TIDMEZJ
RNS Number : 8010Z
easyJet PLC
18 May 2023
18 May 2023
easyJet plc
Results for the six months ending 31 March 2023
Strong demand for summer 23 continues on easyJet's enhanced
primary network which, alongside its transformed revenue
generation, is leading to an expected acceleration in the delivery
of its medium-term targets
- Headline loss before tax of GBP411 million (Reported loss before tax of GBP415 million)
- Financial strength - GBP0.2 billion net debt with GBP3.5
billion in cash and money market deposits
- Booking strength
o Q3 RPS expected to be +20% YoY
o Booking window returns towards normalised levels
-- Q3 - 73% booked: +1ppts vs FY22
-- Q4 - 36% booked: +3ppts vs FY22
o easyJet holidays expects to make >GBP80 million PBT in
FY23
- easyJet holidays to launch second source market (Switzerland),
for holidays departing in early 2024. Multi-currency technology
platform enables rapid expansion into other source markets
- Expect H2 headline cost per seat ex fuel to be broadly flat year on year
- Business transformation is expected to accelerate the delivery
of existing medium term targets:
o Mid teen EBITDAR margin
o Low to mid teen ROCE
o Holidays to make GBP100 million + PBT contribution
o Grow capacity back to 105 million seats
-- Launching Birmingham base for FY24
Commenting on the results, Johan Lundgren, easyJet Chief
Executive said:
"easyJet's optimised network combined with the strong demand
seen for flights and holidays, enhanced revenue capabilities and
operational resilience, means we enter the summer with confidence.
Recent research has shown that travel is the number one priority
for household discretionary spend with customers safeguarding their
holidays and increasingly opting for low cost airlines and brands
which provide great value.
"easyJet holidays expects to deliver full year profits of more
than GBP80 million as it continues its rapid growth in the UK
alongside its entry into the European package holiday market. From
summer it will start selling holidays in Switzerland which will be
the first of a number of planned new European markets.
"All of this progress should result in the acceleration in the
delivery of our medium-term targets while we continue to also
capture the opportunities ahead. This includes the addition of a
new base in the UK, in Birmingham, which will not only provide more
choice and connectivity for consumers but also the creation of
hundreds of jobs."
Overview
easyJet is starting to benefit from actions taken over the past
18 months. This has been driven by the low risk growth at primary
airports and Berlin performance which has strengthened following
its rightsizing. easyJet will continue to allocate aircraft to the
most profitable routes based on demand, following the 50 aircraft
which have been reallocated over the past two years. These actions,
coupled with the step changed revenue generation from ancillary
products, growth at easyJet holidays and a continued focus on cost
is enabling the expected acceleration of the delivery of our
medium-term targets.
This summer sees the additional Lisbon slots being utilised for
their first peak period. In the Greek Islands, where easyJet has
added +67% capacity, there has been no margin dilution. Ancillary
revenue continues to drive incremental contribution to the Group,
with airline ancillary yield +GBP10.65 vs H1 2019, demonstrating
the strength of easyJet's products, alongside pricing
enhancements.
easyJet holidays expects to make a profit of >GBP80 million
this year, having seen +200% customer growth year on year in the
first half. The continued success it has achieved within the UK
will be built on, alongside the launch into the Swiss market this
summer, for holidays departing in early 2024. Our multi-currency
technology platform enables easy expansion into additional European
source markets with very low risk.
Financial Summary
- Headline loss before tax of GBP411 million (H1 2022: GBP545 million)
o Total revenue increased by 80% to GBP2,689 million (H1 2022:
GBP1,498 million) predominantly due to pricing strength, increased
flown capacity, improved load factors and ancillary products
continuing to deliver incremental revenue.
o Group headline costs increased by 52% to GBP3,100 million (H1
2022: GBP2,043 million), primarily due to the increase in flown
capacity, significantly increased fuel costs and industry wide
inflationary pressures, combined with resilience measures as part
of the summer 23 ramp up preparations and 15 wet lease aircraft
which were within the fleet for the month of October.
- Reported loss before tax of GBP415 million (H1 2022: GBP557 million).
o Non-headline loss of GBP4 million (H1 2022: GBP12 million).
Non-headline items consist primarily of returning final slots at
Berlin Brandenburg airport following the rightsizing of the
operation from 18 to 11 aircraft.
Fuel & FX Hedging
Jet Fuel H2'23 H1'24 H2'24 USD H2'23 H1'24 H2'24
Hedged position 75% 52% 22% Hedged position 77% 55% 23%
----- ----- ----- ----- ----- -----
Average hedged rate
($/MT) 885 868 806 Average hedged rate (USD/GBP) 1.24 1.21 1.23
----- ----- ----- ----- ----- -----
Current spot ($/MT) c.720 Current spot (USD/GBP) c.1.25
at 17.05.23 at 17.05.23
------------------- -------------------
- Carbon obligation 96% covered for CY23 at EUR41/MT
- USD Lease payments hedged for the next three years at 1.30
- Capex hedged for the next 12 months in EUR & USD
Key Stats
H1 2023 H1 2022 Change
favourable/(adverse)
------------------------------------------- -------- --------- --------------------------
Capacity(1) (millions of seats) 37.9 30.3 25%
Passengers(2) (millions) 33.1 23.4 41%
Load factor(3) (%) 87.5 77.3 10.2ppt
Average sector length (km) 1,192 1,131 5%
Airline revenue per seat (GBP) 66.46 47.61 40%
Airline revenue per ASK (p) 5.58 4.21 33%
Airline revenue per ASK at constant
currency(4) (p) 5.49 4.21 30%
Fuel cost per seat (GBP) 20.43 11.94 (71)%
Airline headline cost ex fuel per seat
(GBP) 57.15 53.48 (7)%
Airline headline cost per seat (GBP) 77.55 65.42 (19)%
Airline headline CASK ex fuel (p) 4.80 4.73 (2)%
Airline headline CASK ex fuel at constant
currency(4) (p) (4.72) (4.74)xx 0%
Airline EBITDAR per seat (GBP) (2.12) (6.78) 69%
Airline EBIT per seat (GBP) (10.60) (15.88) 33%
Airline headline loss before tax per
seat (GBP) (11.12) (17.80) 38%
Holidays passengers (m) 0.6 0.2 200%
Holidays profit before tax (GBPm) 10 (5) 300%
Headline EBITDAR Margin (2.6%) (13.9%) 11.3ppts
Headline ROCE (12%) (12%) 0ppts
------------------------------------------- -------- --------- --------------------------
Outlook
- Q3 RPS expected to be +20% YoY
- Booking window returns towards normalised level
o Q3 - 73% booked: +1ppts vs FY22
o Q4 - 36% booked: +3ppts vs FY22
- Expect headline cost per seat ex fuel to be broadly flat year on year
- Expected acceleration in the delivery of medium-term targets
- Capacity
o H2 c.56m seats, c.9% increase YoY
o Q4 capacity around pre-pandemic levels
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
Harry Cameron Teneo +44 (0)20 7353 4200
Olivia Peters Teneo +44 (0)20 7353 4200
Conference call
There will be an analyst presentation at 09:00am GMT on 18 May
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/645d10337935152b5ae756d0
Alternatively dial in details are as follows: 0808 109 0700/+44
(0) 33 0551 0200 quoting easyJet half year results when
prompted.
Revenue
Total revenue increased by 80% to GBP2,689 million (H1 2022:
GBP1,498 million) partly due to capacity increasing to 37.9 million
seats (H1 2022: 30.3 million), but also due to ticket yield
strength and the continued step change in ancillary revenue
generation.
Passenger revenue increased by 78% to GBP1,749 million (H1 2022:
GBP985 million) as we flew increased levels of capacity compared to
the same period last year. Passenger RPS increased by 42% to
GBP46.24 (H1 2022: GBP32.49) as easyJet's optimised primary airport
network continues to drive yield growth as demand remains
strong.
Group ancillary revenue increased by 83% to GBP940 million (H1
2022: GBP513 million) as capacity increased and as easyJet holidays
continues its rapid growth (customers +200% YoY). Airline ancillary
revenue per seat also increased by 34% to GBP20.22 (H1 2022:
GBP15.12) as easyJet's embedded ancillary products have transformed
the revenue generation of the airline's ancillaries.
Costs
Group headline costs excluding fuel and FX gains increased by
40% to GBP2,354 million (H1 2022: GBP1,683 million), driven by an
increase in capacity flown, industry wide inflationary pressure,
the rapid growth of easyJet holidays and resilience actions taken
in preparation for summer 23.
easyJet recorded a GBP27 million gain from foreign exchange on
balance sheet revaluations (H1 2022: GBP2 million gain),
benefitting from the strengthening of sterling versus the USD over
the period on our net USD denominated liabilities.
Headline Airline cost per seat excluding fuel at constant
currency increased by 5% to GBP56.27 (H1 2022: GBP53.57), broadly
in line with the sector length increase of 5%. This is despite
inflation impacting the cost base, within airports, navigation and
staff costs and the 10-percentage point increase in load factor
seen during the period which impacts per passenger charges within
airports.
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 interim financial information. A Group
non-headline loss before tax of GBP4 million (H1 2022: GBP12
million loss) was recognised in the first half. The significant
item is the return of final slots at Berlin Brandenburg airport
following the rightsizing of the operation from 18 to 11
aircraft.
Balance Sheet
During the first half, easyJet repaid a EUR 500 million
bond.
As at 31 March 2023 our net debt position was c.GBP0.2 billion
(30 September 2022: GBP0.7 billion) including cash and cash
equivalents and money market deposits of GBP3.5 billion (30
September 2022: GBP3.6 billion).
Fleet
easyJet's total fleet as at 31 March 2023 comprised 328 aircraft
(30 September 2022: 320 aircraft, excluding three A319 aircraft
held on a zero rent basis). The increase was driven by:
-- Delivery of five new A320neo aircraft, including accelerating
two FY25 scheduled orders into FY23.
-- Acquisition of three mid-life A320 leased aircraft.
-- Re-entry into the fleet of one former easyJet A319 aircraft,
and the return to service of three aircraft held on a zero-rental
agreement in 2022.
Four older leased aircraft exited the fleet at the end of their
lease-term (two A319 aircraft, and two A320 aircraft) , as easyJet
continues its journey of retiring older, less efficient, aircraft
whilst benefitting from the A320neo family aircraft with their
superior fuel efficiency and greater number of seats.
We have an agreed order book consisting of 163 firm orders, 130
for A320neo aircraft and 33 A321neo aircraft. This includes the
aircraft purchase approved in Summer 22, securing 56 aircraft
deliveries with the conversion of 18 A320neo aircraft into A321neo
aircraft for delivery between FY26 and FY29. In addition to the
accelerated delivery of two aircraft from FY25 to FY23, easyJet has
agreed to take a further two FY25 aircraft deliveries in FY24.
easyJet also has a contractual commitment to lease 11 further
mid-life A320 aircraft, for delivery between now and Q1 FY24.
In order to meet our long-term fleet requirements, we will
continue to keep all options under review going forward.
The average age of the fleet increased to 9.7 years (30
September 2022: 9.3 years). The average gauge of the fleet is now
179 seats per aircraft (30 September 2022: 179 seats).
Fleet as at 31 March 2023
Changes
% of since Firm Reconfirmation Purchase
Owned Leased Total fleet Sep-22 Orders Aircraft Rights
A319 29 67 96 29% 2 - - -
A320 105 63 168 51% 1 - - -
A320neo 42 7 49 15% 5 130 (a) 2 1
A321neo 4 11 15 5% - 33(a) - -
------------ ------ ------- ------ ------- -------- -------- ---------------------------- ---------
180 148 328 163 2 1
------------ ------ ------- ------ ------- -------- -------- ---------------------------- ---------
Percentage
of total
fleet 55% 45%
a) easyJet retains the option to alter the aircraft type of
future deliveries, subject to providing sufficient notification to
the OEM.
Our flexible fleet plan allows us to expand or contract the size
of the fleet depending on the demand outlook.
Number of aircraft H1 23 FY23 FY24 FY25 FY26
--------------------------- ----- -------- -------- -------- -------
Current contractual
maximum - 336 349 373 380
Actual aircraft 328 - - - -
Current contractual
minimum - 331 319 312 299
---------------------------- ----- -------- -------- -------- -------
New aircraft deliveries 5* 8 18 27 28
---------------------------- ----- -------- -------- -------- -------
Gross capital expenditure c.1,000 c.1,500 c.1,700 c.1,800
(GBP'm)
---------------------------- ----- -------- -------- -------- -------
*Two aircraft are held within work in progress at 31 March as
modifications are completed prior to entering into the
operations.
Capex is comprised of new fleet delivery payments, maintenance
related expenditure as well as lease payments and other capital
expenditure such as IT development.
Strategy Update
easyJet's purpose is to make low-cost travel easy. Underpinning
this purpose is our strategy which has four strategic priorities
that 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
-- Driving our low-cost model
-- Delivering ease and reliability
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. 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 is demonstrated by the optimisation at Berlin,
improving profitability(6) by c. 190% through focusing on key city
pairs and leisure flows, removal of German domestics and increasing
utilisation. We have also increased customer choice by entering new
markets such as Tunisia.
We seek to further strengthen our position in key markets as the
competitive landscape evolves. easyJet has continued to leverage
slot growth on our existing network, which has enabled aircraft to
be re deployed across the network over the last 18 months; +9 into
the Greek Islands, +7 in Portugal (across Lisbon and Porto) and +20
at Gatwick.
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 bundles, amongst other ancillary
products, have continued to deliver incremental revenue through the
period. Alongside this, easyJet's inflight retail brand and
proposition, which launched last year, is delivering growth across
all KPIs; conversion, spend per seat and profit per seat, and is
allowing us to tailor product offering to our customers. These
initiatives have contributed to the Airline's ancillary yield being
GBP10.65 higher than the same period in 2019.
In the first half of this year, we implemented closed loop Wi-Fi
on all our aircraft. This has facilitated enhanced marketing
revenue generation opportunities through our partners and enables
the launch of order to seat capability ahead of peak summer.
easyJet also plans to unlock pre-order capability later this year,
with a focus on the duty-free proposition.
easyJet holidays:
easyJet holidays continues its rapid growth, becoming a major
player within the sector, expecting customer growth of >60% year
on year and is expecting to deliver a profit before tax in excess
of GBP80 million in the 2023 financial year. This growth is being
delivered through strong customer satisfaction of 87%, with 70% of
customers likely to re book.
As the holidays business grows in scale, targeted investments
will be made to strengthen the customer base. This has been
demonstrated at Gatwick where marketing spend has been focused,
targeting easyJet's largest base of aircraft. Future initiatives
are underway to optimise pricing alongside enhancing the product
offering through room options and ancillary products.
Our multi-currency technology platform enables easy and rapid
expansion into other source markets, where we will unlock the Swiss
market next. Switzerland will go on sale this summer for departures
from early 2024. We already have a leading leisure network from
Geneva and Basel to destinations including the Balearics, Canaries
and Greece, where Switzerland's package holiday market of 1.1
million customers provides an opportunity for easyJet holidays to
continue its rapid growth.
Driving our low-cost model
easyJet has a cost advantage over its major competitors on the
primary network that it operates. Alongside cost actions, easyJet
is focused on margin through its network optimisation, effective
pricing management and ancillaries driving higher yields.
easyJet has delivered a number of cost actions:
-- Descent profile optimisation software: the upgraded
technology retrofit has commenced on our CEO aircraft, achieving
fuel savings through lower thrust and fuel burn during descent not
only providing a cost saving but also achieving a permanent carbon
emissions saving.
-- Insourcing line maintenance at LGW, BER, GLA, EDI and BRS:
enabling easyJet to have greater control over maintenance, reducing
cost incurred and improving the quality of maintenance
fulfilled.
o Since opening our Berlin hangar in January, we have seen a 41%
average cost saving per aircraft visit .
-- Increasing automation of self-service management: increasing
digitalisation of customer flows and reducing the need for contact
centre support.
o Over 70% of disrupted customers are now using the self-service
platform, reducing disruption costs by enabling customers to
self-select alternative flights and accommodation.
Cost remains a core emphasis for the business for the coming
year, with cost benefits to come through:
-- Increased productivity: capacity restoration through summer
23 and further winter capacity restoration in FY24 to promote
productivity and cost savings.
-- Up-gauging of the fleet: efficiency benefits will be unlocked
as A319s leave the fleet, being replaced by A320 family aircraft.
The increased mix of NEO aircraft will see additional fuel and
airport incentive benefits as easyJet's order book of 163 A320neo
family aircraft enter the fleet.
Delivering ease and reliability
easyJet has a loyal customer base, with 78% of seats booked by
returning customers. Customer satisfaction of 79% has returned to
historical levels as our crew provide our customers with the
warmest onboard experience.
easyJet aims to deliver a seamless and digitally enabled
customer journey at every stage and is continuously working to
enhance the customer experience. The focus areas to deliver ease in
the customer experience are:
-- Communications: providing helpful and timely information
flows and creating cohesion across the end-to-end experience.
-- Airport journey: improving the airport experience by
optimising core processes including boarding and bag drop like
providing twilight check in at more airports and the application of
technology enhancements such as biometric automation to reduce
queuing.
-- Inflight offering: creating a more personalised service
enabled through the use of connected technology and enhancing the
current crew's engagement.
-- Disruption management: focusing on improvements to streamline
policies, simplify processes and automate solutions, alongside more
efficient communications via connected devices.
easyJet also aims to deliver reliable performance through:
-- Process oversight: a focus on base driven reporting, with
station level ownership and control.
-- Prior to departure: optimising planning activities such as
crew rostering and standby allocation.
-- On the day turn execution: key to delivery, with elements
including supply chain, event communications management, hand
luggage policies and inventory optimisation.
Sustainability
In September 2022, 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(5) , 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 achieving a world first - successfully running
a modern aircraft engine on hydrogen. This is a major milestone
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 financial year, as well
as enhancing our ratings achieved across indices including CDP,
MSCI & Sustainalytics.
Our People
easyJet continues to have a market leading reputation as an
employer of choice, as evidenced through our Glassdoor rating of
3.9, the highest within the travel and tourism sector. Our people
are a key source of differentiation, and this helps to deliver
excellent customer experience and loyalty. Our employee engagement
has increased to 7.3, an increase of 4% on last year.
As we journey towards our destination to be Europe's most loved
airline, for our people this means being a place to work that is
loved because we're a place where you belong, you can do your best
work, thrive and grow your career.
We have spent considerable time in the first half of this year,
working with our leaders to create the most inclusive culture -
connecting people to our strategy, purpose and promises. Our focus
continues to prioritise activity that ensures our readiness and
operational resilience for the summer ahead, while also positively
contributing to our colleague experience. This enables easyJet to
attract and retain the best people.
Footnotes
(1) Capacity based on actual number of seats flown.
(2) 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.
(3) 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.
(4) Constant currency is calculated by comparing 2023 financial
year performance translated at the 2022 financial year effective
exchange rate to the 2022 financial year reported performance,
excluding foreign exchange gains and losses on balance sheet
revaluations.
(5) 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 FY35 from a FY19 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.
(6) Based on expected contribution per block hour for FY23
OUR FINANCIAL RESULTS
Headline loss before tax of GBP411 million for the six months
ended 31(st) March 2023 was a reduction of GBP134 million on the
loss of GBP545 million for the comparative period ended 31(st)
March 2022. This improvement was driven by increased capacity, load
factors and yields with all travel restrictions now lifted, pent up
demand being realised and enhanced contribution from our ancillary
product offering and easyJet holidays. easyJet flew 33.1 million
passengers in the six months ended 31(st) March 2023 (H1 2022: 23.4
million), up 41% on the comparative period as post pandemic
recovery continues at pace. The period has been characterised by
strong yields and airline revenue per seat (RPS) recovery (23% and
40% increase over the comparative period respectively) alongside
industry-wide cost challenges. Load factor for the period was 87.5%
(H1 2022: 77.3%), just 2.7 percentage points (ppt) lower than the
comparable pre-pandemic period, H1 2019, with capacity over H1 2023
at 82% the level of H1 2019. easyJet holidays took 0.6 million
customers (including affiliates) away in the period (H1 2022: 0.2
million), generating incremental revenue of GBP173 million (H1
2022: GBP54 million) and delivering GBP10 million of headline
profit before tax (H1 2022: GBP5 million loss).
Revenue of GBP2,689 million (H1 2022: GBP1,498 million) reflects
strong trading with increased capacity versus the comparative
period and strong yield performance. H1 2022 performance was
heavily impacted by the emergence of Omicron, with limitations on
travel impacting the key Christmas trading period and most of Q2
2022. H1 2023 trading is characterised by increased capacity, loads
and yield as demand has strengthened with trading to date setting
new airline RPS records (for the first half of a financial year)
due to strong yield performance. Achieving this has seen loads
slightly behind the pre-pandemic period, H1 2019, but our offer
remained competitive in the market and reflects our focus on
sustaining prices whilst looking to be cost and resource efficient
and adapting our network where appropriate.
Fuel prices continue to be at a higher level in H1 2023 compared
to the comparative period, which coupled with general inflation
across Europe has impacted business costs. Additionally, proposed
French government pension reforms have been a key factor in
widespread industrial action in France which, due to the
involvement of French Air Traffic Control (ATC), has impacted air
travel by causing disruption to flights utilising French airspace.
This has impacted our on-time performance and led to some
cancellations, with the associated costs and disruption for our
customers. In March, only five days were unaffected by this
industrial action, and disruption is expected to continue in
Q3.
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 H1 2023 H1 2022
================================================ ============= ==========
Group revenue 2,689 1,498
Headline costs excluding fuel, FX gain
and ownership (1) (1,985) (1,344)
Fuel (773) (362)
Headline EBITDAR (69) (208)
Depreciation, amortisation & dry leasing
costs (323) (278)
===================================================== ============= ==========
Headline EBIT (392) (486)
Net finance charges (46) (61)
Foreign exchange gain 27 2
===================================================== ============= ==========
Group headline loss before tax (411) (545)
Being:
Airline headline (loss) before tax (421) (540)
Holidays headline profit / (loss) before
tax 10 (5)
----------------------------------------------------- ------------- ----------
GBP per seat -- Airline only (2) H1 2023 H1 2022
===================================================== ========= ===========
Airline revenue 66.46 47.61
Headline costs excluding fuel, FX gain
and ownership (48.15) (42.45)
Fuel (20.43) (11.94)
Headline EBITDAR (2.12) (6.78)
Depreciation, amortisation & dry leasing
costs (8.48) (9.11)
===================================================== --------- -----------
Headline EBIT (10.60) (15.89)
Net finance charges (1.22) (2.01)
Foreign exchange gain 0.70 0.09
===================================================== ========= ===========
Airline headline loss before tax (11.12) (17.80)
===================================================== ========= ===========
Headline tax credit 2.84 3.94
===================================================== ========= ===========
Airline headline loss after tax (8.28) (13.86)
===================================================== ========= ===========
Non-headline items (0.10) (0.40)
Non-headline tax credit 0.02 0.10
===================================================== ========= ===========
Airline total loss after tax (8.36) (14.16)
===================================================== ========= ===========
(1) Ownership costs defined as depreciation, amortisation and
dry leasing costs plus net finance charges.
(2) 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.
In the period, the total number of passengers carried increased
by 41% to 33.1 million (H1 2022: 23.4 million), which was driven by
a 25% increase in seats flown to 37.9 million seats (H1 2022: 30.3
million seats) and a 10.2 ppt increase in load factor to 87.5% (H1
2022: 77.3%). This reflects the increased capacity available as the
period was without travel restrictions, and saw the return of
customer demand. The capacity for the period was 82% of the
comparable pre-pandemic period, H1 2019, and the load factor of
87.5% was 2.7 ppt lower.
Total revenue increased by 80% to GBP2,689 million (H1 2022:
GBP1,498 million) and by 77% at constant currency. The period
experienced a record first half airline RPS achievement of GBP66.46
(H1 2022: GBP47.61), an increase of 40% on the comparative period
and 38% at constant currency. The increase in RPS is a consequence
of increased loads, and strong ticket yields, with ancillary
initiatives continuing to deliver a revenue benefit. Airline
ancillary RPS increased by 34% and 32% at constant currency.
Airline ancillary revenue is now 47% higher than it was in H1 2019
despite passenger numbers being 21% lower. Additionally, easyJet
holidays continues to grow and contributed GBP173 million revenue
(H1 2022: GBP54 million) over and above airline sales.
Total headline costs excluding fuel, foreign exchange gains, and
ownership costs increased by 48% to GBP1,985 million (H1 2022:
GBP1,344 million) mainly as a result of the volume of flying and
general cost pressures. Costs were also impacted by the disruption
arising from weather events and the French ATC industrial action,
alongside measures such as tankering fuel into areas impacted by
industrial action to maintain operations and reduce the impact on
customers. This was partly offset by a release from the carried
forward provision held for disruption costs as the rate of customer
compensation claims for the Q3 FY22 period of significant
disruption have not matched our estimations (which were based on
previous periods of disruption). Our cost saving programme
continues to deliver, with notable ongoing initiatives including
fitting fuel-saving descent optimisation software on our aircraft
and insourcing line maintenance where there is a cost benefit to do
so. In addition, the continuing development of our self-service
disruption management tool (through the easyJet app) brings the
twin benefit when disruption does occur, of a better customer
experience and enhanced cost management.
Airline headline cost per seat (CPS) excluding fuel, foreign
exchange gains, and ownership costs increased by 13% to GBP48.15
(H1 2022: GBP42.45) and 10% at constant currency. This is against a
backdrop of increased sector length and load factors, and an
investment in crew resilience ahead of summer 2023. Increased
flying and the associated benefit of fixed operating costs being
spread across more capacity has contributed to the management of
CPS, combined with easyJet's continued focus on cost, as noted
above.
Within the period the translation of revenue and costs,
including fuel, from foreign currency has had a net adverse impact
of GBP96 million on the Group income statement when compared to
translated values had the exchange rates from H1 2022 been used.
This has been partly offset by a gain of GBP27 million (H1 2022:
GBP2 million credit) from the translation of foreign currency
denominated monetary assets and liabilities held on the statement
of financial position. Ownership costs were impacted by a GBP7
million charge as a result of the movement in the period of the US
dollar interest rates used to set the discount rate of the
maintenance reserves provision, compared to a GBP19 million benefit
in the comparative period.
Airline fuel CPS increased by 71% to GBP20.43 (H1 2022:
GBP11.94) and by 55% at constant currency. This is a result of both
the significant increase in the post hedge fuel price and an
increased average sector length compared to the comparative period,
arising from the destination mix in the period shifting towards
leisure routes.
Loss per share
H1 2023 H1 2022
----------- ----------
Pence Pence per Change
per share share in pence
per share
------------------------------- ----------- ---------- -----------
Basic headline loss per share (40.5) (56.0) 15.5
Basic total loss per share (40.9) (57.2) 16.3
Basic headline loss per share decreased by 15.5 pence and basic
total loss per share decreased by 16.3 pence as a consequence of
the lower loss generated compared to the comparative period.
Return on capital employed (ROCE)
Reported GBPm H1 2023 H1 2022
======================================== ======== ========
Headline loss before interest, foreign
exchange gain and tax (392) (486)
UK corporation tax rate 19% 19%
========================================= ======== ========
Normalised headline operating loss
after tax (NOPAT) (318) (394)
========================================= ======== ========
Average shareholders' equity 2,227 2,540
Average net debt 413 753
========================================= ======== ========
Average adjusted capital employed 2,640 3,293
========================================= ======== ========
Headline Return on capital employed (12.0%) (12.0%)
========================================= ======== ========
Total Return on capital employed (12.2%) (12.3%)
========================================= ======== ========
ROCE is calculated by taking headline loss before interest,
foreign exchange gain and tax, applying tax at the prevailing UK
corporation tax rate at the end of the reporting period, and
dividing by average capital employed. Capital employed is
shareholders' equity plus net debt.
Headline ROCE for the period was comparable to H1 2022. The
reduction in operating loss before interest, foreign exchange gain
and tax in the period was broadly in tandem with the proportional
reduction in average capital employed, with shareholders' equity
reduced as a consequence of the additional losses over the previous
twelve months together with the hedging reserve deficit offsetting
the benefit in reduced net debt. Total ROCE for the period was an
improvement of 0.1 ppt on the comparative period.
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.
H1 2023 H1 2022 Change
GBP million GBP million GBP million
========================================= ============ ============ ============
Operating loss (396) (499) 103
Net tax (paid)/received (6) 1 (7)
Net working capital movement excl
unearned revenue (343) (157) (186)
Unearned revenue movement 1,338 934 404
Depreciation and amortization 322 277 45
Net capital expenditure (477) (247) (230)
Net proceeds from sale and leaseback
of aircraft 61 87 (26)
Increase in lease liability 82 34 48
Net funding activities - 97 (97)
Purchase of own shares for employee
share schemes (15) (4) (11)
Other (including the effect of exchange
rate movements) (52) (209) 157
Net decrease in net debt 514 314 200
========================================== ============ ============ ============
Net debt at the beginning of the period (670) (910) 240
========================================== ============ ============ ============
Net debt at the end of the period (156) (596) 440
========================================== ============ ============ ============
Net debt as at 31 March 2023 was GBP156 million (31 March 2022:
GBP596 million) and comprised cash and cash equivalents and money
market deposits of GBP3,486 million (31 March 2022: GBP3,505
million), borrowings of GBP2,682 million (31 March 2022: GBP3,046
million) and lease liabilities of GBP960 million (31 March 2022:
GBP1,055 million).
Net working capital movement of GBP343 million since the year
end (H1 2022: GBP157 million) predominantly reflects the build up
of Emission Trading System (ETS) credits as CY2023 free credits
have been received and purchases for FY23 and FY24 flying have been
made, whilst the CY2022 credits are held pending surrender in H2
2023.
The unearned revenue inflow of GBP1,338 million (H1 2022: GBP934
million) has increased as customer behaviour normalises and booking
curves begin to reflect pre-pandemic advance booking practices.
Additionally, the comparative period included Covid-19 travel
restrictions and a level of consumer nervousness following the
emergence of Omicron.
The increase in depreciation and amortisation to GBP322 million
(H1 2022: GBP277 million) reflects higher maintenance costs for
leased aircraft with the rise in flying volumes and some rate
changes over the reporting period driving a higher charge.
Net capital expenditure in the year of GBP477 million (H1 2022:
GBP247 million) is across new five new aircraft (H1 2022: five),
pre-delivery payments, maintenance additions and significant
advance payments for long life parts. The sale and leaseback of 6
aircraft in H1 2023 resulted in a net cash inflow of GBP61 million
compared to the ten sale and leasebacks in H1 2022 which generated
proceeds of GBP87 million. Lease additions, extensions and rate
updates increased the lease liability by GBP82 million.
In the prior year the net funding activities of GBP97 million
related to final funding income from the rights issue in FY21.
Exchange rates
The proportion of revenue and headline costs denominated in
currencies other than sterling is outlined below alongside the
exchange rates in the period:
Headline Costs
Revenue (1)
-------------------- -----------------------
H1 2023 H1 2022 H1 2023 H1 2022(1)
--------------------------------------- --------- --------- --------- ------------
Sterling 51% 45% 39% 37%
Euro 38% 45% 33% 33%
US dollar 1%* 0% 22% 24%
Other (principally Swiss franc) 10% 10% 6% 6%
---------------------------------------- --------- --------- --------- ------------
Average headline exchange rates** H1 2023 H1 2022
--------------------------------------- --------- --------- --------- ------------
Euro - revenue EUR1.15 EUR1.17
Euro - costs EUR1.14 EUR1.19
US dollar $1.26 $1.37
Swiss franc CHF CHF 1.24
1.16
--------------------------------------- --------- --------- --------- ------------
Closing exchange rates H1 2023 H1 2022
--------------------------------------- --------- --------- --------- ------------
Euro EUR1.14 EUR1.19
US dollar $1.23 $1.31
Swiss franc CHF CHF 1.21
1.13
---------------------------------------- --------- --------- --------- ------------
(1) H1 2022 figures have been restated to exclude the impact of non-headline
costs. In addition, US dollar and euro values in H1 22 reporting were
transposed and have been corrected.
*our customers have the option of paying for flights in US dollars
**exchange rates quoted are post-hedging applied to 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 half year has seen a weakening of sterling against both the
euro and US dollar when compared to the exchange rates at H1 2022,
resulting in a net adverse foreign currency impact of GBP96 million
on the Group income statement had the exchange rates from H1 2022
been used. Conversely the translation of foreign currency
denominated monetary assets and liabilities held on the statement
of financial position has resulted in a gain of GBP27 million (H1
2022: GBP2 million credit).
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 17 19 2 1 39
Fuel (1) - (70) - (71)
Headline costs excluding fuel (36) (16) (11) (1) (64)
------------------------------------------ ----------- --------- ------------ --------- -----------
Headline total before tax (1) (20) 3 (79) - (96)
------------------------------------------ ----------- --------- ------------ --------- -----------
(1) Excludes the impact of balance
sheet revaluations
easyJet recognises a significant element of revenue across its
network in euros, and therefore a weaker sterling vs euro at
average rates has improved revenue in the period. Additionally the
weakening against the Swiss franc has been beneficial. However, the
revenue foreign exchange benefit has been offset by the converse
impact on costs. easyJet's cost base includes US dollar denominated
costs, particularly fuel and aircraft lease payments, and therefore
post-hedge US dollar strengthening against the comparative period
has increased the sterling value of those headline costs.
FINANCIAL PERFORMANCE
Revenue
GBPm Group H1 2023 H1 2022
================================== ======== ========
Passenger revenue 1,749 985
Ancillary revenue 767 459
Holidays incremental revenue (1)
(2) 173 54
=================================== ======== ========
Total revenue 2,689 1,498
=================================== ======== ========
(1) Holidays numbers include elimination of intercompany airline transactions
(2) The presentation of Group revenue has been amended to split
out holidays incremental revenue; refer to note 1C(iii) in the
condensed consolidated interim financial information
Total revenue increased by 80% to GBP2,689 million (H1 2022:
GBP1,498 million) and 77% at constant currency. This was a combined
result of increased customer volumes, a focus on yield optimisation
resulting in strong ticket yield, and continued growth in our
ancillary offer. The total number of passengers carried increased
by 41% to 33.1 million (H1 2022: 23.4 million), arising from a
combination of a 25% increase in seats flown to 37.9 million seats
(H1 2022: 30.3 million seats) and a 10.2 ppt increase in load
factor to 87.5% (H1 2022: 77.3%). This reflects the increased
capacity with the removal of all travel restrictions that were in
place in the prior year and the resumption of customer demand as
the air travel industry returns to a level of normality. Similar to
FY22, within revenue there was a GBP17 million credit (H1 2022:
GBPnil million) arising from the release of aged contract
liabilities within other payables, split GBP14 million against
passenger revenue and GBP3 million against ancillary revenue.
Total airline RPS of GBP66.46 was 38% ahead of H1 2022 at
constant currency and total yield of GBP75.98 was 22% favourable
when compared against H1 2022 at constant currency, with passenger
yields 24% favourable and ancillary yields 16% favourable at
constant currency.
Airline ancillary revenue of GBP767 million was 67% ahead of H1
2022, and 64% at constant currency, as a result of both passenger
numbers and favourable yields. Pricing initiatives, fare bundling
and standalone cabin bags introduced since H1 2022 have contributed
to the growth of the ancillary offer. Note that airline ancillary
revenue is now 47% higher than in H1 2019 despite passenger numbers
being 21% lower.
easyJet holidays incremental revenue increased by 220% to GBP173
million (H1 2022: GBP54 million) with strong yields and growth in
customer numbers to 0.6 million (including affiliates) in the
period (H1 2022: 0.2 million) as the holidays offer resonated with
customers and grew in strength throughout the period.
Headline costs excluding fuel
H1 2023 H1 2022
================================= ===================== ========================
Group Airline Airline
GBP GBP Group GBP per
million per seat GBP million seat
================================= ========= ========== ============= =========
Operating costs and income
Airports and ground handling 735 19.41 474 15.65
Crew 424 11.19 318 10.48
Navigation 165 4.36 110 3.63
Maintenance 174 4.59 157 5.16
Holidays direct operating costs 132 n/a 40 n/a
Selling and marketing 103 2.34 68 2.03
Other costs 253 6.29 183 5.61
Other income (1) (0.03) (6) (0.11)
================================== ========= ========== ============= =========
1,985 48.15 1,344 42.45
========= ========== ============= =========
Ownership costs
Aircraft dry leasing 1 0.02 1 0.04
Depreciation 309 8.17 265 8.74
Amortisation 13 0.29 12 0.33
Net finance charges 46 1.22 61 2.01
================================== ========= ========== ============= =========
369 9.70 339 11.12
Foreign exchange gain (27) (0.70) (2) (0.09)
================================== ========= ========== ============= =========
342 9.00 337 11.03
========= ========== ============= =========
Headline costs excluding fuel 2,327 57.15 1,681 53.48
================================== ========= ========== ============= =========
Headline CPS excluding fuel for the airline increased by 7% to
GBP57.15 (H1 2022: GBP53.48), and by 5% at constant currency.
Included within the Group headline costs excluding fuel of
GBP2,327 million is GBP163 million (H1 2022: GBP59 million) related
to the holidays business, the cost increase primarily being
activity related due to the growth of the business.
Operating costs and income
Airports and ground handling operating costs increased by 55% to
GBP735 million (H1 2022: GBP474 million), an increase of 24% to
GBP19.41 (H1 2022: GBP15.65) on a cost per seat (CPS) basis, 19% at
constant currency. The period has seen an overall increase in
airport rates, reflecting that easyJet largely flies from slot
constrained and regulated airports. In addition, operating costs
associated with improved load factors, and higher passenger and
security charges contributed to price inflation driving a cost
increase on a per seat basis.
Crew costs increased by 33% to GBP424 million (H1 2022: GBP318
million), an increase of 7% to GBP11.19 (H1 2022: GBP10.48) on a
CPS basis, 4% at constant currency. This CPS increase has resulted
from increased costs as easyJet looks to secure crew levels for
Summer 2023 flying in addition to post-pandemic pay deals, partly
offset by allocating the fixed element of crew costs over greater
capacity.
Navigation costs increased by 50% to GBP165 million (H1 2022:
GBP110 million), a rise of 20% to GBP4.36 (H1 2022: GBP3.63) on a
CPS basis, 16% at constant currency, as a result of the increases
in both EuroControl rates and an increase in the sector length of
our commercial flying compared to the comparative period.
Maintenance costs increased by 11% to GBP174 million (H1 2022:
GBP157 million), but decreased by 11% to GBP4.59 (H1 2022: GBP5.16)
on a CPS basis. This CPS decrease is primarily the result of the
fixed element of our maintenance costs being apportioned over
increased capacity.
Selling and marketing costs increased by 51% to GBP103 million
(H1 2022: GBP68 million), an increase of 16% to GBP2.34 (H1 2022:
GBP2.03) on a CPS basis, 12% at constant currency. The increase is
predominantly in selling costs which result from increased credit
card bookings and the associated fees on forward bookings.
Other costs increased by 38% to GBP253 million (H1 2022: GBP183
million), an increase of 12% to GBP6.29 (H1 2022: GBP5.61) on a CPS
basis, 10% at constant currency. Other costs include the impact of
the disruption experienced in the period, with net GBP37 million
disruption compensation and welfare costs incurred (H1 2022: GBP6
million) after a GBP24 million release (H1 2022: GBP3 million
pre-pandemic claim release) of provision held for disruption costs
where customer compensation claims for the Q3 FY22 period of
significant disruption have not matched our initial estimations of
claim rates (based on previous periods of disruption) .
Additionally, in Q1 we incurred significant wet lease costs before
the aircraft were removed from the fleet at the end of the summer
flying season, and there has been increased employee benefits and
an investment in cyber security and merchandising technology in the
year.
Ownership costs
Depreciation costs increased by 17% to GBP309 million (H1 2022:
GBP265 million), but decreased by 7% to GBP8.17 (H1 2022: GBP8.73)
on a CPS basis, 6% at constant currency. The increase in
depreciation costs compared to H1 2022 is largely due to the
increased maintenance provision for leased aircraft, reflecting
higher flying volumes and the change in the discount rate arising
from movements in the US dollar interest rates. Depreciation on
owned aircraft has remained relatively stable. The cost on a CPS
basis has benefitted from the increased maintenance cost being
allocated across a significantly increased seat capacity.
Net finance charges decreased by 25% to GBP46 million (H1 2022:
GBP61 million), and by 39% on a CPS basis to GBP1.22 (H1 2022:
GBP2.01) reflecting the benefit from improved interest rates on
cash deposits in the period and a reduced level of debt.
Foreign exchange gains were GBP27 million (H1 2022: GBP2
million) being the benefit of the retranslation of foreign currency
denominated monetary assets and liabilities arising from the
currency movements in the reporting period, with sterling being
stronger against the US dollar offsetting the impact of a
marginally weaker sterling against the euro as at 31 March 2023
compared to 30 September 2022.
Fuel
H1 2023 H1 2022
===================== ========================
Group Airline Group Airline
GBP GBP GBP million GBP per
million per seat seat
====== ========= ========== ============= =========
Fuel (773) (20.43) (362) (11.94)
======= ========= ========== ============= =========
Fuel costs for the period were GBP773 million, compared to
GBP362 million in H1 2021, a 71% increase on a CPS basis to
GBP20.43 (H1 2022: GBP11.94), 55% on a constant currency basis. The
increase in flying volumes, resulting in a 33% increase in block
hours in the period, has contributed, but the significant driver
has been the increase in fuel prices over the period.
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.
During the period the average market price payable for jet fuel
increased by 33% from $762 per tonne in H1 2022 to $1,012 per tonne
in H1 2023. Whilst hedging undertaken by the Group provided some
mitigation, the overall post hedge fuel price for H1 2023 of $860
per tonne was 44% higher than the post hedge fuel price of $599 per
tonne achieved in H1 2022. Approximately 80% of jet fuel was hedged
in H1 2023.
Group loss after tax
GBP million (Reported) -- Group H1 2023 H1 2022
=================================== ======== ========
Group headline loss before tax (411) (545)
Headline tax credit 107 123
==================================== ======== ========
Group headline loss after tax (304) (422)
==================================== ======== ========
Non-headline items before tax (4) (12)
Non-headline tax credit 1 3
==================================== ======== ========
Group total loss after tax (307) (431)
==================================== ======== ========
Non-headline items
A non-headline charge of GBP4 million (H1 2022: GBP12 million)
was recognised in the period. This consisted of a GBP3 million loss
on disposal for a further and final surrender of landing rights as
a consequence of the reduction in our operations at Berlin airport
(H1 2022: GBPnil) and net restructuring charges of GBP1 million (H1
2022: GBP8 million release) resulting from the net impact of
additional costs arising from previously announced restructuring
programmes in Germany. The sale and leaseback of 6 aircraft in the
period generated a GBPnil gain (H1 2022: GBP21 million loss from 10
aircraft).
Corporate Tax
Corporate tax has been recognised at an effective rate of 26.1%
(H1 2022: 22.7%), resulting in an overall tax credit of GBP108
million (H1 2022: GBP126 million credit). This splits into a tax
credit of GBP107 million on the headline losses and a tax credit of
GBP1 million on the non-headline items.
KEY STATISTICS
OPERATING MEASURES
Increase/
H1 2023 H1 2022 (decrease)
------------------------------------------------- -------- -------- ------------
Seats flown (millions) 37.9 30.3 25%
Passengers (millions) 33.1 23.4 41%
Load factor 87.5% 77.3% 10.2 ppts
Available seat kilometres (ASK) (millions) 45,108 34,287 32%
Revenue passenger kilometres (RPK) (millions) 39,956 26,811 49%
Average sector length (kilometres) 1,192 1,131 5%
Sectors ('000) 212 168 26%
Block hours ('000) 438 329 33%
easyJet holidays passengers (thousands)
(1) 445 137 225%
Number of aircraft owned/leased at end of
period 328 322 2%
Average number of aircraft owned/leased
during period 325 322 1%
Average number of aircraft operated per
day during period 249 204 22%
Number of routes operated at end of period 988 930 6%
Number of airports served at end of period 154 150 3%
-------------------------------------------------- -------- -------- ------------
FINANCIAL MEASURES Favourable/
H1 2023 H1 2022 (adverse)
------------------------------------------------- -------- -------- ------------
Total return on capital employed (12.2%) (12.3%) 0.1ppts
Headline return on capital employed (12.0%) (12.0%) 0.0ppts
Airline total loss before tax per seat (GBP) (11.22) (18.20) 38.4%
Airline headline loss before tax per seat
(GBP) (11.12) (17.80) 37.6%
Airline total loss before tax per ASK (pence) (0.94) (1.61) 41.6%
Airline headline loss before tax per ASK
(pence) (0.93) (1.57) 40.8%
easyJet holidays total profit / (loss) before
tax (millions) 10 (5) 300.0%
Revenue
------------------------------------------------- -------- -------- ------------
Airline revenue per seat (GBP) 66.46 47.61 39.6%
Airline revenue per seat at constant currency
(GBP) 65.44 47.61 37.5%
Airline revenue per ASK (pence) 5.58 4.21 32.5%
Airline revenue per ASK at constant currency
(pence) 5.49 4.21 30.4%
Airline revenue per passenger (GBP) 75.98 61.59 23.4%
Airline revenue per passenger at constant
currency (GBP) 74.82 61.59 21.5%
-------------------------------------------------- -------- -------- ------------
Costs
------------------------------------------------- -------- -------- ------------
Per seat measures
Airline headline cost per seat (GBP) (77.58) (65.42) (18.6%)
Airline total cost per seat (GBP) (77.68) (65.81) (18.1%)
Airline headline cost per seat excluding
fuel (GBP) (57.15) (53.48) (6.9%)
Airline headline cost per seat exc fuel
at constant currency (GBP) (56.27) (53.57) (5.0%)
Airline total cost per seat excluding fuel
(GBP) (57.25) (53.87) (6.3%)
Airline total cost per seat excluding fuel
at constant currency (GBP) (56.50) (53.96) (4.7%)
Per ASK measures
Airline headline cost per ASK (pence) (6.51) (5.78) (12.6%)
Airline total cost per ASK (GBP) (6.52) (5.82) (12.0%)
Airline headline cost per ASK excluding
fuel (pence) (4.80) (4.73) (1.5%)
Airline headline cost per ASK exc fuel at
constant currency (pence) (4.72) (4.74) 0.4%
Airline total cost per ASK excluding fuel
(pence) (4.80) (4.76) (0.8%)
Airline total cost per ASK exc fuel at constant
currency (pence) (4.74) (4.77) 0.1%
-------------------------------------------------- -------- -------- ------------
(1) Total holiday customers including affiliates
is 0.6 million (HY22: 0.2 million).
PRINCIPAL RISKS AND UNCERTAINTIES
The Board is ultimately responsible for determining the nature
and extent of the principal risks it is willing to take to achieve
its strategic objectives, its risk appetite, and maintaining the
Group's systems of internal control and risk management. The Audit
Committee, on behalf of the Board, is accountable for reviewing and
assessing the risk management processes. The Risk and Assurance
team, which reports jointly to the Chair of the Audit Committee and
CFO, ensures that robust processes are in place for identifying and
assessing the Group's emerging and principal risks.
Over the course of H1 2023, the Risk and Assurance team has
spent time with each area of the business, to ensure that risks
continue to be identified and assessed in line with the Risk
Framework. This has been conducted via functional and business unit
risk reviews. We continue to develop our corporate risk framework
to ensure that risks, including emerging risks, are identified,
assessed, managed and articulated.
The Board has reconsidered the principal risks and uncertainties
affecting the Group at the half year. The principal risks and
uncertainties set out in the 2022 Annual Report and Accounts have
not materially changed, and therefore easyJet's risk themes remain
unchanged and are as follows:
-- Asset Efficiency & Effectiveness
-- Environment & Sustainability
-- Legislative / Regulatory Landscape
-- Macro-economic & Geopolitical
-- People
-- Safety, Security, and Operations
-- Technology & Cyber
CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
Condensed consolidated income statement (unaudited)
Six months ended 31 March
2023 2022
----------------------------------- -----------------------------------------
Non-headline Non-headline
(note (note
Headline 3) Total Headline 3) Total
--------- ------------- --------- ------------ ------------- ------------
GBP GBP GBP
Notes million million million GBP million GBP million GBP million
----------------------- ------ --------- ------------- --------- ------------ ------------- ------------
Passenger revenue 1,749 - 1,749 985 - 985
Ancillary revenue*
Airline ancillary
revenue 767 - 767 459 - 459
Holidays incremental
revenue 173 - 173 54 - 54
------------------------ ------ --------- ------------- --------- ------------ ------------- ------------
Total ancillary revenue 940 - 940 513 - 513
------------------------ ------ --------- ------------- --------- ------------ ------------- ------------
Total revenue 2,689 - 2,689 1,498 - 1,498
Fuel (773) - (773) (362) - (362)
Airports and ground handling * (735) - (735) (474) - (474)
Crew (424) - (424) (318) - (318)
Navigation (165) - (165) (110) - (110)
Maintenance (174) - (174) (157) - (157)
Holidays direct
operating
costs (excluding
flights)
* (132) - (132) (40) - (40)
Selling and marketing (103) - (103) (68) - (68)
Other costs (253) (4) (257) (183) (12) (195)
Other income 1 - 1 6 (1) 5
------------------------ ------ --------- ------------- --------- ------------ ------------- ------------
EBITDAR (69) (4) (73) (208) (13) (221)
Aircraft dry leasing (1) - (1) (1) - (1)
Depreciation 8 (309) - (309) (265) - (265)
Amortisation of
intangible
assets (13) - (13) (12) - (12)
------------------------ ------ --------- ------------- --------- ------------ ------------- ------------
Operating loss (392) (4) (396) (486) (13) (499)
Interest receivable and other
financing
income** 53 - 53 4 2 6
Interest payable and
other
financing charges (99) - (99) (65) (1) (66)
Foreign exchange gain** 27 - 27 2 - 2
------------------------ ------ --------- ------------- --------- ------------ ------------- ------------
Net finance
(charge)/income (19) - (19) (59) 1 (58)
Loss before tax (411) (4) (415) (545) (12) (557)
Tax credit 4 107 1 108 123 3 126
Loss for the period (304) (3) (307) (422) (9) (431)
-------------------------------- --------- ------------- --------- ------------ ------------- ------------
Loss per share, pence
Basic 5 (40.9) (57.2)
------------------------ ------ --------- ------------- --------- ------------ ------------- ------------
* Revenue and expenditure of easyJet holidays recognised in the
prior period has been re-presented, see note 1C(iii) for
details.
** Interest receivable and other financing income, and foreign
exchange gain recognised in the prior period has been re-presented,
see note 1C(iii) for details.
Condensed consolidated statement of comprehensive income
(unaudited)
Six months Six months
ended ended
31 March 2023 31 March 2022
Notes GBP million GBP million
------------------------------------------------- ------ -------------- --------------
Loss for the period (307) (431)
Other comprehensive (loss)/income
Items that may be reclassified to the
income statement
Cash flow hedges
Fair value (losses)/gains in the period 7 (224) 396
Gains transferred to income statement 7 (153) (118)
Hedge discontinuation gain transferred
to income statement 7 - (5)
4,
Related deferred tax credit/(charge) 7 86 (53)
Cost of hedging (1) 3
Items that will not be reclassified
to the income statement
Remeasurement (loss)/gain on post-employment
benefit
obligations (5) 23
Related deferred tax credit/(charge) 4 1 (6)
(296) 240
Total comprehensive loss for the period (603) (191)
-------------------------------------------------- ------ -------------- --------------
Condensed consolidated statement of financial position
(unaudited)
31 March 30 September
2022
2023
Notes GBP million GBP million
---------------------------------------- ------ ------------ -------------
Non-current assets
Goodwill 365 365
Other intangible assets 246 217
Property, plant and equipment 8 4,744 4,629
Derivative financial instruments 27 127
Equity investments 31 31
Restricted cash 2 3
Other non-current assets 105 91
Deferred tax assets 259 62
----------------------------------------- ------ ------------ -------------
5,779 5,525
Current assets
Trade and other receivables 373 367
Intangible assets 843 495
Derivative financial instruments 60 423
Restricted cash - 4
Money market deposits 81 126
Cash and cash equivalents 3,405 3,514
----------------------------------------- ------ ------------ -------------
4,762 4,929
Current liabilities
Trade and other payables (1,624) (1,685)
Unearned revenue (2,375) (1,042)
Borrowings 9 (440) (437)
Lease liabilities (193) (247)
Derivative financial instruments (188) (86)
Current tax payable (3) (5)
Provisions for liabilities and charges 10 (197) (176)
----------------------------------------- ------ ------------ -------------
(5,020) (3,678)
Net current (liabilities)/assets (258) 1,251
Non-current liabilities
Borrowings 9 (2,242) (2,760)
Unearned revenue (6) (1)
Lease liabilities (767) (866)
Derivative financial instruments (25) (22)
Non-current deferred income (3) (4)
Post-employment benefit obligations - (1)
Provisions for liabilities and charges 10 (557) (589)
(3,600) (4,243)
Net assets 1,921 2,533
----------------------------------------- ------ ------------ -------------
Shareholders' equity
---------------------------------------- ------ ------------ -------------
Share capital 207 207
Share premium 2,166 2,166
Hedging reserve 7 (121) 170
Cost of hedging reserve 4 5
Translation reserve (5) (6)
Accumulated losses (330) (9)
----------------------------------------- ------ ------------ -------------
Total equity 1,921 2,533
----------------------------------------- ------ ------------ -------------
Condensed consolidated statement of changes in equity
(unaudited)
Share Share Hedging Cost Translation Accumulated Total
capital premium reserve of hedging reserve losses
reserve
GBP GBP GBP GBP GBP million GBP million GBP
million million million million million
------------------ ------------ ------------ ------------ ------------ ------------ -------------- ------------
At 1 October 2022 207 2,166 170 5 (6) (9) 2,533
Loss for the
period - - - - - (307) (307)
Other
comprehensive
loss - - (291) (1) - (4) (296)
Total
comprehensive
loss - - (291) (1) - (311) (603)
Share incentive
schemes
Value of
employee
services - - - - - 5 5
Purchase of own
shares - - - - - (15) (15)
Currency
translation
differences - - - - 1 - 1
------------------ ------------ ------------ ------------ ------------ ------------ -------------- ------------
At 31 March 2023 207 2,166 (121) 4 (5) (330) 1,921
------------------ ------------ ------------ ------------ ------------ ------------ -------------- ------------
Share Share Hedging Cost Translation Retained Total
capital premium reserve of hedging reserve earnings/
reserve (Accumulated
losses)
GBP million GBP million GBP million GBP million GBP million GBP million GBP million
------------------ ------------ ------------ ------------ ------------ ------------ -------------- ------------
At 1 October 2021 207 2,166 156 (1) - 111 2,639
Loss for the
period - - - - - (431) (431)
Other
comprehensive
income - - 220 3 - 17 240
Total
comprehensive
income/(loss) - - 220 3 - (414) (191)
Transfers to
Property
Plant and
Equipment - - (12) - - - (12)
Share incentive
schemes
Value of
employee
services - - - - - 10 10
Purchase of own
shares - - - - - (4) (4)
Currency
translation
differences - - - - (2) - (2)
------------------ ------------ ------------ ------------ ------------ ------------ -------------- ------------
At 31 March 2022 207 2,166 364 2 (2) (297) 2,440
------------------ ------------ ------------ ------------ ------------ ------------ -------------- ------------
The hedging reserve comprises the effective portion of the
cumulative net change in the fair value of cash flow hedging
instruments relating to highly probable transactions that are
forecast to occur after the period end.
Condensed consolidated statement of cash flows (unaudited)
Six months Six months
ended ended
31 March 31 March
2023 2022*
Notes GBP million GBP million
---------------------------------------------- ------ ------------ ------------
Cash flows from operating activities
Cash generated from operations* 12 933 516
Interest and other financing charges
paid* (88) (74)
Interest and other financing income received 50 -
Settlement of derivatives 80 -
Net tax (paid)/received (6) 1
----------------------------------------------- ------ ------------ ------------
Net cash generated from operating activities 969 443
Cash flows from investing activities
Purchase of property, plant and equipment (438) (236)
Purchase of non-current other intangible
assets (39) (11)
Net decrease/(increase) in money market
deposits 45 (258)
Proceeds from sale and leaseback of aircraft 61 87
Net cash used in investing activities (371) (418)
Cash flows from financing activities
Proceeds from issue of ordinary share
capital - 91
Share issue transaction costs - (37)
Purchase of own shares for employee share
schemes (15) (4)
Repayment of bank loans and other borrowings (432) (300)
Repayment of capital element of leases (108) (92)
Decrease in restricted cash 5 9
----------------------------------------------- ------ ------------ ------------
Net cash used in financing activities (550) (333)
Effect of exchange rate changes (157) 19
Net decrease in cash and cash equivalents (109) (289)
Cash and cash equivalents at beginning
of period 3,514 3,536
Cash and cash equivalents at end of
period 3,405 3,247
----------------------------------------------- ------ ------------ ------------
*Consistent with the financial statements for the year ended 30
September 2022 the condensed consolidated statement of cash flows
has been re-presented to separately disclose the cash settlement of
derivatives relating to cash flows for ineffective and discontinued
hedging derivatives and fair value derivatives through profit and
loss. In addition the condensed consolidated statement of cash
flows for the six months ended 31 March 2022 includes a restatement
of the disclosure of derivative cash inflows that principally
related to operational hedges and were incorrectly included within
interest and other financing charges paid. The overall impact of
these changes can be seen in note 1C(iii). In the current period
the amount recognised in settlement of derivatives includes cash
flows arising from the maturity of cross currency interest rate
swaps.
Notes to the condensed consolidated interim financial
information (unaudited)
1. General information
easyJet plc (the Company) is a Company registered in England
(Company no. 03959649) and domiciled in the United Kingdom (UK).
The condensed consolidated interim financial information of the
Company as at and for the six months ended 31 March 2023 comprises
the Company and its interest in its subsidiaries (together referred
to as the Group). Its principal business is that of a low-cost
airline carrier and package holiday Group operating primarily in
Europe. The consolidated financial statements of the Group as at
and for the year ended 30 September 2022 are available upon request
to the Company Secretary from the Company's registered office at
Hangar 89, London Luton Airport, Luton, Bedfordshire, LU2 9PF or
are available on the corporate website at
http://corporate.easyJet.com.
1A. Basis of preparation
The condensed consolidated interim financial information has
been prepared in accordance with IAS 34 'Interim Financial
Reporting' under UK-adopted international accounting standards and
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority. It should be read in conjunction with
the Annual Report and Accounts for the year ended 30 September
2022, which were prepared in accordance with international
accounting standards in conformity with the requirements of the
Companies Act 2006.
The interim financial information does not constitute statutory
accounts within the meaning of sections 434 and 435 of the
Companies Act 2006. Statutory accounts for the year ended 30
September 2022 were approved by the Board of Directors on 29
November 2022 and have been delivered to the Registrar of
Companies. The report of the auditors was unqualified.
The Group's financial risk management objectives and policies
are materially consistent with those disclosed in the consolidated
financial statements as at and for the year ended 30 September
2022.
1B. Going concern
In adopting the going concern basis for preparing these interim
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 December 2024.
As at 31 March 2023 easyJet has a net debt position of GBP0.2
billion including cash and cash equivalents and money market
deposits of GBP3.5 billion, the Group has unrestricted access to
GBP4.5 billion of liquidity and has retained ownership of 55% of
the total fleet with 40% being unencumbered.
The Directors have reviewed the financial forecasts and funding
requirements with consideration given to the potential impact of
severe but plausible 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, and 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.75% hedged for fuel
in H2 of FY23 at c.US$885 per metric tonne, c.52% hedged for H1
FY24 at c.US$868 and c.22% hedged for H2 FY24 at c.US$806.
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),
reoccurrence of additional disruption costs (at FY22 levels), a 10%
growth reduction for the Holidays segment and delays in the
delivery of strategic revenue initiatives and cost savings. 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.
1C. Accounting policies
The accounting policies adopted are consistent with those
described in the Annual report and accounts for the year ended 30
September 2022.
1C (i) New and revised standards and interpretations
The following standards applicable for periods commencing on or
after 1 January 2022 came into effect during the period, and did
not have a material impact:
-- Amendments to IFRS 3 - Business Combinations
-- Amendments to IAS16 - Property, plant and equipment
-- Amendments to IAS37 - Provisions, contingent liabilities and contingent assets
-- Annual improvements to IFRS 1, IFRS 9, IAS 41 and
illustrative examples accompanying IFRS 16 Leases
There are no standards that are issued but not yet effective
that would be expected to have a material impact on the entity in
the current or future reporting periods and on foreseeable future
transactions.
1C (ii) Estimates and judgements
The preparation of the condensed consolidated interim 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 condensed consolidated interim 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.
In preparing these condensed consolidated interim financial
statements, the key judgements and estimates are the same as those
applied in the most recently published consolidated financial
statements.
1C(iii) Change in presentation
Net foreign exchange gains and losses:
Net foreign exchange gains and losses arising from the
revaluation of monetary assets and liabilities have historically
been included within either 'Interest receivable and other
financing income' or 'Interest payable and other financing charges'
on the face of the income statement. During the year ended
September 2022, it was concluded that it would be clearer for users
of the financial statements if net foreign exchange gains and
losses were a separate financial statement line item. The prior
period therefore has been presented on a consistent basis, which
has resulted in the re-presentation of the consolidated income
statement as below.
Six months ended 31 March 2022
(Previously reported) (Re-presented)
--------------------------------- ----------------------------------------
Headline Non-headline Total Headline Non-headline Total
(note (note
3) 3)
--------- ------------- ----------- --------- ------------- ------------
GBP GBP GBP GBP
million million million million GBP million GBP million
---------------------- ------ --------- ------------- ----------- --------- ------------- ------------
Interest receivable
and other financing
income 6 2 8 4 2 6
Interest payable
and other financing
charges (65) (1) (66) (65) (1) (66)
Foreign exchange
gain - - - 2 - 2
------------------------------ --------- ------------- ----------- --------- ------------- ------------
Net finance (charge)
/ income (59) 1 (58) (59) 1 (58)
------------------------------ --------- ------------- ----------- --------- ------------- ------------
Cash settlement of derivatives:
Historically cash settlement of derivatives relating to cash
flows for ineffective and discontinued hedging derivatives,
cashflows relating to effective cashflow hedged derivatives which
recycle within net finance (charge)/income 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. As first presented in the financial
statements for the year ended 30 September 2022, in order to give
greater clarity to the users of the financial statements, these
derivatives are now presented as a separate line within the
condensed consolidated statement of cash flows. There is no impact
from this presentational change for the six months ended 31 March
2022 as the total impact of the related items was GBPnil.
In addition it was identified that in the condensed consolidated
statement of cash flows for the six months ended 31 March 2022,
there were GBP74m of derivative cash inflows that principally
related to effective operational cashflow hedges which recycle
within operating profit that were presented within interest and
other financing charges paid which should have been presented in
increase/(decrease) in derivative financial instruments included
within cash generated from operations. The impact on the condensed
consolidated statement of cash flows and reconciliation of
operating loss to cash generated from operations note (note 12) can
be seen in the extracts below:
Six months ended 31 March
2022
(Previously (Restated)
reported)
------------- -------------
GBP million GBP million
---------------------------------------------- ------------- -------------
Cash flows from operating activities
Cash generated from operations 590 516
Interest and other financing charges
paid (148) (74)
Net tax received 1 1
----------------------------------------------- ------------- -------------
Net cash generated from operating activities 443 443
----------------------------------------------- ------------- -------------
Operating loss (499) (499)
Total adjustments for non-cash items 312 312
Decrease/(increase) in derivative financial
instruments 55 (19)
Other working capital movements 722 722
----------------------------------------------- ------------- -------------
Cash flows from operating activities 590 516
----------------------------------------------- ------------- -------------
Presentation of easyJet holidays:
The presentation of the consolidated income statement has been
amended in order to provide more relevant information to the users
of the financial statements, reflecting the increasing significance
of the Holidays operating segment. Holidays revenues have
historically been presented within 'Ancillary revenue', whilst
associated costs have been presented within the 'Airports, ground
handling, holidays accommodation, and other operating costs' line.
Ancillary revenue has now been split into ancillary revenue
attributable to airline passengers and holidays incremental
revenue, which is the revenue from holidays' customers net of
flight revenue (the passenger revenue and airline ancillary revenue
attributable to holidays' customers being included in the passenger
revenue and airlines ancillary revenue lines respectively).
Additionally, a new cost line 'Holidays direct operating costs' is
shown which includes costs specific to the holidays business such
as accommodation costs and holiday transfers.
The prior period has been presented on a consistent basis, which
has resulted in the re-presentation of the condensed consolidated
income statement as below.
Six months ended 31 March 2022
(Previously reported) (Re-presented)
-------------------------------------- --------------------------------------
Headline Non-headline Total Headline Non-headline Total
(note 3) (note 3)
------------ ------------- --------- ------------ ------------- ---------
GBP GBP
GBP million GBP million million GBP million GBP million million
------------------------------ ------------ ------------- --------- ------------ ------------- ---------
Revenue
Passenger revenue 985 - 985 985 - 985
Airline ancillary - - - 459 - 459
Holidays incremental revenue - - - 54 - 54
------------ ------------- ---------
Ancillary revenue 513 - 513 513 - 513
Total Revenue 1,498 - 1,498 1,498 - 1,498
------------------------------- ------------ ------------- --------- ------------ ------------- ---------
Expenditure
Airports and ground handling - - - (474) - (474)
Airports, ground handling,
holidays accommodation,
and other operating costs (514) - (514) - - -
Holidays direct operating
costs (excluding flights) - - - (40) - (40)
Total (514) - (514) (514) - (514)
------------------------------- ------------ ------------- --------- ------------ ------------- ---------
2. Seasonality
The airline and package holiday industries are highly seasonal.
The airline industry experiences significantly higher demand and
yields during the summer. Accordingly, revenue and profitability
are usually higher in the second half of the financial year.
Historically, the Airline operating segment has reported a loss for
the first half of the financial year. This seasonal profile has
been exacerbated by the pandemic, but as the airline industry
emerges from the pandemic, historic patterns of seasonality have
returned. The Holidays operating segment also experiences higher
demand during the summer and consequentially profitability in the
second half of the financial year.
3. Non-headline items
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.
An analysis of the amounts presented as 'non-headline' is given
below:
Six months Six months ended
ended
31 March 31 March 2022
2023
GBP million GBP million
Sale and leaseback loss - 21
Restructuring charge/(credit) 4 (8)
Recognised in operating loss 4 13
Hedge discontinuation credit - (1)
Total non-headline charge before tax 4 12
Tax credit on non-headline items (1) (3)
Total non-headline charge after tax 3 9
Sale and leaseback
During the period, easyJet completed the sale and leaseback of
six A319 aircraft (H1 2022: 10). The income statement impact of the
six sale and leasebacks was a GBPnil profit on disposal (H1 2022:
GBP21 million loss recognised in Other costs).
Restructuring
As a result of the downsizing of operations at Berlin
Brandenburg airport, announced in the previous financial year, in
the current period easyJet returned an additional number of landing
right 'slots' held at the airport relating to our summer 2023
flying schedule. As noted last year, the slots in Berlin were
acquired as part of the acquisition of Air Berlin's operations in
2017. An allocation of the purchase price to the surrendered slots
has been estimated and, as no consideration was received in return
for giving back the slots, recognised as a loss on disposal of an
intangible asset. This resulted in a non-headline restructuring
charge of GBP3 million. Additionally, net restructuring charges of
GBP1 million (H1 2022: GBP8 million credit) representing additional
costs arising from previously announced restructuring programmes in
Germany, have been incurred in the period. Together, these amounts
have been presented as a net GBP4 million restructuring charge (H1
2022: GBP8 million credit).
Hedge discontinuations
Hedge discontinuation relates to the cumulative fair value of
financial derivatives at the time of being discontinued from a
previous hedge accounting relationship. No hedges were discontinued
in the six months ended March 2023.
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. In the six months
ended March 2022 this resulted in a GBP1 million net credit related
to these discontinued derivatives held in other comprehensive
income being immediately recorded in the income statement.
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 GBP6 million (H1 2022: GBP14 million loss) which results
in a tax credit of GBP1 million (2022: GBP3 million credit) for the
period.
4. Tax credit
Tax on loss on ordinary activities:
Six months Six months
ended ended
31 March 31 March
2023 2022
GBP million GBP million
------------ ------------
Current tax 4 3
Deferred tax (112) (129)
------------ ------------
(108) (126)
------------------------------------------------
Effective tax rate 26.1% 22.7%
Effective tax rate excluding rate change impact 26.1% 16.8%
The forecast effective tax rate (using currently enacted rates)
is higher than the standard rate of corporation tax in the United
Kingdom (22%) principally due to timing differences being
recognised at the substantively enacted tax rate for deferred tax
(25%). This is on the basis that the Finance Act 2021 confirmed the
increase of the UK Corporation Tax rate from 19% to 25% effective
from 1 April 2023. As such, timing differences that unwind after
this date are recognised at 25%. The standard rate of corporation
tax reflects a rate of 19% for the 6 months ended March 2023 and a
rate of 25% for the 6 months ended September 2023.
Had all timing differences been recognised at the current year
rate, the resulting effective tax rate (23.7%) would be higher than
the standard rate of corporation tax principally due to permanent
tax differences and differences in tax rates in jurisdictions where
easyJet has a taxable presence outside the UK. The permanent tax
differences are as a result of the sale and leaseback transactions
(disclosed within note 3) as well as other disallowable
expenses.
The forecasted effective tax rates have been determined on the
basis that deferred tax assets on tax losses are fully recoverable.
Additionally, the Full Expense Relief announced by the Chancellor
of the Exchequer and included in the draft Finance Bill 2023 has
not been taken into account as this has yet to be substantively
enacted.
Tax on items recognised directly in other comprehensive income
Six months Six months
ended ended
31 March 31 March
2023 2022
GBP million GBP million
------------
Credit/(charge) to other comprehensive income
Deferred tax credit/(charge) on defined benefit
scheme 1 (6)
Deferred tax credit/(charge) on fair value movements
of cash flow hedges 86 (53)
------------
Total credit/(charge) to other comprehensive
income 87 (59)
There was no tax on items recognised directly in shareholders' equity
in the period (H1 2022: GBPnil).
5. Loss per share
Six months Six months
ended ended
31 March
2023 31 March 2022
GBPmillion GBPmillion
Headline loss for the period (304) (422)
Total loss for the period (307) (431)
Six months Six months
ended ended
31 March
2023 31 March 2022
million million
Weighted average number of ordinary shares
used to calculate basic loss per share 751 754
Six months Six months
ended ended
31 March
2023 31 March 2022
pence pence
Basic loss per share
Total (40.9) (57.2)
Adjustment for non-headline 0.4 1.2
Headline (40.5) (56.0)
Diluted earnings per share figures are not presented for either
period as the impact of potential ordinary shares is
anti-dilutive.
6. Segmental Reporting
Six months ending 31 March
2023
Airline Holidays Intra-group Group
transactions
GBP GBP million GBP million GBP million
million
Passenger revenue 1,749 - - 1,749
Ancillary revenue 767 239 (66) 940
Total revenue 2,516 239 (66) 2,689
Operating costs excl fuel (1,824) (32) 3 (1,853)
Fuel (773) - - (773)
Holidays direct operating costs - (195) 63 (132)
Ownership costs (367) (2) - (369)
Foreign exchange gain 27 - - 27
Headline (loss)/profit before tax (421) 10 - (411)
Non-headline items (4) - - (4)
Total (loss)/profit before tax (425) 10 - (415)
Six months ending 31 March
2022
(re-presented)
Airline Holidays Intra-group Group
transactions
GBP GBP million GBP million GBP
million million
Passenger revenue 985 - - 985
Ancillary revenue 459 73 (19) 513
---------
Total revenue 1,444 73 (19) 1,498
Operating costs excl fuel (1,287) (17) - (1,304)
Fuel (362) - - (362)
Holidays direct operating costs - (59) 19 (40)
Ownership costs (337) (2) - (339)
Foreign exchange gain 2 - - 2
Headline loss before tax (540) (5) - (545)
---------
Non-headline items (12) - - (12)
---------
Total loss before tax (552) (5) - (557)
---------
The presentation of this note has been expanded to include
further details on revenue, the impact of foreign exchange
revaluations on the statement of financial position, and direct
operating costs of the Holidays operating segment. The prior period
has been presented on a consistent basis, which has resulted in the
re-presentation of the segmental information above.
This revised presentation reflects the increased granularity of
the internal reporting to the Chief Operating Decision Maker (CODM)
and plc Board. 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. Individual cost lines are not
reported separately as these are not key metrics reported to the
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.
7. Hedging Reserve
Within the consolidated statement of comprehensive income, there
is a decrease of GBP291 million (H1 2022: increase of GBP220
million) associated with the fair value movement of cashflow hedges
and the related deferred tax credit/charge. Gains of GBP153
million, primarily associated with jet fuel swaps settled in the
period, were transferred to the income statement (H1 2022: gains of
GBP123 million). In addition, fair value losses of GBP224 million
were recognised in the hedging reserve in the period (H1 2022:
gains of GBP396 million), mainly due to the movement in the market
rate of jet fuel verses the average hedged rates. The fair value
gain in the prior period was primarily due to the increase in the
market rate of jet fuel in the initial aftermath of the start of
the conflict in Ukraine. The net decrease in the current period of
GBP377 million in the reserves for the cashflow hedges (H1 2022:
net increase of GBP273 million) is partially offset by the related
deferred tax increase of GBP86 million (H1 2022: decrease of GBP53
million).
8. Property, plant and equipment
Right of use
Owned assets assets Total
Aircraft Land Other Aircraft Other Total
and and
spares buildings
GBP GBP GBP GBP
million million million million GBP million GBP million
Cost
At 1 October 2022 4,988 44 68 2,416 45 7,561
Additions 262 - 72 130 - 464
Aircraft sold and
leased
back (128) - - 25 - (103)
Disposals (16) - (5) - - (21)
At 31 March 2023 5,106 44 135 2,571 45 7,901
Depreciation
At 1 October 2022 1,390 - 28 1,479 35 2,932
Charge for the period 131 - 6 172 - 309
Aircraft sold and
leased
back (66) - - - - (66)
Disposals (13) - (5) - - (18)
At 31 March 2023 1,442 - 29 1,651 35 3,157
Net book value
At 31 March 2023 3,664 44 106 920 10 4,744
At 1 October 2022 3,598 44 40 937 10 4,629
Right of use
Owned assets assets Total
Aircraft Land and Other Aircraft Other Total
and buildings
spares
GBP GBP GBP GBP GBP
million million million million million GBP million
Cost
At 1 October 2021 4,802 44 55 2,335 45 7,281
Additions 414 - 28 120 - 562
Transfers - - (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
Depreciation
At 1 October 2021 1,243 - 19 1,255 29 2,546
Charge for the period 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
The net book value of aircraft includes GBP321 million
(30.09.22: GBP297 million) relating to advance payments for future
aircraft deliveries. This amount is not depreciated.
The net book value of aircraft spares is GBP85 million
(30.09.22: GBP81 million)
Transfers are from work in progress on other owned assets to
computer software intangible assets.
The 'Other' categories are principally comprised of leasehold
improvements, computer hardware, leasehold property, fixtures,
fittings and equipment, and work in progress in respect of various
projects. The work in progress as at 31 March 2023 was GBP74
million (30.09.22: GBP20 million). Included within work in progress
are amounts relating to two A320 NEOs received from Airbus in
March, which were initially due to be sold to another airline. As
the aircraft are not built to easyJet operational standards and
work is required to bring them to the required specification,
management will hold these assets as work in progress and shall not
commence depreciation until they enter operation in early Summer
2023.
As at 31 March 2023 easyJet was contractually committed to the
acquisition of 163 (30.09.22: 168) Airbus A320 family aircraft,
with a total list price* of US$22.3 billion (30.09.22: US$21.9
billion) before escalations and discounts for delivery. It is
expected that three aircraft will be delivered during the remainder
of FY 23, and 18 in FY 24, with the remaining aircraft delivered
between 2025 and 2029. In addition, easyJet was contractually
committed to the acquisition of four LEAP engines (30.09.22:
four).
easyJet is committed to 11 additional lease commitments and one
extension with a combined value of GBP123 million, of which the
extension and four of the lease commitments were entered into after
the statement of financial position date.
*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 2023 of 11.2% (or 2.7% CAGR)
9. Borrowings
Current Non-current Total
GBP
GBP million GBP million million
At 31 March 2023
Eurobonds 440 1,483 1,923
Term Loan (UK Export Finance backed
facility) - 759 759
440 2,242 2,682
At 30 September 2022
Eurobonds 437 1,919 2,356
Term Loan (UK Export Finance backed
facility) - 841 841
437 2,760 3,197
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.
During the period a Eurobond with a carrying value of GBP437
million was repaid.
Refer to note 11 for further details on borrowings.
10. Provisions for liabilities and charges
Maintenance Provisions Restructuring Other Total
provisions for customer Provisions provisions
claims
GBP million GBP million GBP million GBP million GBP million
-------------
At 1 October 2022 636 80 15 34 765
Exchange adjustments (52) - - - (52)
Release of provisions - (27) (3) (5) (35)
Additional provisions
recognised 113 61 4 8 186
Updated discount rates
net of unwind of discount 2 - - - 2
Utilised (44) (60) (5) (3) (112)
At 31 March 2023 655 54 11 34 754
-------------
Maintenance provisions comprise of 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.
31 March 30 September
2023 2022
GBP million GBP million
------------ ------------
Current 197 176
Non-current 557 589
754 765
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 31 March 2023 and therefore are classified as
current.
11. Financial instruments
Carrying value and fair value of financial assets and
liabilities
The fair values of financial assets and liabilities, together
with the carrying value at each reporting date, are as follows:
Amortised
cost Held at fair value
Fair Cash Other
Financial Financial value flow financial Other Carrying Fair
assets liabilities hedges hedges instruments (1) value value
GBP GBP GBP GBP GBP GBP GBP
At 31 March 2023 million million million million GBP million million million million
Other non-current
assets 105 - - - - - 105 105
Trade and other
receivables 252 - - - - 121 373 373
Trade and other
payables
(2) - (790) - - - (834) (1,624) (1,624)
Derivative financial
instruments - - - (147) 21 - (126) (126)
Restricted cash 2 - - - - - 2 2
Money market
deposits 81 - - - - - 81 81
Cash and cash
equivalents 2,398 - - - 1,007 - 3,405 3,405
Eurobonds
(3),(4),(5),(6).(7) - (1,923) - - - - (1,923) (1,774)
Other borrowings
(8) - (759) - - - - (759) (759)
Lease liabilities
(9) - (960) - - - - (960) N/A
Equity investments
(10) - - - - 31 - 31 31
Amortised cost Held at fair value
Fair Cash Other
Financial Financial value flow financial Other Carrying Fair
assets liabilities hedges hedges instruments (1) value value
GBP GBP GBP GBP GBP GBP GBP
At 30 September 2022 million million million million GBP million million million million
Other non-current
assets 91 - - - - - 91 91
Trade and other
receivables 230 - - - - 137 367 367
Trade and other
payables
(2) - (1,077) - - - (608) (1,685) (1,685)
Derivative financial
instruments - - 58 264 120 - 442 442
Restricted cash 7 - - - - - 7 7
Money market
deposits 126 - - - - - 126 126
Cash and cash
equivalents 2,528 - - - 986 - 3,514 3,514
Eurobonds
(3),(4),(5),(6),(7) - (2,356) - - - - (2,356) (2,081)
Other borrowings
(8) - (841) - - - - (841) (841)
Lease liabilities
(9) - (1,113) - - - - (1,113) N/A
Equity investments
(10) - - - - 31 - 31 31
(1). Amounts disclosed in the 'Other' column are items that do
not meet the definition of a financial instrument. They are
disclosed to facilitate reconciliation of the carrying values of
financial instruments to line items presented in the statement of
financial position.
(2) During the year ended 30 September 2022, GBP322m of
obligations under the EU Emissions Trading Scheme (ETS) were
presented as a financial liability within Trade and other payables.
During the period ended 31 March 2023 management concluded these
obligations are a non-financial liability and have presented
obligations of GBP608m within the 'Other' column. The prior period
has been presented on a consistent basis, resulting in
reclassification of GBP322m from the Financial liabilities column
to Other within Trade and other payables.
(3). easyJet plc established a GBP3,000 million Euro Medium Term
Note (EMTN) Programme on 7 January 2016. Subsequently easyJet plc
has issued three bonds under this programme and easyJet FinCo B.V.
has issued one bond. One bond has been repaid within the reporting
period. The remaining three bonds under this scheme are guaranteed
by easyJet Airline Company Limited, easyJet plc and easyJet FinCo
B.V. On 11 February 2022 the EMTN programme increased in size to
GBP4,000 million.
(4). In February 2016, easyJet plc issued a EUR500 million bond
under the GBP3,000 million Euro Medium Term Note Programme
guaranteed by easyJet Airline Company Limited. The Eurobond had a
seven year-term and paid an annual fixed coupon of 1.750%. At the
same time the Group entered into three cross-currency interest rate
swaps to convert the entire EUR500 million fixed rate Eurobond to a
sterling floating rate exposure. In February 2023 this bond reached
maturity and was settled, with a corresponding gain realised on
settlement of the cross-currency swap.
(5). In October 2016 easyJet plc issued a EUR500 million bond
under the GBP3,000 million Euro Medium Term Note Programme
guaranteed by easyJet Airline Company Limited. The Eurobond is for
a seven year term and pays an annual fixed coupon of 1.125%.
Shortly after the issuance of the EUR500 million bond the Group
entered into three cross-currency interest rate swaps to convert
the entire EUR500 million fixed rate Eurobond to a Sterling fixed
rate exposure. The cross-currency interest rate swaps were executed
on 8 November 2016 with settlement and notional exchange occurring
on 14 November 2016. All three swaps pay fixed interest
semi-annually, receive fixed interest annually, and have maturities
matching the Eurobond. The Group designated all three
cross-currency interest rate swaps as a cash flow hedge of the
currency risk on the EUR500 million Eurobond. The cross-currency
interest rate swaps are measured at fair value with the effective
portion taken through the statement of comprehensive income. The
element of the fair value generated by the change in the spot rate
is recycled to the income statement from the statement of
comprehensive income to offset the revaluation of the Eurobond. The
carrying value of the fixed rate Eurobond net of the cross-currency
interest rate swap at 31 March 2023 was GBP445 million. This value
does not include capitalised set-up costs incurred in the issuing
of the bond.
(6). In June 2019 easyJet plc issued a EUR500 million bond under
the GBP3,000 million Euro Medium Term Note Programme guaranteed by
easyJet Airline Company Limited. The Eurobond is for a six
year-term and pays an annual fixed coupon of 0.875%. At the same
time the Group entered into three cross-currency interest rate
swaps to convert the entire EUR500 million fixed rate Eurobond to a
sterling fixed rate exposure. All three swaps pay fixed interest
semi-annually, receive fixed interest annually, and have maturities
matching the Eurobond. The Group designated all three
cross-currency interest rate swaps as a cash flow hedge of the
currency risk on the EUR500 million Eurobond. The cross-currency
interest rate swaps are measured at fair value with the effective
portion taken through the statement of comprehensive income. The
element of the fair value generated by the change in the spot rate
is recycled to the income statement from the statement of
comprehensive income to offset the revaluation of the Eurobond. The
carrying value of the fixed rate Eurobond net of the cross-currency
interest rate swap at 31 March 2023 was GBP445 million. This value
does not include capitalised set-up costs incurred in the issuing
of the bond.
(7) In March 2021 easyJet FinCo B.V. issued a EUR1,200 million
bond under the GBP3,000 million Euro Medium Term Note Programme
guaranteed by easyJet Airline Company Limited and easyJet plc. The
Eurobond is for a seven-year term and pays an annual fixed coupon
of 1.875%. easyJet subsequently entered into four cross-currency
interest rate swaps to convert EUR600m of the fixed rate Eurobond
to a Sterling fixed rate exposure. All four swaps pay fixed
interest semi-annually, receive fixed interest annually, and have
maturities matching the Eurobond. The Group designated all four
cross-currency interest rate swaps as a cash flow hedge of the
currency risk for half of the EUR1,200 million Eurobond. The
cross-currency interest rate swaps are measured at fair value with
the effective portion taken through the statement of comprehensive
income. The element of the fair value generated by the change in
the spot rate is recycled to the income statement from the
statement of comprehensive income to offset the revaluation of the
Eurobond. The carrying value of the fixed rate Eurobond net of the
cross-currency interest rate swaps at 31 March 2023 was GBP1,049m.
This value does not include capitalised set-up costs incurred in
the issuing of the bond.
(8) In January 2021 easyJet entered into a new five-year term
loan facility of $1.87 billion underwritten by a syndicate of banks
and supported by a partial guarantee from UK Export Finance under
their Export Development Guarantee scheme. easyJet drew down $1.05
billion from the UKEF backed facility in January 2022. In April
2022 $0.1bn was repaid, reducing the total facility to $1.77bn and
leaving a closing drawn balance of $0.95bn at 31 March 2023. The
carrying value of the drawn balance as at 31 March 2023 was GBP769
million. This value does not include capitalised set-up costs.
(9) Lease liabilities are valued in accordance with IFRS 16 and
a fair value determination is not applicable.
(10). The equity investment of GBP31 million (30.09.22 GBP31
million) represents a 13.2% shareholding in a non--listed entity,
The Airline Group Limited. Valuation movements are designated as
being fair valued through other comprehensive income due to the
nature of the investment being held for strategic purposes.
Fair value calculation methodology
Where available the fair values of financial instruments have
been determined by reference to observable market prices where the
instruments are traded. Where market prices are not available, the
fair value has been estimated by discounting expected future cash
flows at prevailing interest rates and by applying period end
exchange rates (excluding The Airline Group Limited equity
investment).
The fair values of the three Eurobonds are classified as level 1
of the IFRS 13 'Fair Value Measurement' fair value hierarchy
(valuations taken as the closing market trade price for each
respective Eurobond as on 31 March 2023). Apart from the equity
investment, the remaining financial instruments for which fair
value is disclosed in the table above, and derivative financial
instruments, are classified as level 2.
The fair values of derivatives are calculated using observable
market forward curves (e.g. forward foreign exchange rates, forward
interest rates or forward jet fuel prices) and discounted to
present value using risk free rates. The impacts of counterparty
credit, cross currency basis and market volatility are also
included where appropriate as part of the fair valuation.
The equity investment is classified as level 3 due to the use of
forecast cash flows not based on observable market data, which are
discounted to present value. The fair value is assessed at each
reporting date based on the discounted cash flows. If the level 3
forecast cash flows were 10% higher or lower the fair value would
not increase / decrease by a significant amount.
The fair value measurement hierarchy levels have been defined as
follows;
--Level 1, fair value of financial instruments based on quoted
prices (unadjusted) in active markets for identical assets or
liabilities.
--Level 2, fair value of financial instruments in an active
market (for example, over the counter derivatives) which are
determined using valuation techniques which maximise the use of
observable market data and rely as little as possible on entity
specific estimates.
--Level 3, fair value of financial instruments that are not
based on observable market data (i.e. unobservable inputs).
12. Reconciliation of operating loss to cash generated from
operations
Six months Six months
ended ended
31 March 2023 31 March 2022*
GBP million GBP million
Operating loss (396) (499)
Adjustments for non-cash items:
Depreciation 309 265
Amortisation of intangible assets 13 12
Loss on disposal of property, plant and
equipment and intangibles 6 4
Loss on sale and leaseback - 21
Share-based payments 5 10
Changes in working capital and other items
of an operating nature:
Increase in trade and other receivables (28) (133)
Increase in current intangible assets (204) (86)
Decrease in trade and other payables (64) (9)
Increase in unearned revenue 1,339 934
Post employment defined benefit contributions (10) 5
Decrease in provisions (40) (75)
(Increase)/decrease in other non-current
assets (15) 86
Decrease/(increase) in derivative financial
instruments* 18 (19)
Cash generated from operations* 933 516
*The comparative period has been restated as described in note
1C(iii).
13. Government Grants and assistance
During the half year ended 31 March 2023 easyJet Airline Company
Limited continued to claim "activité partielle longue durée",
long-term partial activity (APLD), a scheme implemented by the
French government under which, subject to agreement with trade
unions, it is possible to reduce the activity of employees, within
the limit of 50% of their legal working time, while maintaining a
compensation funded by the Government. The total amount claimed by
easyJet in the half year ended 31 March 2023 amounted to GBP2
million (H1 2022: GBP8 million, received through this scheme, and
similar "furlough schemes" operated by the governments of
Switzerland and Germany) and is offset within employee costs in the
income statement.
On 8 January 2021 easyJet Airline Company Limited signed a
five-year term loan facility of $1.87bn (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. easyJet drew down
$1.05bn from the UKEF backed facility in January 2022. In April
2022 $0.10bn was repaid, reducing the total facility to $1.77bn and
leaving a closing drawn balance of $0.95bn as at 31 March 2023. The
carrying value of the drawn balance as at 31 March 2023 was GBP769
million. This value does not include capitalised set-up costs.
14. 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 9 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 condensed
consolidated interim financial statements.
In December 2022 easyJet was notified by the Italian Competition
Authority of an investigation into price fixing on Italian domestic
flights between ITA Airways, easyJet, Ryanair and Wizz Air. easyJet
has refuted the claims and is fully cooperating with the Authority
in its investigation. The Group does not expect any financial
impact to arise as a result of the investigation.
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 31 March 2023 easyJet had outstanding letters of credit and
performance bonds totalling GBP41 million (30.09.22: GBP43
million), of which GBP11 million (30.09.22: GBP10 million) expire
within one year. The fair value of these instruments at each period
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 at 31 March 2023 easyJet was contractually committed to the
acquisition of 163 (30.09.22: 168) Airbus A320 family aircraft,
with a total list price* of US$22.3 billion (30.09.22: US$21.9
billion) before escalations and discounts for delivery. It is
expected that three aircraft will be delivered during the remainder
of FY23, and 18 in FY24, with the remaining aircraft delivered
between 2025 and 2029. In addition, easyJet was contractually
committed to the acquisition of four LEAP engines (30.09.22:
four).
easyJet is committed to 11 additional lease commitments and one
extension with a combined value of GBP123 million, of which the
extension and four of the lease commitments were entered into after
the statement of financial position date.
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 is a signed
agreement requiring a financial commitment from easyJet in the
future, any future payments are contingent on project progress and
are therefore not certain, hence no liability has been recognised
for these payments.
*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 2023 of 11.2% (or 2.7% CAGR)
15. Related party transactions
The Company licenses the easyJet brand from easyGroup Ltd
('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 31 March 2023.
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 the agreement is 50 years.
easyJet and easyGroup have 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 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:
Six months Six months
ended ended
31 March 31 March
2023 2022
GBP million GBP million
Royalty 6.7 3.6
Brand protection (legal fees paid through easyGroup
to third parties) 0.1 -
6.8 3.6
At 31 March 2023, GBP0.4 million (30.09.22: GBP11.1 million) was
payable to easyGroup.
At 31 March 2023, GBP0.2 million (30.09.22: GBPnil) is
receivable from easyGroup.
16. Events after the statement of financial position date
There are no events to disclose.
Glossary - Alternative performance measures (APMs)
Non-headline items 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/nature
(See note 3).
Headline loss before A measure of underlying performance which is not
tax impacted by non-headline items.
Period Period
ended ended
31 March 31 March
2023 2022
GBP GBP million
million
Statutory loss before tax (415) (557)
Total non-headline loss before tax (see note
3) 4 12
Headline loss before tax (411) (545)
EBITDAR Earnings before interest, taxes, depreciation,
amortisation, and aircraft rental
Headline EBITDAR Earnings before non-headline items, interest,
taxes, depreciation, amortisation, and aircraft
rental.
Period Period
ended ended
31 March 31 March
2023 2022
GBP GBP million
million
Statutory operating loss (396) (499)
Add back;
Aircraft dry leasing 1 1
Depreciation 309 265
Amortisation of intangible assets 13 12
EBITDAR (73) (221)
Non-headline charge within operating profit
(see note 3) 4 13
Headline EBITDAR (69) (208)
Net debt Total cash less borrowings and lease liabilities;
cash includes money market deposits but excludes
restricted cash.
As at As at As at
31 March 30 September 31 March
2023 2022 2022
GBP GBP million GBP million
million
Borrowings 2,682 3,197 3,046
Lease liabilities 960 1,113 1,055
Cash and money market deposits (excluding
restricted cash) (3,486) (3,640) (3,505)
Net debt 156 670 596
Return on capital Operating profit, less tax at the prevailing UK
employed (ROCE) corporation tax rate at the end of the period,
divided by average capital employed (shareholder
equity plus net debt).
Headline return on Operating profit less non-headline items, less
capital employed (ROCE) tax at the prevailing UK corporation tax rate at
the end of the period, divided by average capital
employed (shareholder equity plus net debt).
Period Period
ended ended
31 March 31 March
2023 2022
GBP GBP million
million
Opening shareholders' equity 2,533 2,639
Closing shareholders' equity 1,921 2,440
Average shareholders' equity 2,227 2,540
Opening net debt 670 910
Closing net debt 156 596
Average net debt 413 753
Average capital employed 2,640 3,293
Reported operating loss (396) (499)
Tax rate 19% 19%
Adjusted operating profit after tax (321) (404)
Return on capital employed (12.2%) (12.3%)
Reported operating loss (396) (499)
Non-headline charge within operating profit
(see note 3) 4 13
Headline reported operating loss (392) (486)
Tax rate 19% 19%
Adjusted headline operating loss after tax (318) (394)
Headline returned on capital employed (12.0%) (12.0%)
Basic headline (loss)/earnings Total headline loss for the period divided by
per share - pence the weighted average number of shares in issue
during the period after adjusting for shares held
in employee benefit trusts.
Diluted headline (loss)/earnings Total headline loss for the period divided by
per share - pence the weighted average number of ordinary shares
in issue adjusted to assume conversion of all
dilutive potential shares.
Period Period
ended ended
31 March 31 March
2023 2022
GBP GBP million
million
Total loss after tax for the period (307) (431)
Total non-headline charge before tax (see note
3) 4 12
Tax impact of non-headline items (1) (3)
Headline loss after tax (304) (422)
million million
Weighted average number of ordinary shares used
to calculate basic loss per share 751 754
Weighted average number of ordinary shares used
to calculate diluted loss per share 751 754
Headline loss per share Pence Pence
Basic (40.5) (56.0)
Diluted (40.5) (56.0)
Constant currency These performance measures are calculated by translating
measures the period ended 31 March 2023 income statement
at the financial period average exchange rate for
period ended 31 March 2022, excluding any income
statement impact in either financial period from
foreign currency exchange gains and losses arising
from the revaluation of the statement of financial
position. The purpose of this APM is to provide
a like for like comparison of underlying operating
performance by excluding the impact of exchange
rate movements.
Glossary - Other
Aircraft dry / Dry leasing arrangements relate solely to the
wet leasing provision of an aircraft. Wet leasing arrangements
relate to the provision of aircraft, crew, maintenance
and insurance.
Aircraft owned/leased Number of aircraft owned or on lease arrangements
at end of period of over one month's duration at the end of the
period. This excludes operating leased aircraft
which have been acquired for future operations.
These are held at zero rent and are excluded from
the fleet numbers.
Available seat kilometres Seats flown multiplied by the number of kilometres
(ASK) flown.
Average adjusted The average of opening and closing capital employed.
capital employed
Block hours Hours of service for aircraft, measured from the
time that the aircraft leaves the terminal at
the departure airport to the time that it arrives
at the terminal at the destination airport.
Capital employed Shareholders' equity plus debt.
Airline cost per ASK Airline revenue less profit before tax, divided
(CASK) by available seat kilometres.
Airline cost per seat Airline revenue less profit before tax, divided
by seats flown.
Airline cost per seat, Airline revenue, less profit before tax, adding
excluding fuel back fuel costs, divided by seats flown.
Airline CSAT (Customer A weighted average of responses of surveys sent
Satisfaction Score) to customers who experienced either an on-time,
delayed, severely delayed or cancelled flight.
Gearing Net debt divided by the sum of shareholders' equity
and adjusted net cash/debt.
Booked load factor Number of passengers as a percentage of number
of seats flown. The load factor is not weighted
for the effect of varying sector lengths.
Normalised operating Reported operating profit, less tax at the prevailing
profit after tax UK corporation tax rate at the end of the period.
Operating costs excl Includes costs relating to airports and ground
fuel handling, crew, navigation, maintenance, selling
and marketing and other costs/income.
Ownership costs Includes depreciation, amortisation, net finance
charges and the impact of foreign exchange gain/losses
from the revaluation of the statement of financial
position.
Other costs Administrative and operational costs not reported
elsewhere, including disruption costs, IT costs,
costs of 3(rd) party providers, some employee
costs, wet lease costs and insurance. Additionally,
some non-headline costs, such as loss on sale
and leaseback transactions, and restructuring
costs, are included in other costs.
Other income Includes insurance receipts, supplier compensation
payments, rental income and gain on sale and leaseback
transactions.
Passengers Number of earned seats flown. Earned seats comprises
seats sold to passengers (including no-shows),
seats provided for promotional purposes and seats
provided to staff for business travel.
Profit before tax Profit before tax divided by seats flown.
per seat
Total revenue The sum of passenger revenue and ancillary revenue,
including package holiday revenue.
Revenue passenger Number of airline passengers multiplied by the
kilometres (RPK) number of kilometres those passengers were flown.
Revenue per ASK Airline revenue (passenger and ancillary) divided
by available seat kilometres.
Revenue per seat Airline revenue (passenger and ancillary) divided
by seats flown.
Seats flown Seats available for passengers.
Sector A one-way revenue flight
Statement of Directors' responsibilities
The Directors are responsible for preparing the interim report
in accordance with applicable law and regulations. The Directors
confirm that the condensed consolidated interim financial
information has been prepared in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
The interim management report includes a fair review of the
information required by the Disclosure Guidance and Transparency
Rules paragraphs 4.2.7 R and 4.2.8 R, namely:
-- an indication of important events that have occurred during
the six months ended 31 March 2023 and their impact on the
condensed set of financial information, and a description of the
principal risks and uncertainties for the remaining six months of
the financial year; and
-- material related-party transactions during the six months
ended 31 March 2023 and any material changes in the related-party
transactions described in the Annual report and accounts for the
year ended 30 September 2022.
The Directors of easyJet plc are listed in the Annual report and
accounts for the year ended 30 September 2022. A list of current
Directors is maintained on the easyJet plc website:
http://corporate.easyJet.com .
The Directors are responsible for the maintenance and integrity
of, amongst other things, the financial and corporate governance
information as provided on the easyJet website
(http://corporate.easyJet.com). Legislation in the United Kingdom
governing the preparation and dissemination of financial
information may differ from legislation in other jurisdictions.
The interim report was approved by the Board of Directors and
authorised for issue on 18 May 2023 and signed on its behalf
by:
Johan Lundgren Kenton Jarvis
Chief Executive Chief Financial Officer
Independent review report to easyJet plc
Report on the condensed consolidated interim financial
information
Our conclusion
We have reviewed easyJet plc's condensed consolidated interim
financial information (the "interim financial statements") in the
interim report of easyJet plc for the 6 month period ended 31 March
2023 (the "period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
The interim financial statements comprise:
-- the Condensed consolidated statement of financial position as at 31 March 2023;
-- the Condensed consolidated income statement and Condensed
consolidated statement of comprehensive income for the period then
ended;
-- the Condensed consolidated statement of cash flows for the period then ended;
-- the Condensed consolidated statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the interim report
of easyJet plc have been prepared in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, 'Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity' issued by the Financial Reporting Council for use in the
United Kingdom ("ISRE (UK) 2410"). A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the interim
report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on
the review procedures performed in accordance with ISRE (UK) 2410.
However, future events or conditions may cause the group to cease
to continue as a going concern.
Responsibilities for the interim financial information and the
review
Our responsibilities and those of the directors
The interim report, including the interim financial statements,
is the responsibility of, and has been approved by the directors.
The directors are responsible for preparing the interim report in
accordance with the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority. In
preparing the interim report, including the interim financial
statements, the directors are responsible for assessing the group's
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the
group or to cease operations, or have no realistic alternative but
to do so.
Our responsibility is to express a conclusion on the interim
financial statements in the interim report based on our review. Our
conclusion, including our Conclusions relating to going concern, is
based on procedures that are less extensive than audit procedures,
as described in the Basis for conclusion paragraph of this report.
This report, including the conclusion, has been prepared for and
only for the company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
Watford
18 May 2023
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END
IR FZGMKLNVGFZM
(END) Dow Jones Newswires
May 18, 2023 02:00 ET (06:00 GMT)
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