TIDMEZJ
RNS Number : 8488U
easyJet PLC
28 November 2023
28 November 2023
easyJet plc
Results for the twelve months ending 30 September 2023
Record H2'23 financial performance with a positive outlook for
FY24
-- Record H2 profit before tax despite challenging external operating environment
- FY23 headline profit before tax of GBP455 million (GBP633 million year on year improvement)
- easyJet holidays profits grew 221%, delivering GBP122 million profit before tax
-- Positive outlook for FY24
- October RPS +12% (Q1 RPS expected to be ahead YoY despite
being impacted by Middle East conflict)
- Q2 to Q4 RPS all ahead YoY
- H1 CPS ex fuel to be broadly flat YoY
- easyJet holidays expected to grow >35% in FY24 with ASP up high single digits
-- Remain on track to deliver disciplined growth of c.9% in FY24
- H1'24 c. 42m seats, +11% YoY
- H2'24 c. 59m seats, +8% YoY
-- Financial strength
- GBP41 million net cash with GBP4.7 billion liquidity
- BBB/Baa3 credit ratings, both with positive outlook
-- Dividends reinstated
- 4.5p per share payable in early 2024
- Expect pay out to increase to 20% of headline PAT on FY24's result
- Potential to increase level of future returns to be assessed over the coming years
Commenting on the results, Johan Lundgren, easyJet's Chief
Executive Officer, said:
"Our record summer performance demonstrates the success of our
strategy and that demand for easyJet remains strong as customers
choose us for our network and value.
"We see a positive outlook for this year with airline and
holidays bookings both ahead year on year and recent consumer
research highlights that around three quarters of Britons plan to
spend more on their holidays versus last year with travel
continuing to be the top priority for household discretionary
spending.
"We are confident about the future and the opportunity ahead,
focusing on capital discipline and driving our low cost model to
achieve our ambitious medium term targets."
Overview
easyJet achieved a record performance during summer 2023,
despite high fuel costs and the challenges arising from the
external operational environment, thanks to initiatives implemented
over the past year and a half. Supported by strong consumer demand
and easyJet's leading brand position, the Company's success is
driven by the low-risk expansion at primary airports, significant
increases in ancillary revenue, market beating growth for easyJet
holidays and a constant focus on cost. This led to a pre-tax
headline profit of GBP455 million for the 2023 financial year, an
improvement of GBP633m year on year.
Medium-term targets
easyJet has ambitious and credible medium-term targets, that
provide the building blocks to achieve a Group PBT per seat of
between GBP7 to GBP10. The levers to achieving this are: reducing
winter losses, growing easyJet holidays to deliver over GBP250
million of PBT and the cost savings that our current Airbus order
book will deliver from fleet efficiency and upgauging. In addition
to the delivery of our strategy, these targets are integral to
achieving easyJet's ambition to deliver more than GBP1 billion
PBT.
Shareholder Returns
Considering easyJet's strong financial results in FY23 and
robust liquidity position, the board is proposing an ordinary
dividend of 4.5 pence per share, amounting to GBP34 million, at the
upcoming Annual General Meeting. This represents 10% of the
after-tax headline profit. The expectation is that this will rise
to 20% of headline profits after tax in FY24, payable in early
2025. The Board is committed to maintaining regular returns to
shareholders, with the level of future return to be assessed over
the coming years, taking into account market conditions, capex
requirements and progress towards the Group's new medium-term
targets.
Proposed aircraft purchase and conversion
easyJet has an existing order book with Airbus to FY29 for a
further 158 A320neo family aircraft still to be delivered.
Alongside this, as announced on 12 October 2023, easyJet has
entered into conditional arrangements with Airbus to secure the
delivery of a further 157 aircraft (56 A320neo & 101 A321neo)
between FY29 - FY34 as well as 100 purchase rights (the "Proposed
Purchase"). This provides easyJet with the ability to complete its
fleet replacement programme of A319 aircraft and replace
approximately half of the A320ceo aircraft as well as providing the
foundation for disciplined growth. The Company is in exclusive
negotiations with CFM for the supply of engines for the Proposed
Purchase.
easyJet has also agreed to exercise conversion rights within its
current order book to convert 35 A320neo deliveries into A321neo
aircraft (the "Conversion"). This alongside the Proposed Purchase
will deliver lower fuel burn, CO(2) emissions and operating costs
per seat.
A circular is expected to be published on 29 November 2023
giving further details of the Proposed Purchase and seeking
shareholder approval at a General Meeting on 19 December 2023.
FY23 Financial Summary
- Headline profit before tax of GBP455 million (2022: GBP178 million loss)
o Total revenue increased by 42% to GBP8,171 million (2022:
GBP5,769 million) predominantly due to pricing strength, increased
flown capacity, improved load factors and the continued growth of
easyJet holidays.
o Group headline costs increased by 30% to GBP7,716 million
(2022: GBP5,947 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 2023 ramp up preparations and 15 wet lease aircraft
which were within the fleet for the month of October. The continued
growth of easyJet holidays, with 77% customer growth has seen costs
increase, although at a slower rate than revenue resulting in
improved margins.
- Reported profit before tax of GBP432 million (2022: GBP208 million loss)
o Non-headline loss of GBP23 million (2022: GBP30 million loss).
Non-headline items consist primarily of returning final slots at
Berlin Brandenburg airport following the rightsizing of the
operation from 18 to 11 aircraft and an adjustment to right of use
asset depreciation to correct a historic non-cash foreign currency
translation error.
Fuel & FX Hedging
Jet Fuel H1'24 H2'24 H1'25 USD H1'24 H2'24 H1'25
Hedged position 76% 51% 25% Hedged position 76% 53% 27%
----- ----- ----- ----- ----- -----
Average hedged rate
($/MT) 867 823 832 Average hedged rate (USD/GBP) 1.22 1.24 1.24
----- ----- ----- ----- ----- -----
Current spot ($/MT) c.900 Current spot (USD/GBP) c.1.25
at 27.11.23 at 27.11.23
------------------- -------------------
- Carbon obligation including free allowances
o 100% covered for CY23 at EUR42/MT
o 86% covered for CY24 at EUR41/MT
- USD Lease payments hedged for the next three years at 1.29
- Capex hedged for the next 12 months in EUR & USD
Key Stats
2023 2022 Change
favourable/(adverse)
---------------------------------------- ------ ------- --------------------------
Capacity(1) (millions of seats) 92.6 81.5 14%
Passengers(2) (millions) 82.8 69.7 19%
Load factor(3) (%) 89% 86% 3ppt
Average sector length (km) 1,224 1,193 3%
Airline revenue per seat (GBP) 79.84 66.23 21%
Airline RASK (p) 6.52 5.54 18%
Fuel cost per seat (GBP) 21.95 15.68 (40)%
Airline headline cost ex fuel per seat
(GBP) 54.30 53.20 (2)%
Airline headline cost per seat (GBP) 76.25 68.88 (11)%
Airline headline CASK ex fuel (p) 4.44 4.45 0%
Airline EBITDAR per seat (GBP) 10.96 6.46 70%
Airline EBIT per seat (GBP) 3.94 (0.43) 1,016%
Airline headline PBT/(LBT) per seat
(GBP) 3.59 (2.65) 235%
Group headline PBT/(LBT) per seat 4.91 (2.19) 324%
Holidays passengers (m) 1.9 1.1 77%
Holidays profit before tax (GBPm) 122 38 221%
Headline EBITDAR Margin 14% 10% 4ppts
Headline ROCE 13% 0% 13ppts
Dividend (pence per share) 4.5 0 -
---------------------------------------- ------ ------- --------------------------
Outlook
The 2024 financial year has begun positively with strong
year-on-year profit growth in October and revenue per seat on early
bookings for Q2-Q4 pleasingly ahead of last year. There's also
strong growth in easyJet holidays' bookings for all periods on
sale, continuing the upward trend. Consequently, easyJet aims for
continued progress towards our medium-term profitability
ambitions.
Early winter results for FY24 will see an impact from the
conflict in the Middle East, which started on 7th October. In our
planned winter schedule, flights to Israel, Jordan (both
temporarily paused) and Egypt represented 4% of capacity and 10%
ASKs. Additionally there was a broader impact on near term flight
searches and bookings across the industry, though this seems to be
coming back with a recent improvement in trading. Accordingly,
despite positive underlying strength, easyJet does not currently
expect its Q1 loss to improve year on year. The present booking
strength for summer 2024, coupled with supply constraints in
Europe, provide a positive outlook for the year as a whole.
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
Olivia Peters Teneo +44 (0) 20 7353 4200
Harry Cameron Teneo +44 (0) 20 7353 4200
Conference call
There will be an analyst presentation at 09:00am GMT on 28
November 2023 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://brrmedia.news/EZJ_FY23
Alternatively dial in details are as follows: Dial in details
are as follows: 0808 109 0700/+44 (0) 33 0551 0200 quoting 'easyJet
full year results' when prompted.
Revenue
Total revenue saw a significant rise of 42%, reaching GBP8,171
million, compared to GBP5,769 million in 2022. This is primarily
due to an increase in capacity to 92.6 million seats from 81.5
million in 2022, coupled with strong ticket yield and a continued
increase in ancillary revenue generation.
Passenger revenue climbed by 37% to GBP5,221 million, up from
GBP3,816 million in 2022, as we operated with higher capacity
compared to the prior financial year. The Passenger Revenue Per
Seat (RPS) also saw a 20% increase to GBP56.37, up from GBP46.80 in
2022. This growth is driven by easyJet's optimised network at
primary airports, as demand remained strong through the year.
Group ancillary revenue saw a 51% increase to GBP2,950 million,
up from GBP1,953 million in 2022. This is due to increased capacity
and the rapid growth of easyJet holidays (with a 77% YoY increase
in customers). Airline ancillary revenue per seat also rose by 21%
to GBP23.47, compared to GBP19.43 in 2022. This is a result of
easyJet's ongoing efforts to increase conversion and revenue
management, generating additional revenue for the airline.
Costs
Group headline costs, excluding fuel, rose by 22% to GBP5,683
million, up from GBP4,668 million in 2022. This increase is
attributed to higher capacity, industry-wide inflation, rapid
expansion of easyJet holidays, and resilience measures implemented
ahead of Summer 2023.
easyJet reported a gain of GBP27 million from foreign exchange
on balance sheet revaluations, benefiting from the strengthening of
sterling against the USD during the period on our net
USD-denominated liabilities. This compares to a GBP64 million loss
recorded in 2022.
Headline Airline cost per seat, excluding fuel, saw a marginal
increase of 2% to GBP54.30 from GBP53.20 in 2022, aligning closely
with the sector length increase of 3%. This is despite inflation
being seen across the cost base, including within airport,
navigation and staffing expenses, and a 3-percentage point increase
in load factor observed during the year, which affects per
passenger charges within airports.
Non-Headline Items
Non-headline items are those where, in management's opinion,
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. These costs are separately disclosed and further
detail can be found in the notes to the financial statements. Group
non headline loss of GBP23 million (2022: GBP30 million loss) was
recognised in the 2023 financial year. The significant items are
the return of final slots at Berlin Brandenburg airport following
the rightsizing of the operation from 18 to 11 aircraft and an
adjustment to right of use asset depreciation to correct an
historic non-cash foreign currency translation error.
Balance Sheet
During the 2023 financial year easyJet has focused on reducing
its gross debt. This has included the repayment of a EUR500 million
bond in February 2023 and the refinancing of the $1.8bn UKEF
facility where an additional $950 million of gross debt was repaid.
During the first quarter of the 2024 financial year, easyJet has
also repaid a EUR 500 million Eurobond which matured in October
2023.
As at 30 September 2023 our net cash position was GBP41 million
(30 September 2022: GBP670 million net debt) including cash and
cash equivalents and money market deposits of GBP2.9 billion (30
September 2022: GBP3.6 billion).
Fleet
easyJet's total fleet as at 30 September 2023 comprised 336
aircraft (30 September 2022: 320 aircraft, excluding three A319
aircraft held on a zero rent basis). The increase was driven
by:
-- Delivery of ten new A320neo aircraft, including accelerating
two FY25 scheduled orders into FY23.
-- Acquisition of eight 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.
Six older leased aircraft exited the fleet at the end of their
lease-term (three A319 aircraft, and three 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.
easyJet already has 69 A320neo family aircraft within its fleet
and an existing order book with Airbus to FY29 for a further 158
A320neo family aircraft still to be delivered. Alongside this,
easyJet has now entered into conditional arrangements with Airbus
to secure the delivery of a further 157 aircraft (56 A320neo &
101 A321neo) between FY29 - FY34 as well as 100 purchase rights
(the "Proposed Purchase"). This provides easyJet with the ability
to complete its fleet replacement programme of A319 aircraft and
replace approximately half of the A320ceo aircraft, alongside
providing the foundation for disciplined growth.
The average age of the fleet increased to 9.9 years (30
September 2022: 9.3 years). The average gauge of the fleet is
currently 179 seats per aircraft (30 September 2022: 179
seats).
Fleet as at 30 September 2023
Changes since Firm
Owned Leased Total % of fleet Sep-22 Orders
A319 29 66 95 28% 1 -
A320 103 69 172 51% 5 -
A320neo 47 7 54 16% 10 90 (a)
A321neo 4 11 15 5% - 68(a)
--------------- ------ ------- ------ ----------- -------------- --------
183 153 336 158
--------------- ------ ------- ------ ----------- -------------- --------
Percentage of
total fleet 54% 46%
a) easyJet retains the option to alter the aircraft type of
future deliveries, subject to providing sufficient notification to
the OEM. The presented number assumes the conversion of 35 A320neo
deliveries into A321neo deliveries as set out in the proposed
aircraft purchase and conversion section of this release. It does
not reflect the proposed aircraft order from FY29 to FY34.
Our flexible fleet plan allows us to expand or contract the size
of the fleet depending on the demand outlook.
Number of aircraft FY24 FY25 FY26
----------------------------------- -------- -------- -------
Current contractual maximum 346 373 395
Base fleet plan 346 358 370
Current contractual minimum 337 338 313
------------------------------------ -------- -------- -------
New aircraft deliveries 16 19 27
------------------------------------ -------- -------- -------
Gross capital expenditure (GBP'm) c.1,300 c.1,500 c.1,900
------------------------------------ -------- -------- -------
Capex is comprised of new fleet delivery payments, maintenance
related expenditure, lease payments and other capital expenditure
such as IT development.
Strategy
easyJet's purpose is to make low-cost travel easy. Our strategy
is built around four key priorities that leverage our structural
benefits in the European aviation market. These strategic
initiatives guide easyJet towards its goal of becoming Europe's
most loved airline, delivering value for our customers,
shareholders, and people. The details of our strategic priorities
are as follows:
-- 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 number one and number two
positions in primary airports, which has proven to be amongst the
highest yielding in the market. This allows us to make efficient
network choices, focusing on maximising returns.
easyJet constantly reviews its network to ensure capacity is
allocated to markets where demand and returns are highest. From
Summer 2019 to 2023, we've reallocated 47 aircraft, leading to
stronger returns at bases where aircraft have been added and at
those where capacity has been streamlined. Alongside this, we've
expanded customer options by introducing over 80 new routes this
year. Our investment into Italy and capacity rationalisation in
Berlin saw routes mature during FY23, delivering an 45% and 83%
profit improvement respectively. We expect to see continued route
maturity in these locations through FY24 alongside maturity from
the investments we made through FY23 in Porto and Lisbon.
We aim to further strengthen our position in key markets as the
competitive landscape evolves. easyJet remains ready for
opportunistic growth alongside growth on our existing network,
through leveraging slot growth in core markets and upgauging which
allows expansion at slot constrained airports. In 2023, 42% of
capacity was in fully constrained airports (+5 ppts vs 2019) and
39% of capacity was in airports that are constrained at peak times
(+9 ppts vs 2019), which demonstrates our increased concentration
at airports that deliver the highest returns.
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, which 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 revenue
easyJet recognises that the continued evolution of our product
portfolio represents a significant opportunity to build on spend
per customer and deliver enhanced sustainable returns.
Airline Ancillaries:
Cabin bags and our leisure bundles, amongst other ancillary
products, have continued to deliver incremental revenue through the
period. Additionally, easyJet's inflight retail offering,
introduced last year, has resulted in a profit per seat increase of
+42% in FY23 compared to the former model. These initiatives have
led to the Airline's ancillary yield being GBP11.95 higher than the
same period in 2019.
Integrated pricing has been implemented for cabin and hold bags
on 16% of the network, delivering a GBP0.43 per seat benefit on the
test routes, with the roll out to be continued to the rest of the
network in FY24. This is a step towards the long-term strategy of
total basket optimisation. Further initiatives are underway with
data science in revenue management, gauge optimisation and
e-commerce enabling us to unlock further merchandising
capability.
easyJet holidays:
easyJet holidays continues its rapid growth, becoming a major
player within the sector and doubling its UK market share year on
year. easyJet holidays has recorded 77% customer growth year on
year and a profit before tax of GBP122 million in the 2023
financial year.
As the holidays business grows in scale, targeted investments
will continue to be made to strengthen the customer base. Future
initiatives are underway to optimise pricing alongside enhancing
the product offering through room options and ancillary
products.
The UK market has further opportunities for growth in Leisure,
City Breaks and new products, to continue to increase our market
share. Our multi-currency technology platform also enables easy and
rapid expansion into other source markets. This year we launched
Switzerland, which is on sale 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
offers an excellent opportunity for easyJet holidays to continue
its growth.
Moving into the 2024 financial year, easyJet holidays expects to
grow by more than 35% taking its UK market share from 5% to 7%. The
business will also launch French and German source markets as the
holidays business continues to expand its presence as a pan
European holiday company.
Driving our low-cost model
easyJet has a cost advantage over its major competitors within
its primary airport network. Alongside cost actions, easyJet is
focused on improving margins 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 been completed 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, BHX, BFS,
MAN 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 38%
average cost saving per aircraft visit.
o Line maintenance insourcing at Birmingham, Manchester and
Belfast resulting in line maintenance being fully insourced in the
UK.
-- Increasing automation of self-service management: increasing
digitalisation of customer flows and reducing the need for contact
centre support.
o 80% of customers are now using the self-service platform as
our Generative AI tool is assisting customer queries, resulting in
a 50% reduction in response processing times and a 30% reduction in
processing cost of each email received.
Cost remains a core emphasis for the business for the coming
year, with cost benefits to come through:
-- Fleet upgauging: As we replace A319s with A320 family
aircraft, we will unlock efficiency benefits, increasing the
average gauge from 179 to the low 190s by FY28 and to the low 200s
by FY34. The delivery of NEO aircraft from easyJet's new and
existing orders will also bring additional fuel and airport
incentive benefits.
-- Increased productivity: capacity restoration through Winter
24 will promote productivity and additional cost savings. Further
efficiency will be driven through data and IA.
Delivering ease and reliability
easyJet aims to deliver a seamless and digitally enabled
customer journey at every stage and is continuously working to
enhance the customer experience. 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.
Despite the operational challenges seen during the year, we
executed on our plan for FY23, ranking either first or second in on
time performance in our top 10 airports. Our focus on resilience
will continue as we look ahead to FY24, we are investing to ensure
we are well prepared for external challenges that may happen in
Summer 24.
Gatwick continues to be a clear focus, and we have looked to
further optimise our schedule and increased the level of standby
aircraft here.
Our enhanced use of technology is also being applied to improve
and speed up every aspect of the customer experience. More than
three quarters of customers exclusively use our digital
self-service platforms to self-serve, and we have also implemented
A.I to help speed up the time it takes to resolve customer
queries.
Sustainability
There are many benefits of travel and tourism. It connects
people, countries and cultures and supports the aspirations and
livelihoods of millions of people. If lost, it would have a
devastating global impact on economic prosperity and social
mobility. Clearly, we need to find a balance that both lowers the
impact of aviation and safeguards these benefits. This is why we
developed and published a SBTi-aligned net zero roadmap, and
secured validation from SBTi for our interim target of 35%
greenhouse gas emissions intensity reduction by 2035 (against a
FY19 baseline). We are collaborating in multiple cross-sector
partnerships and have invested multimillions of pounds in the
development of zero carbon emission technology. It is very pleasing
to see that this work is being recognised, with each of our ratings
from CDP, Sustainalytics and MSCI either improving or being
maintained. During 2023 we were also included into FTSE 4 Good.
We're also making significant breakthroughs. We partnered with
Rolls-Royce to set a world first by successfully running a modern
aero engine on green hydrogen. A test on a key component in a Pearl
700 engine in September further proves hydrogen's suitability for
aviation, and - in addition to continued partnerships with Airbus,
GKN Aerospace and Cranfield Aerospace Solutions - easyJet has
played the lead role in establishing the Hydrogen in Aviation
Alliance (HIA) to help ensure the infrastructure and supply exists,
so we can capitalise on this opportunity when it becomes
available.
We're also making substantial operational efficiencies. A fifth
of our fleet comprises the highly efficient NEO aircraft and we've
invested heavily in state-of-the-art software to drive flight
efficiencies - all of which are contributing to easyJet's best-ever
carbon intensity performance in FY23.
Looking beyond our operations, we continue to support the vital
work of UNICEF and many charitable and local community focused
projects. At the same time, easyJet holidays is working to maximise
the socio-economic benefits of tourism to destination communities,
while managing environmental impacts.
Sustainability is at the heart of our strategy and everyone at
easyJet is dedicated to building a sustainable and thriving
aviation sector that will serve and benefit countless generations
to come.
Our People
easyJet continues to have a market leading reputation as an
employer of choice, as evidenced through our Glassdoor rating of
4.2.
In a recruitment market that remains competitive, we continue to
improve how we attract and retain diverse talent that reflects the
communities we serve. We have evolved our Employee Value
Proposition (EVP) and launched a more compelling careers website to
deliver a much-improved candidate experience and to convert more of
the interest generated by our recruitment advertising into
applications.
When people join easyJet, our proactive and rewarding health and
wellbeing strategy empowers them to take small, easy steps to
better wellbeing every day. By giving colleagues the tools, support
and confidence they need to take care of themselves and each other,
they will have the energy to enable us to perform at our best and
win together.
By building an inclusive culture and living our behaviours, we
create a place where everyone can not only be themselves but also
thrive, grow to their full potential and be at their best.
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.
OUR FINANCIAL RESULTS
The year was characterised by a strong trading environment,
culminating in a record summer for the Group, supported by an
excellent contribution from easyJet holidays.
Headline profit before tax of GBP455 million for the year ended
30 September 2023 was an improvement of GBP633 million on the loss
of GBP178 million for the year ended 30 September 2022, with total
revenue of GBP8,171 million, GBP2,402 million ahead of the prior
year. The year was characterised by a strong trading environment,
culminating in a record summer for the Group. This result was
supported by an excellent contribution from easyJet holidays, which
has started to demonstrate its potential for the future.
easyJet flew 82.8 million passengers in the year (2022: 69.7
million), up 19% on the previous year, this being the first year
with no travel restrictions since 2019. Strong yields and airline
revenue per seat (RPS) recovery (15% and 21% increase respectively
over the prior year) were key drivers of success in the year. Load
factor for the year was 89.3% (2022: 85.5%), an improvement of 3.8
percentage points, and capacity was 14% ahead of the prior year.
easyJet holidays delivered package holidays for 1.9 million
customers (including agent commission passengers, 2022: 1.1
million), generating incremental revenue of GBP776 million (2022:
GBP368 million) and delivering GBP122 million of headline profit
before tax (2022: GBP38 million). The year was also characterised
by industry-wide cost challenges coming off the back of
persistently high levels of inflation. Despite the resilience
measures that easyJet undertook, we also saw significant disruption
including the impact of ATC failures and external industrial action
in several of our markets.
Trading in the first half of the financial year, with the
absence of the prior year pandemic-related travel restrictions, saw
capacity increase by 25% to 37.9 million seats flown (H1 2022: 30.3
million) and strong yields delivering a record first half RPS
result of GBP66.46 (H1 2022: GBP47.61). The total number of
passengers carried in H1 increased by 41% to 33.1 million (H1 2022:
23.4 million) with load factors at 87.5%, a 10.2 percentage point
increase on the comparative period (H1 2022: 77.3%). Disruption due
to external industrial action has been a feature throughout the
year, starting in the first half of the financial year with French
ATC strikes resulting in flight cancellations and an impact on
on-time performance. In March alone only five days were unaffected
by strike action.
Second half trading saw a continuation of strong yields and RPS
results, and a Q4 load factor of 91.6%. July and August revenues of
over GBP1 billion in each month were a record, as was headline EBIT
in Q4, the strongest quarterly headline EBIT in easyJet's history.
This was despite significant disruption over the summer period,
with ongoing industrial action and significant ATC challenges
across Europe, in particular at Gatwick Airport. easyJet took
action to thin the flying schedule at Gatwick over the peak trading
period in order to mitigate ATC issues and ensure flights flew to
schedule, protecting the customer experience by limiting on-the-day
cancellations.
Fuel prices remained high throughout the year and experienced
significant volatility, ranging from c. $700 to $1,100 per metric
tonne. The industry faced significant inflationary cost pressures
in addition to the cost of the disruption in the year.
Notwithstanding, with a focus on cost management, productivity, and
increased capacity, the airline cost per seat (CPS) excluding fuel
for the year of GBP54.30, was an increase of only 2% on the prior
year (2022: GBP53.20). With the increase in average sector length
factored in, airline headline cost per available seat kilometre
(CASK) excluding fuel at 4.44 pence was marginally lower than the
prior year (2022: 4.45 pence).
The strong revenues and cost management delivered a headline
EBITDAR achievement for the year of GBP1,130 million, GBP561
million greater than the prior year (2022: GBP569 million), and a
statutory profit before tax for the year of GBP432 million, an
improvement from the loss of GBP208 million in the previous
year.
Where amounts are presented at constant currency these values
are an alternative performance measure (APM) and are not determined
in accordance with International Financial Reporting Standards
(IFRS), but provide relevant and comparative reporting for readers
of these financial statements. Definitions of APMs and
reconciliations to IFRS measures are set out in the Glossary in the
annual reports and accounts.
Performance summary
GBP million (reported) - Group 2023 2022
------------------------------------------------------------------------------------------- --------- ----------
Total revenue 8,171 5,769
Headline costs excluding fuel, balance sheet FX and ownership costs(1) (5,008) (3,921)
Fuel (2,033) (1,279)
------------------------------------------------------------------------------------------- --------- ----------
Headline EBITDAR 1,130 569
Depreciation, amortisation and dry leasing costs (654) (566)
Headline EBIT 476 3
Net finance charges (48) (117)
Foreign exchange gain/(loss) 27 (64)
------------------------------------------------------------------------------------------- --------- ----------
Headline profit/(loss) before tax 455 (178)
Being:
Airline headline profit/(loss) before tax 333 (216)
Holidays headline profit before tax 122 38
------------------------------------------------------------------------------------------- --------- ----------
Headline tax (charge)/credit (114) 31
------------------------------------------------------------------------------------------- --------- ----------
Headline profit/(loss) after tax 341 (147)
Non-headline items (23) (30)
Non-headline tax credit 6 8
------------------------------------------------------------------------------------------- --------- ----------
Total profit/(loss) after tax 324 (169)
------------------------------------------------------------------------------------------- --------- ----------
GBP million (reported) - Group 2023 2022
------------------------------------------------------------------------------------------- --------- ----------
Headline profit/(loss) before tax per seat GBP4.91 GBP(2.19)
GBP per seat - Airline only (2) 2023 2022
------------------------------------------------------------------------------------------- --------- ----------
Airline revenue 79.84 66.23
Headline costs excluding fuel, balance sheet FX and ownership costs(1) (46.93) (44.09)
Fuel (21.95) (15.68)
------------------------------------------------------------------------------------------- --------- ----------
Headline EBITDAR 10.96 6.46
Depreciation, amortisation and dry leasing costs (7.02) (6.89)
------------------------------------------------------------------------------------------- --------- ----------
Headline EBIT 3.94 (0.43)
Net finance charges (0.63) (1.45)
Foreign exchange gain/(loss) 0.28 (0.77)
------------------------------------------------------------------------------------------- --------- ----------
Airline headline profit/(loss) before tax 3.59 (2.65)
Headline tax (charge)/credit (1.22) 0.38
------------------------------------------------------------------------------------------- --------- ----------
Airline headline profit/(loss) after tax 2.37 (2.27)
Non-headline items (0.24) (0.36)
Non-headline tax credit 0.06 0.10
------------------------------------------------------------------------------------------- --------- ----------
Airline total profit/(loss) after tax 2.19 (2.53)
------------------------------------------------------------------------------------------- --------- ----------
1) Ownership costs are defined as depreciation, amortisation and dry leasing costs, plus net
finance charges.
2) These 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 they
are not directly correlated to the seats flown by the airline. Our easyJet holidays business
forms a separate operating segment to the airline, and easyJet holidays' key metrics are included
under key statistics.
The total number of passengers carried in the financial year
increased by 19% to 82.8 million (2022: 69.7 million), driven by a
14% increase in seats flown to 92.6 million seats (2022: 81.5
million seats) and a 3.8 percentage point increase in load factor
to 89.3% (2022: 85.5%). This reflects the increased capacity from a
year with no travel restrictions, an expanded network offer, and
the increased customer demand. Capacity was impacted by disruption
in the year, with specific measures such as pre-emptive thinning to
provide schedule resilience, and the capacity caps introduced at
Gatwick in the fourth quarter as the airport struggled with a
shortage of staffing in the control tower operated by NATS.
Total revenue increased by 42% to GBP8,171 million (2022:
GBP5,769 million) and by 40% at constant currency. Airline RPS
increased by 21% to GBP79.84 (2022: GBP66.23) and increased by 19%
at constant currency, reflecting both increased load and strong
ticket yield. The increase in airline RPS was balanced across
passenger and ancillary revenue, and included revenue from the
revised in-flight retail offer. As noted above, the airline
performance was complemented by strong holidays performance with
net revenue (i.e. excluding flight revenue which is reported under
airline revenue) of GBP776 million.
Total headline costs excluding fuel, balance sheet exchange
movements and ownership costs increased by 28% to GBP5,008 million
(2022: GBP3,921 million) mainly as a result of the volume of flying
and general industry cost pressures. Costs were also impacted by
the disruption seen throughout the year with increased costs to
deliver operational resilience and GBP211 million EU261
compensation and welfare costs incurred for airline passengers
(2022: GBP205 million). However, the airline CPS of GBP46.93, was
only 6% higher than the prior year (2022: GBP44.09), 4% at constant
currency, and accommodates an increase in average sector length of
3% versus FY22. The CPS benefited from fixed operating costs spread
across greater flying capacity in addition to easyJet's continued
focus on operational cost reduction with a number of cost reduction
projects delivered in the year. The projects included the
retrofitting of descent profile optimisation software across the
fleet, reducing fuel burn, and the launch of enhancements to our
customer self-service disruption management tool, which has
provided cost and customer experience benefits with regards to the
management of disruption within the year.
Total fuel costs increased by 59% to GBP2,033 million for the
year (2022: GBP1,279 million), which on an airline CPS basis
represented a 40% increase to GBP21.95 (2022: GBP15.68), 31% at
constant currency. The price of jet fuel remains high due to the
increase in global demand with the resumption of pre-pandemic
levels of flying and increased economic activity, along with the
restricted supply from OPEC+ due to production cuts. The CPS metric
also reflects the increase in average sector length compared to the
prior year, with an increase of leisure routes in the destination
mix.
Similar to the prior financial year, the movement in exchange
rates in the year, and the translation of foreign currency
denominated revenue and costs including fuel, has had a notable
impact on the consolidated income statement. This has resulted in a
net debit impact of GBP115 million (2022: GBP88 million) across
costs and revenue, and an income statement credit of GBP27 million
(2022: GBP64 million charge) from the translation of foreign
currency denominated monetary assets and liabilities on the
statement of financial position. Ownership costs benefited from the
movement in US dollar interest rates with a credit of GBP30 million
(2022: GBP71 million) from the discounted maintenance reserves
provision, which uses long-term US dollar interest rates to set the
discount rate.
During the financial year, the drawn element of the UKEF
facility and the February 2016 EUR500 million Eurobond were repaid,
considerably reducing easyJet's gross debt. This benefited net
interest costs in the second half of the financial year, whilst
there was also a positive impact from higher interest rates on cash
balances throughout the whole year, resulting in the net finance
charge for the year of GBP48 million being 59% lower than the prior
year (2022: GBP117 million).
easyJet holidays continued to perform strongly, with a
significant growth in customer numbers and its low fixed-cost
operating model. Overall, incremental revenue from easyJet holidays
of GBP776 million was more than double (111%) the previous year's
revenue contribution (2022: GBP368 million), with 1.9 million
customers (including agent commission passengers, 2022: 1.1
million) delivering GBP122 million of headline profit before tax
(2022: GBP38 million).
The headline profit before tax per seat for the Group was
GBP4.91 (2022: GBP2.19 loss). The airline's headline profit before
tax per seat improved from a loss of GBP2.65 in the prior year to a
profit of GBP3.59 this year, driven by the improvement in RPS as
described earlier. This was tempered by the headline CPS increasing
by 11%, primarily due to the increase in fuel costs on a per seat
basis increasing 31% at constant currency. However, airline
headline CPS excluding fuel only rose by 2% at constant currency,
as strong cost management and increased flying (which reduces fixed
costs per seat) offset the inflationary headwinds the sector
overall has been exposed to. Holidays contributed GBP1.32 to the
Group's headline profit before tax per seat, up from GBP0.46 in
FY22, as a consequence of its increased profitability driven by its
growth in customer numbers.
A non-headline charge of GBP23 million (2022: GBP30 million) was
recognised in the year consisting of a GBP19 million correction on
an historical foreign currency translation error of right of use
asset depreciation, a GBPnil million loss on the sale and leaseback
of eight aircraft (2022: GBP21 million loss from ten aircraft), a
GBP3 million loss (2022: GBP10 million loss) on the final disposal
of landing rights surrendered as a consequence of the reduction in
our operations at Berlin Airport, and a net GBP1 million of
restructuring charges (2022: GBPnil million) reflecting the change
in estimation of the final settlement of restructuring programmes
initiated in prior years.
Corporate tax has been recognised at an effective rate of 25.1%
(2022: 18.7%), resulting in an overall tax charge of GBP108 million
(2022: GBP39 million credit). This splits into a tax credit of GBP6
million on the non-headline losses and a tax charge of GBP114
million on headline items.
Profit/(loss) per share
2023 2022
---------------- ----------------
Pence per share Pence per share Change in pence per share
---------------------------------------- ---------------- ---------------- --------------------------
Basic headline profit/(loss) per share 45.4 (19.6) 65.0
Basic total profit/(loss) per share 43.1 (22.4) 65.5
Basic headline profit per share increased by 65.0 pence and
basic total profit per share increased by 65.5 pence over the loss
per share in the prior financial year as a consequence of the
profit generated in the current financial year.
Return on capital employed (ROCE)
Reported GBPmillion 2023 2022(1)
----------------------------------------------------------------------------------- ------ --------
Headline profit before interest, foreign exchange gain/(loss) and tax 476 3
UK corporation tax rate 25% 19%
------------------------------------------------------------------------------------ ------ --------
Normalised headline operating profit after tax (NOPAT) 357 2
------------------------------------------------------------------------------------ ------ --------
Average shareholders' equity (excluding the hedging and cost of hedging reserves) 2,517 2,421
Average net debt 315 790
------------------------------------------------------------------------------------ ------ --------
Average capital employed 2,832 3,211
------------------------------------------------------------------------------------ ------ --------
Headline return on capital employed 12.6% 0.1%
------------------------------------------------------------------------------------ ------ --------
Total return on capital employed 12.0% (0.7%)
------------------------------------------------------------------------------------ ------ --------
1) The average capital employed and ROCE percentage has been
restated to exclude the hedging and cost of hedging reserves.
ROCE is calculated by taking headline profit before interest,
foreign exchange gain/(loss) and tax, applying tax at the
prevailing UK corporation tax rate at the end of the financial
year, and dividing by average capital employed. Capital employed is
defined as shareholders' equity excluding hedging and cost of
hedging reserves plus net debt.
Headline ROCE for the year of 12.6% is significantly ahead of
the prior year (2022: 0.1%). This reflects the move into a strong
headline profit position in the year combined with the reduction in
net debt from the profits generated and the positive working
capital movement in the year driven by the increase in unearned
revenue. Total ROCE of 12.0% (2022: (0.7%)) is reduced by the
non-headline charge in the year, and is greater than prior year
where the FY22 non-headline charge resulted in an operating
loss.
Summary net cash/(debt) reconciliation
The below table presents cash flows on a net cash basis. This
presentation is different to the presentation of the statement of
cash flows in the consolidated financial statements as it includes
non-cash movements on debt facilities.
2023 2022 Change
------------ ------------ ------------
GBP million GBP million GBP million
--------------------------------------------------------- ------------ ------------ ------------
Operating profit/(loss) 453 (27) 480
Net tax paid (12) (4) (8)
Net working capital movement excluding unearned revenue (19) 101 (120)
Unearned revenue movement 458 197 261
Depreciation and amortisation 673 564 109
Net capital expenditure (754) (530) (224)
Net proceeds from sale and leaseback of aircraft 76 87 (11)
Increase in lease liability (208) (43) (165)
Net funding activities - 53 (53)
Purchase of own shares for employee share schemes (15) (9) (6)
Other (including the effect of exchange rate movements) 59 (149) 208
---------------------------------------------------------- ------------ ------------ ------------
Net decrease in net debt 711 240 471
---------------------------------------------------------- ------------ ------------ ------------
Net debt at the beginning of the year (670) (910) 240
---------------------------------------------------------- ------------ ------------ ------------
Net cash/(debt) at the end of the year 41 (670) 711
---------------------------------------------------------- ------------ ------------ ------------
Net cash as at 30 September 2023 was GBP41 million (30 September
2022: GBP670 million net debt) and comprised cash, cash equivalents
and money market deposits of GBP2,925 million (30 September 2022:
GBP3,640 million), borrowings of GBP1,895 million (30 September
2022: GBP3,197 million) and lease liabilities of GBP989 million (30
September 2022: GBP1,113 million).
Net working capital outflow, excluding unearned revenue, of
GBP19 million in the year (2022: GBP101 million inflow)
predominantly reflects the increased holding of Emissions Trading
System (ETS) allowances for the remaining FY23 flying liability and
FY24 forward purchase of allowances.
The unearned revenue movement of GBP458 million (2022: GBP197
million) has increased as customer booking behaviour has normalised
in the year, and easyJet has increased available capacity and
stimulated improved levels of demand, including for the easyJet
holidays offer. In addition, the inflow reflects the improved
ticket and ancillary yields achieved.
The increase in depreciation and amortisation to GBP673 million
(2022: GBP564 million) predominantly reflects the increase in
leased aircraft maintenance costs, recognised through depreciation,
with the rise in flying volumes and greater numbers of leased
aircraft. Additionally, the prior financial year benefited from a
significant movement in the discount rate on maintenance reserves
(based predominantly on US dollar short-term and long-term rates)
which reduced the overall maintenance charge, whereas the change in
the rate this financial year has been less pronounced.
Net capital expenditure in the year of GBP754 million (2022:
GBP530 million) reflects the investment in fleet renewal and growth
in the overall size of the fleet. The expenditure is across ten new
aircraft (2022: eight), pre-delivery payments for future aircraft,
capital expenditure on long life parts, engines and aircraft
spares, and maintenance additions. The sale and leaseback of eight
aircraft in the year resulted in a net cash inflow of GBP76 million
compared to the ten sale and leasebacks in FY22 which generated
proceeds of GBP87 million. Lease additions (including the eight
sale and leaseback aircraft) and lease extensions are the key
drivers for the increase in the lease liability by GBP208 million
(which excludes exchange rate impact and lease payments).
In the prior year, the net funding activities of GBP53 million
relate to final funding income from the rights issue in FY21.
The GBP208 million movement in 'Other' predominantly reflects a
movement in net interest, as interest received in this financial
year is significantly higher due to increased interest rates, and
the foreign exchange impact in the year.
Exchange rates
The proportion of revenue and headline costs denominated in
currencies other than sterling is outlined below alongside the
exchange rates in the year:
Revenue Headline costs (1)
---------------------- ----------------------------
2023 2022 2023 2022(1)
------------------------------------------- --- ----------- -------- -------- ------------------
Sterling 55% 51% 32% 32%
Euro 35% 38% 35% 37%
US dollar 1% (2) 1% 27% 25%
Other (principally Swiss franc) 9% 10% 6% 6%
------------------------------------------- --- ----------- -------- -------- ------------------
Average headline exchange rates (3) 2023 2022
------------------------------------------- --- ----------- -------- -------- ------------------
Euro - revenue EUR1.15 EUR1.18
Euro - costs EUR1.15 EUR1.18
US dollar $1.24 $1.32
Swiss franc CHF CHF 1.25
1.14
------------------------------------------- --- ----------- -------- -------- ------------------
Closing exchange rates 2023 2022
------------------------------------------- --- ----------- -------- -------- ------------------
Euro EUR1.15 EUR1.14
US dollar $1.22 $1.11
Swiss franc CHF CHF 1.09
1.12
------------------------------------------- --- ----------- -------- -------- ------------------
1) 2022 figures have been restated to exclude the impact of non-headline costs.
2) Our customers have the option of paying for flights in US dollars.
3) Exchange rates quoted are post-hedging applied to revenue and headline costs.
Headline exchange rate impact
Euro Swiss franc US Other Total
dollar
Favourable/(adverse) GBP million GBP million GBP GBP GBP
million million million
------------------------------------ ------------------ -------------- -------- -------- --------
Total revenue 66 46 1 1 114
Fuel (4) - (125) - (129)
Headline costs excluding fuel (63) (24) (17) 4 (100)
------------------------------------ ------------------ -------------- -------- -------- --------
Headline total before tax (1) (1) 22 (141) 5 (115)
------------------------------------ ------------------ -------------- -------- -------- --------
1) Excludes the impact of
balance sheet revaluations.
The Group's Foreign Currency Risk Management policy aims to
reduce the impact of fluctuations in exchange rates on future cash
flows. Refer to note 26 in the financial statements for more
details.
easyJet recognises a significant element of revenue, 35%, across
its network in euros, and therefore a weaker sterling versus euro
on average, when compared to the prior year, has resulted in a
stronger sterling denominated revenue (and similarly with Swiss
francs). However, this has been offset by increased costs due to
the stronger euro compared to the prior year. Additionally,
easyJet's cost base is 27% US dollar denominated, notably fuel and
aircraft lease payments, and therefore the post-hedge US dollar
rate strengthening compared to the prior year has also increased
headline costs. On a net position, the movement in average exchange
rates between the current and prior years has resulted in an
adverse foreign currency impact of GBP115 million on the
consolidated income statement.
Conversely, in-year movements in closing exchange rates resulted
in easyJet benefitting from the translation of foreign currency
denominated monetary assets and liabilities held on the statement
of financial position, primarily due to sterling strengthening
against the US dollar over the course of the year, resulting in a
net gain of GBP27 million (2022: GBP64 million loss).
FINANCIAL PERFORMANCE
Revenue
GBP million - Group 2023 2022
------------------------------------- ------ ------
Passenger revenue 5,221 3,816
Ancillary revenue 2,174 1,585
Holidays incremental revenue(1) (2) 776 368
-------------------------------------- ------ ------
Total revenue 8,171 5,769
-------------------------------------- ------ ------
1) easyJet 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 1 in the financial
statements.
Total revenue increased by 42% to GBP8,171 million (2022:
GBP5,769 million) and 40% at constant currency.
The increase in revenue 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 19% to 82.8 million
(2022: 69.7 million), arising from a combination of a 14% increase
in seats flown to 92.6 million seats (2022: 81.5 million seats) and
a 3.8 percentage point increase in load factor to 89.3% (2022:
85.5%). This reflects the increased capacity on offer with the
return to flying in the absence of pandemic-related travel
restrictions. Similar to the prior year, within revenue there was a
GBP47 million credit (2022: GBP22 million) arising from the release
of aged contract liabilities within other payables, with GBP40
million recognised in passenger revenue and GBP7 million in
ancillary revenue.
Total airline RPS of GBP79.84 was 21% ahead of prior year (2022:
GBP66.23), 19% at constant currency, and total yield of GBP89.36
was 15% favourable (2022: GBP77.48), 14% at constant currency, with
passenger yield 13% and ancillary yield 14% favourable at constant
currency.
Airline ancillary revenue of GBP2,174 million was 37% ahead of
the previous financial year (2022: GBP1,585 million), 35% at
constant currency, as a result of both passenger numbers and
improved yields. Refreshed ancillary offers and pricing initiatives
have contributed to the continued growth of this revenue stream as
an increasing proportion of our customers choose to buy our
flexible product offering. Within ancillary revenue the relaunch of
the in-flight retail offer has delivered an additional GBP22
million of partner revenue compared to the prior financial year
with improved spend per seat alongside higher passenger
numbers.
easyJet holidays' incremental revenue increased by 111% to
GBP776 million (2022: GBP368 million) and now accounts for 9% of
total revenue. The growth is attributable to improved yields and
growth in customer numbers to 1.9 million (including agent
commission passengers, 2022: 1.1 million).
Headline costs excluding fuel
2023 2022
----------------------------- -----------------------------
Group Airline Group Airline
GBP million GBP per seat GBP million GBP per seat
------------- -------------- ------------- --------------
Operating costs and income
Airports and ground handling 1,800 19.44 1,443 17.70
Crew 941 10.16 767 9.40
Navigation 422 4.56 339 4.16
Maintenance 341 3.69 301 3.69
Holidays direct operating costs 582 n/a 273 n/a
Selling and marketing 232 2.04 173 1.88
Other costs 695 7.09 635 7.38
Other income (5) (0.05) (10) (0.12)
---------------------------------------------------- ------------- -------------- ------------- --------------
5,008 46.93 3,921 44.09
--------------------------------------------------- ------------- -------------- ------------- --------------
Ownership costs
Aircraft dry leasing - - 2 0.04
Depreciation 625 6.75 539 6.60
Amortisation 29 0.27 25 0.25
Net interest and other financing income and charges 48 0.63 117 1.45
---------------------------------------------------- ------------- -------------- ------------- --------------
702 7.65 683 8.34
--------------------------------------------------- ------------- -------------- ------------- --------------
Foreign exchange (gain)/loss (27) (0.28) 64 0.77
---------------------------------------------------- ------------- -------------- ------------- --------------
675 7.37 747 9.11
--------------------------------------------------- ------------- -------------- ------------- --------------
Headline costs excluding fuel 5,683 54.30 4,668 53.20
---------------------------------------------------- ------------- -------------- ------------- --------------
Headline CPS excluding fuel for the airline increased by 2% to
GBP54.30 (2022: GBP53.20), and by 2% at constant currency.
Included within the Group headline costs excluding fuel of
GBP5,683 million is GBP654 million (2022: GBP330 million) related
to the Holidays business, the cost increase primarily being
activity related due to the growth of the business.
Headline operating costs and income
Airports and ground handling operating costs increased by 25% to
GBP1,800 million (2022: GBP1,443 million), an increase of 10% to
GBP19.44 (2022: GBP17.70) on an airline CPS basis, 7% at constant
currency. The year has seen a significant overall increase in
airport rates, both contractual and regulatory, reflecting that
easyJet largely flies from slot-constrained and regulated airports.
In addition, with airport and ground handling costs being linked to
volumes, operating costs associated with improved load factors, as
well as higher passenger and security charges, drove a cost
increase on a per seat basis.
Crew costs increased by 23% to GBP941 million (2022: GBP767
million), an increase of 8% to GBP10.16 (2022: GBP9.40) on an
airline CPS basis, 6% at constant currency. This CPS increase
reflects the current highly inflationary CPI environment, increased
costs invested in resilience to mitigate disruption, post-pandemic
pay deals and an increase in sector length. This has been offset by
productivity gains in the year and the benefit of allocating the
fixed element of crew costs over greater capacity.
Navigation costs increased by 24% to GBP422 million (2022:
GBP339 million), a rise of 10% to GBP4.56 (2022: GBP4.16) on an
airline CPS basis, 7% 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 previous year.
Maintenance costs increased by 13% to GBP341 million (2022:
GBP301 million), but remained flat at GBP3.69 (2022: GBP3.69) on an
airline CPS basis, and decreased by 4% at constant currency. This
reflects that whilst flying hours have increased in the year, there
is a benefit from the fixed element of maintenance costs being
apportioned over the increased capacity.
Group selling and marketing costs increased by 34% to GBP232
million (2022: GBP173 million), which for the airline resulted in
an increase of 9% to GBP2.04 (2022: GBP1.88) on a CPS basis, 6% at
constant currency. The increase is predominantly in selling costs
which result from increased credit card bookings on increased
sales, higher credit card fees, and an element of increased airport
commission.
Group other costs increased by 9% to GBP695 million (2022:
GBP635 million), which for the airline was a reduction of 4% to
GBP7.09 (2022: GBP7.38) on a CPS basis, and 4% reduction at
constant currency. Other costs include the impact of the disruption
experienced in the year, with net GBP211 million disruption
compensation and welfare costs incurred (2022: GBP205 million)
after a GBP24 million release (2022: GBP3 million pre-pandemic
liability release) of a liability held for prior year disruption
costs where customer compensation claims have not matched our
initial estimations . In the prior year, easyJet also incurred
significant wet lease costs; the absence of such costs this year
has been offset by increased employee costs and benefits, and an
investment in cybersecurity and merchandising technology in the
year.
Headline ownership costs
Depreciation costs increased by 16% to GBP625 million (2022:
GBP539 million), a 2% increase to GBP6.75 (2022: GBP6.60) on a CPS
basis, and 2% at constant currency. The increase in depreciation
costs compared to prior year is due to the increased maintenance
provision for leased aircraft, reflecting higher flying volumes and
the change in the discount rate arising from movements in US dollar
interest rates, as well as an increase in the leasehold fleet. The
cost on a CPS basis has benefited from the increased maintenance
cost being allocated across an increased seat capacity.
Group net interest and other financing income and charges
decreased by 59% to GBP48 million (2022: GBP117 million), which
amounted to a 57% decrease on an airline CPS basis to GBP0.63
(2022: GBP1.45) reflecting the benefit from higher interest rates
on cash deposits in the period, and the reduction in gross
debt.
Foreign exchange gains in the year were GBP27 million (2022:
GBP64 million loss), being the benefit of the retranslation of
foreign currency denominated monetary assets and liabilities
arising from currency movements, with sterling being stronger
against both the US dollar and euro at 30 September 2023 compared
to 30 September 2022.
Fuel
2023 2022
----------------------------- -----------------------------
Group Airline Group Airline
GBP million GBP per seat GBP million GBP per seat
------ ------------- -------------- ------------- --------------
Fuel 2,033 21.95 1,279 15.68
------- ------------- -------------- ------------- --------------
Fuel costs for the year increased by 59% to GBP2,033 million,
compared to GBP1,279 million in 2022, a 40% increase on a CPS basis
to GBP21.95 (2022: GBP15.68), 31% on a constant currency basis. The
increase in flying volumes, resulting in a 17% increase in block
hours in the year, 3% increase in average sector length (1,224km
from 1,193km) and increased load factor, has contributed (on an
absolute basis), in addition to the increase in post-hedge fuel
prices over the year.
The Group uses jet fuel derivatives to hedge against increases
in jet fuel prices to mitigate cash and income statement
volatility. 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 forecast exposures.
During the financial year, the average market price payable for
jet fuel reduced by 16% from $1,063 per tonne in 2022 to $897 per
tonne in 2023. The overall post-hedge fuel price in the year was
$867 per tonne (2022: $705), the 23% increase compared to FY22
being due to the fuel cost at the time the FY23 hedges were entered
into. Approximately 80% of jet fuel was hedged in 2023.
Additionally, the cost of compliance with emission trading schemes
increased with a greater level of flying and the higher cost of
allowances coupled with the previous year comparative including the
carry forward of unused ETS allowances from the years impacted by
pandemic-related restrictions.
Group profit/(loss) after tax
GBP million (reported) -- Group 2023 2022
----------------------------------- ------ ------
Headline profit/(loss) before tax 455 (178)
------------------------------------ ------ ------
Headline tax (charge)/credit (114) 31
------------------------------------ ------ ------
Headline profit/(loss) after tax 341 (147)
------------------------------------ ------ ------
Non-headline items before tax (23) (30)
Non-headline tax credit 6 8
------------------------------------ ------ ------
Total profit/(loss) after tax 324 (169)
------------------------------------ ------ ------
Non-headline items
A non-headline charge of GBP23 million (2022: GBP30 million) was
recognised in the year. This consisted of a GBP19 million
correction on an historical foreign currency translation error of
right of use asset depreciation, 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 (2022: GBP10
million) and net restructuring charges of GBP1 million (2022:
GBPnil million) resulting from the impact of additional costs
arising from previously announced restructuring programmes in
Germany. The sale and leaseback of eight aircraft in the period
generated a GBPnil million loss (2022: GBP21 million loss from ten
aircraft).
Corporate tax
Corporate tax has been recognised at an effective rate of 25.1%
(2022: 18.7%), resulting in an overall tax charge of GBP108 million
(2022: GBP39 million credit). This splits into a tax charge of
GBP114 million on the headline losses and a tax credit of GBP6
million on the non-headline items, the right of use asset
depreciation non-headline charge being tax deductible and therefore
creating a tax credit.
Summary consolidated statement of financial position
2023 2022 Change
Re-presented(1)
------------ ---------------- ------------
GBP million GBP million GBP million
--------------------------------------------------------------- ------------ ---------------- ------------
Goodwill and other non-current intangible assets 641 582 59
Property, plant and equipment (excluding right of use assets) 3,936 3,682 254
Right of use assets 928 947 (19)
Derivative financial instruments 153 442 (289)
Equity investment 31 31 -
Other assets (excluding cash and money market deposits) 1,159 1,022 137
Unearned revenue (1,501) (1,043) (458)
Trade and other payables (1,764) (1,759) (5)
Other liabilities (excluding debt) (837) (701) (136)
---------------------------------------------------------------- ------------ ---------------- ------------
Capital employed 2,746 3,203 (457)
---------------------------------------------------------------- ------------ ---------------- ------------
Cash and money market deposits(2) 2,925 3,640 (715)
Debt (excluding lease liabilities) (1,895) (3,197) 1,302
Lease liabilities (989) (1,113) 124
Net cash/(debt) 41 (670) 711
---------------------------------------------------------------- ------------ ---------------- ------------
Net assets 2,787 2,533 254
---------------------------------------------------------------- ------------ ---------------- ------------
1) The liability for compensation and reimbursements for airline
customer delays and cancellations has been re-presented from
provisions for liabilities and charges to liabilities within other
payables.
2) Excludes restricted cash.
Since 30 September 2022 net assets have increased by GBP254
million.
The net book value of goodwill and other non-current intangible
assets has increased in the year by GBP59 million, reflecting
significant investment in the year on software development and
applications, with a focus on digital safety and security,
optimising commercial platforms and customer applications, and
implementing aircraft descent optimisation software.
The property, plant and equipment (excluding right of use
assets) net book value has increased by GBP254 million, the impact
of the sale and leaseback of eight aircraft and the depreciation
charge for the year being offset by the ten new owned aircraft
brought into the fleet in the year.
At 30 September 2023, right of use assets amounted to GBP928
million (2022: GBP947 million) and lease liabilities amounted to
GBP989 million (2022: GBP1,113 million). Whilst there have been a
number of new leases, including aircraft sale and leaseback
transactions, and lease extensions, the relatively static position
of lease assets and liabilities arises from a number of lease
returns, and the fact that new leases are being entered into for
shorter lease periods as easyJet manages the exit of A319 aircraft
from the fleet.
There has been a GBP289 million decrease in the net asset value
of derivative financial instruments, with a closing net asset
balance of GBP153 million (2022: GBP442 million). The movement is
due to a decrease in currency assets, including cross currency
swaps, as a result of the stronger pound against the US dollar and
euro in comparison to the rates at 30 September 2022. This
reduction was partially offset by a gain in the asset value of jet
fuel hedges compared to 30 September 2022 as a result of an
increase in the jet fuel forward curve.
Other assets have increased by GBP137 million, mainly driven by
increased current intangible assets reflecting the ETS allowances
held as a result of increased flying and the increased cost of the
allowances.
Unearned revenue increased by GBP458 million, reflecting
customer behaviour returning to a more forward booking position,
improved yields, and FY24 capacity availability.
Other liabilities have increased by GBP136 million as a result
of increased provisions, in particular for maintenance with the
increase in flying over the year, but also because deferred tax is
now in a liability position with the return to profit in the
year.
Debt has decreased by GBP1,302 million as a result of the
repayment of the drawn element of the UKEF facility, and repayment
of a EUR500 million Eurobond in the year, with no additional debt
entered into.
KEY STATISTICS
OPERATING MEASURES
2023 2022 Increase/ (decrease)
------------------------------------------------------------------- ------------- -------- ----------------------
Seats flown (millions) 92.6 81.5 14%
Passengers (millions) 82.8 69.7 19%
Load factor 89.3% 85.5% 3.8ppt
Available seat kilometres (ASK) (millions) 113,334 97,287 16%
Revenue passenger kilometres (RPK) (millions) 102,984 84,874 21%
Average sector length (kilometres) 1,224 1,193 3%
Sectors (thousands) 519 456 14%
Block hours (thousands) 1,094 938 17%
easyJet holidays passengers (thousands)(1) 1,893 1,072 77%
Number of aircraft owned/leased at end of year 336 320 5%
Average number of aircraft owned/leased during year 328 321 2%
Average number of aircraft operated per day during year 276 255 8%
Number of routes operated at end of year 1,018 988 3%
Number of airports served at end of year 155 153 1%
------------------------------------------------------------------- ------------- -------- ----------------------
FINANCIAL MEASURES 2023 2022 Favourable/ (adverse)
------------------------------------------------------------------- ------------- -------- ----------------------
Total return on capital employed 12.0% (0.7%) 12.7ppt
Headline return on capital employed 12.6% 0.1% 12.5ppt
Group total profit/(loss) before tax per seat (GBP) 4.67 (2.55) 283%
Group headline profit/(loss) before tax per seat (GBP) 4.91 (2.19) 324%
Airline total profit/(loss) before tax per seat (GBP) 3.35 (3.01) 211%
Airline headline profit/(loss) before tax per seat (GBP) 3.59 (2.65) 235%
Airline headline profit/(loss) before tax per ASK (pence) 0.29 (0.22) 232%
easyJet holidays total profit before tax (GBP millions) 122 38 221%
Revenue
------------------------------------------------------------------- ------------- -------- ----------------------
Airline revenue per seat (GBP) 79.84 66.23 21%
Airline revenue per seat at constant currency (GBP) 78.60 66.23 19%
Airline revenue per ASK (pence) 6.52 5.54 18%
Airline revenue per ASK at constant currency (pence) 6.42 5.54 16%
Airline revenue per passenger (GBP) 89.36 77.48 15%
Airline revenue per passenger at constant currency (GBP) 87.98 77.48 14%
------------------------------------------------------------------- ------------- -------- ----------------------
Costs
------------------------------------------------------------------- ------------- -------- ----------------------
Per seat measures
Airline headline cost per seat (GBP) 76.25 68.88 (11%)
Airline headline cost per seat excluding fuel (GBP) 54.30 53.20 (2%)
Airline headline cost per seat excl fuel at constant currency
(GBP) 53.58 52.43 (2%)
Per ASK measures
Airline headline cost per ASK (pence) 6.23 5.77 (8%)
Airline headline cost per ASK excluding fuel (pence) 4.44 4.45 0%
Airline headline cost per ASK exc fuel at constant currency
(pence) 4.38 4.39 0%
------------------------------------------------------------------- ------------- -------- ----------------------
1) Holidays passenger numbers excluding agency commission passengers
are 1.6 million (FY22
0.8m).
Refer to the Glossary in the annual report and accounts for
further detail.
Going Concern and Viability Statement
Assessment of prospects
The strategic report in the annual report and accounts sets out
the activities of the Group and the factors likely to impact its
future development, performance and position. The Finance Review in
the annual report and accounts sets out the financial position of
the Group, cash flows, liquidity position and borrowing activity.
The notes to the accounts include the objectives, policies and
procedures for managing capital, financial risk management
objectives, details of financial instruments and hedging activities
and exposure to credit risk and liquidity risk.
In accordance with the requirements of the 2018 UK Corporate
Governance Code, the Directors have assessed the long-term
prospects of the Group, taking into account its current position,
the updated medium-term targets set out in the strategic plan and a
range of internal and external factors, including the principal
risks. The Directors have determined that a three-year period is an
appropriate timeframe for this viability assessment. In concluding
on a three-year period, the Directors considered the reliability of
forecast information, the current macro-economic and market
conditions and longer-term management incentives. However, it is
noted that the high-level fleet plan used by easyJet is necessarily
over a longer period to enable future planning of aircraft
deliveries underpinning the plans for fleet modernisation, future
growth, cost efficiencies and sustainability improvements. This
longer-term planning is evidenced this year by the latest proposed
aircraft purchase transaction which, if approved by shareholders,
will secure aircraft deliveries for the period FY29-34.
The assessment of the prospects of the Group includes the
following factors:
-- The strategic plan - which takes into consideration growth
expected by way of creating value through the business model,
market conditions, future commitments, cash flow, expected impact
of key risks, funding requirements and maturity of existing
financing facilities (see below).
As at September 2023 Maturity date Available funds (drawn and undrawn)
Eurobonds October 2023 EUR500m
------------------- ------------------------------------
June 2025 EUR500m
-------------------------------------------------- ------------------------------------
March 2028 EUR1,200m
-------------------------------------------------- ------------------------------------
Revolving credit facility September 2025(1) $400m
------------------- ------------------------------------
Undrawn UKEF backed facility June 2028 $1,750m
------------------- ------------------------------------
1) Option to extend to September 2026 at lender's consent.
-- The fleet plan - the plan retains some flexibility to adjust
the size of the fleet in response to opportunities or risks.
-- Strength of the balance sheet and unencumbered assets - this
sustainable strength gives us access to capital markets.
-- Risk assessment - see detailed risk assessment in the annual report and accounts.
Stress testing
The corporate risk management framework facilitates the
identification, analysis, and response to plausible risks,
including emerging risks, as our business evolves in an
increasingly volatile environment. Through our corporate risk
management process, a robust assessment of the principal risks
facing the organisation has been performed and the controls and
mitigations identified.
Both individually and combined these potential risks are
unlikely to require significant additional management actions to
support the business to remain viable, however, there could be
actions that management would deem necessary to reduce the impact
of the risks. The stress testing scenarios identified in the table
on the subsequent pages show that there is sufficient liquidity
under all scenarios. In the first four scenarios one of the
assumptions is that the existing Eurobonds are refinanced, whereas
in the last scenario no refinancing of existing Eurobonds is
assumed.
Going concern statement
The financial statements have been prepared on a going concern
basis. In adopting the going concern basis for preparing these
financial statements, the Directors have considered easyJet's
business activities, together with factors likely to affect its
future development and performance, as well as easyJet's principal
risks and uncertainties through to June 2025.
As at 30 September 2023, easyJet had a net cash position of
GBP41 million including cash and cash equivalents of GBP2.9
billion, with unrestricted access to GBP4.7 billion of liquidity,
and has retained ownership of 54% of the total fleet, all of which
are 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 allowances, the
phasing out of the free ETS allowances from 2024, the expected
price and quantity required of Sustainable Aviation Fuel (SAF)
usage and fleet renewals.
The business is exposed to fluctuations in fuel prices and
foreign exchange rates. easyJet is currently c.76% hedged for fuel
in H1 of FY24 at c.$867 per metric tonne, c.51% hedged for H2 FY24
at c.$823 and c.25% hedged for H1 FY25 at c.$832.
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 a reduction in Holidays
contribution of 5%. The model also includes the recurrence of
additional disruption costs (at FY22 levels), an additional $50 per
metric tonne on the fuel price, 1.5% additional operating cost
inflation and an adverse movement on the US dollar rate. 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 the duration of 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.
The Directors also considered a separate downside model that
included the operational disruption and adverse US dollar rate but,
instead of the yield reduction, modelled increased costs
(additional 3% inflation assumed on operating costs) and an
additional $100 per metric tonne on the fuel price compared to the
base case. This scenario was not as severe and as such still
resulted in sufficient headroom. It was not deemed plausible to
combine yield reduction and the higher cost and fuel increases
based on an analysis of historical information across the airline
industry.
After reviewing the current liquidity position, committed
funding facilities, the base case and severe but plausible downside
financial forecasts incorporating the uncertainties described
above, the Directors have a reasonable expectation that the Group
has sufficient resources to continue in operation for the
foreseeable future. For these reasons, the Directors continue to
adopt the going concern basis of accounting in preparing the
Group's financial statements.
Viability Statement
Based on the assessment performed, the Directors have a
reasonable expectation that the Company and the Group will be able
to continue in operation and meet all liabilities as they fall due
up to September 2026. In making this statement, the Directors have
made the following key assumptions:
1. easyJet has access to a variety of funding options including
capital markets, aircraft financing and bank or government debt.
The stress testing demonstrates that the current funding with
refinancing of the existing Eurobonds would be sufficient to retain
liquidity in both the base and downside scenarios (excluding the
specific lack of funding scenario).
2. In assessing viability, it is assumed that the detailed risk
management process as outlined in the annual report and accounts
captures all plausible risks, and that in the event that multiple
risks occur, all available actions to mitigate the impact to the
Group would be taken on a timely basis and have the intended
impact.
3. There is no prolonged grounding of a substantial portion of
the fleet greater than included in the downside and alternative
downside scenarios. This includes a grounding of 25% of the fleet
for the duration of the peak trading month of August, to cover the
range of severe but plausible risks that could result in
significant operational disruption.
The key risks that are most likely to have a significant impact
on easyJet's viability have been considered in the stress testing
across multiple scenarios and are shown in the table below. The
assumptions applied to the models are based on plausible but severe
impacts of the risks, as assessed by review of the current
macro-economic position and historical information across the
airline industry. The principal risks have continued to be assessed
for any changes in the risk environment. The actions in place to
mitigate against these risks are included in the Risk section in
the annual report and accounts.
Scenario Description Assumptions applied Corporate risk
Modelled covered
Demand Downside scenario Across the whole period: Breach of
suppression covering multiple - reduction in ticket regulatory
and operational risks that may yield of 5% requirements
disruption lead to a - reduction in Holidays Significant
reduction contribution of 5% safety
in demand, - additional disruption or security
resulting costs (based on FY22 levels). event
in a prolonged One -off: Significant
yield reduction * a grounding of 25% of the fleet for the duration of digital
over the period. the peak trading month of August. security event
In addition, Network and
this scenario primary
combines risks airport risks
that also would Significant
lead to operational
operational disruption
disruption and/or
short-term
grounding
of the fleet.
------------------ ----------------------------------------------------------- -----------------
Increase Scenario covers Across the whole period: Breach of
in costs multiple risks - additional $100 per regulatory
and operational that would result metric tonne on the fuel requirements
disruption in an increase price Significant
in costs across - increased costs (additional safety
the period or inflation assumed on all or security
a significant costs) event
spike in costs. - additional disruption Significant
In addition, costs (based on FY22 levels) operational
this scenario - an adverse movement disruption
combines risks on the US dollar rate. Significant
that also would digital
lead to One-off: security event
operational * a grounding of 25% of the fleet for the duration of Network and
disruption and/or the peak trading month of August. primary
short-term airport risks
grounding Macro-economic
of the fleet. conditions
------------------ ----------------------------------------------------------- -----------------
Climate change Scenario covers Across the whole period: Climate change
climate-based * reduction in demand - reduced yields or capacity transition risks
risks that would
result in both
a reduction in * increased fuel costs (SAF and ETS)
demand and
increased
costs. This * increased maintenance costs
includes
SAF and ETS
costs, * new taxes.
capex and
maintenance
costs due to
technology
changes
and additional
costs for
regulatory
and legal
challenge.
------------------ ----------------------------------------------------------- -----------------
Failure to Scenario covers Across the whole period: Non-delivery of
deliver on the risks that - reduced initiatives strategic
plans would result income initiatives
in easyJet being - increased costs Talent
unable to deliver - reduction in ticket acquisition
on its plans yield of 5% and retention
for the period. * reduction in Holidays contribution of 5%. risks
------------------ ----------------------------------------------------------- -----------------
Lack of Funding Scenario covers Across the whole period: Macro-economic
the risk that * uncommitted funding excluded. conditions
would result
in no further
funding being
available to
easyJet during
the period.
------------------ ----------------------------------------------------------- -----------------
Consolidated income statement
Year ended 30 September
------------------------------------------------------------------------------
2023 2022
Non-headline Non-headline
(note (note
Headline 2) Total Headline 2) Total
GBP GBP GBP
Notes million million million GBP million GBP million GBP million
----------------------- ------ --------- ------------- --------- ------------ ------------- ------------
Passenger revenue 5,221 - 5,221 3,816 - 3,816
Ancillary revenue(1)
Airline ancillary
revenue 2,174 - 2,174 1,585 - 1,585
Holidays incremental
revenue 776 - 776 368 - 368
------------------------ ------ --------- ------------- --------- ------------ ------------- ------------
Total ancillary revenue 2,950 - 2,950 1,953 - 1,953
------------------------ ------ --------- ------------- --------- ------------ ------------- ------------
Total revenue 5 8,171 - 8,171 5,769 - 5,769
Fuel (2,033) - (2,033) (1,279) - (1,279)
Airports and ground
handling(1) (1,800) - (1,800) (1,443) - (1,443)
Crew (941) - (941) (767) - (767)
Navigation (422) - (422) (339) - (339)
Maintenance (341) - (341) (301) - (301)
Holidays direct operating
costs (excluding flights)(1) (582) - (582) (273) - (273)
Selling and marketing (232) - (232) (173) - (173)
Other costs (695) (10) (705) (635) (30) (665)
Other income 5 6 11 10 - 10
------------------------ ------ --------- ------------- --------- ------------ ------------- ------------
EBITDAR 1,130 (4) 1,126 569 (30) 539
Aircraft dry leasing - - - (2) - (2)
Depreciation 7 (625) (19) (644) (539) - (539)
Amortisation of
intangible
assets (29) - (29) (25) - (25)
------------------------ ------ --------- ------------- --------- ------------ ------------- ------------
Operating profit/(loss) 476 (23) 453 3 (30) (27)
Interest receivable
and other financing
income 132 - 132 26 - 26
Interest payable and
other financing
charges (180) - (180) (143) - (143)
Foreign exchange
gain/(loss) 27 - 27 (64) - (64)
------------------------ ------ --------- ------------- --------- ------------ ------------- ------------
Net finance charges (21) - (21) (181) - (181)
Profit/(loss) before
tax 455 (23) 432 (178) (30) (208)
Tax (charge)/credit 3 (114) 6 (108) 31 8 39
Profit/(loss) for the year 341 (17) 324 (147) (22) (169)
-------------------------------- --------- ------------- --------- ------------ ------------- ------------
Earnings/(loss)
per share, pence
Basic 4 43.1 (22.4)
Diluted 4 42.7 (22.4)
------------------------ ------ --------- ------------- --------- ------------ ------------- ------------
1) Revenue and expenditure of easyJet holidays recognised in the prior
year has been re-presented, see note 1 for details.
Consolidated statement of comprehensive income
Year ended Year ended
30
September 30 September
2023 2022
Notes GBP million GBP million
------------------------------------------------------ ------ ------------ -------------
Profit/(loss) for the year 324 (169)
Other comprehensive (loss)/income
Items that may be reclassified to the income
statement:
Cash flow hedges
Fair value (losses)/gains in the year (19) 774
Gains transferred to income statement (51) (730)
Hedge ineffectiveness/discontinuation loss/(gain)
transferred to income statement 1 (5)
Related deferred tax credit/(charge) 3 12 (11)
Cost of hedging (9) 8
Related deferred tax credit/(charge) 3 2 (2)
Items that will not be reclassified to the income
statement:
Remeasurement (loss)/gain of post-employment benefit
obligations (8) 41
Related deferred tax charge 3 (1) (10)
Fair value gains on equity investment - 1
------------------------------------------------------ ------ ------------ -------------
(73) 66
------------------------------------------------------ ------ ------------ -------------
Total comprehensive income/(loss) for the year 251 (103)
------------------------------------------------------ ------ ------------ -------------
1) The liability for compensation and reimbursements for airline customer delays and
cancellations
has been re-presented from provisions for liabilities and charges to liabilities
within other
payables. Refer to note 1 for further detail.
Consolidated statement of financial position
As at 30 As at 30 September 2022
September 2023 (re-presented)
Notes GBP million GBP million
------------------------------------------ ----- ---------------- -----------------------
Non-current assets
Goodwill 365 365
Other intangible assets 276 217
Property, plant and equipment 7 4,864 4,629
Derivative financial instruments 35 127
Equity investment 31 31
Restricted cash 2 3
Other non-current assets 138 91
Deferred tax assets 3 - 62
------------------------------------------ ----- ---------------- -----------------------
5,711 5,525
Current assets
Trade and other receivables 343 367
Intangible assets 676 495
Derivative financial instruments 186 423
Restricted cash - 4
Money market deposits - 126
Cash and cash equivalents 2,925 3,514
------------------------------------------ ----- ---------------- -----------------------
4,130 4,929
Current liabilities
Trade and other payables(1) (1,764) (1,759)
Unearned revenue (1,498) (1,042)
Borrowings 8 (433) (437)
Lease liabilities (217) (247)
Derivative financial instruments (54) (86)
Current tax payable 3 (3) (5)
Provisions for liabilities and charges(1) 9 (175) (102)
------------------------------------------ ----- ---------------- -----------------------
(4,144) (3,678)
Net current (liabilities)/assets (14) 1,251
Non-current liabilities
Borrowings 8 (1,462) (2,760)
Unearned revenue (3) (1)
Lease liabilities (772) (866)
Derivative financial instruments (14) (22)
Non-current deferred income (4) (4)
Post-employment benefit obligation (7) (1)
Provisions for liabilities and charges 9 (626) (589)
Deferred tax liabilities 3 (22) -
(2,910) (4,243)
Net assets 2,787 2,533
------------------------------------------ ----- ---------------- -----------------------
Shareholders' equity
------------------------------------------ ----- ---------------- -----------------------
Share capital 207 207
Share premium 2,166 2,166
Hedging reserve 113 170
Cost of hedging reserve (2) 5
Translation reserve 72 (6)
Retained earnings/(accumulated losses) 231 (9)
------------------------------------------ ----- ---------------- -----------------------
Total equity 2,787 2,533
------------------------------------------ ----- ---------------- -----------------------
Consolidated statement of changes in equity
Cost of
Share Share Hedging hedging Translation Retained earnings/ Total
capital premium reserve reserve reserve (accumulated losses) equity
GBP GBP GBP GBP GBP
million million million million GBP million GBP million million
--------------- --------- --------- --------- -------- ------------ --------------------- ---------
At 1 October
2022 207 2,166 170 5 (6) (9) 2,533
Profit for the
year - - - - - 324 324
Other
comprehensive
loss - - (57) (7) - (9) (73)
Total
comprehensive
income/(loss) - - (57) (7) - 315 251
Share
incentive
schemes
Employee
share
schemes -
value of
employee
services - - - - - 18 18
Purchase of
own shares - - - - - (15) (15)
Currency
translation
transfer(1) - - - - 78 (78) -
--------------- --------- --------- --------- -------- ------------ --------------------- ---------
At 30
September
2023 207 2,166 113 (2) 72 231 2,787
Cost of
Share Share Hedging hedging Translation Retained earnings/ Total
capital premium reserve reserve reserve (accumulated losses) equity
GBP GBP GBP GBP GBP
million million million million GBP million GBP million million
--------------- --------- -------- -------- -------- ------------ --------------------- --------
At 1 October
2021 207 2,166 156 (1) - 111 2,639
Loss for the
year - - - - - (169) (169)
Other
comprehensive
income - - 28 6 - 32 66
---------------- --------- -------- -------- -------- ------------ --------------------- --------
Total
comprehensive
(loss)/income - - 28 6 - (137) (103)
Transfers to
property,
plant &
equipment - - (14) - - - (14)
Share
incentive
schemes
Employee
share
schemes -
value of
employee
services - - - - - 26 26
Purchase of
own shares - - - - - (9) (9)
Currency
translation
differences - - - - (6) - (6)
---------------- --------- -------- -------- -------- ------------ --------------------- --------
At 30 September
2022 207 2,166 170 5 (6) (9) 2,533
---------------- --------- -------- -------- -------- ------------ --------------------- --------
1) The translation reserves transfer relates to a correction of
a historical error in the retranslation of monetary assets and
liabilities in overseas subsidiaries on consolidation. The
cumulative amount of exchange differences on these balances were
previously presented within retained earnings/(accumulated losses)
in the consolidated statement of changes in equity and the
consolidated statement of financial position. However, these
exchange differences should have been presented as part of the
translation reserve. This has resulted in a GBP78 million transfer
between retained earnings/(accumulated losses) and the translation
reserve to more accurately present the cumulative foreign exchange
gains recognised on consolidation. The nature of the error is
considered to not constitute a material error on a qualitative
basis and therefore the impact has been adjusted in the current
year. There is no change in brought forward or carried forward
total equity from this change and no restatement of the
consolidated statement of financial position or consolidated
statement of changes in equity has been made.
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 year end.
At 30 September 2023, amounts in the cost of hedging reserve
comprised of a GBP3 million gain related to cross-currency basis
(2022: GBP7 million gain) and a GBP5 million loss related to the
time value of options (2022: GBP2 million loss).
Consolidated statement of cash flows
Year ended Year ended
30 September
2023 30 September 2022
Notes GBP million GBP million
--------------------------------------------------- ------ ------------- ------------------
Cash flows from operating activities
Cash generated from operations 10 1,509 892
Interest and other financing charges paid (162) (130)
Interest and other financing income received 125 11
Settlement of derivatives 91 7
Net tax paid 3 (12) (4)
--------------------------------------------------- ------ ------------- ------------------
Net cash generated from operating activities 1,551 776
Cash flows from investing activities
Purchase of property, plant and equipment 7 (677) (501)
Purchase of non-current other intangible assets (77) (29)
Net decrease/(increase) in money market deposits 11 126 (126)
Net proceeds from sale and leaseback of aircraft 76 87
--------------------------------------------------- ------ ------------- ------------------
Net cash used in investing activities (552) (569)
Cash flows from financing activities
Proceeds from issue of ordinary share capital - 91
Share issue transaction costs - (38)
Purchase of own shares for employee share schemes (15) (9)
Repayment of bank loans and other borrowings 11 (1,192) (377)
Repayment of capital element of leases 11 (218) (206)
Decrease in restricted cash 5 7
--------------------------------------------------- ------ ------------- ------------------
Net cash used in financing activities (1,420) (532)
Effect of exchange rate changes (168) 303
Net decrease in cash and cash equivalents (589) (22)
Cash and cash equivalents at beginning of year 3,514 3,536
Cash and cash equivalents at end of year 2,925 3,514
--------------------------------------------------- ------ ------------- ------------------
Notes to the financial statements
1. Accounting policies, judgements and estimates
Statement of compliance
easyJet plc (the 'Company') and its subsidiaries ('easyJet' or
the 'Group' as applicable) is a low-cost airline carrier operating
principally in Europe. The Company is a public limited company
(company number 03959649), incorporated and domiciled in the United
Kingdom, whose shares are listed on the London Stock Exchange under
the ticker symbol EZJ. The address of its registered office is
Hangar 89, London Luton Airport, Luton, Bedfordshire, LU2 9PF,
England.
The consolidated financial statements of easyJet plc have been
prepared in accordance with UK-adopted International Accounting
Standards and with the requirements of the Companies Act 2006 as
applicable to companies reporting under those standards.
Basis of preparation
This consolidated financial information has been prepared in
accordance with the Listing Rules of the Financial Conduct
Authority.
The financial information set out in this document does not
constitute statutory financial statements for easyJet plc for the
two years ended 30 September 2023 but is extracted from the 2023
Annual Report and Financial statements.
The financial statements have been prepared on a going concern
basis. In adopting the going concern basis for preparing these
financial statements, the Directors have considered easyJet's
business activities, together with factors likely to affect its
future development and performance, as well as easyJet's principal
risks and uncertainties through to June 2025.
As at 30 September 2023, easyJet has a net cash position of
GBP41 million including cash and cash equivalents of GBP2.9
billion, with unrestricted access to GBP4.7 billion of liquidity,
and has retained ownership of 54% of the total fleet, all of which
are 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 Emissions Trading
System (ETS) allowances, the phasing out of the free ETS allowances
from 2024, and the expected price and quantity required of
Sustainable Aviation Fuel (SAF) usage and fleet renewals.
The business is exposed to fluctuations in fuel prices and
foreign exchange rates. easyJet is currently c.76% hedged for fuel
in H1 of FY24 at c.$867 per metric tonne, c.51% hedged for H2 FY24
at c.$823 and c.25% hedged for H1 FY25 at c.$832.
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 a reduction in Holidays
contribution of 5%. The model also includes the reoccurrence of
additional disruption costs (at FY22 levels), an additional $50 per
metric tonne on the fuel price, 1.5% additional operating cost
inflation and an adverse movement on the US dollar rate. 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 the duration of 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.
The Directors also considered a separate downside model that
included the operational disruption and adverse US dollar rate but,
instead of the yield reduction, modelled increased costs
(additional 3% inflation assumed on operating costs) and an
additional $100 per metric tonne on the fuel price compared to the
base case. This scenario was not as severe and as such still
resulted in sufficient headroom. It was not deemed plausible to
combine yield reduction and the higher cost and fuel increases
based on an analysis of historical information across the airline
industry.
After reviewing the current liquidity position, committed
funding facilities, the base case and severe but plausible downside
financial forecasts incorporating the uncertainties described
above, the Directors have a reasonable expectation that the Group
has sufficient resources to continue in operation for the
foreseeable future. For these reasons, the Directors continue to
adopt the going concern basis of accounting in preparing the
Group's financial statements.
The Annual Report and Accounts for 2022 has been delivered to
the Registrar of Companies.
The Annual Report and Accounts for 2023 will be delivered to the
Registrar of Companies in due course. The auditors' report on those
financial statements was unqualified and neither drew attention to
any matters by way of emphasis nor contained a statement under
either section 498(2) of Companies Act 2006 (accounting records or
returns inadequate or financial statements not agreeing with
records and returns), or section 498(3) of Companies Act 2006
(failure to obtain necessary information and explanations).
Accounting policies
The accounting policies adopted are consistent with those
described in the Annual Report and Accounts for the year ended 30
September 2023.
Change in presentation
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 airport transfers.
The prior year has been presented on a consistent basis, which
has resulted in the re-presentation of the consolidated income
statement as below.
Year ended 30 September 2022
(Previously reported) (Re-presented)
-------------------------------------------- --------------------------------------------
Headline Non-headline Total Headline Non-headline Total
(note 2) (note 2)
------------ ---------------- ------------ ------------ ---------------- ------------
GBP million GBP million GBP million GBP million GBP million GBP million
--------------------- ------------ ---------------- ------------ ------------ ---------------- ------------
Revenue
Passenger revenue 3,816 - 3,816 3,816 - 3,816
Airline ancillary - - - 1,585 - 1,585
Holidays incremental
revenue - - - 368 - 368
------------ ---------------- ------------
Ancillary revenue 1,953 - 1,953 1,953 - 1,953
Total revenue 5,769 - 5,769 5,769 - 5,769
---------------------- ------------ ---------------- ------------ ------------ ---------------- ------------
Expenditure
Airports and ground
handling - - - (1,443) - (1,443)
Airports, ground
handling, holidays
accommodation, and
other operating
costs (1,716) - (1,716) - - -
Holidays direct
operating costs
(excluding flights) - - - (273) - (273)
Total (1,716) - (1,716) (1,716) - (1,716)
---------------------- ------------ ---------------- ------------ ------------ ---------------- ------------
Presentation of the liability for compensation for airline
customer delays and cancellations
In previous reporting periods easyJet has classified the
liability for compensation and reimbursements for airline customers
arising from flight delays and cancellations as a provision. In
response to a ruling by the International Financial Reporting
Interpretations Committee (IFRIC) that compensation for delays
gives rise to variable consideration, this liability has been
re-presented from provisions for liabilities and charges to
liabilities within trade and other payables. This impacts both the
statement of financial position and the accompanying notes to the
financial statements. The prior year statement of financial
position has been re-presented as described below, and the impact
on accompanying notes is described in those notes. Specifically,
for note 9, as a result of this re-presentation, the provision for
holidays' customer compensation for quality issues, personal injury
and illness, and the provision for refunds of air passenger duty
and similar charges have been re-presented as 'Other
provisions'.
As at 30 September 2022
-----------------------------------
Previously reported Re-presented
-------------------- -------------
GBP million GBP million
Current liabilities
Trade and other payables (1,685) (1,759)
Provisions for liabilities and charges (176) (102)
Remaining other current liabilities (1,817) (1,817)
----------------------------------------
(3,678) (3,678)
---------------------------------------- -------------------- -------------
The value of the liability for the year ending 30 September 2021
was not material and therefore the 1 October 2021 opening balance
in the relevant comparative notes has not been re-presented.
Critical accounting judgements and estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to
make judgements as to the application of accounting standards to
the recognition and presentation of material transactions, assets
and liabilities within the Group, and the use of estimates and
assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements, and the
reported amounts of income and expenses during the reporting
period. Estimations are based on management's best evaluation of a
range of assumptions, however, events or actions may mean that
actual results ultimately differ from those estimates, and these
differences may be material. The estimates and the underlying
assumptions are reviewed regularly.
Critical accounting judgements
The following are the critical judgements, apart from those
involving estimation (which are dealt with separately below), that
the Directors have made in the process of applying the Group's
accounting policies and that have the most significant effect on
the amounts recognised and presented in the financial
statements.
Classification of income or expenses between headline and
non-headline (note 2)
Non-headline items are those where, in management's opinion,
their separate reporting provides an additional understanding to
users of the financial statements of easyJet's underlying trading
performance, and which are significant by virtue of their size
and/or nature. In considering the categorisation of an item as
non-headline, management's judgement includes, but is not limited
to, a consideration of:
-- whether the item is outside of the principal activities of
the easyJet Group (being to provide point-to-point airline services
and package holidays);
-- the specific circumstances which have led to the item
arising, including, if extinguishing an item from the statement of
financial position, whether that item was first generated via
headline or non-headline activity. The rebuttable presumption being
that when subsequently extinguishing an item from the statement of
financial position, any impact on the income statement should be
reflected in the same way as that which was used in the initial
creation of the item;
-- if the item is irregular in nature; and,
-- whether the item is unusual by virtue of its size.
Non-headline items may include impairments, amounts relating to
corporate acquisitions and disposals, expenditure on major
restructuring programmes and the gain or loss resulting from the
initial recognition of sale and leaseback transactions.
Consolidation of easyJet Switzerland S.A.
Judgement has been applied in consolidating easyJet Switzerland
S.A. as a subsidiary on the basis that the Company exercises a
dominant influence over the undertaking. A non-controlling interest
has not been reflected in the consolidated financial statements on
the basis that the holders of the remaining 51% of the shares have
no entitlement to any dividends from that holding and the Company
has an option to acquire those shares for a predetermined minimal
consideration.
Critical accounting estimates
The following critical accounting estimates include judgements
or complexity and are the major sources of estimation uncertainty
that have a significant risk of resulting in a material adjustment
to the carrying amounts of assets and liabilities within the next
year.
Owned aircraft carrying values - GBP3,846 million (2022:
GBP3,598 million) (note 7)
The key estimates used in arriving at aircraft carrying values
are the UELs and residual values of the owned aircraft.
Aircraft are depreciated over their UEL to their residual values
in line with the Property, Plant and Equipment Accounting Policy.
The UEL is based on easyJet's long-term fleet plan and intended
utilisation of the current fleet which include long-term
assumptions of market conditions and customer demands, which by
their nature are inherently uncertain.
Residual value estimates for aircraft are based on independent
aircraft valuations. The valuations are based on an assessment of
the current and future state of the global marketplace for specific
aircraft assets. Should the marketplace for an asset class
deteriorate unpredictably, there could be a risk that the
recoverable amount for some aircraft assets would fall below their
current carrying value or that residual values are subject to
downward adjustment. If the market expectation of residual value of
the easyJet aircraft varied by +/- 10% this would result in an
approximate +/- GBP7 million impact on annual depreciation
rates.
Owned and leased aircraft asset recoverable amounts are included
in the Airline CGU and are therefore subject to review for
impairment annually or when there is an indication of impairment
within the Airline CGU.
Aircraft maintenance provisions - GBP753 million (2022: GBP636
million) (note 9)
easyJet incurs liabilities for maintenance costs arising during
the lease term of leased aircraft. These costs arise from legal and
constructive contractual obligations relating to the condition of
the aircraft when it is returned to the lessor. To discharge these
obligations, it is usual for easyJet to carry out at least one
heavy maintenance check on each of the engines and the airframe of
the aircraft during the lease term. A material provision
representing the estimated cost of this obligation is built up over
the course of the lease. The estimates and assumptions used in the
calculation of the provision are reviewed at least annually, and
when information becomes available that is capable of causing a
material change to an estimate, such as the renegotiation of end of
lease return conditions, increased or decreased aircraft
utilisation, or changes in the cost of heavy maintenance services
and the expected uplift in future prices.
A significant portion of the future maintenance costs and cost
increases are under contract and provide certainty to the
provision. Where cost increases are not under contract, an
estimation of the likely future increases are made in the
calculation of the provision. Given the significant value of the
provision, the provision is sensitive to changes in the future
increase of uncontracted costs. An additional 4% cost uplift on
uncontracted costs over the future years used in the provision
would result in a GBP28 million increase in the provision.
Additionally, with many maintenance costs incurred in US dollars,
the provision remains sensitive to changes in the GBP/USD exchange
rate. A significant +/- 10 cent change in the GBP/USD exchange rate
would impact the provision by -GBP48 million/+GBP56 million
respectively.
The rates used to discount the provision to arrive at a present
value are based on observable market rates as an estimate of the
relevant risk free rate.
The provision can also be materially influenced by the
maintenance status of aircraft when they enter the easyJet fleet.
To give flexibility to the fleet plan easyJet may lease 'mid-life'
aircraft. When mid-life aircraft enter the fleet, a 'catch-up'
maintenance provision is created to reflect the maintenance
obligation for the flying cycles undertaken before the aircraft
entered the easyJet fleet. The trigger for such increases to the
provision is the lease contract and as such any future mid-life
lease events are not reflected in the current provision. It is of
note that where contractually agreed a mid-life delivery asset is
also created when the mid-life leased aircraft enter the fleet,
creating a separate related asset on the statement of financial
position.
Goodwill and landing rights - GBP520 million (2022: GBP523
million)
It is management's judgement that there are two separate CGUs
which generate largely independent cash flows, these being
easyJet's Airline route network and its Holidays business. The
recoverable amount of goodwill and landing rights has been
determined based on value in use calculations for the airline route
network CGU as they are wholly attributable to it. The value in use
is determined by discounting future cash flows to their present
value. When applying this method, easyJet relies on a number of key
estimates including the ability to meet its strategic plans, future
fuel prices and exchange rates, long-term economic growth rates for
the principal countries in which it operates, and its pre-tax
weighted average cost of capital. Strategic plans include
assessments of the future impact of climate change on easyJet to
the extent these can be estimated. This includes, for example, the
future estimated price of ETS allowances, the phasing out of the
free ETS allowances from 2024, the expected price and quantity
required of SAF usage and currently estimated fleet renewals. The
impact of longer-term climate change risks that are not part of the
strategic plans has been considered as part of the stress testing
and plausible scenarios modelled.
Fuel prices and exchange rates continue to be volatile in nature
and the ability to pass these changes on to the customer is a
critical judgement that requires estimation. In addition,
assumptions over customer demand levels could have a significant
effect on the impairment assessment performed. Any future events
that would lead to extended travel restrictions or fleet grounding
may impact future impairment or useful economic life assessments.
The stress testing considered as part of the overall impairment
assessment takes into account different assumptions for these key
estimates.
Recoverability of deferred tax assets - GBP442 million (2022:
GBP443 million) (note 3)
The deferred tax asset balances include GBP442 million (2022:
GBP443 million) arising on full recognition of the UK trading tax
losses accumulated at the statement of financial position date. The
Group has concluded that these deferred tax assets will be fully
recoverable against the unwind of taxable temporary differences and
future taxable income based on the long-term strategic plans of the
Group. Where applicable the financial projections used in assessing
future taxable income are consistent with those used elsewhere
across the business, for example in the assessment of going
concern. These assessments include the expected impact of climate
change on easyJet, and the future financial impact within cash flow
projections, including the future estimated price of ETS
allowances, the phasing out of the free ETS allowances from 2024,
the expected price and quantity required of SAF usage and fleet
renewals.
The tax losses for which a deferred tax asset has been
recognised are expected to be utilised within the next six years,
assessed by considering probable forecast future taxable income.
The probable forecast future taxable income includes the impact of
the expected unwind of taxable temporary differences as well as the
effect of Full Expensing Relief for qualifying capital expenditure.
Probable forecast future taxable income includes an incremental and
increasing risk weighting to represent higher levels of uncertainty
in future periods.
The period over which the loss is utilised has been stress
tested by assessing probable future taxable income for the next
three years, based on the same risk weightings to those applied
above, but assuming no profit growth from the end of a three year
forecast period. The resultant reduction in forecast taxable profit
calculated on this basis would extend the tax loss utilisation
period by one year.
The tax losses can be carried forward indefinitely and have no
expiry date.
In the 22 November 2023 Autumn Statement it was announced that
full expensing relief, introduced in the Finance (No.2) Act 2023,
for qualifying expenditure incurred from 1 April 2023 to 31 March
2026 will be made permanent. It is not substantively enacted at the
statement of financial position date but the Group is assessing the
impact it may have on the recoverability of deferred tax assets for
subsequent financial years.
Defined benefit pension assumptions - GBP152 million gross
obligation (2022: GBP140 million gross obligation)
The Swiss pension scheme meets the requirements under IAS 19 to
be recognised as a defined benefit pension scheme and the net
pension obligation is recognised on the consolidated statement of
financial position. The measurement of scheme assets and
obligations are calculated by an independent actuary in line with
IAS 19. The financial and demographic assumptions used in the
calculation are determined by management following consultation
with the independent actuary with consideration of external market
movements and inputs. The calculation is most sensitive to
movements in the discount rate applied, which has been subject to
significant volatility.
Liability for compensation payments - GBP62 million (2022: GBP74
million)
easyJet incurs liabilities for amounts payable to customers who
make claims in respect of flight delays and cancellations, for
which claims could be made up to six years after the event, and for
reimbursement of reasonable expenses incurred as a result of flight
delays and cancellations. The key estimation in the liability is
the passenger claim rate for compensation payments. The estimation
carries a level of uncertainty as it is based on customer
behaviour. The basis of the estimates included in the liability are
reviewed at least annually and when information becomes available
that may result in a material change to the estimate. Should the
claim rate for compensation paid to customers increase by 2% across
the six-year liability period, it would result in an addition to
the year end provision of GBP15 million.
Vouchers issued - GBP58 million (2022: GBP111 million)
It is currently easyJet policy in the event of flight
cancellations to offer customers the option to accept vouchers in
lieu of cash refunds. The liability for these vouchers is
classified under other payables until the voucher is redeemed
against a future booking, when it is reclassified to unearned
revenue.
For airline flight vouchers, where the likelihood of the
contractual right being exercised is considered to be remote,
immaterial breakage has been applied. This has been estimated based
on the utilisation rates experienced to date, and these liabilities
have been taken to the consolidated income statement as revenue.
The breakage was applied in the first half of the financial year
ahead of a significant voucher expiry deadline later in the
financial year. That deadline was subsequently been extended into
the next financial year to allow customers the maximum opportunity
to utilise their vouchers. Utilisation patterns since this
extension do not suggest that the breakage recognition should be
reversed.
For vouchers issued to customers in countries where regulations
stipulate unused vouchers should be refunded to the customer before
the expiry of the statutory period, the required refunds have been
made.
Applying breakage to the balance of the remaining airline flight
vouchers at 30 September 2023 at a rate of 10% would result in a
reduction in the liability of c.GBP5 million.
New and revised standards and interpretations
A number of ame nded standards became applicable during the
current reporting period. The Group did not have to change its
accounting policies or make retrospective adjustments as a result
of adopting these standards. The amendments that became applicable
for annual reporting periods commencing on or after 1 January 2022,
and did not have a material impact were:
-- Amendments to IFRS 3 - Business Combinations - Reference to the conceptual framework
-- Amendments to IAS16 - Property, plant and equipment - Proceeds before intended use
-- Amendments to IAS37 - Provisions, contingent liabilities and
contingent assets - Onerous contracts: Cost of fulfilling a
contract
-- 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.
2. Non-headline items
An analysis of the amounts presented as non-headline is given
below:
Year ended Year ended
30 September 30 September 2022
2023
GBP million GBP million
-------------------------------------------------------- ------------- ------------------
Sale and leaseback loss - 21
Restructuring charge 1 -
Loss on disposal of landing rights 3 10
Fair value adjustment and hedge discontinuation credit - (1)
Correction of prior year error 19 -
-------------------------------------------------------- ------------- ------------------
Total non-headline charge before tax 23 30
Tax credit on non-headline items (6) (8)
--------------------------------------------------------- ------------- ------------------
Total non-headline charge after tax 17 22
--------------------------------------------------------- ------------- ------------------
Sale and leaseback loss
During the year, easyJet completed the sale and leaseback of
eight A319 aircraft (2022: ten). There was a GBPnil million impact
in the income statement (GBP6 million loss recognised in other
costs offset by GBP6 million gain recognised in other income) for
the sale and leaseback of the eight aircraft during the year (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 year 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 (2022: GBP10 million). Additionally, net
restructuring charges of GBP1 million (2022: GBPnil million)
representing additional costs arising from previously announced
restructuring programmes in Germany, have been incurred in the
period. As at 30 September 2023, there were unpaid amounts of GBP6
million (2022: GBP15 million) representing remaining redundancy
cases which have not been finalised and settled at the end of the
financial year.
Hedge discontinuation
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 year ended 30 September 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. In the year ending 30 September 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.
Correction of prior year error
In performing a review of foreign currency translation, an
immaterial error was identified in a third-party system relating to
aircraft lease modifications which occurred in FY21 and the
depreciation of the corresponding right of use assets. The required
correction to the statement of financial position at 30 September
2023 of GBP19 million has been posted to depreciation on those
right of use assets. This has been disclosed as a non-headline item
as it is an irregular, immaterial error originating in an earlier
financial year.
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, there is a non-headline tax credit of GBP6
million (2022: GBP8 million) for the year.
3. Tax (charge)/credit
Tax on profit/(loss) on ordinary activities
2023 2022
GBP million GBP million
------------------------------------------------------------------- ------------ ------------
Current tax
Foreign tax 11 7
----------------------------------------------------------------------- ------------ ------------
Total current tax charge 11 7
----------------------------------------------------------------------- ------------ ------------
Deferred tax
Temporary differences relating to property, plant and equipment 76 (50)
Other temporary differences 24 (2)
Adjustments in respect of prior years (3) 2
Remeasurement of opening balances due to change in tax rates - 4
----------------------------------------------------------------------- ------------ ------------
Total deferred tax charge/(credit) 97 (46)
----------------------------------------------------------------------- ------------ ------------
Total tax charge/(credit) 108 (39)
----------------------------------------------------------------------- ------------ ------------
Effective tax rate 25.1% 18.7%
----------------------------------------------------------------------- ------------ ------------
Reconciliation of the total tax charge/(credit)
The tax for the year is higher than (2022: lower than) the standard rate of corporation tax
in the UK as set out below:
2023 2022
GBP million GBP million
------------------------------------------------------------------- ------------ ------------
Profit/(loss)before tax 432 (208)
Tax charge/(credit) at 22.0% (2022: 19.0%) 95 (40)
Income not chargeable for tax purposes:
Expenses not deductible for tax purposes 8 5
Share-based payments (3) 2
Adjustments in respect of prior years - deferred tax (3) 2
Difference in applicable rates for current and deferred tax 12 (12)
Attributable to rates other than standard UK rate (1) 1
Change in substantively enacted tax rate - 4
Movement in provisions - (1)
----------------------------------------------------------------------- ------------ ------------
Total tax charge/(credit) 108 (39)
----------------------------------------------------------------------- ------------ ------------
Current tax payable at 30 September 2023 amounted to GBP3
million (2022: GBP5 million payable) which is solely related to tax
payable in other European jurisdictions.
During the year ended 30 September 2023, net cash tax paid
amounted to GBP12 million (2022: GBP4 million net cash tax
paid).
The Finance Act 2021 confirmed an increase of the UK corporation
tax rate from 19% to 25% with effect from 1 April 2023 and as such,
the blended statutory current tax rate for the year ended 30
September 2023 is 22%. Temporary differences have been measured
using the enacted tax rates that are expected to apply when the
liability is settled or the asset is realised, which is 25%.
On 20 June 2023, Finance (No.2) Act 2023 was substantively
enacted in the UK, introducing a global minimum effective tax rate
of 15%. The legislation implements a domestic top-up tax and a
multinational top-up tax, effective for accounting periods starting
on or after 31 December 2023. This will therefore apply to the
Group for the year ended 30 September 2025 onwards. The Group has
applied the exception allowed by an amendment to IAS 12 to
recognising and disclosing information about deferred tax assets
and liabilities related to top-up income taxes.
Tax on items recognised directly in other comprehensive (loss)/income or shareholders' equity:
2023 2022
GBP million GBP million
-------------------------------------------------------------------- -------------- --------------
Charge/(credit) to other comprehensive (loss)/income
Deferred tax on change in fair value of cash flow hedges 14 (13)
Deferred tax on post-employment benefit (1) (10)
--------------------------------------------------------------------- -------------- --------------
Deferred tax
The net deferred tax (asset)/liability in the statement of financial position is as follows:
Fair
Accelerated Short-term value Post-employment
capital timing (gains)/ Share-based benefit Trading
allowances differences losses payments obligation loss Total
GBP GBP
GBP million GBP million million GBP million GBP million million GBP million
-------------------- ------------ ------------ ---------- ------------ ---------------- ---------- ------------
At 1 October 2022 341 (26) 68 (1) (1) (443) (62)
Charged/(credited)
to income
statement 73 27 - (3) (1) 1 97
Charged to other
comprehensive loss - - (14) - 1 - (13)
-------------------- ------------ ------------ ---------- ------------ ---------------- ---------- ------------
At 30 September
2023 414 1 54 (4) (1) (442) 22
-------------------- ------------ ------------ ---------- ------------ ---------------- ---------- ------------
Deferred tax liabilities expected to be settled:
GBP million
-------------------- ------------ ------------ ---------- ------------ ---------------- ---------- ------------
Within 12 months -
After more than 12
months 22
-------------------- ------------ ------------ ---------- ------------ ---------------- ---------- ------------
At 30 September
2023 22
-------------------- ------------ ------------ ---------- ------------ ---------------- ---------- ------------
Deferred tax assets and liabilities are offset when there is a legally enforceable right to
set off current tax assets against current tax liabilities and it is the intention to settle
these on a net basis.
Post-employment
Accelerated Short-term Fair value
capital timing (gains)/ Share-based benefit Trading
allowances differences losses payments obligation loss Total
GBP GBP GBP GBP
million million million million GBP million GBP million GBP million
-------------------- ----------- ----------- ----------- ----------- ---------------- ------------ ------------
At 1 October 2021 373 (26) 51 (3) (9) (425) (39)
Charged/(credited)
to income
statement (32) - 4 2 (2) (18) (46)
Charged to other
comprehensive
income - - 13 - 10 - 23
-------------------- ----------- ----------- ----------- ----------- ---------------- ------------ ------------
At 30 September
2022 341 (26) 68 (1) (1) (443) (62)
-------------------- ----------- ----------- ----------- ----------- ---------------- ------------ ------------
4. Earnings/(loss) per share
Basic earnings/(loss) per share has been calculated by dividing
the total profit/(loss) for the year by the weighted average number
of shares in issue during the year after adjusting for shares held
in employee benefit trusts.
To calculate diluted earnings/(loss) per share, the weighted
average number of ordinary shares in issue has been adjusted to
assume conversion of all dilutive potential shares. Share options
granted to employees where the exercise price is less than the
average market price of the Company's ordinary shares during the
year are considered to be dilutive potential shares. Where share
options are exercisable based on performance criteria and those
performance criteria have been met during the year, these options
are included in the calculation of dilutive potential shares. The
calculation of diluted loss per share does not assume conversion,
exercise, or other issue of potential ordinary shares that would
have an antidilutive effect on earnings per share.
Headline basic and diluted earnings/(loss) per share are also
presented, based on headline profit/(loss) for the year.
Earnings/(loss) per share is based on:
2023 2022
GBP million GBP million
-------------------------------------------------------------------------------------- ------------
Headline profit/(loss) for the year 341 (147)
Total profit/(loss) for the year 324 (169)
------------
2023 2022
million million
-------------------------------------------------------------------------------------- ------------
Weighted average number of ordinary shares used to calculate basic earnings/(loss) per
share 751 753
Weighted average number of ordinary shares used to calculate diluted earnings/(loss)
per share 758 753
------------
2023 2022
Earnings/(loss) per share pence pence
------------
Basic 43.1 (22.4)
Diluted 42.7 (22.4)
------------
2023 2022
Headline earnings/(loss) per share pence pence
------------
Basic 45.4 (19.6)
Diluted 45.0 (19.6)
------------
5. Segmental and geographical revenue reporting
Segmental analysis:
Year ended 30 September 2023
Intergroup
Airline Holidays transactions Group
GBP million GBP million GBP million GBP million
Passenger revenue 5,221 - - 5,221
Ancillary revenue 2,174 1,047 (271) 2,950
Total revenue 7,395 1,047 (271) 8,171
Airline operating costs including fuel (5,537) - - (5,537)
Holidays direct operating costs - (842) 260 (582)
Selling and marketing (189) (43) - (232)
Other costs and other income (654) (47) 11 (690)
Amortisation, depreciation and dry leasing (649) (5) - (654)
Net interest (payable)/receivable and other financing
income/(charges) (59) 11 - (48)
Foreign exchange gain 26 1 - 27
Headline profit before tax 333 122 - 455
Non-headline items (23) - - (23)
Total profit before tax 310 122 - 432
Year ended 30 September 2022 (re-presented)
Intergroup
Airline Holidays transactions Group
GBP million GBP million GBP million GBP million
Passenger revenue 3,816 - - 3,816
Ancillary revenue 1,585 495 (127) 1,953
Total revenue 5,401 495 (127) 5,769
Airline operating costs including fuel (4,129) - - (4,129)
Holidays direct operating costs* - (400) 127 (273)
Selling and marketing* (153) (20) - (173)
Other costs and other income (593) (32) - (625)
Amortisation, depreciation and dry leasing* (562) (4) - (566)
Net interest (payable)/receivable and other financing
income/(charges)* (117) - - (117)
Foreign exchange loss (63) (1) - (64)
Headline (loss)/profit before tax (216) 38 - (178)
Non-headline items (30) - - (30)
Total (loss)/profit before tax (246) 38 - (208)
The presentation of this note has been expanded in the current
year to provide further information to the users of the financial
statements; additional financial statement line items are marked in
the above table with an *. Note that airline operating costs
including fuel comprises operating costs that relate solely to the
airline segment, and similarly holidays direct operating costs are
costs specific to the Holidays segment. All other costs are
incurred by both the Airline and Holidays segments.
The prior year has been re-presented in order to show the
information on a consistent basis. This revised presentation
reflects the increased granularity of the Holidays segment
available to the CODM and plc Board.
As described in note 1, airline revenue is recognised at a point
in time (when the flight takes place). The Holidays revenue
detailed in this note includes both flight revenue, recognised at
the time the flight takes place, and remaining ancillary revenue
which is recognised over time, aligned to the duration of the
holiday. The holidays flight revenue is included in this note
within ancillary revenue (with the associated intergroup
transaction) aligned to the presentation of revenue to the 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.
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.
Geographical revenue:
2023 2022
(re-presented)
GBP million GBP million
United Kingdom 4,345 2,845
France 852 674
Switzerland 791 626
Northern Europe (excluding Switzerland) 610 537
Southern Europe (excluding France) 1,434 995
Other 139 92
8,171 5,769
easyJet has assessed the materiality of geographical revenues
and has disclosed revenues by country of origin where such revenues
are in excess of 10% of total revenue. For the year ended 30
September 2023, this included separate presentation of France and
Switzerland which were previously included in Southern Europe and
Northern Europe respectively. The prior year has therefore been
re-presented in order to show the information on a consistent
basis.
Geographical revenue is allocated according to the location of
the first departure airport on each booking.
Southern Europe comprises countries lying wholly or mainly south
of the border between Italy and Switzerland.
easyJet holidays' revenue is generated wholly from the United
Kingdom.
easyJet's non-current assets principally comprise its fleet of
183 (2022: 181) owned and 153 (2022: 139) leased aircraft, giving a
total fleet of 336 at 30 September 2023 (2022: 320). easyJet stored
nil aircraft under power by the hour agreements (2022: 3). 27
aircraft (2022: 27) are registered in Switzerland, 128 (2022: 132)
are registered in Austria, nil (2022: 4) are registered in the
Cayman Islands, and the remaining 181 (2022: 160) are registered in
the United Kingdom.
6. Dividends
No dividend was paid in the year ending 30 September 2023 or 30
September 2022.
An ordinary dividend in respect of the year ended 30 September
2023 of 4.5 pence per share, or GBP34 million, based on 10%
headline profit after tax, is to be proposed at the forthcoming
Annual General Meeting. These financial statements do not reflect
this proposed dividend.
7. Property, plant and equipment
Owned assets Right of use assets
Aircraft and Land and Aircraft and
spares buildings Other spares Other Total
GBP million GBP million GBP million GBP million GBP million GBP million
Cost
1 October 2022 4,988 44 68 2,416 45 7,561
Additions 604 - 14 292 18 928
Aircraft sold and
leased back (165) - - 44 - (121)
Disposals(1) (31) - (4) (100) (15) (150)
At 30 September
2023 5,396 44 78 2,652 48 8,218
Accumulated
depreciation
At 1 October 2022 1,390 - 28 1,479 35 2,932
Charge for the
year 263 - 8 368 5 644
Aircraft sold and
leased back (86) - - - - (86)
Disposals(1) (17) - (4) (100) (15) (136)
At 30 September
2023 1,550 - 32 1,747 25 3,354
Net book value
At 30 September
2023 3,846 44 46 905 23 4,864
At 1 October 2022 3,598 44 40 937 10 4,629
Owned assets Right of use assets
Aircraft and Land and Aircraft and
spares buildings Other spares Other Total
GBP million GBP million GBP million GBP million GBP million GBP million
Cost
At 1 October
2021 4,802 44 55 2,335 45 7,281
Additions(2) 414 - 14 120 - 548
Aircraft sold
and leased back (216) - - 25 - (191)
Disposals (12) - (1) (64) - (77)
At 30 September
2022 4,988 44 68 2,416 45 7,561
Accumulated
depreciation
At 1 October
2021 1,243 - 19 1,255 29 2,546
Charge for the
year 255 - 9 269 6 539
Aircraft sold
and leased back (102) - - - - (102)
Disposals (6) - - (45) - (51)
At 30 September
2022 1,390 - 28 1,479 35 2,932
Net book value
At 30 September
2022 3,598 44 40 937 10 4,629
At 1 October
2021 3,559 44 36 1,080 16 4,735
The net book value of aircraft includes GBP569 million (2022:
GBP414 million) relating to advance payments for future deliveries
and life limited parts not yet in use. This amount is not
depreciated.
The net book value of aircraft spares is GBP112 million (2022:
GBP81 million).
The 'Other' categories are principally comprised of leasehold
improvements, computer hardware, leasehold property, fixtures,
fittings and equipment, and work in progress in respect of
property, plant and equipment projects. The work in progress as at
30 September 2023 was GBP14 million (2022: GBP20 million).
As at 30 September 2023, easyJet was contractually committed to
the acquisition of two CFM LEAP engines (2022: four), and 158
(2022: 168) Airbus A320 family aircraft, with a total estimated
list price(3) of $18.1 billion (2022: $19.2 billion) before
escalations and discounts, for delivery in financial years 2024 (16
aircraft), 2025 (19 aircraft) and 2026 to 2029 (123 aircraft).
At the year end date easyJet had a commitment for six aircraft
lease contracts, where the aircraft had not been delivered, with a
combined value of GBP67 million. Subsequent to 30 September 2023
two aircraft have been delivered reducing the commitment to GBP45
million.
1) Right of use asset disposals includes the transactions to
remove the fully depreciated assets from the statement of financial
position when the leased assets are returned. The gross value of
the cost and associated accumulated depreciation was GBP100
million.
2) GBP(14)million Other asset values previously recorded as
transfers have been reclassified as additions.
3) As Airbus no longer publishes list prices, the last available
list price published in January 2018 has been used for the
estimated list price and the prior year comparator has been
restated to be on the same basis.
8. Borrowings
Current Non-current Total
GBP million GBP million GBP million
At 30 September 2023
Eurobonds 433 1,462 1,895
433 1,462 1,895
Current Non-current Total
GBP million GBP million GBP million
At 30 September 2022
Eurobonds 437 1,919 2,356
Term loan (UK Export Finance backed facility) - 841 841
437 2,760 3,197
Amounts above are shown net of issue costs or discounted amounts
which are amortised at the effective interest rate over the life of
the debt instruments.
The February 2016 Eurobond with a carrying value of GBP437
million was repaid in February 2023. In addition, the Term loan (UK
Export Finance backed facility) with a carrying value of GBP841
million was repaid in June 2023 and the facility was cancelled. At
the same time easyJet entered into a new undrawn facility for $1.75
billion. The October 2016 Eurobond with a carrying value of GBP433
million has been repaid in October 2023.
9. Provisions for liabilities and charges
Maintenance provisions Restructuring Other provisions Total provisions
GBP million GBP million GBP million GBP million
At 1 October 2022 (re-presented)
(1) 636 15 40 691
Exchange adjustments (44) - - (44)
Release of provisions - (5) (6) (11)
Additional provisions recognised 257 6 17 280
Updated discount rates net of
unwind of discount (30) - - (30)
Utilised (66) (10) (9) (85)
At 30 September 2023 753 6 42 801
Year ended 30 September 2022
(re-presented)(1) Maintenance provisions Restructuring Other provisions Total provisions
GBP million GBP million GBP million GBP million
At 1 October 2021 550 18 16 584
Exchange adjustments 93 - - 93
Release of provisions - (10) (1) (11)
Additional provisions recognised 141 10 31 182
Related to aircraft sold and
leased back 6 - - 6
Updated discount rates net of
unwind of discount (71) - - (71)
Utilised (83) (3) (6) (92)
At 20 September 2022 636 15 40 691
The maintenance provisions provide for maintenance costs arising
from legal and constructive obligations relating to the condition
of the aircraft when returned to the lessor. 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.
2023 2022(1)
GBP million GBP million
Current 175 102
Non-current 626 589
801 691
1) The liability for compensation and reimbursements for airline customer delays and cancellations
has been re-presented from provisions for liabilities and charges to liabilities within other
payables. Refer to note 1 for further detail.
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 restructuring could be fully utilised within one year from 30 September 2023 and therefore
are classified as current.
10. Reconciliation of operating profit/(loss) to cash generated
from operations
2022
2023 (re-presented)
GBP million GBP million
Operating profit/(loss) 453 (27)
Adjustments for non-cash items:
Depreciation 644 539
Loss on disposal of property, plant and equipment 14 7
Loss on sale and leaseback - 21
Amortisation of intangible assets 29 25
Share-based payments 18 26
Loss on disposal of other intangible assets 3 10
Changes in working capital and other items of an operating nature:
Increase in trade and other receivables (16) (151)
Increase in current intangible assets (179) (43)
Increase in trade and other payables(1) 120 312
Increase in unearned revenue 458 197
Post employment benefit contributions (2) (1)
Decrease in provisions(1) (7) (61)
(Increase)/decrease in other non-current assets (40) 64
Increase/(decrease) in other derivative financial instruments 14 (26)
Cash generated from operations 1,509 892
1) The liability for compensation and reimbursements for airline
customer delays and cancellations has been re-presented from
provisions for liabilities and charges to liabilities within other
payables. Refer to note 1 for further detail.
11. Reconciliation of net cash flow to movement in net
cash/(debt)
New debt
01 October Foreign raised in the Net 30 September
2022 exchange year Other(1) cash flow 2023
GBP million GBP million GBP million GBP million GBP million GBP million
Cash and cash
equivalents 3,514 (168) - - (421) 2,925
Money market
deposits 126 - - - (126) -
3,640 (168) - - (547) 2,925
Eurobond (2,356) 28 - (11) 444 (1,895)
Term loan (UK Export
Finance backed
facility) (841) 105 - (12) 748 -
Lease liabilities (1,113) 94 (126) (62) 218 (989)
(4,310) 227 (126) (85) 1,410 (2,884)
Net (debt)/cash (670) 59 (126) (85) 863 41
1) Other
includes
deferred
fees, lease
extensions
and rate
changes.
12. Government Grants and assistance
During the year ended 30 September 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 companies in the year ended 30 September 2023 amounted to
GBP3 million (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. There are no unfulfilled conditions or
contingencies relating to this scheme.
On 8 January 2021, easyJet Airline Company Limited signed a
five-year term loan facility of $1.87 billion (with easyJet plc as
a Guarantor), underwritten by a syndicate of banks and supported by
a partial guarantee from UK Export Finance under their Export
Development Guarantee scheme. The Export Development Guarantee
scheme for commercial loans is available to qualifying UK
companies, does not carry preferential rates or require state aid
approval, but does contain some restrictive covenants including
dividend payments. However, these restrictive covenants are
compatible with easyJet's existing policies. In April 2022, easyJet
repaid $100 million of this facility, reducing the overall UKEF
facility size from $1.87 billion to $1.77 billion and in June 2023
this facility was repaid and terminated. A new five-year undrawn
facility of $1.75 billion was entered into in June 2023. Embedded
within the facility is a sustainability key performance indicator
linked to a reduction in carbon emission intensity in line with
easyJet's SBTi validated target, with a margin adjustment mechanism
(upward or downward) conditional on the achievement of specific
milestones. Other than the sustainability linkage the facility is
on similar terms to the 2021 agreement.
13. Contingent liabilities and commitments
Contingent liabilities
easyJet is involved in a number of disputes and litigation cases
which arose in the normal course of business. The potential outcome
of these disputes and litigations can cover a range of scenarios,
and in complex cases reliable estimates of any potential obligation
may not be possible.
easyJet has previously disclosed an investigation by the
Information Commissioner's Office (ICO) into a cyberattack and
subsequent data breach that took place in 2020. The ICO has advised
in this financial year that no further action will be taken and the
investigation against easyJet is now closed. Due to the uncertainty
surrounding the investigation no provision had been made for an
estimated outcome from the case, and as such there is no impact on
the financial statements of the ICO's decision to close the
investigation. Although the ICO investigation is closed, the
associated class action filed in May 2020 in the UK High Court by a
law firm representing a class of customers affected by the data
breach arising from the cyberattack, remains in place. Similarly,
other claims have been commenced or are threatened in certain other
courts and jurisdictions. The merit, likely outcome and potential
impact of these actions are subject to significant uncertainties
and therefore the Group is unable to currently assess the likely
outcome or quantum of the claims, and as such a provision is not
included in these financial statements.
Additionally, there is a possibility of a claim being made by a
third-party supplier, for what would be a material recovery.
Management have assessed the likelihood of a case being brought,
easyJet's response and likelihood of a successful defence, and at
this stage do not consider it appropriate to provide for such a
possibility.
Contingent commitments
Letters of credit and performance bonds
At 30 September 2023, easyJet had outstanding letters of credit
and performance bonds totalling GBP45 million (2022: GBP43
million), of which GBP12 million (2022: GBP10 million) expires
within one year. The fair value of these instruments at each year
end was negligible.
No amount is recognised on the statement of financial position
in respect of any of these financial instruments as it is not
probable that there will be an outflow of resources and the fair
value has been assessed to be GBPnil.
Aircraft orders
easyJet's current order book with Airbus extends to calendar
year 2028 and will deliver 158 aircraft (90 A320neo and 68
A321neo). This will continue the Company's fleet modernisation, as
the 156 seat A319 and some A320ceo aircraft (180 or 186 seat) leave
the business and new A320neo (186 seat) and A321neo (235 seat)
aircraft enter, providing upgauging, cost and sustainability
enhancements. Further, easyJet has a commitment with CFM to
purchase two LEAP engines in FY24.
In addition, easyJet has entered into conditional arrangements
with Airbus to secure the delivery of a further 157 aircraft (56
A320neo and 101 A321neo) between FY29 and FY34 as well as 100
purchase rights (the 'Proposed Purchase'). This provides easyJet
with the ability to complete its fleet replacement programme of
A319 aircraft and replace approximately half of the A320ceo
aircraft, alongside providing the foundation for disciplined
growth.
The conditional arrangement includes easyJet's agreement with
Airbus to exercise conversion rights of 35 A320neo deliveries into
A321neo aircraft (the 'Conversion'). Alongside the Proposed
Purchase this arrangement will deliver lower fuel burn, lower CO2
emissions and lower operating costs per seat.
The scale of the Proposed Purchase and the Conversion means that
both are conditional on shareholder approval at a general meeting
of the shareholders which will be held in December 2023.
Based on latest list prices for aircraft published in January
2018, the Proposed Purchase and the Conversion are expected to
result in an aggregate commitment of approximately $19.9 billion,
which will be spread over a number of years. The aggregate actual
price for the aircraft would be substantially lower because of
certain price concessions granted by Airbus.
At the year end date easyJet had a commitment for six aircraft
lease contracts, where the aircraft had not been delivered, with a
combined value of GBP67 million. Subsequent to 30 September 2023
two aircraft have been delivered reducing the commitment to GBP45
million.
Pathway to net zero
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 or
product / service delivery and are therefore not certain, hence no
liability has been recognised for these payments.
14. Related party transactions
The Company licences the easyJet brand from easyGroup Limited
('easyGroup'), a wholly owned subsidiary of easyGroup Holdings
Limited, an entity in which easyJet's founder, Sir Stelios
Haji-Ioannou, holds a beneficial controlling interest. The
Haji-Ioannou family concert party shareholding (being easyGroup
Holdings Limited and Polys Holding Limited) holds, in total,
approximately 15.27% of the issued share capital of easyJet plc as
at 30 September 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 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 2
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 are as follows:
2023 2022
GBP million GBP million
----------------------------------------------------------------------- ------------ ------------
Annual royalty 20 14
Brand protection (legal fees paid through easyGroup to third parties) 1 2
------------------------------------------------------------------------ ------------ ------------
21 16
----------------------------------------------------------------------- ------------ ------------
At 30 September 2023, GBP6.0 million (2022: GBP11.1 million) was
payable to easyGroup.
15. Events after the statement of financial position date
After the statement of financial position date of 30 September
2023,
-- in October 2023, the October 2016 Eurobond of EUR500 million was repaid;
-- in October 2023, three A319 aircraft were sold and leased
back with gross proceeds of GBP32 million; and
-- in November 2023, easyJet signed two aircraft leases with a
combined value of GBP12 million.
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END
FR FIFSVLVLTFIV
(END) Dow Jones Newswires
November 28, 2023 02:00 ET (07:00 GMT)
Grafico Azioni Easyjet (LSE:EZJ)
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Da Apr 2024 a Mag 2024
Grafico Azioni Easyjet (LSE:EZJ)
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