the next three years.
Sustainability
In the fourth quarter, easyJet announced its roadmap to
achieving net-zero by 2050. The roadmap is aligned to the Science
Based Targets initiative (SBTi), with easyJet being the first
low-cost airline to announce its interim target, of a 35% carbon
emission intensity reduction by 2035(7) , which is validated by the
SBTi.
The long-term roadmap sees easyJet transition from carbon
offsetting, which has been a valuable interim measure but is not
recognised under the SBTi framework, towards investments that drive
in-sector emission reductions to deliver our net zero roadmap.
We plan to achieve our ambitious roadmap through the combination
of six drivers: fleet renewal, operational efficiencies, airspace
modernisation, sustainable aviation fuel, zero carbon emission
aircraft and carbon removal technology. For further information on
our roadmap, please see
https://corporate.easyjet.com/corporate-responsibility/net-zero-pathway.
Since this announcement we have made a step forward with our
partner Rolls-Royce who have achieved a world first - successfully
running a modern aircraft engine on hydrogen. This is a major step
towards proving that hydrogen can be a zero carbon aviation fuel of
the future - a key element of our net zero roadmap.
Our sustainability strategy is underpinned by strong
sustainability governance and monitoring at Board level to make
sure the strategy is delivered, with remuneration also being linked
to sustainability and the delivery of the key steps towards
delivering our roadmap.
easyJet has received IATA IEnvA Stage 2 certification, making us
the first low-cost carrier worldwide with a fully IATA IEnvA
certified Environmental Management System (EMS). This follows our
successful completion of the IATA IEnvA Stage 1 implementation,
assessment, and certification earlier this year, as well as
enhancing our ratings achieved across indices including CDP, MSCI
& Sustainalytics.
Our People
David Morgan has been appointed as Chief Operating Officer on a
permanent basis. David has been an integral part of the easyJet
leadership team since he joined as Chief Pilot in 2016 from Wizz
Air where he held the same role. David remains an active pilot.
easyJet continues to have a strong reputation as an employer of
choice. Our people are a key source of differentiation, and this
helps to deliver excellent customer experience and loyalty.
Our Glassdoor rating of employee satisfaction is 4.0(6) (out of
5.0), which is the highest within the travel and tourism sector,
illustrating our market-leading position.
We have constructively worked in partnership with our employee
representative bodies across Europe in order to support the
operation. We recognise that the wider economic environment of
rising inflation and the increased cost of living has and continues
to be challenging for our people and we continue to work with our
trade union partners in order to support our people whilst
maintaining control of our cost base.
In FY22 some of the key deliverables include:
-- Readiness and operational resilience: We recruited around
1,650 cabin crew to deliver the flying programme against a
difficult labour market across the network, particularly in the UK.
Meanwhile, in the face of challenges related to processing
employment referencing across the industry we reacted quickly by
setting up an in-house team to supplement our partners. This new
model will allow easyJet to manage all referencing checks
end-to-end.
-- Employee experience: Working with our employee representative
groups across Europe we continued to support new ways of working -
including flexibility of employment contracts and the continuation
of our hybrid working model for our office-based colleagues.
-- Learning and development: We have introduced a new People
Management development programme to help develop our manager and
leader capabilities throughout all First Line Leaders, while
continuing to develop our approach to early careers including the
re-launch of our engineering apprenticeships. In addition, we have
also utilised our Apprenticeship levy to support a range of head
office roles.
-- Health and Wellbeing : We have implemented a new UK
occupational health provision and mobile enabled support for all
employees while also delivering comprehensive mental health
awareness training for all employees and managers.
-- Diversity and inclusion : Implementation of a new Equal Opportunities and Inclusion Policy.
Board
There have been a number of changes to our Board during the
year. Ryanne van der Eijk, Harald Eisenächer and Dr Detlef Trefzger
joined the Board as Independent Non-Executive Directors on 1
September 2022, and Nick Leeder stood down on 30 September
2022.
Andreas Bierwirth has decided not to seek re-election at the
Company's next Annual General Meeting in line with corporate
governance best practice, having served for nearly nine years.
Julie Southern has also decided not to seek re-election at the next
AGM having been appointed Chair designate at RWS Holdings plc.
Dividends
Given a reported loss, the Board will not be recommending
payment of a dividend in respect of the year to 30 September 2022.
The Board is mindful of the importance of capital returns to
shareholders and will reassess the potential for, and structure of
future shareholder cash returns when the market conditions and
financial performance of the Group allows.
Footnotes
(1) Based on earnings before interest at constant currency.
(2) Capacity based on actual number of seats flown.
(3) Represents the number of earned seats flown. Earned seats
include seats which are flown whether or not the passenger turns
up, as easyJet is a no-refund airline and once a flight has
departed, a no-show customer is generally not entitled to change
flights or seek a refund. Earned seats also include seats provided
for promotional purposes and to staff for business travel.
(4) Represents the number of passengers as a proportion of the
number of seats available for passengers. No weighting of the load
factor is carried out to recognise the effect of varying flight (or
"sector") lengths.
(5) Constant currency is calculated by comparing 2022 financial
year performance translated at the 2021 financial year effective
exchange rate to the 2021 financial year reported performance,
excluding foreign exchange gains and losses on balance sheet
revaluations.
(6) As at 30 September 2022
(7) easyJet plc commits to reduce well-to-wake GHG emissions
related to jet fuel from owned and leased operations by 35% per
revenue tonne kilometre (RTK) by FY2035 from a FY2019 base year.
The target boundary includes biogenic emissions and removals from
bioenergy feedstocks. Non-CO2e effects which may also contribute to
aviation induced warming are not included in this target.
Our Financial Results
Headline loss before tax of GBP178 million for the year ended 30
September 2022 was a significant reduction on the loss of GBP1,136
million for the year ended 30 September 2021. This improvement was
driven by increased capacity and yields as customer confidence to
travel returned once Covid-19 related restrictions were lifted
across Europe, along with enhanced contribution from our ancillary
product offering and easyJet holidays. easyJet flew 69.7 million
passengers in the year ended 30 September 2022 (2021: 20.4
million), up 242% on the prior year, reflecting that return of
confidence. Load factor for the year was 85.5% (2021: 72.5%).
Capacity for the year was 78% of the level of the pre-pandemic
year, FY19, and the load factor of 85.5% was 6 ppt lower.
Trading in the first half of the financial year was impacted by
the emergence of the Omicron variant of Covid-19. Trading had been
relatively strong in October and early November but then travel
restrictions were re-imposed at different times across Europe from
mid-November and remained in place until starting to be relaxed in
February-April 2022, the timing and precise degree of relaxation
varying from country to country. The total number of passengers
carried in H1 increased by 471% to 23.4 million (H1 2021: 4.1
million) with a 13.6 percentage point increase in load factor to
77.3% (H1 2021: 63.7%). Capacity for H1 was 66% of FY19 and the
load factor of 77.3% was 12.8 ppt lower.
The other major event which occurred during H1 was the Russian
invasion of Ukraine in February 2022. Whilst this did not impact
easyJet's network directly as we do not fly to or over Ukraine, it
has had an indirect effect through the increase in oil prices and
therefore jet fuel prices which has occurred since then.
Trading in our third quarter started to pick-up as the
Omicron-related travel restrictions fell away across Europe and
consumer confidence to travel returned. In Q3 easyJet flew 22
million passengers, more than seven times higher than the same
period in the previous financial year, representing 87% of FY19
capacity. Load factors continued to build over the quarter,
reaching highs of 92% in June. The unprecedented ramp up across the
aviation industry, coupled with a tight labour market, resulted in
widespread operational challenges culminating in higher levels of
cancellations in Q3 than normal and consequently higher disruption
expenses were incurred. The industry's challenges were reflected in
the flight caps announced at two significant airports, London
Gatwick and Amsterdam. Alongside these capacity caps, easyJet took
swift action to reduce our capacity and build resilience into Q4.
As a result, disruption in Q4 was much reduced and in line with
historical levels.
After the operational issues experienced across the industry in
Q3, the fourth quarter was characterised by more stable operations
with load factors of 92% being achieved. Headline EBITDAR in Q4 was
the strongest quarterly headline EBITDAR in the history of the
Group, helping take the full year headline EBIT result to
breakeven. Headline EBITDAR achieved for the year of GBP569 million
was GBP1,120 million better than the result in the prior year when
easyJet recorded an EBITDAR loss of GBP551 million. Similarly,
total loss after tax for the year ended 30 September 2022 of GBP169
million was an improvement from the loss of GBP858 million in the
year ended 30 September 2021.
Amounts presented at constant currency throughout this section
are an alternative performance measure and are not determined in
accordance with International Financial Reporting Standards but
provide relevant and comparative reporting for readers of these
financial statements.
Financial overview
GBP million (Reported) - Group 2022 2021
------------------------------------------------------------- -------- -------
Group revenue 5,769 1,458
Headline costs excluding fuel, balance sheet FX and
ownership costs (3,921) (1,638)
Fuel (1,279) (371)
------------------------------------------------------------- -------- -------
Headline EBITDAR 569 (551)
Depreciation, amortisation & dry leasing costs (566) (485)
------------------------------------------------------------- -------- -------
Headline EBIT 3 (1,036)
Net finance charges (117) (110)
Balance sheet foreign exchange (loss)/gain (64) 10
------------------------------------------------------------- -------- -------
Group headline loss before tax (178) (1,136)
Being:
Airline headline loss before tax (216) (1,124)
Holidays headline profit/(loss) before tax 38 (12)
------------------------------------------------------------- -------- -------
Headline tax credit 31 236
------------------------------------------------------------- -------- -------
Group headline loss after tax (147) (900)
Non-headline items (30) 100
Non-headline tax credit/(charge) 8 (58)
------------------------------------------------------------- -------- -------
Group total loss after tax (169) (858)
------------------------------------------------------------- -------- -------
GBP per seat - Airline only (1) 2022 2021
------------------------------------------------------------- -------- -------
Airline revenue 66.23 50.54
Headline costs excluding fuel, balance sheet FX and
ownership costs (44.09) (56.62)
Fuel (15.68) (13.16)
------------------------------------------------------------- -------- -------
Headline EBITDAR 6.46 (19.24)
Depreciation, amortisation & dry leasing costs (6.89) (17.12)
------------------------------------------------------------- -------- -------
Headline EBIT (0.43) (36.36)
Net finance charges (1.45) (3.83)
Balance sheet foreign exchange (loss)/gain (0.77) 0.32
------------------------------------------------------------- -------- -------
Airline headline loss before tax (2.65) (39.87)
Headline tax credit 0.38 8.39
------------------------------------------------------------- -------- -------
Airline headline loss after tax (2.27) (31.48)
Non-headline items (0.36) 3.53
Non-headline tax credit/(charge) 0.10 (2.07)
------------------------------------------------------------- -------- -------
Airline total loss after tax (2.53) (30.02)
------------------------------------------------------------- -------- -------
( 1) All per seat metrics are for the Airline business only, as the
inclusion of hotel-related revenue and costs from the holidays business
will distort the RPS and CPS metrics as these are not directly correlated
to the seats flown by the Airline. Our easyJet holidays business forms
a separate operating segment to the Airline, and easyJet holidays'
key metrics are included under key statistics.
The total number of passengers carried increased by 242% to 69.7
million (2021: 20.4 million), which was driven by a 189% increase
in seats flown to 81.5 million seats (2021: 28.2 million seats) and
a 13.0 percentage point increase in load factor to 85.5% (2021:
72.5%). This reflects the increased capacity following the
reduction in travel restrictions across Europe over the year, and
the associated strengthening in customer demand as the recovery
from Covid-19 continues. Note that capacity for the year was 78% of
the level of the pre-pandemic year, FY19, and the load factor of
85.5% was 6 ppt lower.
Total revenue increased by 296% to GBP5,769 million (2021:
GBP1,458 million) and by 302% at constant currency. Airline revenue
per seat increased by 31% to GBP66.23 (2021: GBP50.54) and
increased by 33% at constant currency. The increase in Airline
revenue per seat is a consequence of increased loads, reflecting
the growth in demand through the year as travel restrictions eased
across Europe, and strong performance from both bag and seat
initiatives which contributed to an Airline ancillary revenue per
seat increase at constant currency of 31%. Note that airline
ancillary revenue is now 15% higher than it was in FY19 despite
passenger numbers being 27% lower.
Total headline costs excluding fuel, balance sheet exchange
movements and ownership costs increased by 139% to GBP3,921 million
(2021: GBP1,638 million) mainly as a result of the volume of flying
and general cost pressures. Costs were also impacted by the
disruption seen throughout the year; wet lease costs of GBP23
million (2021: GBPnil) were incurred to support operational
resilience and GBP205 million EU261 compensation and welfare costs
were also incurred (2021: GBP7m credit arising from the release of
a Covid specific welfare provision). In addition, wet leases were
required to provide coverage for new slots at Gatwick and Porto at
a cost of GBP30 million (2021: GBPnil million). This year also saw
a significant reduction in furlough schemes as government support
wound down across Europe with GBP8 million support received in 2022
compared to GBP134 million support in the prior year. The cost
impact was partly mitigated by continued operational cost focus
including maintaining a proportion of captains on seasonal
contracts and a release of airport charge accruals of GBP18 million
(2021: GBP4 million) as the return of activity has reduced some of
the uncertainty and risks which were previously accrued for. On an
Airline cost per seat basis total headline costs excluding fuel,
balance sheet foreign exchange movements and ownership costs
decreased by 22% to GBP44.09 (2021: GBP56.62) and 22% at constant
currency. This was mainly a result of increased flying, as fixed
operating costs were being spread across more flying capacity,
combined with easyJet's continued focus on cost, as noted above,
which has also contributed to the favourable movement.
Over the year the translation of revenue and costs, including
fuel, from foreign currency has had a net adverse impact of GBP88
million (2021: GBP22 million credit) on the Group income statement,
with a further income statement charge of GBP64 million (2021: GBP9
million credit) from the translation of foreign currency
denominated monetary assets and liabilities on the statement of
financial position. Conversely, ownership costs benefited from the
movement in US dollar interest rates with a credit of GBP71 million
(2021: GBP20 million credit) from the discounted maintenance
reserves provision which uses long-term US dollar interest rates to
set the discount rate.
Additionally, within ownership costs is the first full year
impact of the change in estimation for the useful economic lives
(UEL) of the owned CEO fleet from 23 to 18 years and the amended
approach to residual value estimation. This increased the
depreciation charge in the year by GBP50 million (2021: GBP13
million, 3 months' impact).
Airline fuel cost per seat increased by 19% to GBP15.68 (2021:
GBP13.16) and by 17% at constant currency. This is a result of both
the significant increase in the post hedge fuel price due to the
war in Ukraine and an increased average sector length compared to
the prior year, arising from the destination mix shifting towards
beach in the current financial year. The impact of higher fuel
prices was partly offset by the carry forward of the allocated free
ETS (Emission Trading Systems) certificates from the prior year
which were not utilised due to the reduced flying volumes in prior
year, and in-year allocation of free credits.
easyJet holidays performed strongly, with this summer being its
first season of trading relatively unaffected by Covid-19 under its
revised operating model. Overall, it contributed incremental
revenue of GBP368 million (2021: GBP34 million) to the Group from
1.1 million customers (including affiliates), delivering GBP38
million of headline profit before tax (2021: GBP12 million
loss).
A non-headline charge of GBP30 million (2021: GBP100 million
gain) was recognised in the year, consisting of a GBP21 million
loss on the sale and leaseback of 10 aircraft (2021: GBP65 million
gain from 35 aircraft and two engines), a GBP10 million loss on
disposal of landing rights surrendered as a consequence of the
reduction in our operations at Berlin and a GBP1 million net fair
value adjustment credit for hedge discontinuation (2021: GBP26
million charge). Restructuring charges were net GBPnil million
(2021: GBP61 million credit) as the GBP10 million provision arising
from the announcement of the downsizing of our operations at the
Berlin base has been offset by releases following the finalisation
of restructuring programmes initiated in the prior year. Full
details can be found in note 5 to the financial statements.
Corporate tax has been recognised at an effective rate of 18.7%
(2021: 17.2%), resulting in an overall tax credit of GBP39 million
(2021: GBP178 million credit). This splits into a tax credit of
GBP31 million on the headline losses and a tax credit of GBP8
million on the non-headline items. Whilst the non-headline loss is
GBP30 million, after the necessary tax adjustments the tax adjusted
non-headline items amount to a loss of GBP22 million, which results
in the non-headline tax credit of GBP8 million for the year.
Loss per share
2022 2021
----------- ----------
Pence Pence per Change
per share share in pence
per share
------------------------------- ----------- ---------- -----------
Basic headline loss per share (19.6) (166.9) 147.3
Basic total loss per share (22.4) (159.0) 136.6
Basic headline loss per share decreased by 147.3 pence and basic
total loss per share decreased by 136.6 pence as a consequence of
the lower loss generated during the year.
Return on capital employed (ROCE)
Reported GBPm 2022 2021
------------------------------------------------------ -------- ----------
Headline profit/(loss) before interest and tax 3 (1,036)
UK corporation tax rate 19% 19%
------------------------------------------------------ -------- ----------
Normalised headline operating profit/(loss) after
tax (NOPAT) 2 (839)
------------------------------------------------------ -------- ----------
Average shareholders' equity 2,586 1,741
Average net debt 790 1,570
------------------------------------------------------ -------- ----------
Average adjusted capital employed 3,376 3,311
------------------------------------------------------ -------- ----------
Headline Return on capital employed 0.1% (25.5%)
---------------------------------------------------------- -------- --------
Total Return on capital employed (0.6%) (22.4%)
---------------------------------------------------------- -------- --------
ROCE is calculated by taking headline profit/(loss) before
interest and tax, applying tax at the prevailing UK corporation tax
rate at the end of the financial year, and dividing by average
capital employed. Capital employed is shareholders' equity plus net
debt.
Headline ROCE for the year was 0.1%, an improvement of 25.6
percentage points on the prior year, largely driven by the change
from a headline loss before interest and tax to a headline profit
before interest and tax for the year. Total ROCE for the year was
(0.6)%, an improvement of 21.8 percentage points on the prior year.
The total ROCE was adverse to the headline ROCE due to non-headline
items generating a GBP30 million charge before tax in the income
statement, as noted earlier.
Summary net debt reconciliation
The table presents cash flows on a net cash basis. This
presentation is different to the GAAP presentation of the statement
of cash flows in the financial statements as it includes non-cash
movements on debt facilities.
2022 2021* Change
--------- ------------ ------------
GBP GBP million GBP million
million
--------- ------------ ------------
Operating loss (27) (910) 883
Net tax (paid)/received (4) 1 (5)
Net working capital movement 101 (538) 639
Increase in unearned revenue 197 232 (35)
Depreciation and amortisation 564 480 84
Net capital expenditure (530) (149) (381)
Net proceeds from sale and lease back of aircraft 87 836 (749)
Increase in lease liability (53) (693) 640
Repayment of capital element of leases (206) (261) 55
Net funding activities 53 1,144 (1,091)
Purchase of own shares for employee share schemes (9) (6) (3)
Net decrease in restricted cash 7 5 2
Other (including the effect of exchange rate
movements) 60 74 (14)
Decrease in net debt 240 215 25
---------------------------------------------------- --------- ------------ ------------
Net debt at the beginning of the year (910) (1,125) 215
---------------------------------------------------- --------- ------------ ------------
Net debt at end of year (670) (910) 240
---------------------------------------------------- --------- ------------ ------------
* There has been recategorisation of items in FY21 to better
reflect line item classification.
Net debt as at 30 September 2022 was GBP670 million (30
September 2021: GBP910 million) and comprised cash and cash
equivalents and money market deposits of GBP3,640 million (30
September 2021: GBP3,536 million), borrowings of GBP3,197 million
(30 September 2021: GBP3,367 million) and lease liabilities of
GBP1,113 million (30 September 2021: GBP1,079 million).
The unearned revenue inflow of GBP197 million (2021: GBP232
million) has stabilised as customer bookings start to normalise in
response to the removal of Covid-19 travel restrictions and as
flying schedules return to near pre-pandemic levels. Net working
capital movement has increased by GBP639 million to a GBP101
million inflow compared to the prior year outflow of GBP538
million. This increase was predominantly due to increased flying
volumes which have led to activity-related increases in trade
payables. Furthermore, the prior year saw an unusually large level
of supplier payments as a catch-up effect from the initial lockdown
period, when many supplier accounts were put onto phased payment
plans as part of our cash protection measures. The trade payables
movement was partially offset by increases in trade receivables,
including marketing income, again arising from the increased volume
of activity. Additionally, working capital includes provision
movements and the prior year had a significant reduction in
provisions with the release of restructuring provisions and other
movements.
Net capital expenditure in the year of GBP530 million (2021:
GBP149 million) is predominantly the final delivery payments for
the acquisition of eight aircraft in the year (2021: nil aircraft),
but also includes significant advance payments for long life parts.
The sale and leaseback of 10 aircraft in 2022 (2021: 35 aircraft
and two engines) resulted in a net cash inflow of GBP87 million
compared to the more significant sale and leaseback programme in
2021 which generated proceeds of GBP836 million. Repayment of the
capital element of leases of GBP206 million (2021: GBP261 million)
has decreased by GBP55 million as a result of the prior year having
additional deferred payments from H2 2020 included, and the
increase in lease liability of GBP53 million (2021: GBP693 million)
has reduced compared to prior year with the reduced volume of sale
and leasebacks.
In the prior year the net funding activities of GBP1,144 million
predominantly related to the rights issue, with final funding
received this financial year.
Exchange rates
The proportion of revenue and headline costs denominated in
currencies other than sterling is outlined below:
Revenue Costs
------ --------- -------- ---------
2022 2021 2022 2021
--------------------------------------- ------ --------- -------- ---------
Sterling 51% 34% 32% 45%
Euro 38% 52% 37% 29%
US dollar 1%* 0% 25% 21%
Other (principally Swiss franc) 10% 14% 6% 5%
---------------------------------------- ------ --------- -------- ---------
Average headline exchange rates** 2022 2021
--------------------------------------- ------ --------- -------- ---------
Euro - revenue EUR1.18 EUR1.14
Euro - costs EUR1.18 EUR1.15
US dollar $1.32 $1.36
Swiss franc CHF CHF 1.20
1.25
--------------------------------------- ------ --------- -------- ---------
Closing exchange rates** 2022 2021
--------------------------------------- ------ --------- -------- ---------
Euro EUR1.14 EUR1.16
US dollar $1.11 $1.35
Swiss franc CHF CHF 1.26
1.09
---------------------------------------- ------ --------- -------- ---------
*our customers have the option of paying for flights in US dollars
**exchange rates quoted are post-hedging and for revenue and headline
costs
The Group's foreign currency risk management policy aims to
reduce the impact of fluctuations in exchange rates on future cash
flows.
This year has seen considerable volatility in exchange rates and
the weakening of sterling against both the euro and US dollar. Over
the year the translation of revenue and costs, including fuel, from
foreign currency has had a net adverse impact of GBP88 million on
the Group income statement. The income statement includes a further
charge of GBP64 million from the translation impact of foreign
currency denominated monetary assets and liabilities on the
statement of financial position
Headline exchange rate impact
Euro Swiss US dollar Other Total
franc
Favourable/(adverse) GBP GBP GBP GBP GBP
million million million million million
------------------------------- --------- --------- ---------- --------- ---------
Total revenue (97) 6 3 (2) (90)
Fuel - - (20) - (20)
Headline costs excluding fuel 46 (14) (11) 1 22
Headline total before tax (51) (8) (28) (1) (88)
-------------------------------- --------- --------- ---------- --------- ---------
easyJet recognises a significant element of revenue across its
network in euros, and therefore a stronger sterling vs euro at
average rates has reduced revenue through the year, only partly
offset by the converse impact on costs. easyJet's cost base also
includes US dollar denominated costs, particularly fuel and lease
payments, and therefore post-hedge US dollar strengthening has
increased the sterling value of those headline costs.
FINANCIAL PERFORMANCE
Revenue
2022 2021
GBPm Group GBP million GBP million
--------------------------------------------- ------------ -----------
Passenger revenue 3,816 1,000
Ancillary revenue (excluding package holiday
revenue) 1,585 424
easyJet holidays revenue* 368 34
---------------------------------------------- ------------ -----------
Total revenue 5,769 1,458
---------------------------------------------- ------------ -----------
* easyJet holidays revenue includes the elimination of
intercompany airline transactions
Total revenue increased by 296% to GBP5,769 million (2021:
GBP1,458 million) and 302% at constant currency. This was a
combined result of increased customer volumes and a focus on yield
optimisation resulting in improved ticket yield, with ancillary
yield performing strongly. The total number of passengers carried
increased by 242% to 69.7 million (2021: 20.4 million), which was
driven by a 189% increase in seats flown to 81.5 million seats
(2021: 28.2 million seats) and a 13.0 percentage point increase in
load factor to 85.5% (2021: 72.5%). This reflects the increased
capacity following the reduction in travel restrictions across
Europe over the year, and the associated strengthening in customer
demand as the recovery from Covid-19 continues. Additionally,
within revenue there was a GBP22 million credit (2021: GBP10
million) arising from the release of aged contract liabilities
within other payables, split GBP19 million against passenger
revenue and GBP3 million against ancillary revenue.
Total Airline revenue per seat of GBP66.23 was 33% ahead of 2021
at constant currency and load factors of 85.5% were 13.0 percentage
points ahead. Likewise, total yield of GBP77.48 was 13% favourable
when compared against 2021 at constant currency, with passenger
yields 14% favourable and ancillary yields 11% favourable.
Ancillary revenue of GBP1,585 million was 274% ahead of 2021,
and 279% at constant currency. This was principally due to a good
performance on initiatives with strong attachment across both bags
and seats, favourable yield and the increase in passenger numbers
compared to 2021. Note that airline ancillary revenue is now 15%
higher than it was in FY19 despite passenger numbers being 27%
lower.
easyJet holidays revenue increased by 1,082% to GBP368 million
(2021: GBP34 million) with strong yields and growth in customer
numbers to 1.1 million (2021: 0.1 million) as the holidays offer
resonated with customers in its first full summer season of trading
under its new operating model.
Headline costs excluding fuel
2022 2021
------------ -------- ----------------------
Group Airline Group Airline
GBP million GBP per GBP million GBP per
seat seat
------------------------------------- ------------ -------- ------------ --------
Operating costs and income
Airports, ground handling, holidays
accommodation, and other operating
costs 1,716 17.70 446 15.01
Crew 767 9.40 495 17.56
Navigation 339 4.16 102 3.62
Maintenance 301 3.69 222 7.90
Selling and marketing 173 1.88 60 1.94
Other costs 635 7.38 319 10.80
Other income (10) (0.12) (6) (0.21)
-------------------------------------- ------------ -------- ------------ --------
3,921 44.09 1,638 56.62
------------ -------- ------------ --------
Ownership costs
Aircraft dry leasing 2 0.04 5 0.20
Depreciation 539 6.60 456 16.19
Amortisation 25 0.25 24 0.74
Net finance charges 117 1.45 110 3.83
-------------------------------------- ------------ -------- ------------ --------
683 8.34 595 20.95
Foreign exchange loss / (gain) 64 0.77 (10) (0.32)
-------------------------------------- ------------ -------- ------------ --------
747 9.11 585 20.63
------------ -------- ------------ --------
Headline costs excluding fuel 4,668 53.20 2,223 77.25
-------------------------------------- ------------ -------- ------------ --------
Headline cost per seat excluding fuel for the Airline decreased
by 31% to GBP53.20 (2021: GBP77.25), and also decreased by 32% at
constant currency.
Included within the Group headline costs excluding fuel of
GBP4,668 million is GBP330 million (2021: GBP46 million) related to
the holidays business, the cost increase primarily being activity
related due to the growth of the business compared to last
year.
Operating costs and income
Airports, ground handling and other operating costs increased by
285% to GBP1,716 million (2021: GBP446 million), and Airline cost
per seat increased by 18% to GBP17.70 (2021: GBP15.01), and by 19%
at constant currency. Within the result for the year is a release
of airport charge accruals of GBP18 million (2021: GBP4 million) as
the return of flying activity has reduced some of the contract
uncertainty and risks which were previously being accrued for.
Together with increased marketing activity the release helped
offset an overall increase in airport rates and operating costs
associated with improved load factors, and an increase in passenger
and security charges that drove a cost increase on a per seat
basis.
Crew costs increased by 55% to GBP767 million (2021: GBP495
million), but Airline cost per seat decreased by 46% to GBP9.40,
and Airline cost per seat also decreased by 46% at constant
currency. This cost per seat decrease was primarily due to fixed
payroll costs being spread over higher flying capacity, partially
offset by the reduction in furlough schemes in the year (GBP8
million support 2022 vs GBP134 million support 2021) and additional
one-off crew payments, including retention bonuses. To help
mitigate some of the cost pressures, a proportion of captains
remained on seasonal contracts.
Navigation costs increased by 232% to GBP339 million (2021:
GBP102 million), and Airline cost per seat increased by 15% to
GBP4.16 (2021: GBP3.62) and by 17% at constant currency, as a
result of an increase in the sector length of our commercial flying
compared to the comparative year and an increase in EuroControl
rates effective from January 2022.
Maintenance costs increased by 36% to GBP301 million (2021:
GBP222 million), and Airline cost per seat decreased by 53% to
GBP3.69 (2021: GBP7.90) and decreased by 53% at constant currency.
This cost per seat decrease was driven by the fixed element of our
maintenance costs which have been spread over increased capacity in
the year, whilst also having a reduction in repair costs and
cleaning costs.
Selling and marketing costs increased by 188% to GBP173 million
(2021: GBP60 million). This was due to a combination of factors:
GBP37 million of the increase was from increased marketing spend
and the focus on easyJet holidays as a result of the revival of
travel post-pandemic; whilst GBP76 million of the increase was on
sale and distribution costs, predominantly the result of credit
card bookings and associated fees increasing as activity
returned.
Other costs increased by 99% to GBP635 million (2021: GBP319
million), and Airline cost per seat decreased by 32% to GBP7.38
(2021: GBP10.80), and by 31% at constant currency. Other costs
include the impact of the significant disruption experienced in the
year, with EU261 compensation and welfare costs of GBP205 million
(2021: GBP7m net credit arising from the release of a Covid
specific welfare provision). These compensation payments per
customer were over double the level experienced pre-pandemic. In
addition, wet lease costs of GBP23 million (2021: GBPnil) were
incurred to maintain capacity. Wet lease arrangements were also
used to support the new slots secured in Gatwick and Porto,
increasing our route offer, at a cost of GBP30 million (2021:
GBPnil million). The significant driver in the decrease in the cost
per seat is that fixed costs are being spread over higher flown
capacity.
Ownership costs
Depreciation costs increased by 18% to GBP539 million (2021:
GBP456 million), and Airline cost per seat decreased by 59% to
GBP6.60 (2021: GBP16.19). This increase was driven by higher
maintenance-related depreciation as a result of increased flying
hours, combined with an increase in the number of leased aircraft,
and the change in UEL estimation for CEO aircraft in the prior
year, the first full year impact being to increase the depreciation
charge by GBP50 million in the year (2021: GBP13 million, 3 months
impact). The overall increase in depreciation costs was partially
offset by the regular discounting of the maintenance provision
which resulted in a credit to the income statement of GBP71 million
(2021: credit GBP20 million), principally due to the increase in US
dollar interest rates over the year.
Net finance charges increased marginally by 6% to GBP117 million
(2021: GBP110 million), and Airline cost per seat decreased by 62%
to GBP1.45 (2021: GBP3.83). The decrease per seat is a consequence
of the higher capacity, partially offset by increased interest
costs.
Foreign exchange loss / (gain) moved to a loss of GBP64 million
(2021: GBP10 million credit) with the increased impact of the
retranslation of foreign currency denominated monetary assets and
liabilities arising from the currency movements in the year, with
sterling being weaker against both the US dollar and euro on 30
September 2022 compared to 30 September 2021.
Fuel
2022 2021
---------------------- ----------------------
Group Airline Group Airline
GBP million GBP per GBP million GBP per
seat seat
------ ------------ -------- ------------ --------
Fuel 1,279 15.68 371 13.16
------- ------------ -------- ------------ --------
Fuel costs for 2022 were GBP1,279 million, compared to GBP371
million in 2021. The higher costs were driven both by the 189% rise
in flying volumes as well as the significant increase arising from
the unhedged portion of fuel purchases as a consequence of the
upward pressure on fuel prices over the year. Fuel cost per seat of
GBP15.68 was a 19% increase on the prior year, and a 17% increase
at constant currency.
During the year the average market price payable for jet fuel
increased by 92% from $554 per tonne in 2021 to $1,063 per tonne in
2022. This was substantially mitigated by the hedging undertaken by
the Group, with the overall post hedge fuel price for 2022 of $705
per tonne being only 12% higher than the post hedge fuel price of
$631 per tonne achieved in 2021. The fuel cost includes an offset
of allocated free ETS certificates, with a significant proportion
of carbon costs in the year met by carried forward and in-year
allocations.
The Group uses jet fuel derivatives to hedge against significant
increases in jet fuel prices to mitigate cash and income statement
volatility in the short term. In order to manage the risk exposure,
jet fuel derivative contracts are used in line with the Board
approved policy to hedge up to 18 months of estimated exposures in
advance, with approximately 60% hedged on average in the first 12
months.
Summary consolidated statement of financial position
2022 2021 Change
------------ ------------ ------------
GBP million GBP million GBP million
----------------------------------------------- ------------ ------------ ------------
Goodwill and other non-current intangible
assets 582 582 -
Property, plant and equipment (excluding
RoU assets) 3,676 3,639 37
Right of use (RoU) assets 953 1,096 (143)
Derivative financial instruments 442 203 239
Equity investment 31 30 1
Other assets (excluding cash and money market
deposits) 1,022 619 403
Unearned revenue (1,043) (846) (197)
Trade and other payables (1,685) (1,128) (557)
Other liabilities (excluding debt) (775) (646) (129)
------------------------------------------------ ------------ ------------ ------------
Capital employed 3,203 3,549 (346)
------------------------------------------------ ------------ ------------ ------------
Cash and money market deposits* 3,640 3,536 104
Debt (excluding lease liabilities) (3,197) (3,367) 170
Lease liabilities (1,113) (1,079) (34)
Net debt (670) (910) 240
------------------------------------------------ ------------ ------------ ------------
Net assets 2,533 2,639 (106)
------------------------------------------------ ------------ ------------ ------------
* Excludes restricted cash
Since 30 September 2021 net assets have decreased by GBP106
million.
The net book value of property, plant and equipment excluding
right of use assets, has increased by GBP37 million, the impact of
the sale and leaseback of 10 aircraft being offset by the eight new
owned aircraft brought into the fleet in the year and the
depreciation charge for the year.
At 30 September 2022, right of use (RoU) assets amounted to
GBP953 million (2021: GBP1,096 million) and lease liabilities
amounted to GBP1,113 million (2021: GBP1,079 million) which
reflects additions during the year as a result of aircraft sale and
leasebacks, as well as the impact of lease payments, extensions and
depreciation on RoU assets.
There has been a GBP239 million increase in the net asset value
of derivative financial instruments, with a closing net asset
balance of GBP442 million (2021: GBP203 million asset). The
movement is largely due to mark-to-market gains on US dollar hedges
and cross currency interest rate swaps as a result of the weakened
pound against the US dollar and euro in comparison to the rates at
30 September 2021. This gain was partially offset by a reduction in
the asset value of jet fuel hedges compared to 30 September
2021.
Other assets have increased by GBP403 million, mainly driven by
increased current intangible assets reflecting the ETS credits held
as a result of increased flying and therefore carbon emissions (and
pending surrender in 2023), and increased trade and other
receivables.
Unearned revenue increased by GBP197 million, reflecting
improved customer confidence and strong future bookings compared to
the prior year.
Trade and other payables have increased by GBP557 million
predominantly as a result of higher activity and volumes, and an
increase in ETS payables due to higher credit prices, partially
offset by a reduction in voucher liabilities with customers having
greater opportunities to utilise these vouchers during 2022.
Other liabilities have increased by GBP129 million, mainly as a
result of increased provisions, in particular for maintenance with
the increase in flying over the year, and also the provision for
customer claims reflecting the higher volume of disruption events
in the year.
Debt has decreased by GBP170 million mainly as a result of the
repayment of the final GBP300 million of the Covid Corporate
Financing Facility (CCFF) in the year, plus the $100 million
partial repayment of the UKEF facility, offset by weaker sterling
at 30 September 2022 increasing the translated value of the
debt.
As at 30 September 2022, the Group is unable to assess the
likely outcome or quantum of the claims of the investigation by the
ICO, group action and other claims following the cyber-attack in
May 2020 and no provision has been recognised. (See note 1 under
critical accounting judgements - contingency liability
recognition).
Key statistics
Increase/
2022 2021 (decrease)
---------------------------------------------------- ------- -------- ------------
Operating measures
Seats flown (millions) 81.5 28.2 189.0%
Passengers (millions) 69.7 20.4 241.7%
Load factor 85.5% 72.5% 13.0ppt
Available seat kilometres (ASK) (millions) 97,287 33,348 191.7%
Revenue passenger kilometres (RPK) (millions) 84,874 23,594 259.7%
Average sector length (kilometres) 1,193 1,184 0.8%
Sectors ('000) 456 156 192.3%
Block hours ('000) 938 311 201.6%
easyJet holidays passengers (thousands) (1) 805 58 1,287.9%
Number of aircraft owned/leased at end of year 320 308 3.9%
Average number of aircraft owned/leased during
year 321 331 (3.0%)
Number of aircraft operated at end of year 310 239 29.7%
Average number of aircraft operated during
year 255 198 28.8%
Number of routes operated at end of year 988 927 6.6%
Number of airports served at end of year 153 153 0.0%
Favourable/
2022 2021 (adverse)
---------------------------------------------------- ------- -------- ------------
Financial measures
Total return on capital employed (0.6%) (22.4%) 21.8ppt
Headline return on capital employed 0.1% (25.5%) 25.6ppt
Airline total loss before tax per seat (GBP) (3.01) (36.33) (91.7%)
Airline headline loss before tax per seat (GBP) (2.65) (39.87) (93.4%)
Airline total loss before tax per ASK (pence) (0.25) (3.11) (92.0%)
Airline headline loss before tax per ASK (pence) (0.22) (3.41) (93.5%)
Revenue
Airline revenue per seat (GBP) 66.23 50.54 31.0%
Airline revenue per seat at constant currency
(GBP) (3) 67.33 50.54 33.2%
Airline revenue per ASK (pence) 5.55 4.37 27.0%
Airline revenue per ASK at constant currency
(pence) (3) 5.64 4.37 29.1%
Airline revenue per passenger (GBP) (2) 77.48 69.72 11.1%
Airline revenue per passenger at constant currency
(GBP) (2) (3) 78.77 69.72 13.0%
Costs
Per seat measures
Airline headline cost per seat (GBP) 68.88 90.41 (23.8%)
Airline total cost per seat (GBP) 69.24 86.87 (20.3%)
Airline headline cost per seat excluding fuel
(GBP) 53.20 77.25 (31.1%)
Airline headline cost per seat excluding fuel
at constant currency (GBP) (3) 52.66 77.57 (32.1%)
Airline total cost per seat excluding fuel
(GBP) 53.56 73.72 (27.3%)
Airline total cost per seat excluding fuel
at constant currency (GBP) (3) 53.02 74.04 (28.4%)
Per ASK measures
Airline headline cost per ASK (pence) 5.77 7.64 (24.5%)
Airline total cost per ASK (pence) 5.80 7.34 (21.0%)
Airline headline cost per ASK excluding fuel
(pence) 4.46 6.53 (31.7%)
Airline headline cost per ASK excluding fuel
at constant currency (pence) (3) 4.41 6.55 (32.7%)
Airline total cost per ASK excluding fuel (pence) 4.49 6.23 (27.9%)
Airline total cost per ASK excluding fuel at
constant currency (pence) (3) 4.45 6.26 (28.9%)
(1) Total holiday customers including affiliates
is 1.1 million (FY21: 0.1 million).
(2) Prior year comparative restated to show
correct figure.
(3) Constant currency metrics restate FY22 using FY21 rates, and excludes
the impact of foreign exchange revaluations from both current year and
prior year results.
Going Concern and Viability Statement
Assessment of prospects
The Strategic Report in the annual report and accounts sets out
the activities of the Group and the factors likely to impact its
future development, performance and position. The Finance Review in
the annual report and accounts sets out the financial position of
the Group, cash flows, liquidity position and borrowing activity.
The notes to the accounts include the objectives, policies and
procedures for managing capital, financial risk management
objectives, details of financial instruments and hedging
activities, and exposure to credit risk and liquidity risk.
In accordance with the requirements of the 2018 UK Corporate
Governance Code, the Directors have assessed the long term
prospects of the Group, taking into account its current position
and a range of internal and external factors, including the
principal risks. The Directors have determined that a three-year
period is an appropriate timeframe for this viability assessment.
In concluding on a three-year period, the Directors considered the
reliability of forecast information, the duration and impact of
Covid-19 and longer-term management incentives.
The assessment of the prospects of the Group includes the
following factors:
The strategic plan - which takes into consideration market
conditions, future commitments, cash flow, expected impact of key
risks, funding requirements and maturity of existing financing
facilities (see below)
As at September Maturity date Available funds (drawn
2022 and undrawn)
Eurobonds February 2023 EUR500m
-------------------- -----------------------
October 2023 EUR500m
------------------------------------------- -----------------------
June 2025 EUR500m
------------------------------------------- -----------------------
March 2028 EUR1,200m
------------------------------------------- -----------------------
Revolving credit
facility September 2025 (*) $400m
-------------------- -----------------------
UKEF backed facility January 2026 $1,770m
-------------------- -----------------------
* Option to extend to September 2027 at lender's consent
The fleet plan - the plan retains some flexibility to adjust the
size of the fleet in response to opportunities or risks
Strength of the balance sheet and unencumbered assets - this
sustainable strength gives us access to capital markets
Risk assessment - see detailed risk assessment in the annual
report and accounts.
Stress testing
The corporate risk management framework facilitates the
identification, analysis, and response to plausible risk, including
emerging risks as our business evolves, in an increasingly volatile
environment. Through our corporate risk management process, a
robust assessment of the principal risks facing the organisation
has been performed and the controls and mitigations identified.
Both individually and combined these potential risks are
unlikely to require significant additional management actions to
support the business to remain viable, however, there could be
actions that management would deem necessary to reduce the impact
of the risks. The stress testing scenarios identified in the table
below show that there is sufficient liquidity assuming the
refinancing of the existing bonds.
Going concern statement
In adopting the going concern basis for preparing these
financial statements, the Directors have considered
easyJet's business activities, together with factors likely to
affect its future development and performance, as well
as easyJet's principal risks and uncertainties through to June
2024.
As at 30 September 2022 easyJet has a net debt position of
GBP0.7 billion including cash and cash equivalents and money market
deposits of GBP3.6 billion, with unrestricted access to GBP4.7
billion of liquidity and has retained ownership of 57% of the total
fleet with 41% being unencumbered.
The Directors have reviewed the financial forecasts and funding
requirements with consideration given to the potential impact of
severe but plausible downside risks. easyJet has modelled a base
case representing management's best estimation of how the business
plans to perform over the period. The future impact of climate
change on the business has been incorporated into strategic plans,
including the estimated financial impact within the base case cash
flow projections of the future estimated price of ETS permits, the
phasing out of the free ETS permits from 2024 , the expected price
and quantity required of Sustainable Aviation Fuel usage and fleet
renewals.
The business is exposed to fluctuations in fuel prices and
foreign exchange rates. easyJet is currently c.74% hedged for fuel
in H1 of FY23 at c.US$814 per metric tonne, c.51% hedged for H2
FY23 at c.US$903 and c.25% hedged for H1 FY24 at c.US$922.
In modelling the impact of severe but plausible downside risks,
the Directors have considered demand suppression leading to a
reduction in ticket yield of 5% and reduced capacity of 5% as well
as sensitivities on fuel price (increase of $100 per metric tonne),
operational costs (additional inflation assumed on all costs),
re-occurrence of additional disruption costs (at year ended 30
September 2022 levels) and delays in the delivery of strategic
revenue initiatives. These impacts have been modelled across the
whole going concern period. In addition, this downside-model also
includes a grounding of 25% of the fleet for one month in the peak
trading month of August to cover the range of severe but plausible
risks that could result in significant operational disruption. This
downside scenario resulted in a significant reduction in liquidity
but still maintained sufficient headroom on external liquidity
requirements.
After reviewing the current liquidity position, committed
funding facilities, the base case and severe but plausible downside
financial forecasts incorporating the uncertainties described
above, the Directors have a reasonable expectation that the Group
has sufficient resources to continue in operation for the
foreseeable future. For these reasons the Directors continue to
adopt the going concern basis of accounting in preparing the
Group's financial statements.
Viability Statement
Based on the assessment performed, the Directors have a
reasonable expectation that the Company and the Group will be able
to continue in operation and meet all liabilities as they fall due
up to September 2025. In making this statement, the Directors have
made the following key assumptions:
1. easyJet has access to a variety of funding options including
capital markets, aircraft financing and bank or government debt.
The stress testing demonstrates that the current funding with
refinancing of the existing bonds would be sufficient to retain
liquidity in both the base and downside cases.
2. In assessing viability, it is assumed that the detailed risk
management process as outlined in the annual report and accounts
captures all plausible risks, and that in the event that multiple
risks occur, all available actions to mitigate the impact to the
Group would be taken on a timely basis and have the intended
impact.
3. There is no prolonged grounding of a substantial portion of
the fleet greater than included in the downside risk scenario. This
includes a grounding of 25% of the fleet for one month in the peak
trading month of August to cover the range of severe but plausible
risks that could result in significant operational disruption.
The key risks that are most likely to have a significant impact
on easyJet's viability are shown below along with how the risk has
been considered in the stress testing and what actions are in place
to mitigate against the identified ris k. The principal risks have
continued to be assessed for any changes in the risk
environment.
Risk theme Impact on Risks considered Management action
viability and Board considerations
Safety, security, 1. Significant
and operations safety or * Operational disruption and increase of costs (1, 2) * easyJet Safety Board meet monthly. Functional Safety
security Action Groups in place across the business (1,2)
incident
2. Pandemic * Significant media coverage and/or partial grounding
3. Significant of fleet leading to a reduction in future revenue of * Hull and Liability insurance in place (1,2,3)
operational up to 10% (1,2)
disruption
* A safety policy is published (1,2)
* Fines/regulatory sanctions (1)
* Biosecurity standards group in place (2)
* Increased EU261 compensation (3)
* Operational Resilience actions (3)
--------------- ------------------------------------------------------------ ------------------------------------------------------------
Asset efficiency 4. Single
and effectiveness aircraft * Scheduled reductions/cancellations or partial * Enterprise Project Management Office in place to
type operation grounding of fleet leading to a reduction in revenue oversee delivery of projects (5)
5. of up to 10% (4,7)
Non-delivery
of strategic * Monitoring of airport capacity (6)
initiatives * Inefficient use of resources leading to financial
6. Airport underperformance (5)
Infrastructure * Introduction of A320neo aircraft (4)
7. Continuity
of * Loss of market share due to increased competitor
services capacity (6,7) * Work closely with Airbus to retain some flexibility
in fleet planning (4)
* Significant increase in costs (6)
* Airport business continuity plans in place (7)
* Operational disruption, modelled by a downside risk
scenario (4,6,7)
--------------- ------------------------------------------------------------ ------------------------------------------------------------
Legislative/regulatory 8. Brand
landscape licence * Loss of brand licence (8) * Regular engagement with easyGroup holdings and
9. Changing proactive management of brand-related issues (8)
landscape
10. * Sustained adverse media coverage leading to reduction
Shareholder in revenue of up to 10% (8,10) * Compliance framework in place including mandatory
activism training (9)
* Significant spike in operational costs (9)
* Use of In-house and external legal advisors (9)
* Fines/regulatory sanctions (9)
* Active shareholder engagement programme (10)
--------------- ------------------------------------------------------------ ------------------------------------------------------------
People 11. Industrial
action * Operational disruption leading to increased costs and * Positive and on-going relationship with trade unions
12. Talent loss of revenue of up to 10% (11) and employee workforce (11)
acquisition
and retention
within * Sustained inability to deliver strategic initiatives * Regular employee surveys and action groups to focus
the Group by up to 50% (12) on well-being, talent and retention (12)
* Creation of Retention program (12)
* Hybrid working (12)
--------------- ------------------------------------------------------------ ------------------------------------------------------------
Environment 13. Climate
and sustainability change * Increased costs including ETS, SAF, additional legal * Framework in place - the pathway to net zero (13 a-d)
transition and technology costs and increased cost of
a) future maintenance and replacement of aircraft (13 a,b,d)
environmental * Contracting for SAF volumes (13 a)
legislation
and * Reduction in revenue of up to 10% due to customer
technology demand (13 c) * More fuel efficient A320 and A321 NEO's (13 a)
b) changes to
carbon
trading scheme * Investing in both hydrogen and electric aircraft
c) changing initiatives (13 a)
consumer
demand
d) increased
taxation
--------------- ------------------------------------------------------------ ------------------------------------------------------------
Technology 14. Failure of
and digital critical * Loss of the website leading to reduction in revenue * Ongoing monitoring of critical technologies and
safety technologies of up to 10% (14) interdependencies (14)
15.
Significant
digital safety * Significant spike in costs relating to legal and * IT major incident management team in place (15)
event settlement costs (15)
* Data and cyber risk governance structure exist to
regularly review data and risk (15)
* Dedicated Information Security team (15)
--------------- ------------------------------------------------------------ ------------------------------------------------------------
Macro-economic 16.
and geopolitical Competitive * Reduction in earnings and cash and/or increase in * Strategic planning to ensure flying schedules are
environment costs due to loss of competitive advantage (16) responsive to demand (16)
17. Volatility
in financial
markets * Modelling excluding uncommitted funding (16, 17) * Competitor monitoring systems and processes in place
(16)
* Fuel sensitivities to +$100 MT/tonne on forecast
levels, adverse foreign exchange rate movement by 10% * Consideration of various sensitivities and stress
and fluctuating carbon prices. Cost inflation testing to the forecast presented to the board on an
estimates increased up to 10% (17) ongoing basis (16,17)
* Finance Committee oversees the Group treasury and
funding policies (17)
* Liquidity buffer maintained (16,17)
* Rolling hedging programme in place (17)
--------------- ------------------------------------------------------------ ------------------------------------------------------------
Consolidated income statement
Year ended 30 September
----------------------------------------------------------------------------------
2022 2021
Non-headline Non-headline
(note (note
Headline 2) Total Headline 2) Total
GBP GBP GBP
Notes million million million GBP million GBP million GBP million
------------------- ------ --------- ------------- --------- ------------ ------------- ------------
Passenger revenue 3,816 - 3,816 1,000 - 1,000
Ancillary revenue 1,953 - 1,953 458 - 458
-------------------- ------ --------- ------------- --------- ------------ ------------- ------------
Total revenue 5 5,769 - 5,769 1,458 - 1,458
Fuel (1,279) - (1,279) (371) - (371)
Airports, ground
handling,
holidays
accommodation,
and other
operating
costs (1,716) - (1,716) (446) - (446)
Crew (767) - (767) (495) - (495)
Navigation (339) - (339) (102) - (102)
Maintenance (301) - (301) (222) - (222)
Selling and
marketing (173) - (173) (60) - (60)
Other costs (635) (30) (665) (319) 47 (272)
Other income 10 - 10 6 79 85
-------------------- ------ --------- ------------- --------- ------------ ------------- ------------
EBITDAR 569 (30) 539 (551) 126 (425)
Aircraft dry
leasing (2) - (2) (5) - (5)
Depreciation 7 (539) - (539) (456) - (456)
Amortisation of
intangible
assets (25) - (25) (24) - (24)
-------------------- ------ --------- ------------- --------- ------------ ------------- ------------
Operating
profit/(loss) 3 (30) (27) - (1,036) 126 (910)
Interest receivable
and other
financing
income * 26 - 26 40 33 73
Interest payable
and
other financing
charges (143) - (143) (150) (59) (209)
Foreign exchange
(loss)/gain
* (64) - (64) 10 - 10
-------------------- ------ --------- ------------- --------- ------------ ------------- ------------
Net finance charges (181) - (181) (100) (26) (126)
Loss before tax (178) (30) (208) (1,136) 100 (1,036)
Tax credit/(charge) 3 31 8 39 236 (58) 178
Loss for the year (147) (22) (169) (900) 42 (858)
---------------------------- --------- ------------- --------- ------------ ------------- ------------
Loss per share,
pence
Basic 4 (22.4) (159.0)
Diluted 4 (22.4) (159.0)
-------------------- ------ --------- ------------- --------- ------------ ------------- ------------
* Interest receivable and other financing income, and foreign exchange
(loss)/gain recognised in the prior year has been re-presented.
Consolidated statement of comprehensive income
Year ended Year ended
30 September 30 September
2022 2021
Notes GBP million GBP million
---------------------------------------------- ------ ------------- -------------
Loss for the year (169) (858)
Other comprehensive income/(loss)
Items that may be reclassified to the
income statement:
Cash flow hedges
Fair value gains in the year 774 477
Gains transferred to income statement (730) (17)
Hedge discontinuation (gains)/losses
transferred to income statement (5) 25
Related tax charge 3 (11) (93)
Cost of hedging 8 (3)
Related tax (charge)/credit 3 (2) 1
Items that will not be reclassified to
the income statement:
Remeasurement gain of post-employment
benefit obligations 41 5
Related deferred tax credit 3 (10) (4)
Fair value gains/(loss) on equity investment 1 (3)
----------------------------------------------- ------ ------------- -------------
66 388
------ ------------- -------------
Total comprehensive loss for the year (103) (470)
----------------------------------------------- ------ ------------- -------------
Consolidated statement of financial position
As at 30 As at 30
September September
2022 2021
Notes GBP million GBP million
--------------------------------------- ----- ----------- -----------
Non-current assets
Goodwill 365 365
Other intangible assets 217 217
Property, plant and equipment 7 4,629 4,735
Derivative financial instruments 127 86
Equity investment 31 30
Restricted cash 3 1
Other non-current assets 91 135
Deferred tax assets 3 62 39
---------------------------------------- ----- ----------- -----------
5,525 5,608
Current assets
Trade and other receivables 367 291
Intangible assets 495 140
Derivative financial instruments 423 185
Restricted cash 4 13
Money market deposits 126 -
Cash and cash equivalents 3,514 3,536
---------------------------------------- ----- ----------- -----------
4,929 4,165
Current liabilities
Trade and other payables (1,685) (1,128)
Unearned revenue (1,042) (844)
Borrowings 8 (437) (300)
Lease liabilities (247) (189)
Derivative financial instruments (86) (31)
Current tax payable 3 (5) (2)
Provisions for liabilities and charges 9 (176) (183)
---------------------------------------- ----- ----------- -----------
(3,678) (2,677)
Net current assets 1,251 1,488
Non-current liabilities
Borrowings 8 (2,760) (3,067)
Unearned revenue (1) (2)
Lease liabilities (866) (890)
Derivative financial instruments (22) (37)
Non-current deferred income (4) (4)
Post-employment benefit obligation (1) (37)
Provisions for liabilities and charges 9 (589) (420)
---------------------------------------- ----- ----------- -----------
(4,243) (4,457)
Net assets 2,533 2,639
---------------------------------------- ----- ----------- -----------
Shareholders' equity
--------------------------------------- ----- ----------- -----------
Share capital 207 207
Share premium 2,166 2,166
Hedging reserve 170 156
Cost of hedging reserve 5 (1)
Translation reserve (6) -
(Accumulated losses)/Retained earnings (9) 111
---------------------------------------- ----- ----------- -----------
Total equity 2,533 2,639
---------------------------------------- ----- ----------- -----------
Consolidated statement of changes in equity
Retained
Cost earnings/
Share Share Hedging of hedging Translation (accumulated
capital premium reserve reserve reserve losses) Total
GBP GBP GBP GBP GBP GBP GBP
million million million million million million million
--------------- --------- --------- --------- ----------- ------------ ------------- -----------
At 1 October
2021 207 2,166 156 (1) - 111 2,639
Loss for the
period - - - - - (169) (169)
Other
comprehensive
income - - 28 6 - 32 66
--------- --------- --------- ----------- ------------ ------------- -----------
Total
comprehensive
(loss)/income - - 28 6 - (137) (103)
Transfers to
property,
plant &
equipment - - (14) - - - (14)
Share
incentive
schemes
Employee share
schemes
- value of
employee
services - - - - - 26 26
Purchase of
own shares - - - - - (9) (9)
Currency
translation
differences - - - - (6) - (6)
---------------- --------- --------- --------- ----------- ------------ ------------- -----------
At 30 September
2022 207 2,166 170 5 (6) (9) 2,533
---------------- --------- --------- --------- ----------- ------------ ------------- -----------
Cost
of
Share Share Hedging hedging Translation Retained
capital premium reserve reserve reserve earnings Total
GBP GBP GBP GBP GBP GBP
million million million million GBP million million million
--------------- ---------- ---------- ---------- ---------- ------------ ----------- -----------
At 1 October
2020 125 1,051 (236) 1 (2) 960 1,899
Loss for the
period - - - - - (858) (858)
Other
comprehensive
(loss)/profit - - 392 (2) - (2) 388
---------------- ---------- ---------- ---------- ---------- ------------ ----------- -----------
Total
comprehensive
(loss)/income - - 392 (2) - (860) (470)
Net proceeds
from
rights issue 82 1,115 - - - - 1,197
Share
incentive
schemes
Employee share
schemes
- value of
employee
services - - - - - 15 15
Related tax
(note
3) - - - - - 2 2
Purchase of
own shares - - - - - (6) (6)
Currency
translation
differences - - - - 2 - 2
---------------- ---------- ---------- ---------- ---------- ------------ ----------- -----------
At 30 September
2021 207 2,166 156 (1) - 111 2,639
---------------- ---------- ---------- ---------- ---------- ------------ ----------- -----------
On 9 September 2021 the Company invited its shareholders to
subscribe to a rights issue of 301,260,394 ordinary shares at an
issue price of 410 pence per share on the basis of 31 shares for
every 47 fully paid ordinary shares held, with such shares issued
on 28 September 2021.
The rights issue resulted in GBP1,235 million of gross proceeds.
Shares totalling 280.2 million were taken up by existing
shareholders (93%) with the remaining rump of 21.0 million shares
being underwritten. As at 30 September 2021, there were GBP91
million of proceeds outstanding, which were subsequently received
in October 2021. Costs of GBP38 million were incurred on the rights
issue.
At 30 September 2022 amounts in the cost of hedging reserve
comprised of a GBP7 million gain related to cross-currency basis
(2021: GBPnil) and a GBP2 million loss related to the time value of
options (2021: GBP1 million loss).
Consolidated statement of cash flows
Year ended Year ended
30 September 30 September
2022 2021
Notes GBP million GBP million
---------------------------------------------- ------ ------------- -------------
Cash flows from operating activities
Cash generated from/(used in) operations 10 892 (755)
Interest and other financing charges paid
* (130) (127)
Interest and other financing income received 11 1
Settlement of derivatives * 7 (155)
Net tax (paid)/received (4) 1
---------------------------------------------- ------ ------------- -------------
Net cash generated from/(used in) operating
activities 776 (1,035)
Cash flows from investing activities
Purchase of property, plant and equipment 7 (501) (140)
Purchase of non-current other intangible
assets (29) (9)
Net (increase)/decrease in money market
deposits 11 (126) 32
Net proceeds from sale and leaseback of
aircraft 87 836
---------------------------------------------- ------ ------------- -------------
Net cash (used in)/generated from investing
activities (569) 719
Cash flows from financing activities
Proceeds from issue of ordinary share
capital 91 1,144
Share issue transaction costs (38) -
Purchase of own shares for employee share
schemes (9) (6)
Proceeds from debt financing 11 - 1,804
Repayment of bank loans and other borrowings 11 (377) (1,045)
Repayment of capital element of leases 11 (206) (261)
Decrease in restricted cash 7 5
---------------------------------------------- ------ ------------- -------------
Net cash (used in)/generated from financing
activities (532) 1,641
Effect of exchange rate changes 303 (73)
Net (decrease)/increase in cash and cash
equivalents (22) 1,252
Cash and cash equivalents at beginning
of year 3,536 2,284
Cash and cash equivalents at end of year 3,514 3,536
---------------------------------------------- ------ ------------- -------------
* Historically cash settlement of derivatives relating to cash flows
for ineffective and discontinued hedging derivatives and fair value
derivatives through profit and loss have been presented on the face
of the consolidated statement of cash flows within interest and other
financing charges paid. In order to give greater clarity to the users
of the financial statements, these derivatives have been presented
as a separate line within the consolidated statement of cash flows
for the current and prior year.
Notes to the financial statements
1. Accounting policies, judgements and estimates
Statement of compliance
easyJet plc (the 'Company') and its subsidiaries ('easyJet' or
the 'Group' as applicable) is a low-cost airline carrier and
package holiday Group operating principally in Europe. The Company
is a public limited company (company number 03959649), incorporated
and domiciled in the United Kingdom, whose shares are listed on the
London Stock Exchange under the ticker symbol EZJ. The registered
office address is Hangar 89, London Luton Airport, Luton,
Bedfordshire, LU2 9PF.
On 31 December 2020, IFRS as adopted by the European Union at
that date was brought into UK law and became UK-adopted
International Accounting Standards, with future changes being
subject to endorsement by the UK Endorsement Board. easyJet plc
transitioned to UK-adopted International Accounting Standards in
its consolidated financial statements on 1 October 2021. This
change constitutes a change in accounting framework. However, there
is no impact on recognition, measurement or disclosure in the
period reported as a result of the change in framework. The
consolidated financial statements of easyJet plc have been prepared
in accordance with UK-adopted International Accounting Standards
and with the requirements of the Companies Act 2006 as applicable
to companies reporting under those standards.
Basis of preparation
This consolidated financial information has been prepared in
accordance with the Listing Rules of the Financial Conduct
Authority.
The financial information set out in this document does not
constitute statutory financial statements for easyJet plc for the
two years ended 30 September 2022 but is extracted from the 2022
Annual Report and Financial statements.
The financial statements have been prepared on a going concern
basis. In adopting the going concern basis for preparing these
financial statements, the Directors have considered easyJet's
business activities, together with factors likely to affect its
future development and performance, as well as easyJet's principal
risks and uncertainties through to June 2024.
As at 30 September 2022 easyJet has a net debt position of
GBP0.7 billion including cash and cash equivalents and money market
deposits of GBP3.6 billion, with unrestricted access to GBP4.7
billion of liquidity and has retained ownership of 57% of the total
fleet with 41% being unencumbered.
The Directors have reviewed the financial forecasts and funding
requirements with consideration given to the potential impact of
severe but plausible downside risks. easyJet has modelled a base
case representing management's best estimation of how the business
plans to perform over the period. The future impact of climate
change on the business has been incorporated into strategic plans,
including the estimated financial impact within the base case cash
flow projections of the future estimated price of ETS permits, the
phasing out of the free ETS permits from 2024, the expected price
and quantity required of Sustainable Aviation Fuel usage and fleet
renewals.
The business is exposed to fluctuations in fuel prices and
foreign exchange rates. easyJet is currently c.74% hedged for fuel
in H1 of FY23 at c.US$814 per metric tonne, c.51% hedged for H2
FY23 at c.US$903 and c.25% hedged for H1 FY24 at c.US$922.
In modelling the impact of severe but plausible downside risks,
the Directors have considered demand suppression leading to a
reduction in ticket yield of 5% and reduced capacity of 5% as well
as sensitivities on fuel price (increase of $100 per metric tonne),
operational costs (additional inflation assumed on all costs),
re-occurrence of additional disruption costs (at year ended 30
September 2022 levels) and delays in the delivery of strategic
revenue initiatives. These impacts have been modelled across the
whole going concern period. In addition, this downside-model also
includes a grounding of 25% of the fleet for one month in the peak
trading month of August to cover the range of severe but plausible
risks that could result in significant operational disruption. This
downside scenario resulted in a significant reduction in liquidity
but still maintained sufficient headroom on external liquidity
requirements.
After reviewing the current liquidity position, committed
funding facilities, the base case and severe but plausible downside
financial forecasts incorporating the uncertainties described
above, the Directors have a reasonable expectation that the Group
has sufficient resources to continue in operation for the
foreseeable future. For these reasons the Directors continue to
adopt the going concern basis of accounting in preparing the
Group's financial statements.
The Annual Report and Financial statements for 2021 has been
delivered to the Registrar of Companies.
The Annual Report and Financial statements for 2022 will be
delivered to the Registrar of Companies in due course. The
auditors' report on those financial statements was unqualified and
neither drew attention to any matters by way of emphasis nor
contained a statement under either section 498(2) of Companies Act
2006 (accounting records or returns inadequate or financial
statements not agreeing with records and returns), or section
498(3) of Companies Act 2006 (failure to obtain necessary
information and explanations).
Accounting policies
The accounting policies adopted are consistent with those
described in the Annual report and financial statements for the
year ended 30 September 2022.
Critical accounting judgements and estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to
make judgements as to the application of accounting standards to
the recognition and presentation of material transactions, assets
and liabilities within the Group, and the use of estimates and
assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements, and the
reported amounts of income and expenses during the reporting
period. Estimations are based on management's best evaluation of a
range of assumptions; however events or actions may mean that
actual results ultimately differ from those estimates, and these
differences may be material. The estimates and the underlying
assumptions are reviewed regularly.
Critical accounting judgements
The following are the critical judgements, apart from those
involving estimations (which are dealt with separately below), that
the Directors have made in the process of applying the Group's
accounting policies and that have the most significant effect on
the amounts recognised and presented in the financial
statements.
Classification of income or expenses between headline and
non-headline items (note 2)
Non-headline items are those where, in management's opinion,
their separate reporting provides an additional understanding to
users of the financial statements of easyJet's underlying trading
performance, and which are significant by virtue of their size
and/or nature. In considering the categorisation of an item as
non-headline, management's judgement includes, but is not limited
to, a consideration of:
-- whether the item is outside of the principal activities of
the easyJet Group (being to provide point-to-point airline services
and package holidays);
-- the specific circumstances which have led to the item
arising, including, if extinguishing an item from the statement of
financial position, whether that item was first generated via
headline or non-headline activity. The rebuttable presumption being
that when subsequently extinguishing an item from the statement of
financial position, any impact on the income statement should be
reflected in the same way as that which was used in the initial
creation of the item;
-- the likelihood and potential regularity of recurrence; and,
-- whether the item is unusual by virtue of its size.
Non-headline items may include impairments, amounts relating to
corporate acquisitions and disposals, expenditure on major
restructuring programmes and the gain or loss resulting from the
initial recognition of sale and leaseback transactions.
Consolidation of easyJet Switzerland
Judgement has been applied in consolidating easyJet Switzerland
S.A. as a subsidiary on the basis that the Company exercises a
dominant influence over the undertaking. A non-controlling interest
has not been reflected in the consolidated financial statements on
the basis that the holders of the remaining 51% of the shares have
no entitlement to any dividends from that holding and the Company
has an option to acquire those shares for a pre-determined minimal
consideration.
Vouchers issued
It is currently easyJet policy in the event of flight
cancellations to offer customers the option to accept vouchers in
lieu of cash refunds. The liability for these vouchers is
classified as other payables until the voucher is redeemed against
a future booking when it is reclassified to unearned revenue.
Vouchers issued by easyJet holidays have a 12-month redemption
period and any vouchers not redeemed by their expiry date are
recognised in the consolidated income statement as revenue. Over
the course of the pandemic, and the following period of recovery,
the expiry date for easyJet holidays vouchers was extended on a
number of occasions to allow customers more time to utilise the
vouchers.
For airline flight vouchers, to date no vouchers have expired as
expiry dates have been extended to ensure customers have the
maximum opportunity to utilise their vouchers. Additionally, no
breakage has been recognised for airline vouchers as it is judged
that customer behaviour, and therefore redemption levels, has not
yet normalised post pandemic given the flight disruption seen as
the industry starts to return to pre-pandemic levels of flying. For
vouchers issued to customers in countries where regulations
stipulate unused vouchers should be refunded to the customer before
the expiry of the statutory period, the required refunds have been
made.
Applying breakage to the balance of the airline flight vouchers
at 30 September 2022 at a rate of 10% would result in a reduction
in the liability of c.GBP11 million.
Sale and leaseback transactions
Judgement is required when determining if sale and leaseback
proceeds and lease rentals are at fair value. The sale and
leaseback transactions completed in the year have been evaluated
with reference to external valuations specific to the easyJet fleet
and assessed to be at fair value. The accounting treatment would
have been different if the transactions had not been at fair value
(refer to the leases accounting policy in the Group Financial
Statements).
Contingent liability recognition
On 19 May 2020, easyJet announced that it had been the target of
a cyber-attack from a highly sophisticated source. The email
addresses and travel details of approximately nine million
customers were accessed and for a very small subset of customers
(2,208), credit card details were accessed.
The cyber-attack continues to be under investigation by the
Information Commissioner's Office (ICO). As the cyber-attack took
place before the United Kingdom left the European Union, the Group
expects the ICO to be investigating on behalf of all EU data
protection authorities as lead supervisory authority under the
General Data Protection Regulation (GDPR). Any penalty or
enforcement action will need to be reviewed and approved by the
other EU data protection authorities under the GDPR's cooperation
process. In addition, in May 2020, a class action claim was filed
in the UK High Court by a law firm representing a class of affected
customers and claims have also been commenced or threatened in
other courts and jurisdictions.
Judgement has been applied in assessing the merit, likely
outcome and potential impact on the Group of the continued
investigation by the ICO, group action and other claims. These are
still subject to a number of significant uncertainties and
therefore the Group is unable to assess the likely outcome or
quantum of the claims as at the date of these financial statements,
and no provision has been made.
Critical accounting estimates
The following critical accounting estimates involve a higher
degree of judgement or complexity and are the major sources of
estimation uncertainty that have a significant risk of resulting in
a material adjustment to the carrying amounts of assets and
liabilities within the next year.
Owned aircraft carrying values - GBP3,598 million (note 7)
The key estimates used in arriving at aircraft carrying values
are the useful economic lives and residual values of the owned
aircraft.
Aircraft are depreciated over their useful economic life to
their residual values in line with the property, plant and
equipment accounting policy. The useful economic life is based on
easyJet's long-term fleet plan and intended utilisation of the
current fleet which include long term assumptions of market
conditions and customer demands which by their nature are
inherently uncertain.
Residual value estimates for aircraft are based on independent
aircraft valuations. The valuations are based on an assessment of
the current and future state of the global marketplace for specific
aircraft assets. Should the marketplace for an asset class
deteriorate unpredictably, there could be a risk that the
recoverable amount for some aircraft assets would fall below their
current carrying value or that residual values are subject to
downward adjustment. If the market expectation of residual value of
the easyJet aircraft varied by +/- 10% this would result in an
approximate +/- GBP6 million impact on annual depreciation
rates.
Owned and leased aircraft asset recoverable amounts are included
in the Airline CGU and are therefore subject to review for
impairment annually or when there is an indication of impairment
within the Airline CGU.
Aircraft maintenance provisions - GBP636 million (note 9)
easyJet incurs liabilities for maintenance costs arising during
the lease term of leased aircraft. These costs arise from legal and
constructive contractual obligations relating to the condition of
the aircraft when it is returned to the lessor. To discharge these
obligations, it is usual for easyJet to carry out at least one
heavy maintenance check on each of the engines and the airframe of
the aircraft during the lease term. A material provision
representing the estimated cost of this obligation is built up over
the course of the lease.
The estimates and assumptions used in the calculation of the
provision are reviewed at least annually, and when information
becomes available that is capable of causing a material change to
an estimate, such as renegotiation of end of lease return
conditions, increased or decreased aircraft utilisation, or changes
in the cost of heavy maintenance services and expected uplift in
future prices. Given the uncertainty in forecasting future
maintenance requirements, and the associated judgemental nature of
the assumptions applied in determining the maintenance provision,
management believe that a reasonable combination of changes to
these estimates could result in a material movement to the carrying
value of the provision. The most critical estimates in the
calculation of the provision are considered to be the future
utilisation of the aircraft and the expected increase in the cost
of the heavy maintenance checks. Should inflation rates be c.2%
higher than the currently estimated rates in all periods for which
they are not yet contractually fixed or currently under
negotiation, this would increase the provision by c.GBP6
million.
The rates used to discount the provision to arrive at a present
value are based on observable market rates and are therefore at
less risk of management estimation.
Goodwill and landing rights - GBP523 million
It is management's judgement that there are two separate cash
generating units which generate largely independent cash flows,
being easyJet's airline route network and its holidays business.
The recoverable amount of goodwill and landing rights has been
determined based on value in use calculations for the airline route
network cash generating unit. The value in use is determined by
discounting future cash flows to their present value. When applying
this method, easyJet relies on a number of key estimates including
the ability to meet its strategic plans, future fuel prices and
exchange rates, long-term economic growth rates for the principal
countries in which it operates, and its pre-tax weighted average
cost of capital. Strategic plans include assessments of the future
impact of climate change on easyJet to the extent these can be
estimated. This includes, for example the future estimated price of
ETS permits, the phasing out of the free ETS permits from 2024, the
expected price and quantity required of Sustainable Aviation Fuel
usage and fleet renewals. The impact of longer-term climate change
risks that are not part of the strategic plans have been considered
as part of the stress testing and plausible scenarios modelled.
Fuel price and exchange rates continue to be volatile in nature
and the ability to pass these changes on to the customer is a
critical judgement that requires estimation. The assumptions used
are sensitive to significant changes in these rates. In addition,
assumptions over customer demand levels could have a significant
effect on the impairment assessment performed. Any future events
that would lead to extended travel restrictions or fleet grounding
may impact future impairment or useful economic life assessments.
The stress testing considered as part of the overall impairment
assessment takes into account different assumptions for these key
estimates.
Recoverability of deferred tax assets - GBP443 million (note
3)
The deferred tax asset balances include GBP443 million (2021:
GBP425 million) arising on full recognition of the UK trading tax
losses accumulated at the statement of financial position date. The
Group has concluded that these deferred tax assets will be fully
recoverable against the unwind of taxable temporary differences and
future taxable income based on the long term strategic plans of the
Group. Where applicable the financial projections used in assessing
future taxable income are consistent with those used elsewhere
across the business, for example in the assessment of the carrying
value of goodwill. These assessments include the expected impact of
climate change on easyJet, and the future financial impact within
cash flow projections, including the future estimated price of ETS
permits, the phasing out of the free ETS permits from 2024, the
expected price and quantity required of Sustainable Aviation Fuel
usage and fleet renewals.
The tax losses for which a deferred tax asset has been
recognised are expected to be utilised within the next eight years,
assessed by probable forecast future taxable income. Probable
forecast future taxable income includes an incremental and
increasing risk weighting to represent higher levels of uncertainty
in future periods.
The period over which the loss is utilised has been stress
tested by assessing probable future taxable income for the next
three years, based on the same risk weightings to those applied
above, but assuming no profit growth from the end of a three year
forecast period. The resultant reduction in forecast taxable profit
calculated on this basis would extend the tax loss utilisation
period by one year.
The tax losses can be carried forward indefinitely and have no
expiry date.
Other payables - Liability for contract with customers - GBP158
million
Other contract liabilities include amounts transferred from
unearned revenue to other payables due to the cancellation of
flights. This liability includes customer vouchers outstanding and
amounts where customers have not yet requested a refund, voucher,
or flight transfer. These liabilities are judged to be contract
liabilities as they arise from performance obligations where
payment has been received from the customer but the performance
obligation has not been met. The judgement applied to the voucher
liability is described under critical accounting judgements. For
balances where customers have not yet requested a refund, voucher
or flight transfer, management has judged that sufficient time has
passed to assess the element of this liability where the likelihood
of the contractual right being exercised is considered to be
remote. This has been estimated to apply to balances aged over 24
months and of low value, and these liabilities have been taken to
the consolidated income statement as revenue. A 5% increase in this
breakage would result in an additional GBP1 million of revenue
being recognised.
Defined benefit pension assumptions - GBP140 million gross
obligation
The Swiss pension scheme meets the requirements under IAS 19 to
be recognised as a defined benefit pension scheme and the net
pension obligation is recognised on the consolidated statement of
financial position. The measurement of scheme assets and
obligations are calculated by an independent actuary in line with
IAS 19. The financial and demographic assumptions used in the
calculation are determined by management following consultation
with the independent actuary with consideration of external market
movements and inputs. The calculation is most sensitive to
movements in the discount rate applied, which has been subject to
significant volatility.
Provisions for customer claims - GBP80 million (note 9)
easyJet incurs liabilities for amounts payable to customers who
make claims in respect of flight delays and cancellations,
performance, quality issues, and personal injury and illness
experienced whilst on holiday and refunds of air passenger duty or
similar charges, for which claims could be made up to six years
after the event. The key estimation in the provision is the
passenger claim rates, in particular during periods of disrupted
flying. The estimation carries a level of uncertainty as it is
based on customer behaviour. The basis of all estimates included in
the provision are reviewed at least annually and when information
becomes available that may result in a material change to the
estimate. Should customer claims for disruption events be 5% higher
than estimated this would result in an addition to the year end
provision of GBP5 million.
New and revised standards and interpretations
A number of amended standards became applicable during the
current reporting period. The Group did not have to change its
accounting policies or make retrospective adjustments as a result
of adopting these standards. The amendments that became applicable
for annual reporting periods commencing on or after 1 January 2021,
and did not have a material impact were:
-- IFRS 3 Reference to the conceptual framework
-- IAS 37 Onerous contracts - Cost of fulfilling a contract
-- IAS 16 PPE Proceeds before intended use amendments
-- IFRS 1, IFRS 9 and IFRS 16 Annual improvements to IFRS standards
-- Interest rate benchmark reform - Phase 2 - amendments to IFRS
9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
During the current reporting period, the Group has adopted the
'Interest Rate Benchmark Reform Phase 2' amendments to IFRS 9, and
IFRS 7 and has applied this to the specific hedging relationship
identified. Three cross currency interest rate swaps are used to
convert the entire EUR500 million fixed rate Eurobond maturing in
February 2023 to a sterling floating rate exposure. All three swaps
originally were based on three-month LIBOR. Following the cessation
of GBP LIBOR, the floating interest transitioned to the ISDA
Fallback Rate for fixings from January 2022.
The Group has elected to apply the phase 2 reliefs and has
amended its hedge designation and documentation to reflect these
changes which are required by IBOR reform. Such amendments did not
give rise to the hedge relationship being discontinued.
The LIBOR transition working group which was formed in the prior
year continues to consider the wider impacts on the business of
these changes. No other material impacts have emerged during the
period.
There are no new or revised standards that have not been applied
that would materially impact these financial statements in the
current reporting period.
2. Non-headline items
An analysis of the amounts presented as non-headline is given
below:
Year ended Year ended
30 September 30 September
2022 2021
GBP million GBP million
------------------------------------------------- ------------- ---------------
Sale and leaseback loss/(gain) 21 (65)
Restructuring release - (61)
Loss on disposal of landing rights 10 -
Fair value adjustment and hedge discontinuation
(credit)/charge (1) 26
------------- ---------------
Total non-headline charge/(credit) before tax 30 (100)
-------------------------------------------------- ------------- ---------------
Tax (credit)/charge on non-headline items (8) 58
-------------------------------------------------- ------------- ---------------
Total non-headline charge/(credit) after tax 22 (42)
-------------------------------------------------- ------------- ---------------
Sale and leaseback loss/(gain)
During the year, easyJet completed the sale and leaseback of 10
A319 aircraft (2021: 7), nil A320 (2021: 24), nil A321 (2021: 4)
and nil engines (2021: 2). The income statement impact of the sale
and leaseback of the 10 aircraft was a GBP21 million loss
recognised in other costs (2021: GBP79 million gain recognised in
other income offset by GBP14 million loss recognised in other
costs).
Restructuring
The restructuring processes initiated during the pandemic are
largely complete, which has resulted in the majority of the
remaining provision held for these programmes being remeasured and
a credit of GBP10 million (2021: GBP61 million credit) being
recognised during the year as non-headline within other costs where
the initial expense was recognised. Whilst these processes were
brought to completion, during the year new plans were announced to
reduce the level of activity at our base at Berlin Brandenburg
airport, and as a result of this downsizing a restructuring
provision of GBP10 million has been recognised as non-headline
within other costs, resulting in a net GBPnil movement in the
non-headline restructuring provision. As at 30 September 2022 there
were unpaid amounts of GBP15 million (2021: GBP18 million) for all
consultations which have not been finalised and settled.
In addition, the downsizing of activity and restructuring at the
Berlin Brandenburg base has resulted in easyJet returning a number
of the landing right "slots" held at this airport. Landing rights
at Tegel airport were acquired as part of the acquisition of Air
Berlin's operations at the airport in October 2017, and
subsequently transferred to the new Berlin airport. The landing
rights have been held at cost on the statement of financial
position as an intangible asset. A number of slots ceased to be
operated during the pandemic but were not disposed of at that point
due to the suspension of slot utilisation rules during that time.
On emergence from the pandemic the slots were not re-started, and
utilisation of the landing rights has further reduced with the
downsizing of easyJet's activity at the base. These landing rights
have been returned to the Berlin slot regulator in the financial
year. All slots held at the airport were acquired together through
a separate acquisition of an intangible asset, and therefore an
allocation of the purchase price to the surrendered slots has been
estimated. As no consideration was received in return for giving
back the slots the reduction constitutes a loss on disposal of an
intangible asset.
Hedge discontinuation
Hedge discontinuation relates to hedge accounting
ineffectiveness for items currently held in fair value and cash
flow hedge relationships, and the cumulative fair value of
financial derivatives at the time of being discontinued from a
previous hedge accounting relationship.
In accordance with IFRS 9, hedge effectiveness testing is
performed on a regular, periodic basis. For cash flow hedges this
includes an assessment of highly probable future cash exposures
with the amount compared to the notional value of derivatives held
in a hedge relationship. Due to the reduced level of commercial
flying over the pandemic, easyJet had been in an over-hedged
position from both a jet fuel and FX perspective. Where forecast
exposures were no longer expected to occur, these previously hedged
amounts no longer qualified for hedge accounting. This resulted in
a GBP1 million net credit (2021: GBP25 million charge) related to
these discontinued derivatives held in other comprehensive income
being immediately recorded in the income statement. Additionally,
in the prior year fair value adjustments of GBP1 million charge
were recorded related to hedge ineffectiveness on hedges of foreign
currency denominated borrowings.
Tax on non-headline items
After the necessary tax adjustments which principally relate to
the sale and leaseback transactions in both the current and
comparative periods, the tax adjusted non-headline items amount to
a loss of GBP22 million (2021: gain of GBP42 million) which results
in a tax credit of GBP8 million (2021: GBP58 million charge) for
the year.
3. Tax credit
Tax on loss on ordinary activities
2022 2021
GBP
million GBP million
--------------------------------------------------------- --------- ------------
Current tax
Adjustments in respect of prior years - 5
Foreign tax 7 4
---------------------------------------------------------- --------- ------------
Total current tax charge 7 9
---------------------------------------------------------- --------- ------------
Deferred tax
Temporary differences relating to property, plant
and equipment (50) (36)
Other temporary differences (2) (189)
Adjustments in respect of prior years 2 7
Remeasurement of opening balances due to change in
tax rates 4 31
---------------------------------------------------------- --------- ------------
Total deferred tax credit (46) (187)
---------------------------------------------------------- --------- ------------
Total tax credit (39) (178)
---------------------------------------------------------- --------- ------------
Effective tax rate 18.7% 17.2%
---------------------------------------------------------- --------- ------------
Reconciliation of the total tax credit
The tax for the year is lower than (2021: lower than) the standard
rate of corporation tax in the UK as set out below:
2022 2021
GBP
million GBP million
--------------------------------------------------------- --------- ------------
Loss before tax (208) (1,036)
Tax credit at 19.0% (2021: 19.0%) (40) (197)
Income not chargeable for tax purposes:
Expenses not deductible for tax purposes 5 2
Share-based payments 2 2
Adjustments in respect of prior years - current tax - 5
Adjustments in respect of prior years - deferred tax 2 7
Difference in applicable rates for current and deferred
tax (12) (54)
Attributable to rates other than standard UK rate 1 2
Change in substantively enacted tax rate 4 31
Movement in provisions (1) (1)
IFRS 16 restricted gain - 25
---------------------------------------------------------- --------- ------------
Total tax credit (39) (178)
---------------------------------------------------------- --------- ------------
Current tax payable at 30 September 2022 amounted to GBP5
million (2021: GBP2 million payable). GBP4 million of this is in
relation to an amendment to the tax return for easyJet Airline
Company Ltd for the year ended 30 September 2019 with the balance
primarily related to tax payable in other European
jurisdictions.
During the year ended 30 September 2022 net cash tax paid
amounted to GBP4 million (2021: GBP1 million net cash tax
received).
The Finance Act 2021 confirmed an increase of UK corporation tax
rate from 19% to 25% with effect from 1 April 2023 and this was
substantively enacted by the statement of financial position date
and therefore included in these financial statements. Temporary
differences have been remeasured using the enacted tax rates that
are expected to apply when the liability is settled or the asset
realised.
Tax on items recognised directly in other comprehensive income/(loss)
or shareholders' equity:
2022 2021
GBP
million GBP million
------------------------------------------------------ --------- ------------
Charge/(credit) to other comprehensive income/(loss)
Deferred tax on change in fair value of cash flow
hedges (13) (93)
Deferred tax on post-employment benefit (10) (4)
------------------------------------------------------- --------- ------------
Deferred tax
The net deferred tax (asset)/liability in the statement of financial position
is as follows:
Fair
Accelerated Short-term value Post-employment
capital timing (gains)/ Share-based benefit Trading
allowances differences losses payments obligation loss Total
GBP GBP
GBP million GBP million million GBP million GBP million million GBP million
-------------------- ------------ ------------ --------- ------------ ---------------- -------- ------------
At 1 October 2021 373 (26) 51 (3) (9) (425) (39)
Charged/(credited)
to
income statement (32) - 4 2 (2) (18) (46)
Charged to other
comprehensive
loss - - 13 - 10 - 23
--------------------- ------------ ------------ --------- ------------ ---------------- -------- ------------
At 30 September 2022 341 (26) 68 (1) (1) (443) (62)
--------------------- ------------ ------------ --------- ------------ ---------------- -------- ------------
Deferred tax assets/liabilities
expected to be settled:
GBP million
-------------------- ------------
Current -
Non-current (62)
--------------------- ------------
At 30 September 2022 (62)
--------------------- ------------
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and it is the intention to settle these
on a net basis.
Post-employment
Accelerated Short-term Fair
capital timing value Share-based benefit Trading
allowances differences (gains)/losses payments obligation loss Total
GBP GBP
GBP million GBP million GBP million GBP million GBP million million million
-------------------- ------------ ------------ --------------- ------------ ---------------- -------- --------
At 1 October 2020 386 (7) (43) (2) (8) (275) 51
Charged/(credited)
to income statement (13) (19) 1 (1) (5) (150) (187)
Charged to other
comprehensive
income - - 93 - 4 - 97
--------------------- ------------ ------------ --------------- ------------ ---------------- -------- --------
At 30 September
2021 373 (26) 51 (3) (9) (425) (39)
--------------------- ------------ ------------ --------------- ------------ ---------------- -------- --------
4. Loss per share
Basic loss per share has been calculated by dividing the total
loss for the year by the weighted average number of shares in issue
during the year after adjusting for shares held in employee benefit
trusts.
To calculate diluted loss per share, the weighted average number
of ordinary shares in issue has been adjusted to assume conversion
of all dilutive potential shares. Share options granted to
employees where the exercise price is less than the average market
price of the Company's ordinary shares during the year are
considered to be antidilutive potential shares. Where share options
are exercisable based on performance criteria and those performance
criteria have been met during the year, these options are included
in the calculation of dilutive potential shares. The calculation of
diluted loss per share does not assume conversion, exercise, or
other issue of potential ordinary shares that would have an
antidilutive effect on earnings per share.
Headline basic and diluted loss per share are also presented,
based on headline loss for the year.
Loss per share is based on:
2022 2021
GBP
million GBP million
---------------------------------------------------- --------- ------------
Headline loss for the year (147) (900)
Total loss for the year (169) (858)
----------------------------------------------------- --------- ------------
2022 2021
million million
---------------------------------------------------- --------- ------------
Weighted average number of ordinary shares used to
calculate basic loss per share 753 539
Weighted average number of ordinary shares used to
calculate diluted loss per share 753 539
----------------------------------------------------- --------- ------------
2022 2021
Loss per share pence pence
---------------------------------------------------- --------- ------------
Basic (22.4) (159.0)
Diluted (22.4) (159.0)
----------------------------------------------------- --------- ------------
2022 2021
Headline loss per share pence pence
---------------------------------------------------- --------- ------------
Basic (19.6) (166.9)
Diluted (19.6) (166.9)
----------------------------------------------------- --------- ------------
5. Segmental and geographical revenue reporting
Segmental Analysis:
Year ended 30 September 2022
--------------------------------------------------------
Intergroup
Airline Holidays transactions Group
GBP million GBP million GBP million GBP million
-------------------------------- ------------ ------------ -------------- ------------
Passenger revenue 3,816 - - 3,816
Ancillary revenue 1,585 495 (127) 1,953
-------------------------------- ------------ ------------ -------------- ------------
Total revenue 5,401 495 (127) 5,769
Operating costs excl fuel (3,596) (452) 127 (3,921)
Fuel (1,279) - - (1,279)
Balance sheet FX revaluation (63) (1) - (64)
Ownership costs (679) (4) - (683)
-------------------------------- ------------ ------------ -------------- ------------
Headline (loss)/profit before
tax (216) 38 - (178)
Non-headline items (30) - - (30)
-------------------------------- ------------ ------------ -------------- ------------
Total (loss)/profit before tax (246) 38 - (208)
-------------------------------- ------------ ------------ -------------- ------------
Year ended 30 September 2021
--------------------------------------------------------
Intergroup
Airline Holidays transactions Group
GBP million GBP million GBP million GBP million
-------------------------------- ------------ ------------ -------------- ------------
Passenger revenue 1,000 - - 1,000
Ancillary revenue 424 41 (7) 458
-------------------------------- ------------ ------------ -------------- ------------
Total revenue 1,424 41 (7) 1,458
Operating costs excl fuel (1,595) (50) 7 (1,638)
Fuel (371) - - (371)
Balance sheet FX revaluation 10 - - 10
Ownership costs (592) (3) - (595)
-------------------------------- ------------ ------------ -------------- ------------
Headline loss before tax (1,124) (12) - (1,136)
Non-headline items 100 - - 100
-------------------------------- ------------ ------------ -------------- ------------
Total loss before tax (1,024) (12) - (1,036)
-------------------------------- ------------ ------------ -------------- ------------
The presentation of this note has been expanded to include
further detail on revenue and the cost impact of balance sheet
foreign exchange revaluations. This reflects the increased
granularity of the internal reporting to the Chief Operating
Decision Maker and plc Board.
As described in note 1 in the Group Financial Statements,
airline revenue is recognised at a point in time (when the flight
takes place). The holidays revenue detailed in this note includes
flight revenue which is also recognised at the time the flight
takes place with the accommodation element of the revenue
recognised over time, aligned to the duration of the holiday.
The intergroup transactions column represents revenue and cost
transactions between Airline and Holidays for the flight element of
holiday packages. These intercompany transactions are eliminated on
consolidation; note that in the annual report, holidays sales and
costs are stated net of this intergroup consolidation
adjustment.
Individual cost lines are not reported separately as these are
not key metrics reported to the Chief Operating Decision Maker
(CODM). Assets and liabilities are not allocated to individual
segments and are not separately reported to or reviewed by the
CODM, and therefore have not been disclosed. Interest income and
expenditure are not allocated to segments as this activity is
driven by the central treasury function which manages the cash
position of the Group.
Geographical revenue:
2022 2021
GBP
million GBP million
----------------------- --------- ------------
United Kingdom 2,845 413
Southern Europe 1,669 619
Northern Europe 1,163 411
Other 92 15
------------------------ --------- ------------
5,769 1,458
--------- ------------
Geographical revenue is allocated according to the location of
the first departure airport on each booking.
Southern Europe comprises countries lying wholly or mainly south
of the border between Italy and Switzerland, plus France.
easyJet holiday's revenue is generated wholly from the United
Kingdom.
easyJet's non-current assets principally comprise its fleet of
181 (2021: 183) owned and 139 (2021: 125) leased aircraft, giving a
total fleet of 320 at 30 September 2022 (2021: 308). In addition to
this easyJet was storing 3 aircraft under power by the hour
agreements (2021: 12). 27 aircraft (2021: 27) are registered in
Switzerland, 132 (2021: 110) are registered in Austria, 4 (2021:
13) are registered in the Cayman Islands, and the remaining 160
(2021: 170) are registered in the United Kingdom.
6. Dividends
No dividend was paid in the year ending 30 September 2022 or 30
September 2021.
7. Property, plant and equipment
Owned assets Right of use assets
------------------------------------------- ----------------------------------------
Aircraft Land Aircraft
and spares and Buildings Other and spares Other Total
GBP million GBP million GBP million GBP million GBP million GBP million
------------------ ------------ --------------- ------------ ------------ ------------ ------------
Cost
1 October 2021 4,802 44 55 2,335 45 7,281
Additions 414 - 28 120 - 562
Transfers(2) - - (14) - - (14)
Aircraft sold and
leased
back (216) - - 25 - (191)
Disposals (12) - (1) (64) - (77)
At 30 September
2022 4,988 44 68 2,416 45 7,561
Accumulated
depreciation
At 1 October 2021 1,243 - 19 1,255 29 2,546
Charge for the
year 255 - 9 269 6 539
Aircraft sold and
leased
back (102) - - - - (102)
Disposals (6) - - (45) - (51)
------------------- ------------ --------------- ------------ ------------ ------------ ------------
At 30 September
2022 1,390 - 28 1,479 35 2,932
Net book value
------------------ ------------ --------------- ------------ ------------ ------------ ------------
At 30 September
2022 3,598 44 40 937 10 4,629
------------------- ------------ --------------- ------------ ------------ ------------ ------------
At 1 October 2021 3,559 44 36 1,080 16 4,735
------------------- ------------ --------------- ------------ ------------ ------------ ------------
Owned assets Right of use assets
---------------------------------------- ----------------------------------------
Aircraft Land and Aircraft
and spares Buildings Other and spares Other Total
GBP million GBP million GBP million GBP million GBP million GBP million
------------------- ------------ ------------ ------------ ------------ ------------ ------------
Cost
At 1 October 2020 5,520 44 44 1,692 37 7,337
Additions 112 - 28 148 8 296
Transfers 64 - - (64) - -
Aircraft sold and
leased
back * (828) - (15) 559 - (284)
Disposals * (66) - (2) - - (68)
-------------------- ------------ ------------ ------------ ------------ ------------ ------------
At 30 September
2021 4,802 44 55 2,335 45 7,281
Accumulated
depreciation
At 1 October 2020 1,187 - 12 1,062 23 2,284
Charge for the year 227 - 7 216 6 456
Transfers 23 - - (23) - -
Aircraft sold and
leased
back * (153) - - - - (153)
Disposals * (41) - - - - (41)
-------------------- ------------ ------------ ------------ ------------ ------------ ------------
At 30 September
2021 1,243 - 19 1,255 29 2,546
Net book value
------------------- ------------ ------------ ------------ ------------ ------------ ------------
At 30 September
2021 3,559 44 36 1,080 16 4,735
-------------------- ------------ ------------ ------------ ------------ ------------ ------------
At 1 October 2020 4,333 44 32 630 14 5,053
-------------------- ------------ ------------ ------------ ------------ ------------ ------------
The net book value of aircraft includes GBP297 million (2021:
GBP132 million) relating to advance payments for future deliveries.
This amount is not depreciated.
The net book value of aircraft spares is GBP81 million (2021:
GBP67 million).
As at 30 September 2022, easyJet was contractually committed to
the acquisition of four LEAP engines (2021: 0) and 168 (2021: 101)
Airbus 320 family aircraft, with a total estimated list price(1) of
US$ 21.9 billion (2021: US$ 12.3 billion) before escalations and
discounts for delivery in financial years 2023 (7 aircraft), 2024
(21 aircraft), 2025 (23 aircraft) and 2026 to 2029 (117
aircraft).
*GBP33 million of cost and GBP33 million of accumulated
depreciation from components disposed of in the year ended 30
September 2021 were identified which were previously included as
disposals, which have now been presented in Aircraft sold and
leased back, reflecting the aircraft with which they were
associated.
The 'Other' categories are comprised of leasehold improvements,
computer hardware, leasehold property, fixtures, fittings and
equipment, and work in progress in respect of tangible projects.
The work in progress as at 30 September 2022 was GBP20 million
(2021: GBP10 million).
Assets of GBP908 million (2021: GBP934 million) are pledged as
security for the drawn portion of the UKEF backed facility.
(1) Airbus no longer publishes list prices. The estimated list
price is based on the last available list price published in
January 2018 and escalated by Airbus' standard escalation from
January 2018 to January 2022 of 11.2% (or 2.7% CAGR).
(2) Transfers are from work in progress on other owned assets to
computer software intangible assets.
8. Borrowings
Current Non-current Total
GBP million GBP million GBP million
------------------------------------- ------------ ------------ ------------
At 30 September 2022
Eurobonds 437 1,919 2,356
Term loan (UK Export Finance backed
facility) - 841 841
-------------------------------------- ------------ ------------ ------------
437 2,760 3,197
------------ ------------ ------------
Current Non-current Total
GBP million GBP million GBP million
------------------------------------- ------------ ------------ ------------
At 30 September 2021
Eurobonds - 2,303 2,303
Commercial Paper (Covid Corporate
Financing Facility) 300 - 300
Term loan (UK Export Finance backed
facility) - 764 764
-------------------------------------- ------------ ------------ ------------
300 3,067 3,367
------------ ------------ ------------
Amounts above are shown net of issue costs or discounted amounts
which are amortised at the effective interest rate over the life of
the debt instruments.
The remaining Covid Corporate Financing Facility (CCFF) of
GBP300 million was repaid in November 2021.
9. Provisions for liabilities and charges
Provisions
Maintenance for customer
provisions claims Restructuring Other provisions Total provisions
GBP million GBP million GBP million GBP million GBP million
--------------------- ------------ -------------- -------------- ----------------- -----------------
At 1 October 2021 550 21 18 14 603
Exchange adjustments 93 3 - - 96
Release of provisions - (15) (10) (1) (26)
Additional provisions
recognised 141 236 10 21 408
Related to aircraft
sold and leased back 6 - - - 6
Updated discount
rates
net of unwind of
discount (71) - - - (71)
Utilised (83) (165) (3) - (251)
---------------------- ------------ -------------- -------------- ----------------- -----------------
At 30 September 2022 636 80 15 34 765
---------------------- ------------ -------------- -------------- ----------------- =================
The maintenance provisions provide for maintenance costs arising
from legal and constructive obligations relating to the condition
of the aircraft when returned to the lessor. Provisions for
customer claims comprise amounts payable to customers who make
claims in respect of flight delays and cancellations, performance,
quality issues, and personal injury and illness experienced whilst
on holiday, and refunds of air passenger duty or similar charges.
Restructuring and other provisions include amounts in respect of
potential liabilities for employee-related matters and litigation
which arose in the normal course of business.
2022 2021
GBP
million GBP million
---------------------------- --------------------- --------------------------
Current 176 183
Non-current 589 420
----------------------------- --------------------- --------------------------
765 603
--------------------- --------------------------
The split of the current/non-current maintenance provision is based
on the expected maintenance event timings. If actual aircraft usage
varies from expectation the timing of the utilisation of the maintenance
provision could result in a material change in the classification
between current and non-current. Maintenance provisions are expected
to be utilised within nine years.
Within other provisions are provisions for litigation matters. The
split of these provisions between current/non-current is based on
the dates of expected court judgements. Provisions for customer claims
and restructuring provisions could be fully utilised within one year
from 30 September 2022 and therefore are classified as current.
10. Reconciliation of operating loss to cash generated
from/(used in) operations
2022 2021
GBP
million GBP million
--------------------------------------------------------- --------- ------------
Operating loss (27) (910)
Adjustments for non-cash items:
Depreciation 539 456
Loss on disposal of property, plant and equipment 7 30
Loss/(gain) on sale and leaseback 21 (65)
Amortisation of intangible assets 25 24
Share-based payments 26 16
Loss on disposal of landing rights 10 -
Changes in working capital and other items of an
operating nature:
Increase in trade and other receivables (151) (8)
Increase in current intangible assets (43) (74)
Increase/(decrease) in trade and other payables 258 (187)
Increase in unearned revenue 197 232
Post employment benefit contributions (1) (7)
Decrease in provisions (7) (294)
Decrease in other non-current assets 64 24
(Decrease)/increase in derivative financial instruments (26) 9
Decrease in non-current deferred income - (1)
Cash generated from/(used in) operations 892 (755)
---------------------------------------------------------- --------- ------------
11. Reconciliation of net cash flow to movement in net debt
New debt Other
raised and loan Net
1 October Foreign in the issue cash 30 September
2021 exchange year costs flow 2022
GBP million GBP million GBP million GBP million GBP million GBP million
-------------------- ------------ ------------ ------------ ------------ ------------ -------------
Cash and cash
equivalents 3,536 303 - - (325) 3,514
Money market
deposits - - - - 126 126
--------------------- ------------ ------------ ------------ ------------ ------------ -------------
3,536 303 - - (199) 3,640
------------ ------------ ------------ ------------ ------------ -------------
Eurobond (2,303) (48) - (5) - (2,356)
Commercial Paper
(Covid
Corporate Financing
Facility) (300) - - - 300 -
Term loan (UK Export
Finance backed
facility) (764) (150) - (4) 77 (841)
Lease liabilities (1,079) (197) (53) 10 206 (1,113)
--------------------- ------------ ------------ ------------ ------------ ------------ -------------
(4,446) (395) (53) 1 583 (4,310)
------------ ------------ ------------ ------------ ------------ -------------
Net debt (910) (92) (53) 1 384 (670)
--------------------- ------------ ------------ ------------ ------------ ------------ -------------
12. Government Grants and assistance
During the year ended 30 September 2021 easyJet Airline Company
Limited continued to utilised the Coronavirus Job Retention Scheme
implemented by the UK government, where those employees designated
as being 'furloughed workers' were eligible to have 80 per cent of
their wage costs paid up to a maximum amount of GBP2,500 per month.
In the same period, easyJet companies utilised similar schemes
provided by governments in Portugal, Germany, Netherlands, France,
Italy and Switzerland. This continued into the year ended 30
September 2022 for Germany, France and Switzerland. The total
amount of such relief received by the Group in the year ended 30
September 2022 amounted to GBP8 million (2021: GBP134 million) and
is offset within employee costs in the income statement. There are
no unfulfilled conditions or contingencies relating to these
schemes.
In November 2021 easyJet repaid the remaining GBP300 million of
the Covid Corporate Finance Facility (CCFF).
On 8 January 2021 easyJet Airline Company Limited signed a
five-year term loan facility of $1.87 billion (with easyJet plc as
a Guarantor), underwritten by a syndicate of banks and supported by
a partial guarantee from UK Export Finance under their Export
Development Guarantee scheme. The Export Development Guarantee
scheme for commercial loans is available to qualifying UK
companies, does not carry preferential rates or require state aid
approval, but does contain some restrictive covenants including
dividend payments. However, these restrictive covenants are
compatible with easyJet's existing policies. In April 2022 easyJet
repaid $100 million of this facility reducing the overall UKEF
facility size from $1.87 billion to $1.77 billion.
13. Contingent liabilities and commitments
Contingent liabilities
easyJet is involved in a number of disputes and litigation cases
which arose in the normal course of business. The potential outcome
of these disputes and litigations can cover a range of scenarios,
and in complex cases reliable estimates of any potential obligation
may not be possible.
On 19 May 2020, easyJet announced that it had been the target of
a cyber-attack from a highly sophisticated source. The email
addresses and travel details of approximately nine million
customers were accessed and for a very small subset of customers
(2,208), credit card details were accessed.
The cyber-attack continues to be under investigation by the
Information Commissioner's Office (ICO). As the cyber-attack took
place before the United Kingdom left the European Union, the Group
expects the ICO to be investigating on behalf of all EU data
protection authorities as lead supervisory authority under the
GDPR. Any penalty or enforcement action will need to be reviewed
and approved by the other EU data protection authorities under the
GDPR's cooperation process. In addition, in May 2020, a class
action claim was filed in the UK High Court by a law firm
representing a class of affected customers and claims have also
been commenced or threatened in certain other courts and
jurisdictions.
The merit, likely outcome, and potential impact on the Group of
the continued investigation by the ICO, group action and other
claims are still subject to a number of significant uncertainties
and therefore the Group is unable to assess the likely outcome or
quantum of the claims as at the date of these financial
statements.
Additionally, there is a possibility of a claim being made by a
third party supplier, for what would be a material recovery.
Management have assessed the likelihood of a case being brought,
easyJet's response and likelihood of a successful defence and at
this stage do not consider it appropriate to provide for such a
possibility.
Contingent commitments
At 30 September 2022 easyJet had outstanding letters of credit
and performance bonds totalling GBP43 million (2021: GBP72
million), of which GBP10 million (2021: GBP43 million) expires
within one year. The fair value of these instruments at each year
end was negligible.
No amount is recognised on the statement of financial position
in respect of any of these financial instruments as it is not
probable that there will be an outflow of resources and the fair
value has been assessed to be GBPnil.
As part of the commitment to voluntary carbon offsetting,
easyJet currently has contractual commitments to purchase Verified
Emission Reductions worth GBP4 million (2021: GBP11 million) in
total until December 2022.
Following approval of the resolution, at the general meeting on
21 July 2022, a firm commitment has been agreed with Airbus to
substantially complete the 2013 Airbus Agreement. The commitment
includes:
-- The conversion of six purchase options and 50 purchase rights
to a firm order of 56 A320neo family aircraft with deliveries
scheduled between FY26 and Q1 FY29.
-- The conversion of previous firm orders of 18 A320neo aircraft
planned for delivery between FY24 and FY27 to 18 A321neo aircraft
deliveries.
The purchase firms up easyJet's order book with Airbus to
calendar year 2028, continuing the Company's fleet refresh, as the
156 seat A319s and older A320s (180 and 186 seat) leave the
business and new A320 (186 seat) and A321neo (235 seat) aircraft
enter providing up-gauging, cost, and sustainability enhancements
to the business. Additionally, easyJet has a commitment with CFM to
purchase four LEAP engines over the next two years.
On 26 September 2022, easyJet announced its pathway to net zero.
This roadmap references several partnerships with other commercial
companies to explore certain technologies which may assist with the
overall goal to decarbonise the aviation industry. The majority of
these partnerships are in fact agreements to work together on the
areas identified and do not involve a financial commitment from
easyJet other than the time and effort involved in the
collaboration over an agreed period. Where there may be areas
requiring a financial commitment from easyJet in the future, these
are still subject to negotiation and there is no binding commitment
on easyJet at the date of publication of these financial
statements.
1 4. Related party transactions
The Company licenses the easyJet brand from easyGroup Limited
('easyGroup'), a wholly owned subsidiary of easyGroup Holdings
Limited, an entity in which easyJet's founder, Sir Stelios
Haji-Ioannou, holds a beneficial controlling interest. The
Haji-Ioannou family concert party shareholding (being easyGroup
Holdings Limited and Polys Holding Limited) holds, in total,
approximately 15.27% of the issued share capital of easyJet plc as
at 30 September 2022.
Under the Amended Brand Licence signed in October 2010 and
approved by the shareholders of easyJet plc in December 2010, an
annual royalty of 0.25% of total revenue is payable by easyJet to
easyGroup. The full term of agreement is 50 years.
easyJet and easyGroup established a fund to meet the annual
costs of protecting the 'easy' (and related marks) and the
'easyJet' brands. easyJet contributes up to GBP1 million per annum
to this fund and easyGroup contributes GBP100,000 per annum. If
easyJet contributes more than GBP1 million per annum, easyGroup
will match its contribution in the ratio of 1:10 up to a limit of
GBP5 million contributed by easyJet and GBP500,000 contributed by
easyGroup.
Three side letters have been entered into: (i) a letter dated 29
September 2016 in which easyGroup consented to easyJet acquiring a
portion of the equity share capital in Founders Factory Limited;
(ii) a letter dated 26 June 2017 in which the easyJet's permitted
usage of the brand was slightly extended; and (iii) a letter dated
02 February 2018 in which easyGroup agreed that certain affiliates
of easyJet have the right to use the brand.
The amounts included in the income statement, within other
costs, for these items were as follows:
2022 2021
GBP
million GBP million
----------------------------------------------------- --------- ------------
Annual royalty 14 4
Brand protection (legal fees paid through easyGroup
to third parties) 2 1
------------------------------------------------------ --------- ------------
16 5
--------- ------------
At 30 September 2022, GBP11.1 million (2021: GBP0.1 million) of
the above aggregate amount was included in trade and other
payables.
At 30 September 2022 GBPnil million (2021: GBP5.3 million) is
due from related parties and is included within trade and other
receivables.
15. Events after the statement of financial position date
On 25 November 2022 the plc Board approved;
-- Six aircraft sale & leaseback transactions to take place
in the first half of the year ending 30 September 2023; and
-- the acceleration of three Airbus A320neo deliveries from FY25
to FY24; this is a change to the commitments profile stated in note
11 of the consolidated financial statements.
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END
FR FIFVRLSLAFIF
(END) Dow Jones Newswires
November 29, 2022 02:00 ET (07:00 GMT)
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