TIDMEZJ
RNS Number : 1559G
easyJet PLC
23 November 2020
23 November 2020
easyJet plc
(the "Company")
Annual Report and Notice of Annual General Meeting
The Company confirms that the following documents are being
posted or have been made available to shareholders today:
-- Annual Report and Accounts for the year ended 30 September 2020 ('2020 Annual Report');
-- Notice of Annual General Meeting ('AGM Notice'); and
-- Form of Proxy for Annual General Meeting.
In accordance with Listing Rule 9.6.1 copies of the above
documents have been submitted to the National Storage Mechanism and
will shortly be available for inspection at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism The
documents are also available on the Company's website at
http://corporate.easyjet.com .
The appendix to this announcement contains additional
information which has been extracted from the 2020 Annual Report
for the purposes of compliance with the FCA's Disclosure Guidance
and Transparency Rules and should be read together with the Final
Results announcement from 17 November 2020, which can be found at
http://corporate.easyjet.com/investors/regulatory-news . Together
these constitute the information required by DTR 6.3.5 to be
communicated to the media in unedited full text through a
Regulatory Information Service. This information is not a
substitute for reading the full 2020 Annual Report.
Annual General Meeting arrangements
The AGM will take place on Wednesday, 23 December 2020 at 11.00
a.m. The Board takes the well-being of its employees, customers and
shareholders very seriously. Given the UK Government's current
restrictions on public gatherings in place at the date of this
announcement, and in accordance with the regulations set out in
Schedule 14 of the Corporate Insolvency and Governance Act 2020, we
regret that it will not be possible for shareholders to attend the
AGM in person.
The Company is offering facilities for shareholders to attend
and to vote at the AGM electronically and to attend by conference
call to ask questions in real time should they wish to do so.
Further details are set out in Part III of the AGM Notice and a
user guide to the electronic facilities is available on our website
at:
https://corporate.easyjet.com/investors/shareholder-services/shareholder-meetings/agm-december-2020
We strongly encourage shareholders to vote on all resolutions in
advance of the AGM by completing an online proxy appointment form
appointing the Chairman of the meeting as their proxy and to
register any questions in advance. Further details are included in
the AGM Notice.
The Board will keep the situation under review and may need to
make further changes to the arrangements relating to the AGM,
including how it is conducted, and shareholders should therefore
continue to monitor the Company's website and announcements for any
updates.
Shareholders are urged to submit their votes by proxy before
11.00 a.m. on Monday, 21 December 2020 .
For further details please contact easyJet plc:
Institutional investors and analysts:
Michael Barker Investor Relations +44 (0) 7985 890 939
Holly Grainger Investor Relations +44 (0) 7583 101 913
Media:
Anna Knowles Corporate Communications +44 (0) 7985 873 313
Dorothy Burwell Finsbury +44 (0) 207 251 3801
+44 (0) 7733 294 930
LEI: 2138001S47XKWIB7TH90
Appendix: additional information required by DTR 6.3.5
Page and note references in this appendix refer to page numbers
and notes in the 2020 Annual Report.
Directors' Responsibilities and Statements
The following responsibility statement is extracted from the
Statement of Directors' Responsibilities on page 132 of the 2020
Annual Report and Accounts and is repeated here solely for the
purpose of complying with DTR 6.3.5. The statement relates to the
full 2020 Annual Report and Accounts and not the extracted
information presented in this announcement or the Final Results
announcement.
The Directors are responsible for preparing the Annual Report
and Accounts ('accounts') in accordance with applicable law and
regulations.
Company law requires the Directors to prepare accounts for each
financial year. Under that law the Directors have prepared the
Group and Company accounts in accordance with International
Financial Reporting Standards (IFRS) as adopted by the European
Union (EU). Under company law the Directors must not approve the
accounts unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and the Company and of
the profit or loss of the Group and the Company for that
period.
In preparing the accounts, the Directors are required to:
-- select suitable accounting policies and then apply them
consistently
-- make judgements and accounting estimates that are reasonable
and prudent
-- state whether applicable IFRS as adopted by the EU have been
followed, subject to any material departures disclosed and
explained in the accounts
-- prepare the accounts on the going concern basis unless it is
inappropriate to presume that the Group and Company will continue
in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's and the
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Group and the Company. This
enables them to ensure that the accounts and the Directors'
Remuneration Report comply with the Companies Act 2006 and, as
regards the Group accounts, Article 4 of the IAS Regulation. They
are also responsible for safeguarding the assets of the Group and
the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of, amongst other things, the financial and corporate governance
information provided on the easyJet website
http://corporate.easyjet.com/. Legislation in the United Kingdom
governing the preparation and dissemination of accounts may differ
from legislation in other jurisdictions.
The Directors consider that the Annual Report and Accounts,
taken as a whole, are fair, balanced and understandable and provide
the information necessary for shareholders to assess the Group's
and the Company's position and performance, business model and
strategy.
Each of the Directors, whose names and functions are listed on
pages 80 to 83, confirm that, to the best of their knowledge:
-- the Group and Company accounts, which have been prepared in
accordance with IFRS as adopted by the EU, give a true and fair
view of the assets, liabilities, financial position and loss of the
Group and profit of the Company
-- the strategic report, included in the Annual Report, includes
a fair review of the development and performance of the business
and the position of the Group, together with a description of the
principal risks and uncertainties that it faces.
In accordance with section 418 of the Companies Act 2006, each
Director in office at the date the Directors' Report is approved,
confirms that:
-- so far as the Director is aware, there is no relevant audit
information of which the Group and Company's auditor is unaware
-- he/she has taken all the steps that he/she ought to have
taken as a Director in order to make himself/herself aware of any
relevant audit information and to establish that the Group and
Company's auditor is aware of that information.
The Annual Report on pages 1 to 132 was approved by the Board of
Directors and authorised for issue on 17 November 2020 and signed
on its behalf by:
JOHAN LUNDGREN Chief Executive ANDREW FINDLAY Chief Financial Officer
Principal Risks and Uncertainties
The risks and uncertainties set out below are extracted from the
pages 66 to 77 of the 2020 Annual Report and Accounts and are
repeated here solely for the purpose of complying with DTR
6.3.5.
Our risk Profile
The principal risks and uncertainties faced by the Group remain
largely unchanged from 2019 and include the following types of
risks:
-- Impact of COVID-19 - the impacts of government imposed travel
restrictions in response to the COVID-19 pandemic, including their
effects on consumer demand, the competitive landscape, and the
financial markets (see page 67)
-- Asset efficiency and effectiveness - making the best use of
capacity/slots and fleet mix in the right airports at the right
prices, and driving value through our supply chain
-- Environment and sustainability - the impacts of climate
change on our business and operations, carbon credit programmes,
regulation/ taxation, and changing customer and people
expectations
-- Legislative/regulatory landscape - being aware of, and
compliant with, legislation and regulation affecting our
business
-- Macro-economic and geopolitical - events that can affect our
financial performance including supply/ demand imbalance, general
economic trends, Brexit (see page 68), as well as impact of fuel
cost, foreign exchange rates, and counterparty performance
-- People - having the right people through talent acquisition,
retention, engagement, and succession planning
-- Safety, security, and operations - the delivery of a safe and
secure operation which meets the needs and expectations of our
customers
-- Technology and cyber - the availability, security, compliance
and performance of website and critical technologies, and the
protection of company and customer data including the impact of the
data breach announced in May 2020 (see page 68).
As with all businesses, our principal risks and uncertainties
are continually evolving.
IMPACT OF COVID-19
The impact the COVID-19 pandemic continues to evolve. Travel
restrictions continue to be imposed by governments across our
markets. Due to these restrictions, a portion of the easyJet fleet
has remained grounded since 30 March 2020. The risks and
uncertainties, stated in the first half of our 2020 financial year
results, remain and continue to be actively managed:
In order to manage both high levels of volatility in demand and
to protect the business from the risk of heavily loss making
flying, we have put into place a dynamic planning and capacity
management process over summer 20 and winter 20/21. This allows the
review of planned capacity at three key intervals:
1. Six weeks prior to departure: On sale capacity is reduced
significantly to remove the majority of loss making capacity. This
is the biggest capacity modification.
2. Four weeks prior to departure: A further check is conducted
on the forecast performance of the capacity that is left with
further underperforming capacity removed at this point.
3. Three weeks prior to departure any flights with a very low load factor are removed.
Ensuring the safety of our passengers and people is, and always
will be, easyJet's highest priority. Whilst the rate of
transmission of COVID-19 decreased from the peaks seen earlier in
2020, there continue to be new cases of infection in many countries
and the rates have been increasing since the summer. The measures
implemented by easyJet are based on our risk assessments and
government, WHO, EASA, ICAO and public health guidance. easyJet has
a comprehensive set of biosecurity standards in place to minimise
the risk of transmission of infectious diseases which have been
developed and are constantly under review by our Biosecurity
Standards Group. These include all of our aircraft having industry
leading filtration systems, to keep the cabin air as clean as
possible. We have also implemented additional daily cleaning and
disinfection of our aircraft. Furthermore, passengers and crew are
required to wear masks on board all our flights.
Due to the extreme level of uncertainty created by the global
COVID-19 pandemic, there remains a risk that multiple and prolonged
waves of the pandemic could affect our markets, leading to further
travel restrictions being imposed at short notice, which could
reduce customer confidence in travelling at this time. Accordingly,
easyJet has modelled severe but plausible downside scenarios based
on further extended waves of the pandemic. These downside scenarios
include combinations of a prolonged recovery period, decrease in
yield, increased in forecast costs, planned cost initiatives not
being achieved to the level forecast, adverse variations in fuel
price, significant deterioration of relationships with card
acquirers, cash collateralisation and unfavourable foreign exchange
rate movements. Although these severe downside scenarios are not
considered likely, in the event of some or all of these occurring,
and to ensure the business meets its obligations for the next 12
months, the Group may need to secure additional funding, which is
not contractually committed at 30 September 2020.
easyJet has taken several measures to preserve cash, reduce
costs and generate liquidity. These include signing two secured
term loans totalling circa GBP400 million, maturing in 2022. We
have also successfully issued GBP600 million of Commercial Paper
through the Covid Corporate Financing Facility (CCFF) as well as
fully drawing down on a $500 million Revolving Credit Facility.
This facility is secured against aircraft. In the second half of
the financial year, easyJet raised GBP608 million through the sale
and leaseback of 23 aircraft. Furthermore, during the 2021
financial year, easyJet continues to engage with an active lessor
market interested in acquiring further aircraft from easyJet's
fleet on a sale and leaseback basis, including a recently announced
sale of 30 additional aircraft for proceeds of GBP717 million. In
June 2020, easyJet also went to the equity market and successfully
raised GBP409 million through a placing of new shares. In total,
between March and September 2020, easyJet has secured more than
GBP2.4 billion to protect it against the impact of COVID-19.
easyJet continues to take decisive action to remove cost and
non-critical expenditure from the business at every level. This
includes reaching agreement with Airbus to delay the delivery of 24
aircraft, with easyJet now expecting its year end 2021 fleet size
to be around 302 aircraft.
easyJet utilised Government support available across its network
to furlough employees. To reflect the reduced fleet, and proposals
relating to the optimisation of our network and bases, easyJet
announced that it may need to reduce staff numbers by up to 30%
subject to consultation with its employee representatives; several
of those consultation processes are ongoing. During the
organisation design process, the Group has considered the critical
skills and capabilities needed to ensure it remains successful in
the future. As easyJet progresses through the consultation process,
there is a heightened risk of industrial action that may disrupt
our operations.
In light of the global pandemic, the market for aircraft
transactions has slowed significantly. However, asset recoverable
amounts remain, based on value in use, in excess of the carrying
values as at 30 September 2020. Management will continue to keep
these valuations under review.
The significant increase in employees working at home has
increased our IT and information security risks. We have an ongoing
communication and awareness programme to remind all users of the
associated risks, and have issued advice on secure home-working
best practices. We have also changed our multi-factor
authentication and password complexity controls to reflect changing
IT Security threats. Furthermore a comprehensive wellbeing support
microsite was launched to support people to work remotely as well
as manage the personal impact of COVID-19.
To help mitigate the risks from working from home, and meet our
duty of care obligations, our Occupational Health and Safety team
has issued guidance and a method of self-assessment to support
employees. This includes information on how to correctly set up a
home working environment and the need to take regular breaks. Those
who are identified through this process as needing additional
support due to health and safety concerns are being supported, and
provided with equipment, as required.
Further support is being given to employees as the Group moves
to a position where working from home is regularly required via our
Remote Working Policy. This includes a support package to help
facilitate a better, more productive homeworking environment. The
policy also details support given via our Employee Assistance
Programme (EAP) and the #YOUMATTER initiative, which helps to
support our employee's wellbeing.
Brexit
easyJet preparations for the Brexit trade deal continue and the
plan has not changed. The focus remains ensuring that our network
is unaffected by Brexit and that our operations are uninterrupted
by any eventual Brexit trade deal outcome, including a no deal
exit. The cross functional Brexit programme continues to oversee
Brexit planning, led by the Group General Counsel & Company
Secretary. The Board has also had oversight of the preparations and
is regularly briefed.
easyJet has in place a series of measures to protect our flying
rights regardless of the Brexit trade deal outcome, these
included:
-- Implementing a new operating model, with easyJet operating as
a pan-European airline group with three operating airlines: in
Austria, Switzerland and the UK. This will ensure we can continue
to maintain our network
after Brexit
-- Ensuring that we meet the requirements that EU airlines are
majority EU27 owned and controlled, through our investor relations
programme and, if needed, activating our contingency plan that
could involve suspending a small number of shareholders' voting
rights
-- Ensuring that our operation is robust to the UK leaving EASA,
the European Aviation Safety Agency, including transferring our
EU27 based pilots to Austrian pilot licences and ensuring we have
sufficient pilots and cabin crew of EU27 nationality
-- Continuing to engage with European governments, aviation
regulators and the European Commission on Brexit issues
Of particular focus has been ensuring that easyJet is robust to
a no deal Brexit outcome and that flights are able to continue
between the EU and the UK.
To further support the robustness of our operation to a no deal
outcome we have invested in operational measures to ensure that
there is no reliance on EU/UK trading links in case these are
disrupted, including putting in place stores for spare parts within
the EU27.
A no deal Brexit carries potential financial risks for instance
from changes in airport and tax charging structures and any
unexpected outcomes. Alongside this there remains uncertainty about
the economic effects of a no deal Brexit.
IMPACT OF DATA BREACH
On 19 May 2020, easyJet announced that it had been the target of
a cyber attack from a highly sophisticated source. The attacker had
access to the email address and booking details which had been
input by approximately nine million bookers and, for a very small
subset of customers (2,208), payment card details. The Information
Commissioner's Office (ICO) has opened an investigation into the
cyber attack. A class action law firm has filed a group claim
against easyJet in the English High Court and claims have also been
commenced or threatened in certain other courts and jurisdictions.
The likely outcome and potential impact on easyJet of the
investigation by the ICO, and the claims, are subject to a number
of significant uncertainties and, therefore, any assessment of the
likely outcome or quantum cannot be made at the date of this
disclosure.
asset efficiency and effectiveness
We maintain our competitive cost advantage by making the best
use of capacity/slots and fleet mix in the right airports at the
right prices, and driving value through our supply chain.
airport Potential causes Controls and mitigations
Infrastructure * Increased competitor capacity * Where easyJet is affected by industrial action or
Flying to primary other service interruption by a key supplier,
airports is an resources are deployed to manage this as effectively
important element * Environmental restrictions/ pressure restricting as possible See the significant operational
of our customer airport expansions disruption risk on page 76 for further details
proposition. The
airports to which
we fly may already * Delays in airport infrastructure expansion * Sophisticated processes and systems to ensure slot
be or may become transactions are made in an efficient and effective
congested. manner.
* Increase in airport charges
* Effective cross-functional governance to ensure
* Changes in regulation optimal business decisions are made
* Ineffective slot management * easyJet closely monitors airport capacity through a
dedicated airport development team. The team works
with airports to ensure the development of
Potential consequences appropriate capacity for easyJet in a cost efficient
* Weakened customer proposition and timely manner
* Loss of market share * Managing aircraft gauge to improve our ability to
grow
* Inefficient use of crew/aircraft
* Significant increase in costs
Continuity of Potential causes Controls and mitigations
services * Failure of critical IT system * The four key areas of business resilience (IT and
easyJet is dependent processes, people, premises, and suppliers) all form
on a mixture of part of easyJet's functional business and airport
critical IT systems * Destructive cyber-attack (i.e. ransomware) Business Continuity Plans
and processes,
employees,
buildings/facilities * Significant external incident (terrorism, weathe * Critical IT systems are identified with ongoing
and third-party r, efforts to match the business needs with recovery
suppliers. A loss activism) capabilities. The risk of system unavailability is
of one or more now mitigated further, thanks to the adoption of the
of the above cloud, in addition to easyJet's two data-centres
components * Failure of third-party
could lead to
significant * Incident Management and Resilience teams are in place
disruption * Industrial action and ready to respond to any IT related incident
to operations
and could have
an adverse Potential consequences * Time-critical staff have been identified via Business
reputational, * System unavailability for customers and/or staff Impact Assessments and Business Continuity Plans,
financial or legal with regularly tested recovery desks allocated at
impact. alternate locations should the usual place of work be
* Inability to access key buildings/facilities unavailable. An increased provision of laptops and
tablets also enables greater mobility and remote ways
of working
* Unavailability of critical staff
* Enhanced procurement processes include risk
* Reliance on inadequate supplier recovery plans assessments aligned with business objectives. These
require relevant third parties to have their own
Business Continuity/Disaster Recovery plans and we
* Operational disruption are implementing a process to review a sample of
these each year
* Brand/ reputation impact
* Maintain close working relationships with key
stakeholders including, but not limited to, airport
* Sustained adverse media coverage authorities and slot coordinators lobbying where
appropriate
------------------------------------------------------- -------------------------------------------------------------
Non-delivery Potential causes Controls and mitigations
of * Resource dedicated to change delivery and oversight * Complex, large-scale programmes have been initiated,
strategic prioritised and are managed through the Project
initiatives Management Office
The business * Changes in organisation's priorities (may be driven
continues by internal or external factors)
to undertake * A project management framework, which sets out
a approval processes, governance requirements, and key
number of * Scope change/time available ongoing processes and controls, is followed by all
initiatives projects and programmes, and reviews are undertaken
to support to ensure continuous improvement in this approach
its Potential consequences
strategy. * Business benefits not realised
* Each strategic initiative has an executive sponsor
from the AMB and its own steering group which
* Financial underperformance provides oversight and challenge to the project,
monitors progress against programme objectives and
ensures that decisions are made at the appropriate
* Inefficient use of resource level
* Key strategic initiatives are managed by experienced
programme managers, complemented by appropriate
subject matter specialist resource where appropriate
* A Project Management Office is in place to oversee
delivery of projects and programmes, including the
allocation of support resource, budget tracking and
realisation of benefits
* The executive sponsor provides routine updates to the
AMB and can use this as an escalation channel for any
issue resolution
* The Board also receives updates on key strategic
initiatives including any risks or issues associated
with their delivery
* The Internal Audit function provides independent
programme assurance over our most significant
initiatives, drawing upon independent subject matter
expertise where appropriate
Single fleet Potential causes Controls and mitigations
supplier * Delays in the delivery of new aircraft * There are approximately 8,672 A320 family (A319,
easyJet is A320, A321) aircraft operating, with a proven track
dependent record for safety and reliability
on Airbus as * Technical/mechanical issues
its
sole * Introduction of the A320neo in part mitigates this
supplier * Fluctuating second-hand market single fleet supplier risk as the aircraft is
for equipped with a different engine type
aircraft.
The Board Potential consequences
considers * Schedule reductions/cancellations * easyJet continues to work closely with Airbus to
that the ensure full visibility of the delivery schedule for
efficiencies new aircraft. In the event that there are material
achieved by * Grounding of all/part of the fleet delays, appropriate mitigation is put in place; for
operating example short-term wet lease arrangements are used to
a single minimise any operational impact
fleet * Loss of customer confidence
type
outweigh * easyJet operates a rigorous established aircraft
the risks * Financial impact when aircraft leave the fleet maintenance programme. Maintenance schedules are
associated approved by the relevant regulatory body
with
easyJet's
single fleet * easyJet regularly reviews the second-hand-market and
strategy. has a number of different options when looking at
fleet exit strategies. Sale and leaseback facilitates
the exit of aircraft from the fleet by transferring
residual value risk, and also provides flexibility in
managing the fleet size
---------------------------------------------------------- --------------------------------------------------------------
environment and sustainability
The impacts of climate change on our business and operations,
carbon credit programmes, regulation/taxation, and changing
consumer and colleague expectations. easyJet's promise in Our
Strategy is to be a safe and responsible airline. This is what
guides our approach to sustainability, whether that be related to
climate change, health and safety, diversity, or employee
engagement. More information is in the Sustainability section on
page 36.
carbon Potential causes Controls and mitigations
trading * Political change * easyJet influences future and existing policy and
schemes regulations which affect the airline industry through
Adverse a number of different channels, including working
changes * Uncertainty driven by Brexit with relevant industry bodies to assist in this
to carbon
trading
schemes, * International alignment * easyJet looks to optimise fuel usage to reduce
including emissions and therefore reduce the potential impact
the existence of those schemes, for example ensuring optimal
and/or cost * External pressure groups routings as well as using climb, descent and landing
of techniques to improve efficiency
the scheme.
Potential consequences
* Closure of existing scheme * easyJet has an appropriate hedging strategy (to the
extent possible)
* Loss of free allocations, leading to significant cost
impact
* Introduction of new schemes
* Inability to hedge in line with fuel policy
climate Potential causes Controls and mitigations
change * Increased CO 2 emissions * easyJet continues to bring Airbus neo aircraft into
Weather its fleet which are significantly more fuel efficient
patterns than the standard variant
including, Potential consequences
but * Adverse customer experience
not limited * easyJet offsets the carbon emissions from the fuel
to, used on every plan flown
winds, * Injury to customers
storms,
extreme * easyJet implements a range of fuel and carbon saving
temperatures, * Operational disruption (including airspace and runway initiatives, for instance operating flights at high
are becoming closures) load factors and using only one engine when taxiing
increasingly on the ground
difficult to
predict. * Aircraft damage
* Disruption management measures include advanced
winter planning, standby crews and aircraft, as well
* Customers consider alternatives to air travel as the continual review of flight plans to ensure the
optimal routings. In addition, to reduce the time it
takes to resolve aircraft technical faults, easyJet
has a contract for two light aircraft and crew to
transport engineers and spare parts around its
network, with dedicated engineers on standby to
travel
------------------------------------------------------------- --------------------------------------------------------------
Increased Potential causes Controls and mitigations
Taxation * Political change * By engaging with key stakeholders, easyJet seeks to
Future policy reach a common understanding on the drive to impose
measures and policy measures and regulation to address the impact
regulation * External pressure groups of aviation on climate change
to tackle the
impact of
aviation * Customer demand * easyJet continues to explain its environmental
on climate performance, and the further action it is taking, to
change its customers and other stakeholders. For example,
could impact Potential consequences this has included highlighting the introduction of
easyJet's * Significant increase in cost of existing aviation the A320neo and A321neo aircraft and their reduced
business if taxes/levies emissions compared to previous generation aircraft,
they and work with partners in regards to new technologies
impose to radically reduce the carbon footprint of flying
limitations * Future expansion of taxes/levies
and cost on
how * easyJet is able to operate flexible routings in the
easyJet * Policies to constrain growth/capacity event of constraints being brought in
operates
and the
services * Increasing noise curfews * The new generation Airbus A320neo and A321neo
it can aircraft are 50% quieter during takeoff and landing
provide. than the equivalent previous generation aircraft
* Pressure on margins
------------------------------------------------------------- --------------------------------------------------------------
legislative/regulatory landscape
The airline industry is heavily regulated and there is a
continual need to keep well informed and adapt (as required) to any
legislative or regulatory changes across the jurisdictions in which
easyJet operates.
brand license Potential causes Controls and mitigations
and major * Shareholder activism * Active shareholder engagement programme
shareholder
easyJet has two
major shareholders * Actions of easyGroup or other easyGroup licensees * Regular engagement with easyGroup Holdings Limited
(easyGroup Holdings alongside other major shareholders
Limited and Polys
Holdings Limited) Potential consequences
which, as a concert * Eventual loss of the brand licence * Representatives from the Board and senior management
party, control take collective responsibility for addressing issues
approximately arising from any activist approach adopted by the
28.69% of its major shareholder. The objective is to address issues
ordinary shares. when they arise and anticipate and plan for potential
easyJet does not future activism
own its company
name or branding,
which is licensed * Quarterly meeting of senior representatives from both
from easyGroup sides, attended by the Chief Financial Officer and
Ltd. The licence the Group General Counsel & Company Secretary, to
includes certain actively manage brand-related issues as they arise
minimum service
levels that easyJet
must meet in order * easyJet makes contributions to the joint brand
to retain the protection fund
right to use the
name and brand.
legal/regulatory Potential causes Controls and mitigations
non-compliance * New or changes to existing legislation/regulation * Compliance framework including, but not limited to,
Failure to comply policies, procedures, and mandatory training
with legislation programmes
and regulation, * Employee/agent ignorance
such as local
consumer laws, * easyJet has an in-house team of Legal experts to
new case law or * Rogue employee/agent behaviour advise on legal issues and developments, and to
policy changes assist the business in interpreting any formal
in relation to regulatory requirements. Where appropriate, this
customer Potential consequences expertise is supplemented with specialist external
compensation, * Sustained adverse media coverage support relevant to a specific discipline or
environmental jurisdiction
or airport
regulation, * Fines/regulatory sanctions
in the * Panel of external legal advisers, both in the UK and
jurisdictions in key easyJet markets, are briefed to keep easyJet
in which easyJet * Reduction in future revenue informed of any changes or new legislation and to
operates, or data assist easyJet in developing appropriate responses to
protection/ such legislation
information * Operational disruption
protection
regulations * easyJet influences future and existing policy and
could have an * Loss of operating licence regulations which affect the airline industry through
adverse a number of different channels, including working
reputational with relevant industry bodies to assist in this
and financial * Significant spike in costs
impact.
* easyJet adapts to new legislation and regulation,
* Share price movement where possible adapting existing compliance
frameworks (for example mandatory training programmes
and clear policies and associated guidance)
* Loss of colleague/customer trust
---------------------------------------------------------- -------------------------------------------------------------
macro-economic and geopolitical
The airline industry can be sensitive to macro-economic and
geopolitical conditions. These risk events can affect our financial
performance including supply/demand imbalance, general economic
trends, Brexit (discussed on page 22), as well as impact of fuel
cost, foreign exchange rates, and counterparty performance.
supply/demand Potential causes Controls and mitigations
imbalance * Increased capacity * Enhancements to our Commercial organisation to
easyJet's provide even further focus on existing and new
success initiatives to optimise the revenue position
in the highly * Industry consolidation
competitive
European * Weekly trading meeting to review performance -
short-haul * Increased competition from other airlines and attended by senior managers, including members of the
aviation transport providers AMB
market is
built
on our key * Government interventions * Relentless focus on maintaining easyJet's competitive
competitive advantages
advantages:
our * Fall in consumer demand (including but not limited to
network, cost macro-economic conditions and environmental concerns) * The Network Development Forum, a cross-functional
base, brand, panel of senior managers, including members of the
digital AMB, approves the allocation of assets around the
innovation * Internal growth plans network in the context of expected market conditions
and
efficient and
robust Potential consequences * Competitor and consolidation activity is monitored in
capital * Loss of market positions (relative market share) detail by the Network team, enabling strategic
structure. In decision making on key market positions
FY20 the
pandemic * Pressure on margins
has impacted * Fleet framework arrangements, together with the
the Group's leasing policy, provide easyJet with
balance, * Adverse financial position significant flexibility in respect of scaling the
decreasing fleet according to business requirements
demand
significantly * Share price movement
. * Implemented a dynamic planning and capacity
management process of summer 20 and winter 20/21 to
manage supply and demand fluctuations
VOLATILITY IN Potential causes Controls and mitigations
FINANCIAL * Market price risk: volatility in jet fuel prices, * The Finance Committee (a committee of the plc Board)
MARKETS foreign exchange rates, carbon prices, inflation oversees the Group's treasury and funding policies
easyJet is rates or interest rates and activities. See page 107 for further details
exposed
to a variety
of * Counter-party risk: default of counter parties used * Treasury policy sets out plc Board approved
financial for depositing surplus cash and hedging strategies for market price risk management,
markets, counter-party credit risk management and liquidity
volatility in risk management. Monthly reporting on all treasury
which could * Liquidity risk: inability to raise funds when activity including reporting on compliance with
give required treasury policy
rise to
adverse
pressure on Potential consequences * Maintaining a liquidity buffer supported by cash and
the * Insufficient cash to meet financial obligations as a business interruption insurance policy
cash flows of they fall due and/or the inability to fund the
the Group. business when needed leading to insolvency
* Ability to access diverse sources of funding to
support liquidity requirements
* Significant increase in costs
* Rolling hedging programmes on jet fuel and foreign
exchange market price exposure
-------------------------------------------------------------- --------------------------------------------------------------
people
Having the right people is a key part of Our Strategy. In
today's environment, we need to create an inclusive and energising
environment that attracts the right people and inspires everyone to
learn and grow.
industrial Potential causes Controls and mitigations
action * Adverse employee experience * easyJet seeks to maintain positive working
easyJet, and relationships with all trade unions and other
the representative bodies and has a framework in place
aviation * Changes to terms and conditions for consulting and engaging with trade unions and
industry consultative bodies
in general,
has * Political unrest
a * In the event of industrial action or expected
significant disruption, easyJet has processes to mitigate the
number of Potential consequences impact to our operations. The Operations department
employees * Sustained adverse media coverage also has specific procedures to deal with such events
who are
members
of trade * Operational disruption * In summer 2020, agreement with BALPA that avoids
unions. involuntary redundancies by moving to part time
Each of the working patterns
European * Significant spike in costs
countries in
which
easyJet * Reduction in future revenue
operates
has
localised * Share price movement
employment
terms
and * Loss of colleague/ customer trust
conditions.
As such its
pilots,
crew and
engineers
are members
of
24 trade
unions
across eight
countries.
There are
also
an
additional
seven
consultative
bodies
including
five Works
Councils
and a
European
Works
Council.
talent Potential causes Controls and mitigations
acquisition * Uncompetitive remuneration packages * Benchmarking of reward packages
and
retention
In today's * Lack of career progression * Quarterly employee listening tool with action plans
shifting to address issues raised
environment,
we * Outdated ways of working
need to * Talent mapping of senior employees to ensure
place continued investment and development of top talent
even more Potential consequences
focus * Sustained inability to deliver key strategic
on initiatives * Succession planning of key roles
recruiting
the right
people * Diversity and inclusion strategy
and building
the
right * Strategic programme to enhance ways of working for
talent. head office staff
---------------------------------------------------- -------------------------------------------------------------
safety, security and operations
easyJet's number one priority is the safety and security of its
customers, colleagues, and contractors. The delivery of a safe and
secure operation which meets the needs and expectations of our
customers is critical to our business.
significant Potential causes Controls and mitigations
safety * Flight safety incident * Functional Safety Action Groups from across the
or security airline are chaired by the appropriate senior manager
event and are responsible for the identification,
easyJet's * Health and safety incident including biosecurity evaluation and control of safety-related risks
number incidents such as cases of COVID-19
one priority is
the safety and * The easyJet Safety Board meets monthly to review
security of its * Major security threat safety, security and compliance performance across
customers, all Air Operator Certificates (AOC) chaired by the
colleagues, Chief Executive Officer, attended by the three AOC
and Potential consequences Accountable Managers and periodically by AOC
contractors. * Significant injury/loss of life regulators
The Safety
Committee
(a committee of * Sustained adverse media coverage * Safety Review Boards are held locally, including at
the Board) AOC level, and are open for the local regulator to
provides attend
oversight of * Reduction in future revenue
the
management of * A Safety Policy is published that promotes the
easyJet's * Fines/regulatory sanctions incident reporting process and supports this safety
safety culture
processes and
systems. See * Operational disruption
pages * easyJet operates a Safety Management System using
98 to 99 for leading software systems to:
further * Significant spike in costs
details.
The easyJet * report incidents and identify events;
Safety * Share price movement
Board, chaired
by the Chief * identify hazards and threats and take appropriate
Executive risk-mitigating actions;
and including
the Chief
Operating * collect and analyse safety data (enabling potential
Officer and AOC areas of risk to be projected); and
Accountable
Managers,
are responsible * enable learning from easyJet and industry
for directing events/incidents to be captured and embedded into
overall safety future risk mitigations.
and security
policy
and governance. * Timely, credible and reliable information upon which
The Safety to base operational decisions
Board
meets every
month * easyJet has an emergency response process and
to review performs crisis management exercises
safety
performance and
any emerging * Hull (all risks) and liabilities insurance (including
security spares) is held
issues.
* Security cleared specialists continually review
geopolitical developments across the easyJet network
in particular those countries deemed to be higher
risk and report back to the Board any areas of
concern
* easyJet maintains an inspection regime of all our
airports to ensure the security elements are being
effectively managed
* easyJet continually reviews and develops its safety
management processes
* easyJet maintains a comprehensive set of biosecurity
standards to minimise the risk of transmission of
infectious diseases, such as COVID-19. Their efficacy
is monitored by the Biosecurity Standards Group
significant Potential causes Controls and mitigations
operational * Adverse weather * Key strategic project, Operational Resilience,
disruption focusing on:
Non-cancellation
disruption * Industrial action
events * Building appropriate resilience into the flying
reduced schedule
significancy * Technology failure
in 2020 due to
reduced ATC and * Aircraft and crew standby
airport * Destructive cyber-attack (i.e. ransomware)
congestion.
Reduced flying * Operations Control Centre reporting on the day of
in Europe, OTP * Supplier failure operations, including customer communication
Arrivals within
15 Minutes
improved * Infrastructure failure * Airport performance and strategic supply chain
greatly: FY19
75% vs FY20 84%.
Pandemic related * Airspace/airport restrictions/closure * Air traffic control system lobbying and flight
reduced traffic planning enhancements
demand resulted
in The European Potential consequences
Air Traffic * Customer dissatisfaction * The use of data across the operation to predict and
Control manage events and aid decision support
system seeing
significant * Compensation and welfare payable to customers
reduction * Liquidity buffer to better manage the impact of
in ATM delays. downturns in business or temporary curtailment of
* Inefficient use of crew/aircraft activities (see the volatility in financial markets
risk outlined on page 73)
* Adverse media coverage
* Business interruption insurance which provides some
cover for very significant shock events such as
* Share price movement extreme weather, air traffic management issues and
loss of access to key airports. The policy would
allow us to claim in the event of a very substantial
number of cancellations. This is included within our
definition of liquidity
technology and cyber
The nature of these risks, easyJet's reliability on technology
(particularly online devices) and the ever-increasing
sophistication of serious organised crime groups, terrorists,
nation states and even lone parties means that, despite all the
mitigation detailed, easyJet will inevitably retain an element of
vulnerability regarding the availability, confidentiality and
integrity of its information and data.
data breach Potential causes Controls and mitigations
A data breach * Cyber attack * A data and cyber risk governance structure exists to
involves the regularly review the data and cyber risk landscape
unauthorised and determine required action to take place in order
access to * Third-party incident to manage risk effectively
customer
or employee
data. * User error * Dedicated Information Security team who provide
Protecting assurance over third parties, proactively monitor
that threats and respond to incidents
data and its * Misconfigured systems
privacy
remains a * Employee education and awareness programme including
priority Potential consequences a network of champions, online training and awareness
for easyJet. * Sustained adverse media coverage campaigns
* Fines/regulatory sanctions * Security logging and monitoring
* Third-party liability/class actions * Vulnerability scanning and penetration testing
* Reduction in future revenue * Digital Safety programme to ensure compliance with
various and ensure data control and protection
* Operational disruption
* Credit card data is protected through PCI DSS
compliance as a Level 1 Merchant. This is revalidated
* Significant spike in costs annually by an external body, which we (and they)
attest to
* Share price movement
* Loss of colleague/customer trust
Failure of Potential causes Controls and mitigations
critical * Destructive Cyber attack (i.e. rans * Monitoring and alerting of availability of critical
technology omware) technologies and their inter-dependencies
easyJet relies
on a number of
critical * Hardware failure * Security logging and monitoring
technologies
that are key
to * Aged infrastructure * Vulnerability scanning and penetration testing
the delivery
of
essential * Data Centre Outage * Business Interruption Insurance in place
business
processes.
These * Third-party Outage * IT Change Management Process embedded to assess risk
include, but of all changes to technology including changes made
are by third-party providers
not limited * Technological Dependency Failure
to,
operational, * Critical technologies are either cloud hosted, hosted
commercial * IT change across two data centres or at third-party provider
and financial locations with necessary failover protocols and
systems. A security perimeters in place
critical Potential consequences
technology * Sustained adverse media coverage
failure * IT Major Incident Management team is in place to
includes any respond rapidly to any unforeseen critical technology
technical * Reduction in future revenue incidents including those of a security nature
failure which
is sufficient
enough to * Fines/regulatory sanctions * IT Supplier Relationship Management process to ensure
interrupt that third-party services and associated risks are
critical regularly reviewed and assessed
business * Operational disruption
operations
(which * easyJet are progressing the delivery of a hosting and
may include * Significant spike in costs network programme that will further improve the
one resiliency of core infrastructure and cloud
or more connectivity capabilities
systems). * Share price movement
This includes
system * Digital Safety Policies and Standards that set out
unavailability the technical and organisational measures for keeping
or a failure our data and systems safe
which
results in the
loss or * As an Operator of Essential Services under the NIS
corruption regulation In the UK, we have to comply with the
of data. requirements laid out in the CAF for Aviation which
focuses on critical systems availability
------------------------------------------- --------------------------------------------------------------
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END
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(END) Dow Jones Newswires
November 23, 2020 04:08 ET (09:08 GMT)
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