TIDMEZJ
RNS Number : 0058U
easyJet PLC
30 November 2021
30 November 2021
easyJet plc
Results for the year ending 30 September 2021
easyJet's financial position, optimised network, margin
enhancing ancillaries and cost restructure is fast tracking its
recovery, providing a strong base to accelerate growth and deliver
strong shareholder returns.
- Headline loss before tax of GBP1,136 million, ahead of
consensus. GBP4.4bn of liquidity held providing renewed strength to
capture opportunities.
- Transformed business
o Radical reallocation of our aircraft to higher contributing
bases.
o Step change in ancillary products delivering now and into the
future - first in industry to implement dynamic pricing.
o Cost base restructured - line by line cost savings delivered
with further cost savings underway.
- Summer '22 - Current FY'22 H2 revenue booked is ahead of FY'19
level. Operational fleet plan increased by 25 aircraft as we
capture growth opportunities.
Commenting on the results, Johan Lundgren, easyJet Chief
Executive said:
"easyJet is moving through the pandemic with renewed strength
having transformed the business by optimising our network and
flexibility, delivering significant cost savings while also
step-changing ancillary revenue. These initiatives alongside our
strong, investment grade, balance sheet provide easyJet with
renewed strength to manage any further Covid related travel
disruptions, as well as a platform to fast track our growth and
deliver strong shareholder returns. With this platform, we have the
ambition to beat our targets set earlier this year.
"Having delivered FY'21 ahead of consensus, we have seen an
encouraging start to this year with strong demand returning for
peak winter holiday periods, coupled with increasing summer demand
with Q422 capacity expected to be close to FY'19 levels. As the
UK's largest carrier, easyJet expects a significant benefit as the
UK bounces back next summer. Our winning formula combined with the
improvements made during the pandemic will accelerate our
recovery.
"With ambitious plans for profitable growth we are expanding our
leadership positions at key bases such as Gatwick and Milan with
additional slots and aircraft this year and have 118 aircraft on
order with a further 59 purchase options and rights confirmed to
further build on this in the years to come.
"In summary, we remain mindful that many uncertainties remain as
we navigate the winter, but we see a unique opportunity for easyJet
to win customers and take market share from rivals in this
period."
Overview
It's too soon to say what impact Omicron may have on European
travel and any further short-term restrictions that may result.
However, we have prepared ourselves for periods of uncertainty such
as this. While we've seen an increase in transfers with some
softening of trading for Q1 it is really encouraging to see that we
are still seeing good levels of new bookings for H2 and we still
expect that Q4 FY'22 will see a return to near pre pandemic levels
of capacity as people take their long awaited summer holidays.
easyJet has optimised its network and reallocated aircraft to
higher contributing bases alongside the launch of two additional
seasonal bases. Our new ancillary products are delivering now,
utilising innovative industry leading dynamic revenue management to
optimise returns. We have completed significant structural cost
savings through seasonal contracts and improved productivity, while
helping our customers navigate travel during the pandemic with our
industry leading flexible policies.
Having successfully strengthened the balance sheet, we are fast
tracking strategic investment and growth opportunities to deliver
strong, sustainable shareholder returns. This is demonstrated by
slot increases at Gatwick as well as additional slots which we have
obtained in Linate, Lisbon and Porto alongside the expansion of all
seasonal bases in summer 22. We will continue to focus on competing
where it really matters, being relentlessly efficient and only
investing where we can deliver strong, sustainable returns for our
shareholders.
easyJet operated a disciplined flying programme throughout the
2021 financial year whilst continuing to deliver cost savings
across every area of the business. As a result of the continued
impact of Covid-19, easyJet has reported a headline loss before tax
of GBP1,136 million.
Demand is accelerating with key periods such as October half
term, ski and Christmas seeing strong performance. We continue to
add capacity and expect to fly c. 70% of 2019 capacity in Q2 and
expect that Q4 summer capacity will be at near 2019 levels.
Customers will look for value as the economy recovers and short
haul leisure demand will lead the recovery. easyJet will use its
inherent strengths combined with the improvements made during the
pandemic to grow throughout the recovery, which is already
underway, and beyond.
Delivering growth in FY'22:
-- Operational fleet plan increased by 25 aircraft
-- Slots added at Gatwick, Porto, Lisbon and Linate
-- Additional aircraft added to all seasonal bases
Capacity:
-- Q1 Capacity expected to be c.65% of FY'19
-- Q1 Load Factor expected to be over 80%
-- Q2 Capacity is expected to be c.70% of FY'19
-- Capacity expected to have recovered close to FY'19 levels by Q4 FY'22
Hedging
-- easyJet is currently c.55% hedged for fuel in the financial
year ending on 30 September 2022 at c.US$498 per metric tonne with
the spot price as at 29 November 2021 being US$658.
Financial Summary
-- Headline loss before tax of GBP1,136 million (2020: GBP835 million loss) ahead of consensus.
o Total revenue decreased by 52% to GBP1,458 million (2020:
GBP3,009 million) predominately due to H1 FY'20 having no impact
from Covid-19.
o Group headline costs decreased by 33% to GBP2,594 million
(2020: GBP3,844 million), driven by a decrease in capacity flown
and the material savings achieved across many areas of the business
from easyJet's continued cost focus.
-- Reported loss before tax of GBP1,036 million (2020: GBP1,273 million).
o Non-headline gain of GBP100 million (2020: GBP438 million
cost). Non-headline items consist of restructuring provision
release and gains from the sale and leaseback of aircraft, offset
by hedge discontinuation.
2021 2020 Change
Favourable/(adverse)
------------------------------------------ ---------------------- -------- --------------------------
Capacity(1) (millions of seats) 28.2 55.1 (48.9)%
Load factor(2) (%) 72.5 87.2 (14.7)ppts
Passengers(3) (millions) 20.4 48.1 (57.5)%
Total revenue (GBP million) 1,458 3,009 (51.6)%
Headline EBITDAR (GBP million) (551) (273) (101.8)%
Headline (loss)/profit before tax
(GBP million) (1,136) (835) (36.0)%
Reported (loss)/profit before tax
(GBP million) (1,036) (1,273) 18.6%
Headline basic (loss)/earnings per
share (pence) (166.9) (149.7) (11.5)%
Airline revenue per seat (GBP) 50.54 54.35 (7.0)%
Airline revenue per seat at Constant
currency(4) (GBP) 50.90 54.35 (6.4)%
Airline headline cost per seat (GBP) 90.41 69.03 (31.0)%
Airline headline cost per seat excluding
fuel and balance sheet revaluations
at constant currency(4) (GBP) 78.62 55.94 (40.5)%
Headline return on capital employed
(%) (25.5) (19.9) (5.6)ppts
------------------------------------------ ---------------------- -------- --------------------------
For further details please contact easyJet plc:
Institutional investors and analysts:
Michael Barker Investor Relations +44 (0)7985 890 939
Adrian Talbot Investor Relations +44 (0)7971 592 373
Media:
Anna Knowles Corporate Communications +44 (0)7985 873 313
Edward Simpkins Finsbury +44 (0)7947 740 551 / (0)207 251
3801
Dorothy Burwell Finsbury +44 (0)7733 294 930 / (0)207 251
3801
Conference call
There will be an analyst presentation at 09.00am BST on 30
November 2021 .
A webcast of the presentation will be available both live and
for replay. Please register on the following link:
https://webcasting.brrmedia.co.uk/broadcast/61967d91f520ce2e075cc7d6
Revenue
Total revenue decreased by 52% to GBP1,458 million (2020:
GBP3,009 million) with capacity decreasing to 28.2 million seats
(2020: 55.1 million) because of pandemic-related travel
restrictions and national lockdowns compared to 2020 where only H2
was impacted by the pandemic.
Passenger revenue decreased by 57% to GBP1,000 million (2020:
GBP2,303 million) as we flew an optimised schedule with a focus on
domestic and continental Europe where there was the least amount of
restrictions over travel. Passenger RPS decreased by 15% to
GBP35.48 (2020: GBP41.78).
Ancillary revenue decreased by 35% to GBP458 million (2020:
GBP706 million) as capacity reduced. However, ancillary revenue per
seat increased by 20% to GBP15.06 (2020: GBP12.57) as we launched
our new cabin bag proposition as well as our Standard Plus
fare.
Costs
Group headline costs excluding fuel and FX gains decreased by
29% to GBP2,232 million (2020: GBP3,123 million), driven by a
decrease in capacity flown and the material savings achieved across
many areas of the business. easyJet has delivered GBP512 million of
savings in the 2021 financial year as a result of the continued
cost focus.
We recorded a GBP9 million credit from foreign exchange, related
to the impact of stronger Sterling on our net foreign
currency-denominated liabilities, which is being included within
headline costs.
The cost per seat performance was driven overwhelmingly by the
impact of Covid-19, which has resulted in dramatic capacity
reductions. Headline Airline cost per seat at constant currency
increased by 33.0% to GBP91.82 (2020: GBP69.03). Headline Airline
cost per seat excluding fuel and balance sheet revaluations at
constant currency increased by 40.5% to GBP78.62 (2020:
GBP55.94).
Non-Headline Items
Non-headline items are material non-recurring items or are items
which do not reflect the trading performance of the business. These
costs are separately disclosed and further detail can be found in
the notes to the accounts.
A Group non-headline gain of GBP100 million (2020: GBP438
million loss) was recognised in the year. This consisted of a;
-- GBP65 million gain as a result of the sale and leaseback of
35 aircraft and 2 engines during the year;
-- GBP61 million credit in relation to our restructuring
programme following constructive negotiations with our unions;
offset by
-- GBP26 million net charge related to fair value adjustment and hedge discontinuation.
Balance Sheet
easyJet maintained a disciplined approach to capacity and cash
management. As a result, cash burn (on a fixed costs plus capex
basis) during 2021 was GBP36 million per week on average,
outperforming the guidance for GBP40 million per week. easyJet paid
a further GBP455 million of customer refunds during 2021 (2020:
GBP863 million).
easyJet's funding position remains strong with net debt as at 30
September 2021 of GBP910 million (2020: GBP1,125 million). This
comprised cash and money market deposits of GBP3,536 million (2020:
GBP2,316 million), debt of GBP3,367 million (2020: GBP2,731
million) and lease liabilities of GBP1,079 million (2020: GBP710
million).
As at 30 September 2021 easyJet has unrestricted access to
GBP4.4 billion of liquidity, comprising cash and cash equivalents
plus the undrawn portion of the UKEF facility and an undrawn $400m
RCF. The remaining GBP300 million tranche of the CCFF was repaid in
November 2021. easyJet has no other debt maturities outstanding
until the 2023 financial year.
Liquidity of GBP4.4 billion (2020: GBP2.3 billion), represents
material headroom compared to our revised liquidity policy being
unearned revenue plus GBP500 million.
Headline return on capital employed (ROCE) for 2021 fell to
negative 25.5% (2020: negative 19.9%). Total ROCE is negative 22.4%
(2020: negative 23.0%).
Strategy Update
easyJet has prioritised six strategic initiatives that will
continue to build on our structural advantages in the European
aviation market and enable us to lead the recovery as travel
returns.
-- Network strategy
-- Customer excellence
-- Product portfolio evolution
-- easyJet holiday's
-- Cost focus
-- Sustainability
These initiatives, underpinned by operational and digital safety
and a continued focus on our people, will result in strong
shareholder returns being delivered.
Network Strategy
easyJet has a strong network of leading number one and number
two positions in primary airports, which has proven to be amongst
the highest yielding in the market. This enables us to be efficient
with our network choices, with an emphasis on maximising returns.
We have decisively reallocated 43 aircraft to higher returning
bases highlighting the strength of our network. These capital
reallocations focused on markets where easyJet is strong, driving
confidence in delivering higher returns.
We will seek to strengthen these positions as the competitive
landscape evolves, as demonstrated at London Gatwick where we are
increasing our market share after reallocating aircraft to this
high yielding base along with the addition of new slots.
The scale and flexibility of our network will continue to
provide us with opportunities to take advantage as the competitive
landscape develops during the recovery phase. easyJet's network is
unrivalled and difficult to replicate. We have a golden opportunity
to continue to take market share from our main competitors, who fly
120 million seats in our markets and are facing challenges. As a
result of these challenges they are focusing on long-haul whilst
restructuring and retrenching their short-haul operations.
To better capture summer leisure demand, easyJet opened seasonal
bases in Malaga and Faro on 1 June 2021, adding to Palma which was
already an existing seasonal base. All three seasonal bases are
expanding with additional aircraft for summer 22 being added. Our
destination-based fleet, also including Barcelona, is now
increasing from 9 in the 2019 financial year to 21 in the 2022
financial year. These bases operate leisure routes with aircraft at
the destination airport instead of at the source market. This
allows easyJet to manage seasonal demand profiles while reducing
our fixed cost base over winter. This approach provides the
flexibility to shift capacity across multiple source markets at
short notice without impacting our people.
Our schedule for the summer 22 season went on sale far earlier
than it would have done under normal circumstances. This enabled
our customers to easily transfer any bookings which were cancelled
due to Covid-19. This represents the first time that easyJet has
ever had four seasons available for sale at the same time and it
significantly reduced customers' propensity to request refunds.
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. 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 market leading
networks and schedules. We are maintaining our focus on country
leadership in the UK, France and Switzerland and our city focus in
the Netherlands, Italy and Germany.
2. Accelerate investment in Destination Leaders
We will build on our existing leading position 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.
Customer Excellence
easyJet aims to deliver a seamless and digitally enabled
customer journey at every stage:
-- Prior to travel - our 'direct is best' strategy is led by our
digital channels, with an app/mobile-first mindset. Initiatives
include optimising our web booking interface; driving app usage and
improving the overall experience; enhancing self-service booking
management such as changing passenger details or baggage booking;
improving online redemption management such as vouchers; developing
full pre-order capability for retail onboard; and payments
innovation. To help our customers navigate through Covid travel
rules, we launched the Covid-19 Travel Hub in 9 languages,
providing a one stop shop for all information customers require to
prepare for travel, including easy access to Covid-19 tests at
negotiated rates.
-- In airport - moving customers from kerb to aircraft without
the need for human interaction. This involves improving boarding in
order to improve CSAT and reduce queuing, which our new cabin bag
policy is helping with. Streamlining the bag drop and boarding
experience, building a model customer journey at Gatwick to roll
out to other airports, and pushing for virtual solutions is
enhancing the customer experience across our airports.
-- In flight - our warm welcome and personal service to get you
to your destination on time. We are committed to improving On-Time
Performance (OTP) - on time, every time. This is done by managing
suppliers, empowering crew, implementing pre-tactical and strategic
ATC planning, carrying out base operating reviews, building a
customer-level data view to enable targeted offers such as inflight
retail and reviewing the CRM lifecycle for more relevant customer
engagement.
-- Support - we aim to give customers the digital tools to
easily self-serve when things do not go to plan, or to engage after
their flight. As part of this initiative we have delivered an
enhanced Self-Service Disruption Management (SSDM) tool to let
customers quickly self-serve in disruption; we introduced chatbot
capability allowing customers to receive concise information on
biosecurity measures, refunds, vouchers and travel restrictions
without having to speak to a customer service agent. We launched a
new social media strategy, offering more channels for our customers
to contact us, while increasing their engagement with us through
more relevant and inspiring content.
Actions delivered as part of our customer excellence initiative
include:
-- Protection Promise: Giving customers the flexibility they
needed to be confident to book during the uncertainty of
ever-changing travel restrictions, this includes fee free transfer
of flights up to two hours before departure
-- All easyJet flight vouchers can be redeemed online, quickly, and easily when making a booking
-- Processing time of refunds has been further decreased to
ensure customers are getting their money back as quickly as
possible
-- The launch of our chatbots, giving customers the opportunity
to get answers to their queries quickly and easily without having
to pick up the phone
This focus on customer excellence has continued to drive the
strength of our brand and delivered strong customer satisfaction
scores. easyJet remains first choice low cost carrier (LCC) in the
UK, France, Switzerland and Berlin, best value airline in the UK
and France ahead of other LCCs and legacy carriers and best value
LCC in Italy, Switzerland and Berlin.
Our customer satisfaction was 75% which is higher than in
pre-pandemic FY'19.
In FY'21, On Time Performance increased by 3 percentage points
to 87%. This reflects the strides we are taking towards leaving 'on
time, every time'. This is crucially important for our operational
efficiency, as well as customer satisfaction.
OTP % arrivals within 15 Q1 Q2 Q3 Q4 FY'21
minutes(5)
-------------------------- ---- ---- ---- ---- ------
2021 Network 94% 91% 91% 84% 87%
2020 Network 80% 82% 83% 94% 84%
-------------------------- ---- ---- ---- ---- ------
Product Portfolio Evolution
easyJet recognises that the continued evolution of our product
portfolio represents a significant opportunity to increase revenue
per seat and margins in the coming years. During the 2021 financial
year we have launched a number of products, including:
-- Standard Plus: includes Up front seat selection, access to
easyJet Plus Bag Drop, Speedy Boarding, one cabin bag and an
additional under seat cabin bag in one easy fare.
-- Cabin Bags: purchased alongside a premium or standard seat
allowing a large bag to be taken onboard the aircraft.
-- Leisure fare (Essentials): includes a standard seat and 23kg hold bag.
The Directors believe that the continued evolution of the
Group's product portfolio provides the opportunity to build on
spend per customer, delivering enhanced sustainable returns. The
initial performance from these products has been very encouraging
with a significant spend per customer being observed.
Further opportunities within easyJet's product offering have
been highlighted and will be delivered over the coming year.
Inflight retail, our new retail brand & proposition is due to
be launched in H2 of the 2022 financial year. This will involve
direct sourcing and contracting for our on-board retail offering.
We have partnered with dnata and aim to improve our customer
proposition, offering a pre and during flight shopping
experience.
easyJet holidays
The Group is continuing to build on the success of the launch of
easyJet holidays, Europe's fastest growing holiday company, which
offers flexible holiday packages at the best prices. Customers are
drawn to our trusted brand with over 40% of easyJet holidays sales
coming from flight customers choosing to upgrade to a holiday after
visiting easyjet.com. With 300 million visits a year to our app and
website, this provides a significant opportunity going forward. We
offer unbeatable prices with our holidays being the cheapest like
for like on the market. This coupled with our direct hotel
contracting and low fixed cost base provides easyJet with a strong
business model to grow and deliver sustainable returns.
easyJet holidays bookings are underpinned by an industry leading
'Protection Promise' which has meant that the Group has been able
to retain over 60% of customers whose holidays were affected by the
Covid-19 pandemic in FY'21. easyJet holidays also offsets the
carbon emissions directly associated with its holidays-the fuel
used from flights and transfers, plus the energy from hotel
stays.
We enjoy strong partnerships with leading hotels without the
need for financial commitments or inventory risk. 63% of bookings
are with directly contracted hotels and during FY'21, the Group
signed over 40 additional flagship beach hotels which were
previously under exclusive contracts with competitors. This further
optimises the easyJet holidays' portfolio, whilst also establishing
connectivity with some of the world's largest hotel chains
including Hilton, Accor, Radisson and Intercontinental Hotel Group
to improve the range of our cities offering.
Reflecting the strength of the easyJet holidays business model
and the significant opportunities to grow market share, the Group
sees a clear roadmap to easyJet holidays contributing annual profit
before tax in excess of GBP100 million. Our holidays business has a
highly scalable business model based on low fixed costs (96%
variable(6) ) with strong margins and a digital platform which will
provide a base for growth.
Cost focus
easyJet has delivered GBP512 million of cost savings in FY'21,
with almost half being sustainable. These cost savings help
mitigate some of our cost headwinds. Savings have been delivered
across every cost line. As part of our continued cost challenge we
are identifying further sustainable savings to strengthen our
competitive advantage.
As a result of highly constructive relationships with our trade
union partners and our people, we have been able to deliver
significant cost and productivity savings, including:
-- Reducing the number of full-time equivalent (FTE) crew per
aircraft in all bases (excluding Italy at this stage) for our
summer '21 flying programme. This has enabled significant
improvements in our crew ratios and productivity in preparation for
our return to flying
-- Minimised redundancy costs by agreeing innovative part-time
and seasonal contracts with our unions. This improves productivity
on a sustainable basis and allows the capacity to grow if required,
without needing to hire new people
-- Re-balancing of the number of seasonal contracts we have across the network
-- Reductions in base pay in some of our higher-cost
jurisdictions, with easements in rostering rules also being agreed
and two-year pay freeze agreements in most jurisdictions
These measures have reduced our overall cost of crew whilst
addressing structural and productivity challenges with our old crew
model. They have also enabled the investment in seasonal bases in
Faro and Malaga which opened during the 2021 financial year
alongside our existing seasonal base in Palma, continuing to
improve efficiency at a lower cost base.
Airports and ground handling costs represent a major part of our
cost base and have been a particular focus. We continue
negotiations with airports across our network, to secure the best
long-term deals. We have reviewed ground handling costs on a
line-by-line basis and renegotiated 132 major ground handling
contracts, with permanent savings achieved in Ground Operations and
Customer Management Centres. New contracts focus on driving safety
and OTP while reducing costs. We have achieved a 25% reduction in
call centre costs with new contracts to 2027 and improved customer
service.
easyJet outsources the majority of heavy maintenance where it is
cost effective. We have extended our contract with Lufthansa
Technik to 2025 and with SRT Malta to 2023, delivering cost savings
and simpler work packages. We have also extended our low-cost
engine shop visit contract out to 2023 and concluded a
cost-effective deal on Leap engines and ongoing support. Our
components deal has been extended to 2027 with additional cost
savings and a Milan parts hub. We have worked closely with Airbus
to create more efficient 6- and 12-year checks. We have completed
insourcing of line maintenance in Berlin, Glasgow, Edinburgh and
Bristol, which has delivered cost savings and higher quality. All
line maintenance at Gatwick is now done in-house, with the addition
of a completed third hangar bay in March '21.
Sustainability
easyJet has committed to joining the Race to Zero while
continuing to work on our Net Zero pathway to 2050. Sustainability
is of significant and growing importance to our customers as 78% of
consumers say that they are concerned about the impact of climate
change. This is something that easyJet views with the upmost
importance, as we aim to pioneer sustainable travel.
There has been significant progress made during 2021,
demonstrated by our first ever SAF flight at London Gatwick, using
a 30% blend flight taking off on 19 October 2021. A SAF blend was
then used on all flights operating from Gatwick to Glasgow
throughout COP26. During the year we have also conducted an
emission free turnaround trial at Bristol airport where we saw a
97% reduction in CO2 emissions using electric powered ground
equipment instead of diesel.
Our Sustainability strategy has three pillars: tackling our
carbon emissions; stimulating carbon innovation; and going beyond
carbon.
-- Tackling carbon emissions: We were the world's first major
airline to offset the carbon emissions from the fuel used on all
our flights across our entire network, and we continue to work
tirelessly to minimise carbon emissions across our operations. We
continue to operate a fleet of modern, fuel efficient aircraft and
are always looking for more ways to be fuel efficient and emit less
carbon. Customer awareness of our carbon offsetting, based on
customers who have flown within the past 12 months, was 51%,
compared to 45% in FY'20, and the positive difference in overall
satisfaction between customers who were aware and not aware was 6.3
percentage points. easyJet holidays was also the first major
holidays company to offset the carbon emissions directly associated
with its holidays - the fuel from flights and transfers plus the
energy from hotel stays.
-- Stimulating carbon innovation: We are supporting the
development of new technologies to stimulate the decarbonisation of
aviation as quickly as possible. Offsetting can only be an interim
solution, while zero emissions technology is developed. We are
collaborating with several industry leaders to support
technological step change: Wright Electric in their development of
'Wright 1' - a zero emissions 186-seater; and a strategic
partnership with Airbus in their ambition to develop a
zero-emission commercial aircraft by 2035. We are excited to see
the growing momentum behind novel propulsion technologies,
including hybrid-electric, hydrogen fuel-cell and hydrogen
combustion. There is significant potential for these technologies,
particularly on short-haul networks such as our own.
-- Going beyond carbon: We are constantly looking for more ways
to take action outside of carbon reductions including having taken
steps to reduce the amount of plastic used on our services but also
have crew and pilot uniforms made from recycled plastic, which is
our latest initiative in our drive to reduce waste. By the end of
the 2021 financial year we had already removed over 34 million
individual items of plastic from our inflight retail. We are also
aiming to reduce waste and plastic at easyJet and within our supply
chain. We are implementing a ISO14001-compliant Environmental
Management System, and are focused on creating a culture where
employees can champion sustainability. We are particularly pleased
that easyJet's long-term work with our charity partner UNICEF, who
we have supported through on-board collections since 2012, is
continuing by funding COVAX global vaccinations - with Unicef's aim
being to deliver 2 billion vaccines by the end of 2021. Hundreds of
easyJet crew members have volunteered to help at vaccination
centres across Europe, with many of them having trained to deliver
the vaccines.
Fleet
easyJet is pleased to confirm that it has today agreed with
Airbus a firm commitment in respect of an additional nineteen (19)
aircraft with deliveries between FY'25 and FY'28. This results in
118(7) firm Airbus A320 NEO family aircraft outstanding orders at
the date of this announcement.
The 19 firm deliveries consist of:
a. Seven aircraft which easyJet had the option not to take up.
This option not to take up has been relinquished and the aircraft
are now confirmed as firm deliveries between FY'25 and FY'26;
b. Seven purchase option aircraft in respect of which easyJet
has exercised its option to purchase. This results in firm
deliveries for these aircraft between FY'25 and FY'26.
c. Five purchase right aircraft that have been converted into
aircraft with firm delivery dates in FY'27.
Items (a) and (b) above had been previously disclosed. Item (c)
results in easyJet's purchase right aircraft reducing from 58 to
53.
This agreement secures valuable, supply constrained, delivery
slots between January 2025 and September 2027 for aircraft with a
cash value of USD2.25 billion on delivery at 2021 list prices(8) .
All aircraft purchased by easyJet under the terms of the original
2013 Airbus agreement are subject to a substantial discount from
list price.
The resulting status of easyJet's order book with Airbus at
29(th) November 2021 is now:
Aircraft Delivered Future Deliveries Purchase Options Unexercised
Purchase Rights
A320neo 39 102 6 53
---------- ------------------ ----------------- -----------------
A321neo 14 16 - -
---------- ------------------ ----------------- -----------------
Totals 53 118 6 53
---------- ------------------ ----------------- -----------------
easyJet's total fleet as at 30 September 2021 comprised 308
aircraft (30 September 2020: 342 aircraft) with the decrease driven
principally by the redelivery to lessors of A319 aircraft. The
average gauge of the fleet is now 178 seats per aircraft, compared
to 177 seats at 30 September 2020. The average age of the fleet
increased slightly to 8.6 years (30 September 2020: 8.0 years).
Fleet as at 30 September 2021:
Changes
% of since Future Purchase Purchase
Owned Leased Total fleet Sep-20 deliveries options rights
A319 45 52 97 31% (17) - - -
A320 105 55 160 52% (5) - - -
A320 neo 30 7 37 12% - 104(1,2) 6(1) 53(1)
A321 neo 3 11 14 5% - 16(2) - -
------------ ------ ------- ------ ------- -------- ------------ --------- ---------
183 125 308 (22) 120 6 53
Percentage
of total
fleet 59% 41%
1) Includes the impact of Amendment to the Purchase Agreement
with Airbus signed on 29 November 2021, which increased the number
of firm future deliveries by 19, and reduced the number of Purchase
Options by 14 and the number of Purchase Rights by 5.
2) easyJet retains the option to alter the aircraft type of
future deliveries, subject to providing sufficient notification to
the OEM
At the 30 September 2021, easyJet was storing 12 leased aircraft
at zero rent unless flown and are therefore not included within our
fleet numbers published as part of the graphs outlining the fleet,
but with footnotes to highlight the absence.
Our flexible fleet plan allows us to expand or contract the size
of the fleet depending upon the demand outlook.
Number of aircraft FY'22 FY'23 FY'24
----------------------------- ------ ------ ------
Current contractual minimum 319 316 313
Base plan 322 - -
Current contractual maximum 322 326 328
------------------------------ ------ ------ ------
Expected deliveries 8 7 18
------------------------------ ------ ------ ------
Capital Expenditure
Over the next three years easyJet's gross capital expenditure is
expected to be as follows:
FY'22 FY'23 FY'24
------------------------------- ------ -------- --------
Gross capital expenditure (GBP c.900 c.1,000 c.1,300
million)
------------------------------- ------ -------- --------
Capex in FY'22 is comprised of new Airbus fleet delivery
payments, safety- and maintenance-related expenditure as well as
lease payments. Our capex projections assume eight aircraft
deliveries in FY'22, seven deliveries in FY'23 and 18 deliveries in
FY'24.
Our People
Despite the challenges of Covid-19 and resulting restructuring,
easyJet still has a strong reputation as an employer of choice. The
high calibre of our people is a key source of differentiation for
easyJet compared to our competitors, driving CSAT and customer
loyalty. Our strong employer reputation attracts and retains
engaged crew, with the spirit to deliver excellent service. Our
Glassdoor rating of employee satisfaction is 4.2 (out of 5.0),
which is the highest within the travel and hospitality sector,
illustrating our market-leading position in the labour market.
FY'21 has had a significant impact on our entire workforce and
the pandemic has changed the way in which we support Our People.
Some of the key changes and successes delivered include:
1) Constructively worked in partnership with our employee
representative bodies across Europe to avoid compulsory
redundancies in most markets.
-- We have driven changes to right-size our crew establishment,
having implemented agreements to improve our seasonality, reduce
our crew costs (e.g. through changed contracts and pay-freezes) and
improve productivity across our network. Whilst we have protected
jobs where we see future growth and avoided expensive compulsory
redundancy costs in most markets, the changes delivered will
continue to support our focus on productivity in the future.
-- We've worked with local governments and union partners in
order to claim GBP134m in furlough support.
-- Prioritised growth in Spain and Portugal to give transfer
opportunities for Our People who are at risk in other
geographies.
2) Delivered hybrid working in a safe and secure way.
-- Implemented biosecurity standards and initiatives to be
aligned with those implemented for our customers and ensured a safe
working environment for all.
-- Successfully implemented our new hybrid working model across
our network. 84% of our affected employees feel positive about our
approach to hybrid working.
3) Set a platform for enhanced employee experience and improved
our wellbeing and support
-- Undertook multiple 'You Matter' campaigns to support the
wellbeing of our people across the network.
-- Implemented and refreshed a number of core employment
policies e.g. Bullying and Harassment, Wellness and Absence in
addition to providing training for people managers over these
policies.
-- Completed our payroll project (HR Evolution) delivering 98%
pay accuracy throughout the network. We continue to invest in
building out capability in Workday to support employee
self-service.
Board
There have been a number of changes to our Board during the
year. Andrew Findlay stood down as Chief Financial Officer in
February 2021, and we welcomed Kenton Jarvis as his successor.
David Robbie joined the Board as an Independent Non-Executive
Director in November 2020, and Charles Gurassa, Moya Greene DBE and
Dr Anastassia Lauterbach stood down as Independent Non-Executive
Directors in December 2020.
Stephen Hester joined us as an Independent Non-Executive
Director and Chair designate on 1 September 2021 and will succeed
John Barton as Chair on 1 December 2021. John Barton will stand
down as Chair on 1 December 2021 after serving for nearly nine
years on the Board.
EU Ownership
On 23 December 2020, easyJet announced that the Board had passed
resolutions as part of its contingency plan to ensure continued
compliance with EU ownership and control requirements following the
end of the Brexit transition period on 31 December 2020.
Accordingly, and in line with its contingency plan, easyJet
announced on 4 January 2021 that it had commenced steps to suspend
voting rights in respect of certain shares held by relevant persons
in accordance with easyJet's articles of association, so that a
majority of the voting rights in easyJet are held by EU persons. As
at 29 November 2021 the level of ownership by EU persons was
35.68%. Accordingly easyJet has suspended voting rights in respect
of certain shares ('Affected Shares') held by Relevant Persons in
accordance with easyJet's articles of association (the 'Articles')
so that a majority of the voting rights in easyJet are held by EU
Persons. As at 29 November 2021, a majority of the voting rights in
easyJet are held by EU persons.
Those shareholders who own shares whose voting rights will be
suspended at the AGM will receive a notice (an 'Affected Share
Notice') by post from Equiniti, our Registrars, on or around 14
January 2022 notifying them of the suspension of voting rights in
respect of their Affected Shares. Shareholders in receipt of an
Affected Share Notice will not be entitled to attend, speak or vote
at the AGM, in respect of those shares subject to an Affected Share
Notice.
Note: 'EU persons' refers to nationals of EU member states plus
Switzerland, Norway, Iceland, Liechtenstein, but excludes the UK.
'Relevant Persons' has the meaning given to it in the Articles. In
general terms, 'Relevant Persons' refers to non-EU nationals.
Outlook
Based on current travel restrictions in the markets in which we
operate, easyJet expects to fly c.65% of 2019 capacity levels in Q1
with Loads expected to be over 80%%. Q2 capacity is expected to be
c. 70% of Q2 2019 levels.
easyJet has been ramping up capacity as customer confidence
returns and current expectations are that Q4 FY'22 capacity will
have recovered to around Q4 2019 capacity levels.
The targets easyJet has set are; Grow to pre pandemic capacity
by 2023, mid teen EBITDAR margins with low to mid teen ROCE in the
medium term and having a clear roadmap for easyJet holidays to
contribute GBP100 million plus profit before tax to the Group.
At this stage, given the continued level of short-term
uncertainty, it would not be appropriate to provide any further
financial guidance for the 2022 financial year. Customers are
booking closer to departure and visibility remains limited.
Footnotes
(1) Capacity based on actual number of seats flown.
(2) 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.
(3) Represents the number of earned seats flown. Earned seats
include seats which are flown whether or not the passenger turns
up, as easyJet is a no-refund airline and once a flight has
departed, a no-show customer is generally not entitled to change
flights or seek a refund. Earned seats also include seats provided
for promotional purposes and to staff for business travel.
(4) Constant currency is calculated by comparing 2021 financial
year performance translated at the 2020 financial year effective
exchange rate to the 2020 financial year reported performance,
excluding foreign exchange gains and losses on balance sheet
revaluations.
(5) On-time performance is defined as the percentage of flights
which arrive within 15 minutes of the scheduled arrival time and is
measured by internal easyJet systems
(6) Based on FY'22 budget volumes
(7) At 30 September 2021, as stated in this announcement, there
were 101 outstanding orders with Airbus. Between 1st October 2021
and 29 November 2021, 2 aircraft were delivered. By committing to a
further 19 firm orders on 29th November 2021, there are thus (101 -
2 + 19) = 118 firm outstanding orders with Airbus as at the date of
this announcement.
(8) Airbus no longer publish list prices for aircraft. The
estimated list price is based on the last available list price
published in January 2018 and escalated by Airbus' standard
escalation mechanism from January 2018 to January 2021 averaging
2.96% per annum.
Our Financial Results
Financial overview
GBP million (Reported) - Group 2021 2020
---------------------------------------------- -------- --------
Group revenue 1,458 3,009
Headline costs excluding fuel, balance sheet
FX and ownership costs (1,638) (2,561)
Fuel (371) (721)
----------------------------------------------- -------- --------
Headline EBITDAR (551) (273)
Balance sheet foreign exchange gain 9 -
Other ownership costs (594) (562)
----------------------------------------------- -------- --------
Group headline loss before tax (1,136) (835)
Headline tax credit 236 110
----------------------------------------------- -------- --------
Group headline loss after tax (900) (725)
Non-headline items 100 (438)
Non-headline tax credit/(charge) (58) 84
----------------------------------------------- -------- --------
Group total loss after tax (858) (1,079)
----------------------------------------------- -------- --------
GBP per seat - Airline only 2021 2020
---------------------------------------------- -------- --------
Airline revenue 50.54 54.35
Headline costs excluding fuel, balance sheet
FX and ownership costs (56.62) (45.74)
Fuel (13.16) (13.09)
----------------------------------------------- -------- --------
Headline EBITDAR (19.24) (4.48)
Balance sheet foreign exchange gain 0.32 -
Other ownership costs (20.95) (10.20)
----------------------------------------------- -------- --------
Airline headline loss before tax (39.87) (14.68)
Headline tax credit 8.39 1.92
----------------------------------------------- -------- --------
Airline headline loss after tax (31.48) (12.76)
Non-headline items 3.53 (7.98)
Non-headline tax credit (2.07) 1.52
----------------------------------------------- -------- --------
Airline total loss after tax (30.02) (19.22)
----------------------------------------------- -------- --------
Due to the continued impact of Covid-19, in the 2021 financial
year easyJet flew 20.4 million passengers (2020: 48.1 million),
down 58% on the prior year. As a result, Group headline loss before
tax was GBP1,136 million for the year ended 30 September 2021
(2020: loss of GBP835 million) and Group total reported loss after
tax for the year was GBP858 million (2020: loss of GBP1,079
million).
With a full year impact of Covid-19 driving reduced flying and
the softer macro-level demand, Group revenue for the full year
decreased by 51.6% to GBP1,458 million (2020: GBP3,009 million),
and Airline revenue per seat for the year fell 7.0% to GBP50.54
(2020: GBP54.35), and by 6.4% at constant currency. It should be
noted that Covid-19 restrictions started in March 2020 and
therefore did not impact the first half of the 2020 comparative
financial year when easyJet delivered revenue per seat 9.6% higher
than 2019 and load factors of 90.3%.
The ongoing restrictions on travel imposed by governments in
response to Covid-19 have continued to adversely impact air travel.
Our focus over the winter season was on cash generative flying to
minimise cash burn. During the second half of the year, there was
continued uncertainty due to the changing environment, however
travel restrictions were eased across much of Europe. easyJet
successfully maintained a disciplined focus and agile approach on
matching capacity to available demand especially across UK
domestics and mainland Europe.
As a result, cash burn (on a fixed costs plus capex basis)
during 2021 was GBP36 million per week on average, outperforming
the guidance for GBP40 million per week. Strong cash management
also meant that operating cash generation was broadly flat in H2
with a GBP10 million cash outflow versus GBP1,438m in H1.
Group headline costs excluding fuel, balance sheet FX
revaluations and ownership costs for the full year fell by 36% to
GBP1,638 million (2020: GBP2,561 million), mainly as a result of
the reduced level of flying. Airline headline cost per seat
excluding fuel, balance sheet FX revaluations and ownership costs
increased to GBP56.62 (2020: GBP45.74), driven by lower volumes,
with fixed costs being spread over lower flown capacity. easyJet's
cost reduction programme which was implemented in 2020 continues to
achieve significant savings with the Group also benefitting from
the extension of furlough schemes in the UK and across Europe.
Group fuel costs of GBP371 million were GBP350 million lower
than the 2020 financial year (2020: GBP721 million) primarily as a
result of the reduced flying. Airline fuel cost per seat of
GBP13.16 (2020: GBP13.09) was in line with the prior year. There
was an underlying decrease in the market price of fuel by 3.7%
which was offset by the comparative benefits of the carbon credits
asset sales in 2020. When considering easyJet's fuel and US dollar
hedging programme, the effective fuel price decreased by 4.1% to
GBP469 per tonne (2020: GBP489 per tonne).
Group ownership costs increased by 5.7% to GBP594 million (2020:
GBP562 million) predominantly driven by increased interest costs as
a result of higher levels of debt, partially offset by lower
maintenance related depreciation as a result of the reduction in
flying volumes.
A Group non-headline gain of GBP100 million (2020: GBP438
million loss) was recognised in the year. This consisted of a GBP65
million gain as a result of the sale and leaseback of 35 aircraft
and 2 engines during the year, a GBP61 million credit in relation
to our restructuring programme; offset by a GBP27 million net
charge related to hedge discontinuation and ineffectiveness.
The Group total tax credit for the year was GBP178 million
(2020: GBP194 million credit). The effective rate for the year was
17.2% (2020: 15.3%).
Loss per share and dividends per share
2021 2020* Change in
---------------- --------- ---------
Pence per share Pence per Pence per
share share
---------------------------- ---------------- --------- ---------
Basic headline loss per
share (166.9) (149.7) (17.2)
Basic total loss per share (159.0) (222.9) 63.9
Diluted headline loss per
share (166.9) (149.7) (17.2)
During the year a rights issue, which gave rise to GBP1,197
million net proceeds, resulted in the prior year basic and diluted
loss per share needing to be restated.
Basic headline loss per share was 166.9 pence (2020: loss per
share 149.7 pence) and basic total loss per share was 159.0 pence
(2020: loss per share 222.9 pence) driven by the losses for the
year. Weighted average shares in issue in the 2021 financial year
were 539 million (diluted 544 million) (2020: 484 million, diluted
489 million, restated due to the rights issue from 407 million,
diluted 412 million).
In line with easyJet's dividend policy of a pay-out ratio of 50%
of headline profit after tax, the Board did not recommend the
payment of a dividend in respect of the year ended 30 September
2021 (2020: GBPnil). No dividend payments have been made in the
year (2020: 43.9 pence per share was paid for the 2019 dividend).
The dividend policy will be reviewed by the Board during the 2022
financial year.
*Restated as a result of the 2021 rights issue.
Return on capital employed (ROCE)
2021 2020
-------- --------
Headline Return on capital employed (25.5%) (19.8%)
-------------------------------------- -------- --------
Total Return on capital employed (22.4%) (23.0%)
-------------------------------------- -------- --------
Headline ROCE for the year was (25.5)%, a decline of 5.6
percentage points on the prior year, driven by the increased loss
for the year. Total ROCE for the year was (22.4)%, in line with
last year. The total ROCE improvement is mainly driven by the
non-headline sale and leaseback gain and restructuring credit
impact on operating profit.
ROCE is calculated by taking operating loss, less tax at the
prevailing UK corporation tax rate at the end of the financial
year, divided by average capital employed. Capital employed is
shareholders' equity less net debt.
All per seat metrics are for the Airline business only as the
inclusion of hotel-related revenue and costs from the holidays
business will distort the revenue per seat and cost per seat
metrics as these are not directly correlated to the seats flown by
the Airline business. The segmental note within the consolidated
financial statements shows the contribution of each operating
segment towards the Group's performance. All seats flown relate
directly to the Airline business and are therefore included in
total for the per seat metrics. The overall contribution of the
holidays segment to the financial performance of the consolidated
Group for the year ended 30 September 2021 was not significant. As
a result, presenting the Airline-only financial performance metrics
below does not materially distort the financial performance of the
Group as a whole.
Amounts presented at constant currency are an alternative
performance measure and not determined in accordance with
International Financial Reporting Standards but provide relevant
and comparative reporting for users.
Exchange rates
The proportion of revenue denominated in currencies other than
Sterling remained broadly consistent year on year, although the
proportion of Sterling revenue has declined as a result of a faster
recovery in demand across Europe. The proportion of US Dollar by
currency has changed significantly year on year as a result of the
US Dollar exchange impact of sale and leaseback proceeds. Average
effective exchange rates include the impact of hedging:
Revenue Costs
----- -------- --------- ---------
2021 2020 2021 2020
--------------------------------- ----- -------- --------- ---------
Sterling 34% 42% 42% 50%
Euro 52% 47% 21% 31%
US dollar 0% 1% 32% 13%
Other (principally Swiss franc) 14% 10% 5% 6%
---------------------------------- ----- -------- --------- ---------
Average exchange rates
2021 2020
--------------------------------- ----- -------- --------- ---------
Euro - revenue EUR1.14 EUR1.13
Euro - costs EUR1.16 EUR1.15
US dollar $1.16 $1.39
Swiss franc CHF 1.21 CHF 1.26
1.21
---------------------------------- ----- -------- --------- ---------
The Group's foreign currency risk management policy aims to
reduce the impact of fluctuations in exchange rates on future cash
flows; however, the timing of cash flows can be different to the
timing of recognition within the income statement resulting in
foreign exchange movements.
As a result of the reduced flying programme the Group's near
term exposures for jet fuel and foreign currency were significantly
reduced. This caused a proportion of derivatives previously hedge
accounted for to be discontinued from hedge relationships. The full
fair value at the time of discontinuation recorded in the income
statement as a non-headline item and subsequent movements in fair
value recorded as headline items.
To minimise the effects of over-hedging going forward, easyJet
temporarily reduced its operational hedging activity throughout the
year.
Please see note 25 for further detail on hedging activities
during the year.
Headline exchange rate impact
Headline exchange rate impact
Euro Swiss US dollar Other Total
franc
Favourable/(adverse) GBP million GBP million GBP million GBP million GBP million
------------------------------------- ------------ ------------ ------------ ------------ ------------
Total revenue (7) (2) - (1) (10)
Fuel - - 1 - 1
Headline costs excluding fuel 17 4 8 (1) 28
Prior year balance sheet revaluations - 3 2 - 5
-------------------------------------- ------------ ------------ ------------ ------------ ------------
Headline total before tax 10 5 11 (2) 24
-------------------------------------- ------------ ------------ ------------ ------------ ------------
Non-headline exchange rate
impact
Euro Swiss US dollar Other Total
franc
Favourable/(adverse) GBP million GBP million GBP million GBP million GBP million
------------------------------------- ------------ ------------ ------------ ------------ ------------
Non-headline costs 7 - (19) - (12)
Non-headline total before
tax 7 - (19) - (12)
-------------------------------------- ------------ ------------ ------------ ------------ ------------
There was a GBP12 million favourable (2020: GBP9 million
favourable) impact on total loss due to the year-on-year changes in
exchange rates. A GBP24 million favourable (2020: GBP29 million
favourable) impact on headline profit was partially offset by a
GBP12 million adverse (2020: GBP20 million adverse) impact on the
non-headline items.
Financial performance
Revenue
2021 2020
---------- -------- ------------ --------
Group Airline Group Airline
GBP GBP per GBP per
million seat GBP million seat
------------------- ---------- -------- ------------ --------
Passenger revenue 1,000 35.48 2,303 41.78
Ancillary revenue 458 15.06 706 12.57
-------------------- ---------- -------- ------------ --------
Total revenue 1,458 50.54 3,009 54.35
-------------------- ---------- -------- ------------ --------
The total number of passengers carried decreased by 57.6% to
20.4 million (2020: 48.1 million), driven by a reduction in seats
flown of 48.8% to 28.2 million seats (2020: 55.1 million) as a
result of lower levels of flying due to the ongoing impact of
Covid-19 on travel restrictions. Load factor decreased by 14.7
percentage points to 72.5% (2020: 87.2%).
During 2021 the airline industry has continued to be heavily
disrupted by Covid-19, which has resulted in sustained softness in
macro-level demand as customers' confidence and ability to travel
have been impacted by fluctuating infection rates across the UK and
Europe, resulting in local and national lockdowns and frequent
changes in travel restrictions and travel advice.
With an annualised impact of Covid-19, Group revenue for the
full year decreased by 51.6% to GBP1,458 million (2020: GBP3,009
million), and Airline revenue per seat for the year fell 7.0% to
GBP50.54 (2020: GBP54.35), and by 6.4% at constant currency. It
should be noted that during the first half of the 2020 comparative
financial year, easyJet delivered very strong underlying trading,
with Covid-19 restrictions affecting the second half.
As a result of reduced travel restrictions, revenue rose 94.4%
to GBP1,218 million for the second half of the 2021 financial year
compared to the second half of last year (H2 2020: GBP627
million).
Our dynamic capacity management and contribution forecasting
allowed us to adapt our schedule to maximise profitable flying and
to mitigate costs, with our flexible policies providing customers
the reassurance to book. During the fourth quarter travel
restrictions have begun to stabilise and to ease, which has led to
an improvement in new bookings towards the end of the quarter for
2022 departures.
During the year we launched our new cabin bag proposition as
well as our Standard Plus fare, which have provided us the tools to
enhance our ancillary customer proposition and to deliver ancillary
revenue per seat of GBP15.06, 19.9% higher than last year (2020:
GBP12.57).
Headline costs excluding fuel
Airline headline cost per seat excluding fuel increased by 38.1%
to GBP77.25 (2020: GBP55.94) and increased by 40.6% at constant
currency.
2021 2020
------------ -------- ----------------------
Group Airline Group Airline
GBP million GBP per GBP million GBP per
seat seat
-------------------------------- ------------ -------- ------------ --------
Operating costs and income
Airports, ground handling and
other operating costs 446 15.01 939 16.88
Crew 495 17.56 629 11.42
Navigation 102 3.62 206 3.74
Maintenance 222 7.90 278 5.04
Selling and marketing 60 1.94 107 1.70
Other costs 319 10.80 426 7.38
Other income (6) (0.21) (23) (0.42)
--------------------------------- ------------ -------- ------------ --------
1,638 56.62 2,561 45.74
------------ -------- ------------ --------
Ownership costs
Aircraft dry leasing 5 0.20 1 0.02
Depreciation 456 16.18 485 8.81
Amortisation 24 0.74 18 0.30
Net finance charges 109 3.83 58 1.07
Balance sheet foreign exchange
gain (9) (0.32) - -
--------------------------------- ------------ -------- ------------ --------
585 20.63 562 10.20
------------ -------- ------------ --------
Headline costs excluding fuel 2,223 77.25 3,123 55.94
--------------------------------- ------------ -------- ------------ --------
2020 Group Other costs and Other income have been restated to
reflect the grossing up of the sale and leaseback gains and
losses.
Operating costs and income
Group headline costs excluding fuel were GBP2,223 million (2020:
GBP3,123 million), a decrease of 28.8% or GBP900 million on the
prior year. The holidays business contributed GBP54 million to
headline costs in 2021 (2020: GBP45 million), mainly driven by
marketing spend, headcount costs and costs directly related to
holidays provided in the year.
Airline headline cost per seat excluding fuel increased by 38.1%
to GBP77.25 (2020: GBP55.94) and increased by 40.6% at constant
currency. Most of the headline cost per seat adverse variance was
driven by the full year impact of significantly reduced flown
capacity resulting in fixed costs being spread over fewer flown
seats. Partially offsetting this was the benefit of furlough
support from the UK and European governments and easyJet's cost
reduction programme which continues to achieve significant
savings.
Group headline airports, ground handling and other operating
costs decreased by 52.5% to GBP446 million. Airline cost per seat
decreased by 11.1% to GBP15.01, and by 8.5% at constant currency
driven by reduced load factors compared to last year.
Group headline crew costs decreased by 21.4% to GBP495 million,
with Airline cost per seat increasing by 53.8% to GBP17.56, and by
55.1% at constant currency, partly driven by reduced job retention
scheme support, but mainly reflecting significantly reduced
productivity due to lower flying levels.
Group headline navigation costs decreased by 50.4% to GBP102
million resulting from decreased sectors flown, with Airline cost
per seat decreasing by 3.0% to GBP3.62 and by 0.4% at constant
currency due to network mix.
Group headline maintenance costs decreased by 19.9% to GBP222
million, with Airline cost per seat increasing by 56.6% to GBP7.90,
and by 56.6% at constant currency, reflecting reduced capacity
where fixed costs remain.
Group headline other costs decreased by 31.8% to GBP319 million,
with Airline cost per seat increasing by 46.3% to GBP10.80, and by
46.9% at constant currency. The significant driver in the increase
in the cost per seat is a result of fixed costs being spread over
lower flown capacity. In addition to the capacity impact, there
were a number of asset write-offs as a result of focus on spares
and projects.
Ownership costs
Group depreciation costs have decreased 6.0% to GBP456 million
(2020: GBP485 million) primarily due to both lower maintenance
related depreciation as a result of the reduction in flying volumes
, an increased benefit arising from discounting the maintenance
provision due to changes in underlying interest rates, and the
reduction in our fleet size, partially offset by a revision to our
aircraft depreciation policy.
Group net finance charges have increased from GBP60 million in
2020 to GBP109 million in 2021, due to increased interest payable
from additional debt facilities and increased leased aircraft
resulting in higher lease-related interest.
Fuel
2021 2020
---------------------- ----------------------
Group Airline Group Airline
GBP million GBP per GBP million GBP per
seat seat
------ ------------ -------- ------------ --------
Fuel 371 13.16 721 13.09
------- ------------ -------- ------------ --------
Group headline fuel costs of GBP371 million were GBP350 million
lower than 2020. Airline fuel cost per seat of GBP13.16 was 0.5%
higher than last year, and by 0.7% at constant currency.
Group fuel costs of GBP371 million were GBP350 million lower
than the 2020 financial year (2020: GBP721 million) primarily as a
result of reduced flying. Airline fuel cost per seat of GBP13.16
(2020 GBP13.09) was broadly in line with the prior year, despite a
one off credit in last year of GBP55 million which came from the
sale of EU ETS credits. There was an underlying decrease in the pre
hedge cost of fuel by 3.7% driven by lower fuel usage from reduced
burn per block hour offset by increased market price. When taking
into account easyJet's fuel and US dollar hedging programme, the
effective fuel price decreased by 4.1% to $469 (2020: GBP489 per
tonne).
The impact of the Sterling/US dollar exchange rate movement on
fuel costs was GBP1 million favourable (2020: GBP14 million
favourable).
easyJet continues to participate in the EU Emissions Trading
System (EU ETS) and Swiss Emissions Trading System (CH ETS). As a
result of Brexit, easyJet has also participated in the UK Emissions
Trading System (UK ETS) from January 2021. These systems require
easyJet's carbon footprint to be offset by submitting carbon
allowances to the relevant Environment Agencies. The charge of the
ETS systems is included within fuel costs.
The Group uses jet fuel derivatives to hedge against sudden and
significant increases in jet fuel prices to mitigate volatility in
the income statement in the short term.
As a result of the reduced flying programme the Group's
near-term exposures for jet fuel and foreign currency were
significantly reduced. This caused a proportion of derivatives
previously hedge accounted for, to be discontinued from hedge
relationships. The full fair value at the time of discontinuation
was recorded in the income statement as a non-headline item and
subsequent movements in fair value recorded as headline.
To minimise the effects of over-hedging going forward, easyJet
temporarily reduced its operational hedging activity throughout the
year.
Non-headline items
Non-headline items are non-recurring items or items which are
not considered to be reflective of the trading performance of the
business.
2021 2020
---------------------- ----------------------
Group Airline Group Airline
GBP million GBP per GBP million GBP per
seat seat
-------------------------------- ------------ -------- ------------ --------
Restructuring credit/(charge) 61 2.19 (123) (2.22)
Sale and leaseback gain 65 2.28 38 0.69
Fair value adjustment (26) (0.94) (311) (5.69)
Impairment charge - - (37) (0.68)
Balance sheet foreign exchange
loss - - (5) (0.08)
--------------------------------- ------------ -------- ------------ --------
Non-headline items before tax 100 3.53 (438) (7.98)
--------------------------------- ------------ -------- ------------ --------
Group non-headline loss before tax items of GBP100 million
credit comprise:
-- a GBP61 million credit in relation to our restructuring
programme. The credit primarily relates to the remeasurement of
provisions following constructive negotiations with our trade
unions (2020: GBP123 million charge).
-- a GBP65 million net gain as a result of the sale and
leaseback of 35 aircraft and 2 engines in the year (2020: GBP38
million net gain as a result of the sale and leaseback of 33
aircrafts).
-- a fair value adjustment relating to a GBP26 million net
charge related to discontinued hedges and ineffectiveness (2020:
GBP311 million charge).
During the 2021 financial year foreign exchange gains or losses
arising from the re-translation of monetary assets and liabilities
held on the balance sheet have been recognised as headline items
and will no longer be reported as non-headline items. No
reclassification has been made to the prior year due to the
immaterial value.
Summary net debt reconciliation
2021 2020 Change
------------ ------------ ------------
GBP million GBP million GBP million
-------------------------------------------- ------------ ------------ ------------
Operating loss (910) (899) (11)
Depreciation and amortisation 480 503 (23)
Increase/(decrease) in unearned revenue 232 (455) 687
Other net working capital movement (638) 263 (901)
Net capital expenditure (149) (695) 546
Net proceeds from sale and leaseback of
aircraft 836 702 134
Repayment of capital element of leases (261) (230) (31)
Increase in lease liabilities (369) (132) (237)
Loss on disposal of intangibles, property,
plant and equipment (30) (30) -
Net tax received 1 13 (12)
Net decrease/(increase) in restricted cash 5 (15) 20
Other (including the effect of exchange
rates) (120) (52) (68)
Net proceeds from issue of ordinary share
capital 1,144 409 735
Purchase of own shares for employee share
schemes (6) (7) 1
Ordinary dividend paid - (174) 174
--------------------------------------------- ------------ ------------ ------------
Decrease/(increase) in net debt 215 (799) 1,014
--------------------------------------------- ------------ ------------ ------------
Net debt at the beginning of the year (1,125) (326) (799)
Net debt at end of year (910) (1,125) 215
--------------------------------------------- ------------ ------------ ------------
Net debt as at 30 September 2021 was GBP910 million (2020:
GBP1,125 million) and comprised cash and money market deposits of
GBP3,536 million (2020: GBP2,316 million), debt of GBP3,367 million
(2020: GBP2,731 million) and lease liabilities of GBP1,079 million
(2020: GBP710 million).
Debt increased by GBP636 million largely driven by two new
sources of debt, partially offset by repayments in the year. A new
five-year term loan facility of $1.87 billion (circa GBP1.4
billion) was entered, underwritten by a syndicate of banks and
supported by a partial guarantee from UK Export Finance under their
Export Development Guarantee scheme. easyJet drew down $1.05
billion of this in the period. In addition, a EUR1.2 billion 7-year
bond was issued in the period under the Euro Medium Term Note
(EMTN) programme. During the year repayments of GBP300 million from
the Covid Corporate Financing Facility (CCFF), $500 million
Revolving Credit Facility and circa GBP400 million of term loans
were made.
Unearned revenue increased by GBP232 million during 2021,
reflecting increased forward flying bookings in the last quarter of
the year and pent up demand for travel, compared with a GBP455
million year on year decline in 2020 as a result of the
pandemic.
The movement in Other net working capital of GBP638 million over
2021 relates to an increase in current intangible assets (mainly
due to increased ETS carbon allowances held), a reduction in
provisions (mainly due to lower maintenance, restructuring and
disruption provisions), derivative financial instruments (driven by
exchange rate movements and jet forward curve) and a decrease in
trade and other payables reflecting a reduction in revenue refund
accruals and APD deferrals offset by increased levels of
flying.
Net capital expenditure decreased by GBP546 million to aid cash
preservation and as a result of no final delivery payments made for
the acquisition of aircraft in the year (2020: 14 aircraft). The
number of aircraft in the fleet decreased from 342 as at 30
September 2020 to 308 as at 30 September 2021 (which excluded 12
aircraft held under power by the hour agreements).
Net proceeds of GBP836 million were received as a result of the
sale and leaseback of 35 aircraft and 2 engines in the year (2020:
GBP702 million from 33 aircraft).
Lease liabilities and capital repayments on lease liabilities
have both increased during the year. This is driven by the
increased sale and leasebacks completed in the year of 35 aircraft
and 2 engines (2020: 33 aircraft).
Corporate tax receipts in the year amounted to GBP1 million
(2020: GBP13 million).
A rights issue in the year gave rise to GBP1,197 million of net
proceeds, with GBP1,144 million of cash received in the year. As at
30 September 2021, there were GBP91 million of proceeds
outstanding, which have been subsequently received. Costs of GBP38
million were incurred on the rights issue and were still payable as
at 30 September 2021. During the 2020 financial year an equity
placing raised GBP409 million proceeds net of associated costs.
Summary consolidated statement of financial position
2021 2020 Change
------------ ------------ ------------
GBP million GBP million GBP million
------------------------------------------- ------------ ------------ ------------
Goodwill and other non-current intangible
assets 582 597 (15)
Property, plant and equipment (excluding
RoU assets) 3,639 4,409 (770)
Right of use (RoU) assets 1,096 644 452
Derivative financial instruments 203 (327) 530
Equity investments 30 33 (3)
Other assets (excluding cash and money
market deposits) 619 364 255
Unearned revenue (846) (614) (232)
Trade and other payables (1,128) (1,242) 114
Other liabilities (excluding debt) (646) (840) 194
-------------------------------------------- ------------ ------------ ------------
Capital employed 3,549 3,024 525
-------------------------------------------- ------------ ------------ ------------
Cash and money market deposits* 3,536 2,316 1,220
Debt (excluding lease liabilities) (3,367) (2,731) (636)
Lease liabilities (1,079) (710) (369)
Net debt (910) (1,125) 215
-------------------------------------------- ------------ ------------ ------------
Net assets 2,639 1,899 740
-------------------------------------------- ------------ ------------ ------------
* Excludes restricted cash
Since 30 September 2020 net assets have increased by GBP740
million. This reflects the rights issue undertaken in the year,
offset by the loss for the year and increased debt.
Goodwill and other intangible assets have decreased by GBP15
million predominantly due to amortisation of computer software.
The net book value of property, plant and equipment excluding
right of use assets, has decreased by GBP770 million due to the
sale and leaseback of 35 aircraft and 2 engines during the
year.
At 30 September 2021, right of use assets amounted to GBP1,096
million (2020: GBP644 million) and lease liabilities amounted to
GBP1,079 million (2020: GBP710 million) which reflects additions
during the year as a result of aircraft sale and leasebacks, as
well as the impact of lease payments and extensions.
There has been a GBP530 million movement on net derivative
financial instruments with a closing net asset balance of GBP203
million (2020: GBP327 million liability). This movement is largely
due to mark-to-market gains on jet fuel contracts as well as many
out-of-the-money jet trades held at the end of the previous
financial year having matured. This gain was partially offset by a
loss on cross-currency interest rate swaps.
The equity investment of GBP30 million (2020: GBP33 million)
represents a 13.2% shareholding in a non-listed entity, The Airline
Group Limited, which has a shareholding of 41.9% in NATS Holdings
Limited - the provider of UK air traffic control services for the
UK. This investment is held at fair value, with movements
recognised in other comprehensive income.
Other assets have increased by GBP255 million, mainly driven by
increased current intangible assets driven by an increased number
of ETS credits held, and increased trade and other debtors driven
by amounts receivable from the rights issue.
Unearned revenue increased by GBP232 million reflecting
increased forward flying bookings driven by pent up demand for
travel.
Trade and other payables have decreased by GBP114 million
reflecting a reduction in revenue refund accruals and APD deferrals
offset by increased levels of flying.
Other liabilities have decreased by GBP194 million, mainly
driven by a reduced maintenance and restructuring provisions. Other
liabilities also include a GBP37 million post-employment benefit
obligation in relation to a Swiss retirement benefit scheme (2020:
GBP45 million).
Debt has increased by GBP636 million mainly as a result of two
new debt facilities, a EUR1.2 billion bond issuance and $1.05
billion drawn down from a $1.87 billion term loan facility with
repayments of GBP300 million from the Covid Corporate Financing
Facility (CCFF), the $500 million Revolving Credit Facility and
circa GBP400 million of term loans being made in the year.
As at 30 September 2021, the Group is unable to assess the
likely outcome or quantum of the claims of the investigation by the
ICO, group action and other claims following the cyber-attack in
May 2020 and no provision has been recognised. (See note 1 under
critical accounting judgements - contingency liability
recognition).
Key statistics
Increase/
2021 2020 (decrease)
----------------------------------------------- -------- -------- ------------
Operating measures
Seats flown (millions) 28.2 55.1 (48.9%)
Passengers (millions) 20.4 48.1 (57.5%)
Load factor 72.5% 87.2% (14.7ppts)
Available seat kilometres (ASK) (millions) 33,348 62,380 (46.5%)
Revenue passenger kilometres (RPK) (millions) 23,594 58,914 (60.0%)
Average sector length (kilometres) 1,184 1,132 4.6%
Sectors 155,664 311,477 (50.0%)
Block hours ('000) 311 613 (49.3%)
Number of aircraft owned/leased at end
of year 308 342 (9.9%)
Average number of aircraft owned/leased
during year 331 337 (1.8%)
Number of aircraft operated at end of
year 239 157 52.2%
Average number of aircraft operated during
year 198 237 (16.5%)
Number of routes operated at end of year 927 981 (5.5%)
Number of airports served at end of year 153 154 (0.6%)
------------------------------------------------ -------- -------- ------------
Financial measures
Total return on capital employed (22.4%) (23.0%) 0.6ppt
Headline return on capital employed (25.5%) (19.9%) (5.6ppt)
Airline total loss before tax per seat
(GBP) (36.33) (22.66) 60.3%
Airline headline loss before tax per seat
(GBP) (39.87) (14.68) 171.6%
Airline total loss before tax per ASK
(pence) (3.11) (2.04) 52.5%
Airline headline loss before tax per ASK
(pence) (3.41) (1.34) 154.5%
Revenue
Airline revenue per seat (GBP) 50.54 54.35 (7.0%)
Airline revenue per seat at constant currency
(GBP) 50.90 54.35 (6.4%)
Airline revenue per ASK (pence) 4.37 4.82 (9.4%)
Airline revenue per ASK at constant currency
(pence) 4.40 4.82 (8.7%)
Airline revenue per passenger (GBP) 71.37 62.61 14.0%
Airline revenue per passenger at constant
currency (GBP) 71.86 62.61 14.8%
Costs
Per seat measures
Airline headline cost per seat (GBP) 90.41 69.03 (31.0%)
Airline non-headline (income)/cost per
seat (GBP) (3.53) 7.98 144.3%
Airline total cost per seat (GBP) 86.87 77.01 (12.8%)
Airline headline cost per seat excluding
fuel (GBP) 77.25 55.94 (38.1%)
Airline headline cost per seat excluding
fuel at constant currency (GBP) 78.62 55.94 (40.5%)
Airline total cost per seat excluding
fuel (GBP) 73.72 63.92 (15.3%)
Airline total cost per seat excluding
fuel at constant currency (GBP) 74.66 63.92 (16.8%)
Per ASK measures
Airline headline cost per ASK (pence) 7.64 6.16 (24.0%)
Airline non-headline cost per ASK (pence) (0.30) 0.70 142.5%
Airline total cost per ASK (pence) 7.34 6.86 (6.9%)
Airline headline cost per ASK excluding
fuel (pence) 6.53 5.01 (30.4%)
Airline headline cost per ASK excluding
fuel at constant currency (pence) 6.62 5.01 (32.2%)
Airline total cost per ASK excluding fuel
(pence) 6.23 5.71 (9.1%)
Airline total cost per ASK excluding fuel
at constant currency (pence) 6.19 5.71 (8.5%)
Going Concern and Viability Statement
Assessment of prospects
The Strategic Report on pages 2 to 95 of the 2021 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 on pages 66 to 77 of the 2021 Annual Report and
Accounts sets out the financial position of the Group, and Group
cash flows, liquidity position and borrowing activity. The notes to
the accounts include the objectives, policies and procedures for
managing capital, financial risk management objectives, details of
financial instruments and hedging activities, and exposure to
credit risk and liquidity risk.
In accordance with the requirements of the 2018 UK Corporate
Governance Code, the Directors have assessed the long term
prospects of the Group, taking into account its current position
and a range of internal and external factors, including the
principal risks. The Directors have determined that a three-year
period is an appropriate timeframe for this viability assessment.
In concluding on a three-year period, the Directors considered the
reliability of forecast information, duration and the impact of
Covid-19 and longer-term management incentives.
The assessment of the prospects of the Group includes the
following factors:
The strategic plan - which takes into consideration market
conditions, future commitments, cash flow, expected impact of key
risks, funding requirements and maturity of existing financing
facilities (see below)
Available funds (drawn
Maturity date and undrawn)
--------------------------- ------------------- -----------------------
At 30 September 2021
Eurobonds February 2023 EUR500m
October 2023 EUR500m
June 2025 EUR500m
March 2028 EUR1,200m
Commercial Paper (Covid
Corporate Financing
Facility) November 2021 GBP300m
Revolving credit facility September 2025 (*) $400m
Term loan facility January 2026 $1,870m
--------------------------- ------------------- -----------------------
The Commercial Paper (Covid Corporate Financing Facility) was
repaid on 18 November 2021.
Option to extend to September 2027 at lenders 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 on pages 78 to 95
of the 2021 Annual Report and Accounts
Impact of Covid-19
The impact of the Covid-19 pandemic continues to have a wide
impact across the travel industry. Restrictions on travel and
quarantine requirements continue to be imposed by governments
across our markets. The speed of vaccine programmes, efficacy of
vaccines, along with differing governmental testing requirements
continues to result in lower expected customer demand and load
factors in the short term when compared to historical levels of
flying prior to the pandemic.
Since the start of the pandemic, the Group has successfully
raised circa GBP7 billion liquidity through a diverse range of
funding sources. Since the 30 September 2020 year end this includes
raising $1.1 billion of sale and leaseback proceeds, securing a
five year term loan facility of $1.9 billion underwritten by a
syndicate of banks and supported by a partial guarantee from UK
Export Finance, issuing a seven year bond of EUR1.2 billion, a
rights issue raising GBP1.2 billion and securing a new revolving
credit facility of $400 million. Term loans of GBP400 million,
GBP300 million of the CCFF and the $500 million revolving credit
facility were repaid and cancelled in the period. The bond issuance
was heavily oversubscribed which demonstrates external confidence
in the easyJet business model and balance sheet.
Cash collateralisation triggers for key credit card acquirers
have been renegotiated to reduce the risk of collateralisation.
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 managements best estimation of how the business plans
to increase flying which assumes a phased increase to the schedule
over the forecast period, returning to near 2019 financial year
levels by the second half of the 2022 financial year and full
recovery by the second half of the 2023 financial year.
Stress testing
The corporate risk management framework facilitates the
identification, analysis, and response to plausible risk, including
emerging risks as our business evolves, in an increasingly volatile
environment. Through our corporate risk management process, a
robust assessment of the principal risks facing the organisation
has been performed (see pages 78 to 95 in the strategic report of
the 2021 Annual Report and Accounts ) and the controls and
mitigations identified.
Due to the ongoing uncertainty created by the global Covid-19
pandemic, there remains a risk that the recovery from the pandemic
could affect our markets, leading to travel restrictions being
imposed at short notice and reducing customer confidence in travel.
Accordingly, easyJet has considered the severe but plausible
downside scenarios based on the potential impact of risk factors on
the Group's future performance and liquidity, including
combinations of government lockdowns and international travel bans,
leading to a prolonged recovery period, reduction in revenue yield,
lower load factors, cash collateralisation of unearned revenue by
card acquirers, and a reduction to anticipated forward
bookings.
Both individually and combined these potential risks are
unlikely to require significant additional management actions to
support the business to remain viable, however there could be
actions that management would deem necessary to reduce the impact
of the risks. The stress testing scenarios identified in the table
below show that there is sufficient liquidity assuming the
refinancing of the existing bonds.
Going concern statement
In adopting the going concern basis for preparing these
financial statements, the Directors have considered easyJet's
business activities, together with factors likely to affect its
future development and performance, as well as easyJet's principal
risks and uncertainties.
After taking into account the net proceeds of the rights issue,
the new revolving credit facility and the other sources of funding
described above , easyJet has unrestricted access to GBP4.4 billion
of liquidity and has retained ownership of 59% of the total fleet
with 44% being unencumbered. This presents an improved liquidity
position of GBP2.1 billion since 30 September 2020 year end.
After reviewing the current liquidity position, financial
forecasts, stress testing of potential risks and considering the
uncertainties described above and the committed funding facilities,
the Directors believe it appropriate to continue to adopt the going
concern basis of accounting in preparing the Group financial
statements without the inclusion of material uncertainty, which has
been removed since the interim financial statements as at 31 March
2021 and the full year financial statements as at 30 September
2020.
In modelling the impact of severe but plausible downside risks,
the Directors have considered travel restrictions including
government lockdowns and international travel bans, leading to a
prolonged recovery period, reduction in revenue yield, lower load
factors, cash collaterisation of unearned revenue by card
acquirers, and a reduction to anticipated forward bookings.
After reviewing the current liquidity position, financial
forecasts, stress testing of potential risks and considering the
uncertainties described above and the committed funding facilities,
the Directors believe it appropriate to continue to adopt the going
concern basis of accounting in preparing the Group financial
statements without the inclusion of material uncertainty which has
been removed since the interim financial statements as at 31 March
2021 and the full year financial statements as at 30 September
2020.
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 2024. In making this statement, the Directors have
made the following key assumptions:
easyJet has access to a variety of funding options including
capital markets, aircraft financing and bank or government debt.
The downside stress testing demonstrates that the current funding
with refinancing of the existing bonds would be sufficient to
retain liquidity.
In assessing viability, it is assumed that the detailed risk
management process as outlined on pages 78 to 95 of the 2021 Annual
Report and Accounts captures all plausible risks, and that the
mitigating actions are implemented on a timely basis and have the
intended impact.
The impact of Covid-19 is not more prolonged or significant than
the severe but plausible downside stress testing performed. More
severe scenarios, either through multiple risks occurring
concurrently or risks which are not able to be mitigated by
management actions to the extent expected, do not occur.
There will not be another prolonged grounding of a substantial
portion of the fleet.
The key risks that are most likely to have a significant impact
of easyJet's viability are shown below along with how the risk has
been considered in the stress testing and what actions are in place
to mitigate against the identified risk. The principal risks have
continued to be assessed for any changes in the risk
environment.
Risk theme Impact on Risks considered and stress Management action and
viability testing performed Board considerations
Asset efficiency 1.
and effectiveness Unavailability * Schedule reductions/cancellations or partial * Work closely with Airbus to retain some flexibility
of slots or grounding leading to reduction in revenue of 10% in fleet planning (2)
partial (1,2)
fleet
2. Single * Robust effective cross functional governance
aircraft * Loss of market share due to increased competitor structures (1)
type operation capacity (1)
* Significant increase in costs (1)
---------------- ------------------------------------------------------------- -------------------------------------------------------------
Environment 3. Future
and sustainability environmental * Closure of existing ETS scheme leading to increased * Sustainability strategy and governance structure
legislation cost (4) implemented (3,4,5,6)
4. Changes to
carbon trading
scheme * Increased cost of carbon offsetting and introduction * Emission reduction or offset programmes (3,4,5)
5. Reputational of eco-taxes (3,4,6)
damage
6. Increased * Work with relevant industry bodies and stakeholders
taxation * Reduction in revenue of up 10% due to customer demand (3,4)
(5)
* More fuel efficient A320 and A321 neo's (3,4,5,6)
----------------------- ---------------- ------------------------------------------------------------- -------------------------------------------------------------
Legislative/regulatory 7. Brand
landscape licence * Loss of brand licence (7) * Regular engagement with easyGroup holdings and
impact proactive management of brand-related issues (7)
8. Failure to
comply with * Sustained adverse media coverage leading to reduction
requirements in revenue of up to 10% (7,8) * Compliance framework in place including mandatory
training (8)
* Significant spike in costs operationally (8)
* Material legal and settlement costs (8)
----------------------- ---------------- ------------------------------------------------------------- -------------------------------------------------------------
Macro-economic 9.
and geopolitical Supply/demand * Slower return to previous flying levels and low * Strategic planning to ensure flying schedules are
imbalance levels for the next financial year. Impact of responsive to demand and contribution positive (9)
including management initiatives (9)
slower
recovery * Consideration of various sensitivities and stress
from Covid-19 * Modelling excluding uncommitted funding (10) testing to the forecast presented to the Board on an
10. on-going basis (9,10,11)
Refinancing
risk and * Fuel sensitivities to $800/MT, adverse foreign
access exchange rate movement by 5% and fluctuating carbon * Review funding requirements and opportunities in
to alternative prices. Cost inflation estimates increased up to 3% scenarios considered (10)
financing when (11)
required
11. Market * Finance Committee regular monitoring of hedging
price policies to reduce exposure to market price exposures
risk: increase for fuel and foreign exchange (11)
in fuel price,
foreign
exchange
rates, carbon
prices and
inflation
rates
----------------------- ------------------------------------------------------------- -------------------------------------------------------------
People 12. Industrial
action * Operation disruption and increase of costs (12,13) * Positive and on-going relationship with trade unions
13. Talent and employee workforce (12)
recruitment
and retention * Sustained inability to deliver strategic initiatives
within the leading to a reduction in revenue (12,13) * Regular employee surveys and action groups to focus
Group on well-being, talent and retention (13)
* Reduction in revenue of up to 10% (12)
* Creation of Retention program (13)
* Hybrid working (13)
------------------------------------------------------------- -------------------------------------------------------------
Safety, security, 14. Major
and operations flight * Operational disruption and increase of costs (14) * easyJet Safety Board meet monthly. Functional Safety
safety, Action Groups in place across the business (14)
security
incident * Significant media coverage and reduction in future
or health revenue of up to 10% (14) * Hull and Liability insurance in place (14, 15)
and safety
incident
* Fines/regulatory sanctions (14) * A safety policy is published (14)
15. Supply
chain * Inefficient use of aircraft/crew leading to increased
challenges costs (15)
---------------- ------------------------------------------------------------- -------------------------------------------------------------
Technology 16. Failure of
and cyber critical * Material legal and settlement costs (17) * Regular Board updates on Cyber Security (17)
technologies
17. Data breach
and Ransomware * Immediate loss of website and reduction in revenue of * Dedicated Information Security team (17)
up to 10% (16,17)
* Ongoing monitoring of critical technologies and
interdependencies (16)
* IT governance structure (16,17)
* IT major incident management team (16,17)
* Cross functional committee to address customers legal
and regulatory concerns (17)
----------------------- ---------------- ------------------------------------------------------------- -------------------------------------------------------------
Consolidated Income Statement
Year ended 30 September
------------------------------------------------------------------------------------
2021 2020
Non-headline Non-headline
(note (note
Headline 2) Total Headline 2) Total
Notes GBP million GBP million GBP million GBP million GBP million GBP million
----------------- ------ ------------ ------------- ------------ ------------ ------------- ------------
Passenger revenue 1,000 - 1,000 2,303 - 2,303
Ancillary revenue 458 - 458 706 - 706
------------------ ------ ------------ ------------- ------------ ------------ ------------- ------------
Total revenue 1,458 - 1,458 3,009 - 3,009
Fuel (371) - (371) (721) - (721)
Airports, ground
handling and
other
operating costs (446) - (446) (938) - (938)
Crew (495) - (495) (629) - (629)
Navigation (102) - (102) (206) - (206)
Maintenance (222) - (222) (278) - (278)
Selling and
marketing (60) - (60) (107) - (107)
Other costs (319) 47 (272) (426) (130)* (556)
Other Income 6 79 85 23 45* 68
------------------ ------ ------------ ------------- ------------ ------------ ------------- ------------
EBITDAR (551) 126 (425) (273) (85) (358)
Aircraft dry
leasing (5) - (5) (1) - (1)
Impairment - - - - (37) (37)
Depreciation 7 (456) - (456) (485) - (485)
Amortisation of
intangible
assets (24) - (24) (18) - (18)
------------------ ------ ------------ ------------- ------------ ------------ ------------- ------------
Operating
(loss)/profit (1,036) 126 (910) (777) (122) (899)
Interest
receivable
and other
financing
income 50 33 83 12 105 117
Interest payable
and other
financing
charges (150) (59) (209) (70) (421) (491)
------------------ ------ ------------ ------------- ------------ ------------ ------------- ------------
Net finance
charges (100) (26) (126) (58) (316) (374)
Profit/(loss)
before
tax (1,136) 100 (1,036) (833) (438) (1,273)
Tax
(charge)/credit 3 236 (58) 178 110 84 195
(Loss)/Profit for the
year (900) 42 (858) (725) (354) (1,079)
-------------------------- ------------ ------------- ------------ ------------ ------------- ------------
Loss per share,
pence
Basic 4 (159.0) (222.9)
Diluted 4 (159.0) (222.9)
------------------ ------ ------------ ------------- ------------ ------------ ------------- ------------
* Sale and leaseback gains and losses recognised in the prior year
have been re-presented, see note 2
Consolidated Statement of Comprehensive Income
Year ended Year ended
30 September 30 September
2021 2020
Notes GBP million GBP million
================================================ ====== ============= =============
Loss for the year (858) (1,078)
Other comprehensive income/(loss)
Items that may be reclassified to the
income statement:
Cash flow hedges
Fair value gains/(losses) in the year 477 (628)
(Gains)/losses transferred to income statement (17) 39
Hedge discontinuation losses transferred
to income statement 25 284
Related tax (charge)/credit 3 (93) 55
Cost of Hedging (3) (8)
Related tax credit 1 1
Items that will not be reclassified to
the income statement:
Remeasurement of post-employment benefit
obligations 5 3
Related deferred tax credit 3 (4) -
Fair value movement on equity investment (3) (15)
================================================= ====== ============= =============
388 (269)
====== ============= =============
Total comprehensive loss for the year (470) (1,347)
================================================= ====== ============= =============
Consolidated Statement of Financial Position
30 September 30 September
2021 2020
Notes GBP million GBP million
======================================== ====== ============= =============
Non-current assets
Goodwill 365 365
Other intangible assets 217 232
Property, plant and equipment 7 4,735 5,053
Derivative financial instruments 86 89
Equity investment 30 33
Restricted cash 1 5
Other non-current assets 135 133
Deferred tax assets 39 -
======================================== ====== ============= =============
5,608 5,910
Current assets
Trade and other receivables 291 193
Intangible assets 140 12
Derivative financial instruments 185 21
Current tax assets - 7
Restricted cash 13 14
Money market deposits - 32
Cash and cash equivalents 3,536 2,284
========================================= ====== ============= =============
4,165 2,563
Current liabilities
Trade and other payables (1,128) (1,242)
Unearned revenue (844) (614)
Borrowings 8 (300) (987)
Lease liabilities (189) (224)
Derivative financial instruments (31) (352)
Current tax payable (2) -
Provisions for liabilities and charges 9 (183) (407)
========================================= ====== ============= =============
(2,677) (3,826)
Net current assets/(liabilities) 1,488 (1,263)
Non-current liabilities
Borrowings 8 (3,067) (1,744)
Unearned revenue (2) -
Lease liabilities (890) (486)
Derivative financial instruments (37) (85)
Non-current deferred income (4) (5)
Post-employment benefit obligation (37) (45)
Provisions for liabilities and charges 9 (420) (332)
Deferred tax - (51)
========================================= ====== ============= =============
(4,457) (2,748)
Net assets 2,639 1,899
========================================= ====== ============= =============
Shareholders' equity
======================================== ====== ============= =============
Share capital 207 125
Share premium 2,166 1,051
Hedging reserve 156 (236)
Cost of hedging reserve (1) 1
Translation reserve - (2)
Retained earnings 111 960
========================================= ====== ============= =============
2,639 1,899
====== ============= =============
Consolidated Statement of Changes in Equity
Cost
of
Share Share Hedging Hedging Translation Retained
capital premium reserve Reserve reserve earnings Total
GBP GBP GBP GBP GBP GBP
million million million million GBP million million million
--------------- ---------- ---------- ---------- ---------- ------------ ----------- -----------
At 1 October
2020 125 1,051 (236) 1 (2) 960 1,899
Result for the
period - - - - - (858) (858)
Other
comprehensive
income /(loss) - - 392 (2) - (2) 388
Total
comprehensive
income/(loss) - - 392 (2) - (860) (470)
Net proceeds
from
rights issue 82 1,115 - - - - 1,197
Share
incentive
schemes
Value of
employee
services - - - - - 15 15
Related tax
(note
3) - - - - - 2 2
Purchase of
own shares - - - - - (6) (6)
Currency
translation
differences - - - - 2 - 2
---------------- ---------- ---------- ---------- ---------- ------------ ----------- -----------
At 30 September
2021 207 2,166 156 (1) - 111 2,639
---------------- ---------- ---------- ---------- ---------- ------------ ----------- -----------
Cost
of
Share Share Hedging Hedging Translation Retained
capital premium reserve Reserve reserve earnings Total
GBP GBP GBP GBP GBP GBP
million million million million GBP million million million
--------------- ---------- ---------- ---------- ---------- ------------ ----------- -----------
At 1 October
2019 108 659 (4) 8 (1) 2,215 2,985
Loss for the
period - - - - - (1,079) (1,079)
Other
comprehensive
loss - - (250) (7) - (12) (269)
Total
comprehensive
loss - - (250) (7) - (1,091) (1,348)
Transfer to
property,
plant and
equipment - - 18 - - - 18
Dividends paid
(note
6) - - - - - (174) (174)
Net proceeds
from
shares issued 17 392 - - - - 409
Share
incentive
schemes
Value of
employee
services - - - - - 18 18
Related tax
(note
3) - - - - - (1) (1)
Purchase of
own shares - - - - - (7) (7)
Currency
translation
differences - - - - (1) - (1)
---------------- ---------- ---------- ---------- ---------- ------------ ----------- -----------
At 30 September
2020 125 1,051 (236) 1 (2) 960 1,899
---------------- ---------- ---------- ---------- ---------- ------------ ----------- -----------
On 9 September 2021 the Company invited its shareholders to
subscribe to a rights issue of 301,260,394 ordinary shares at an
issue price of 410 pence per share on the basis of 31 shares for
every 47 fully paid ordinary shares held, with such shares issued
on 28 September 2021.
The rights issue resulted in GBP1,235 million of gross proceeds.
Shares totalling 280.2 million were taken up by existing
shareholders (93%) with the remaining rump of 21.0 million shares
being underwritten. As at 30 September 2021, there were GBP91
million of proceeds outstanding, which have been subsequently
received. Costs of GBP38 million were incurred on the rights
issue.
In June 2020, easyJet successfully raised net proceeds of GBP409
million through an equity placing of new shares.
The hedging reserve comprises the effective portion of the
cumulative net change in fair value of cash flow hedging
instruments relating to highly probable transactions that are
forecast to occur after the year end. Included within the hedging
reserve are amounts totalling a GBP13 million gain related to
derivative hedge trades that were mutually early terminated with
counterparty banks in the year ended September 2020 (2020: GBP46
million gain), as these trades had an effective hedge relationship
at the point of termination, the fixed fair value is held in the
hedging reserve and recycled to the income statement in line with
when the original hedge item also impacts the income statement.
At 30 September 2021 amounts in the hedging reserve comprised of
GBPnil related to cross-currency basis (2020: GBP4 million gain)
and a GBP1 million loss related to the time value of options (2020:
GBP3 million loss).
Consolidated Statement of Cash Flows
Year ended Year ended
30 September 30 September
2021 2020
GBP million GBP million
---------------------------------------------- -------------- --------------
Cash flows from operating activities
Cash used in operations (755) (542)
Ordinary dividends paid - (174)
Interest and other financing charges paid (282) (71)
Interest and other financing income received 1 12
Net tax received 1 13
------------------------------------------------- -------------- --------------
Net cash generated from operating activities (1,035) (762)
Cash flows from investing activities
Purchase of property, plant and equipment (140) (659)
Purchase of non-current intangible assets (9) (36)
Net decrease in money market deposits 32 259
Net proceeds from sale and leasebacks 836 702
------------------------------------------------- -------------- --------------
Net cash used by investing activities 719 266
Cash flows from financing activities
Net proceeds from issue of ordinary shares 1,144 409
Purchase of own shares for employee share
schemes (6) (7)
Proceeds from debt financing 1,804 1,399
Repayment of bank loans and other borrowings (1,045) -
Repayment of capital element of leases (261) (230)
Decrease/(increase) in restricted cash 5 (15)
------------------------------------------------- -------------- --------------
Net cash generated from financing activities 1,641 1,556
Effect of exchange rate changes (73) (61)
Net increase in cash and cash equivalents 1,252 999
Cash and cash equivalents at beginning
of period 2,284 1,285
Cash and cash equivalents at end of year 3,536 2,284
------------------------------------------------- -------------- --------------
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
whose shares are listed on the London Stock Exchange under the
ticker symbol EZJ and is incorporated and domiciled in the United
Kingdom. The address of its registered office is Hangar 89, London
Luton Airport, Luton, Bedfordshire, LU2 9PF.
These financial statements have been prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006, and in accordance with
international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European
Union.
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 2021 but is extracted from the 2021
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 and liquidity position.
After taking into account the net proceeds of the rights issue,
the new revolving credit facility and the other sources of funding
described above, easyJet has unrestricted access to GBP4.4 billion
of liquidity and has retained ownership of 59% of the total fleet
with 41% being unencumbered. This presents an improved liquidity
position of GBP2.1 billion since 30 September 2020 year end.
After reviewing the current liquidity position, financial
forecasts, further stress testing of potential risks and
considering the uncertainties described above and the committed
funding facilities, the Directors believe it appropriate to
continue to adopt the going concern basis of accounting in
preparing the Group financial statements without the inclusion of
material uncertainty.
In modelling the impact of severe but plausible downside risks,
the Directors have considered travel restrictions including
government lockdowns and international travel bans, leading to a
prolonged recovery period, reduction in revenue yield, lower load
factors, cash collaterisation of unearned revenue by card
acquirers, and a reduction to anticipated forward bookings.
Following the demonstratable success of the Group's ability to
raise liquidity, the Group is well placed to withstand the risks
identified. Both individually and combined, the risks and scenarios
identified are unlikely to require significant additional
management actions to support the business. Further details of
going concern are detailed in the 2021 Annual Report and Financial
statements.
The Annual Report and Financial statements for 2020 has been
delivered to the Registrar of Companies.
The Annual Report and Financial statements for 2021 will be
delivered to the Registrar of Companies in due course. The
auditors' report on those financial statements was unqualified and
neither drew attention to any matters by way of emphasis nor
contained a statement under either section 498(2) of Companies Act
2006 (accounting records or returns inadequate or financial
statements not agreeing with records and returns), or section
498(3) of Companies Act 2006 (failure to obtain necessary
information and explanations).
Accounting policies
The accounting policies adopted are consistent with those
described in the Annual report and financial statements for the
year ended 30 September 2021.
Critical accounting judgements and estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires 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. Although these amounts are based on management's best
estimates, events or actions may mean that actual results
ultimately differ from those estimates, and these differences may
be material. The estimates and the underlying assumptions are
reviewed regularly.
Critical accounting judgements
The following are the critical judgements, apart from those
involving estimations (which are dealt with separately below), that
the Directors have made in the process of applying the Group's
accounting policies and that have the most significant effect on
the amounts recognised and presented in the financial
statements.
Classification of income or expenses between headline and
non-headline items
The Group seeks to present a measure of underlying performance
which is not impacted by material non-recurring items or items
which are not considered to be reflective of the trading
performance of the business. This measure of profit is described as
'headline' and is used by the Directors to measure and monitor
performance. The excluded items are referred to as 'non-headline'
items.
Non-headline items may include impairments, amounts relating to
acquisitions and disposals, expenditure on major restructuring
programmes, litigation and insurance settlements, the income or
expense resulting from the initial recognition of sale and lease
back transactions, fair value adjustments on financial instruments
and other particularly significant or unusual non-recurring items.
Items relating to the normal trading performance of the business
will always be included within the headline performance.
Judgement is required in determining the classification of items
between headline and non-headline. In line with Financial Reporting
Council (FRC) guidance, easyJet has not attempted to identify
additional non-headline items as a direct or indirect result of
Covid-19, other than those items which clearly meet our existing
definition of non-headline, such as hedge discontinuation,
restructuring and asset impairment.
Consolidation of easyJet Switzerland
Judgement has been applied in consolidating easyJet Switzerland
S.A. as a subsidiary on the basis that the Company exercises a
dominant influence over the undertaking. A non-controlling interest
has not been reflected in the consolidated financial statements on
the basis that holders of the remaining 51% of the shares have no
entitlement to any dividends from that holding and the Company has
an option to acquire those shares for a pre-determined minimal
consideration.
Vouchers issued
Due to the amount of cancelled flights, easyJet continues to
offer customers the option to accept vouchers in lieu of cash
refunds. The liability for vouchers is classified as other payables
until the voucher is redeemed against a future booking when it is
reclassified to unearned revenue. Breakage may occur if customers
do not redeem their voucher prior to expiry and would be recognised
in revenue. The liability has been recorded in full as no vouchers
have yet expired, and due to the significant level of flight
cancellations as a result of the pandemic impact there is not
sufficient historical data available to reliably estimate the
amount of vouchers that will not be used prior to expiry. To date
no vouchers have expired as the vouchers have had the expiry dates
extended to ensure customers have the maximum opportunity to
utilise their vouchers. Applying breakage at 10% would result in a
c. GBP20 million reduction to the liability.
Sale and leaseback transactions
Judgement is required when determining if sale and leaseback
proceeds and lease rentals are at fair value. The sale and
leaseback transactions completed in the year have been assessed
with reference to external valuations specific to the easyJet fleet
and deemed to be at fair value. The accounting treatment would have
been different if the transactions had not been at fair value (see
leases accounting policy).
Contingent liability recognition
On 19 May 2020, easyJet announced that it had been the target of
a cyber-attack from a highly sophisticated source. The email
addresses and travel details of approximately 9 million customers
were accessed and for a very small subset of customers (2,208),
credit card details were accessed.
The cyber-attack continues to be under investigation by the
Information Commissioner's Office (ICO). As the cyber-attack took
place before the United Kingdom left the European Union, the Group
expects the ICO to be investigating on behalf of all EU data
protection authorities as lead supervisory authority under the
GDPR. Any penalty or enforcement action will need to be reviewed
and approved by the other EU data protection authorities under the
GDPR's cooperation process. In addition, in May 2020, a class
action claim was filed in the UK High Court by a law firm
representing a class of affected customers and claims have also
been commenced or threatened in certain other courts and
jurisdictions.
Judgement has been applied in assessing the merit, likely
outcome and potential impact on the Group of the continued
investigation by the ICO, group action and other claims. These are
still subject to a number of significant uncertainties and
therefore the Group is unable to assess the likely outcome or
quantum of the claims as at the date of these financial
statements.
Critical accounting estimates
The following critical accounting estimates involve a higher
degree of judgement or complexity, or are areas where assumptions
are significant to the financial statements. The critical
accounting estimates concerned are not 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.
Aircraft maintenance provisions - GBP550 million
The most critical estimate required for the provision is
considered to be the expected costs of the heavy maintenance checks
at the time they are expected to occur. Other estimates also
impacting the provision include the future utilisation of the
aircraft, the condition of the aircraft, the lifespan of
life-limited parts and the rate used to discount the provision.
easyJet incurs liabilities for maintenance costs in respect of
aircraft leased during the term of the lease. These 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, easyJet will also normally need to
carry out one heavy maintenance check on each of the engines and
the airframe during the lease term.
The bases of all estimates are reviewed at least annually, and
when information becomes available that is capable of causing a
material change to an estimate, such as renegotiation of end of
lease return conditions, increased or decreased aircraft
utilisation, or changes in the cost of heavy maintenance services.
Given the much increased uncertainty in forecasting future
maintenance requirements, and the associated judgemental nature of
the assumptions applied in determining the maintenance provision,
management believe that a reasonable combination of changes to
these estimates could result in a material movement to the carrying
value of the provision. A 5% movement in the estimated cost of
final maintenance events would result in a GBP24 million movement
to the provision.
Goodwill and landing rights - GBP533 million
The recoverable amount of goodwill and landing rights has been
determined based on value in use calculations for the whole airline
route network cash generating unit. The value in use is determined
by discounting future cash flows to their present value. When
applying this method, easyJet relies on a number of key estimates
including the ability to meet its strategic plans, future fuel
prices, the ability to pass on cost price increases to the customer
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 incorporate estimations of
the future impact of climate change on easyJet, this includes the
future financial impact within cashflow projections of
carbon-offsetting, the price of ETS permits and quantity of
Sustainable Aviation Fuel usage.
Fuel price and exchange rates continue to be volatile in nature
and the assumptions used are sensitive to significant changes in
these rates and the ability to pass these on to the customer. In
addition, assumptions over the recovery of customer demand levels
could have a significant effect on the impairment assessment
performed. Due to the uncertainty created by the Covid-19 pandemic,
there remains a risk that further waves of the pandemic could
affect our markets, leading to further travel restrictions being
imposed. These uncertainties could have an effect on future
impairment or useful economic life assessments performed.
Defined benefit pension assumptions - GBP152 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 in the 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 to the future obligation.
Derivative financial instruments - GBP203 million net asset
easyJet is exposed to financial risks including fluctuations in
exchange rates, jet fuel prices and interest rates. Financial risk
management aims to limit these market risks with selected
derivative hedging instruments being used for this purpose. The
Group holds a number of derivatives and financial instruments
including foreign currency forward contracts, jet fuel forward and
option contracts and cross-currency interest rate swap contracts.
easyJet's policy is not to speculatively trade derivatives but to
use the instruments to hedge anticipated exposure. Given the
inherently complex nature of this area, the Finance Committee (a
committee of the Board) oversees the Group's treasury and funding
policies and activities.
Provisions for customer claims - GBP21 million (2020: GBP39
million)
easyJet incurs liabilities for amounts payable to customers who
make claims in respect of flight delays and cancellations, and
refunds of air passenger duty or similar charges, for which claims
could be made up to 6 years after the event. Estimates include
passenger claim rates, the value of claims made, and the period of
time over which claims will be made. The bases of all estimates are
reviewed at least annually and also when information becomes
available that is capable of causing a material change to the
estimate. A 5% movement in the estimated customer claim rate would
result in a GBP1 million movement to the provision.
Hedge discontinuation and ineffectiveness and discontinuation-
GBP26 million charge
As a result of the reduced flying programme throughout the year,
the Group's near-term exposures for jet fuel and foreign currency
were reduced, causing a proportion of derivatives previously hedge
accounted for to be discontinued from a hedge relationship. A net
charge of GBP26 million has been recognised as a non-headline item
in the income statement primarily due to the discontinuation in the
year of hedge accounting for impacted derivatives. In assessing
whether future exposures are still expected to occur, easyJet made
estimates as at 30 September 2021 regarding its jet fuel
consumption requirements and expected future foreign currency cash
flows. These estimates used assumptions based on the expected
recovery of customer demand and subsequent flying schedule as at
that date.
Aircraft carrying values - GBP3,559 million
Aircraft asset recoverable amounts have been tested for
impairment based on value in use at the airline route network cash
generating unit level as described in the goodwill section above.
Strategic plans incorporate estimations of the future impact of
climate change on easyJet, this includes the future financial
impact within cashflow projections of carbon-offsetting, the price
of ETS permits and quantity of Sustainable Aviation Fuel usage. The
recoverable amounts exceed the carrying values as at 30 September
2021.
Aircraft are depreciated over their useful economic life to
their residual values in line with the property, plant and
equipment accounting policy. A review has been performed during the
current financial year and the useful economic life and residual
value amounts for aircraft and capitalised maintenance have been
revised in line with the latest information available. This
included the expected useful economic life estimate for CEO
aircraft revised from 23 years to 18 years in line with expected
usage and the residual value for aircraft revised based on reports
obtained from independent aircraft valuation experts. The revised
estimates led to a net accelerated depreciation of the fleet on a
prospective basis from 1 July 2021. The changes increased the
depreciation charge by c. GBP13 million in the 2021 financial year.
This increase is expected to annualise at GBP47 million in
financial year 2022. The change in depreciation charge is
non-cash.
However, in light of the global pandemic, the longer-term impact
on the airline industry is currently uncertain and the market for
aircraft transactions has also slowed. Should future demand fall
significantly below current expectations there could be a risk that
the recoverable amount for some aircraft assets falls below their
current carrying value or that residual values are subject to
significant deterioration.
Recoverability of deferred tax assets - GBP425 million
The deferred tax asset balances include GBP425 million (2020:
GBP275 million) arising on full recognition of the UK trading tax
losses accumulated at the statement of financial position date. The
Group has concluded that these deferred tax assets will be fully
recoverable against the unwind of taxable temporary differences and
future taxable income based on the long term strategic plans of the
Group. Where applicable the financial projections used in assessing
future taxable income are consistent with those used elsewhere
across the business for example in the assessment of the carrying
value of goodwill. These assessments includes the expected impact
of climate change on easyJet and the future financial impact within
cashflow projections of carbon-offsetting, the price of ETS permits
and quantity of Sustainable Aviation Fuel usage.
The tax losses for which a deferred tax asset has been
recognised are expected to be utilised within the next eight years,
based on probable forecast future taxable income. Probable forecast
future taxable income includes an incremental and increasing risk
weighting to represent higher levels of uncertainty in future
periods.
The loss utilisation has been stress tested by assessing
probable future taxable income for the next five years, based on
the same risk weightings to those applied above, but assuming no
profit growth from the end of a five year forecast period. The
resultant reduction in forecast taxable profit calculated on this
basis would extend the tax loss utilisation period by two
years.
The tax losses can be carried forward indefinitely and have no
expiry date.
New and revised standards and interpretations not applied
A number of amended standards became applicable during the
current reporting period. The Group did not have to change its
accounting policies or make retrospective adjustment's as a result
of adopting these standards. For the amendments that became
applicable for annual reporting periods commending on or after 1
January 2020, and did not have a material impact were:
-- IAS 1 Presentation of Financial Statements & IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors -
Definition of material;
-- IFRS 3 Business Combinations - Definition of business;
-- IFRS 16 Leases - Amendments in relation to Covid-19 related rent concessions; and
-- Revised conceptual framework for financial reporting.
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.
In September 2019 the IASB issued the first accounting amendment
to IFRS 9 and IFRS 7 related to the upcoming IBOR reform and to
address the impact that the current uncertainty could have when
applying specific hedge accounting requirements on applicable hedge
relationships. In particular, the amendment provides temporary
relief to allow hedge accounting to continue during the transition
period before IBOR based hedge items or instruments are amended as
a result of the reform being completed.
The Group early adopted this amendment in the financial year
ending September 2020, applying it retrospectively to accounting
relationships that existed before the start of the current
reporting period. The impacts of IBOR reform on the Group is
assessed as being limited, with this amendment only applicable to
one hedge relationship as at 30 September 2021.
Specifically the amendment impacts the fair value hedge
relationship on one of the Group's Eurobonds, where a
cross-currency interest rate swap (with a sterling notional of
GBP379 million, maturity of February 2023 and a fair value of GBP53
million in an asset position) is used to swap the fixed interest
coupon of the euro denominated debt into a floating interest rate,
reset quarterly using future expected GBP LIBOR. In assessing hedge
effectiveness on a prospective basis for this relationship, the
Group has continued to assume that the GBP-LIBOR related interest
cash flows on the swap are not altered by IBOR reform and the hedge
continues to be highly effective.
Furthermore, hedge accounting did not need to be discontinued
during the period of IBOR-related uncertainty as the Group has
taken the relief available in Phase 1 to separately identify the
risk component at the initial hedge designation and not on an
ongoing basis.
In August 2020, IASB also issued Phase 2 amendments which are
effective from 1 January 2021. This looked to address issues around
the updating of hedge designations and documentation following the
adoption of alternative benchmark rates. The Group is not adopting
these amendments currently due to continued uncertainty over IBOR
transition. Therefore no amendments have been made to the hedged
item and/or hedging instruments in the 2021 financial year.
In October 2020 the International Swaps and Derivatives
Association (ISDA) released its IBOR fallback protocol to aid the
IBOR transition. In June 2021 the Group signed up to this protocol
as part of its approach to the transition.
During the year a LIBOR transition working group was formed to
consider wider impacts on the business of changes. Key areas that
this group reviewed included existing supplier contracts, debt
financing, leases, inter-company loan agreements and discount
rates. No material impacts were identified as part of this
review.
There are no other standards that are issued but not yet
effective that would be expected to have a material impact on the
Group 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
2021 2020
GBP million GBP million
-------------------------------------------------- ------------- -------------
Sale and leaseback gain (65) (38)
Restructuring (release)/charge (61) 123
Impairment - 37
--------------------------------------------------- ------------- -------------
Recognised in operating profit (126) 122
--------------------------------------------------- ------------- -------------
Fair value adjustment 26 311
Statement of financial position foreign exchange
gain - 5
--------------------------------------------------- ------------- -------------
Total non-headline (credit)/charge before tax (100) 438
--------------------------------------------------- ------------- -------------
Tax on non-headline items 58 (84)
--------------------------------------------------- ------------- -------------
Total non-headline (credit)/charge after tax (42) 354
--------------------------------------------------- ------------- -------------
Sale and leaseback charge
During the year, easyJet completed the sale and leaseback of 7
A319 (2020: 17), 24 A320 (2020: 9) and 4 A321 (2020: 7) and 2
engines (2020: nil). The Income Statement impact of the 35 aircraft
and 2 engine sale and leasebacks was a GBP79 million gain (2020:
GBP45 million gain) recognised in Other income offset by a GBP14
million loss (2020: GBP7 million loss) recognised in Other
costs.
The prior year net gain of GBP38 million has been reclassified
on the face of the Income statement to present GBP45 million of
gains within Other income and GBP7 million of losses within Other
costs. There is no net impact on EBITDAR or the loss before
tax.
Restructuring
As a result of the ongoing restructuring programme and
continuing negotiations with unions, restructuring provisions have
been remeasured throughout the year. As a result of this, a credit
of GBP61 million (2020: GBP123 million of costs) has been
recognised as non-headline within Other costs where the initial
expense was recognised. As at 30 September 2021 there were unpaid
amounts of GBP18 million (2020: GBP101 million) for those
consultations which have not been finalised and settled
Impairment
In 2020 due to lower forecasted customer demand, the Group
reassessed the fleet capacity and utilisation requirements leading
to 34 leased aircraft being permanently removed from commercial
service. These assets were not utilised again before being returned
to the lessor at the end of their existing lease term and therefore
did not generate any further economic benefit. As a result, an
impairment charge of GBP37 million was recognised in 2020 for these
aircraft and was categorised as non-headline in the income
statement, along with an equivalent reduction within right of use
assets.
Fair value adjustment and hedge discontinuation
This relates to hedge accounting ineffectiveness for items
currently held in fair value and cash flow hedge relationships, and
the cumulative fair value of derivatives at the time of being
discontinued from a previous hedge accounting relationship.
In accordance with IFRS 9, hedge effectiveness testing is
performed on a regular, periodic basis. For cash flow hedges this
includes an assessment of highly probable future cash exposures
with the amount compared to the notional of derivatives held in a
hedge relationship. In FY21, due to the reduced commercial flying
easyJet was in an over-hedged position from both a jet fuel and FX
perspective. As the forecast exposures were no longer expected to
occur, these previously hedged amounts no longer qualify for hedge
accounting. In FY21, cumulative fair value movement of a GBP25
million loss (2020: GBP311 million loss) related to these
discontinued derivatives held in Other Comprehensive Income was
immediately recorded in the income statement. Subsequent fair value
movement of a GBP30 million gain on these discontinued derivatives
was recognised as a headline item.
Additionally, fair value adjustments of GBP1 million (2020:
GBPnil) were recorded during the period related to hedge
ineffectiveness on hedges of foreign currency denominated
borrowings that continue to be effective hedge relationships. This
hedge ineffectiveness arises as the value of hedged items are
adjusted for changes in fair value attributable to the hedged
risks, which are not perfectly offset by the fair value change on
the hedging instruments due to factors such as in counterparty
credit risk, cash flow timing or amount changes.
Statement of financial position foreign exchange charge
This relates to foreign exchange gains or losses arising from
the re-translation of monetary assets and liabilities held in the
statement of financial position, which have been reclassified as
headline items in the current year (see Voluntary change in policy
section). A GBP9 million gain was recognised as a headline item
(2020: GBP5 million charge recognised as non-headline).
3. Tax charge
Tax on profit on ordinary activities
2021 2020
GBP million GBP million
--------------------------------------------------- ------------ ------------
Current tax
Adjustments in respect of UK tax for prior years 5 (1)
Foreign tax 4 6
---------------------------------------------------- ------------ ------------
Total current tax charge 9 5
---------------------------------------------------- ------------ ------------
Deferred tax
Temporary differences relating to property, plant
and equipment (36) 41
Other temporary differences (189) (275)
Adjustments in respect of prior years 7 (1)
Attributable to rates other than the standard UK
rate 31 36
---------------------------------------------------- ------------ ------------
Total deferred tax charge (187) (199)
---------------------------------------------------- ------------ ------------
Total tax charge (178) (194)
---------------------------------------------------- ------------ ------------
Effective tax rate 17.2% 15.3%
---------------------------------------------------- ------------ ------------
Current tax payable at 30 September 2021 amounted to GBP2
million (2020: GBP7 million receivable). This is related to tax
payable in other European jurisdictions.
During the year ended 30 September 2021, net cash tax received
amounted to GBP1 million (2020: GBP13 million).
The Finance Act 2016 included legislation to reduce the main
rate of UK corporation tax from 20% to 19% from 1 April 2017 and to
17% from 1 April 2020. The rate reduction to 17% was subsequently
reversed by the Finance Act 2020, such that the main rate of UK
corporation tax from 1 April 2021 remains at 19%. The Finance Act
2021 confirmed an increase of UK corporation tax rate from 19% to
25% with effect from 1 April 2023 and this was substantively
enacted by the statement of financial position date and therefore
included in these financial statements. Temporary differences have
been remeasured using the enacted tax rates that are expected to
apply when the liability is settled or the asset realised.
Reconciliation of the total tax (credit)/charge
The tax for the year is lower than (2020: lower than) the
standard rate of corporation tax in the UK as set out below:
2021 2020
GBP
GBP million million
------------------------------------------------------ ------------- ---------
Loss before tax (1,036) (1,273)
Tax credit at 19.0% (2020: 19.0%) (197) (242)
Expenses not deductible for tax purposes 2 1
Share-based payments 2 (1)
Adjustments in respect of prior years - current
tax 5 (1)
Adjustments in respect of prior years - deferred
tax 7 (1)
Difference in applicable rates for current
and deferred tax (54) -
Attributable to rates other than standard
UK rate 2 1
Change in substantively enacted tax rate 31 36
Movement in provisions (1) (1)
IFRS 16 restricted gain 25 14
Total tax credit (178) (194)
------------------------------------------------------ ------------- ---------
Tax on items recognised directly in other comprehensive
income or shareholders' equity
2021 2020
GBP
GBP million million
------------------------------------------------------ ------------- ---------
Charge/(credit) to other comprehensive income/(loss)
Deferred tax on change in fair value of cash
flow hedges (93) 56
Deferred tax on post-employment (4) -
------------------------------------------------------ ------------- ---------
Deferred tax
The net deferred tax 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
GBP million GBP million million GBP million GBP million million million
--------------------- ------------ ------------ ---------- ------------ ----------------- -------- --------
At 1 October
2020 386 (7) (43) (2) (8) (275) 51
Charged/(credited)
to income statement (13) (19) 1 (1) (5) (150) (187)
Charged/(credited)
to other
comprehensive
income - - 93 - 4 - 97
At 30 September
2021 373 (26) 51 (3) (9) (425) (39)
--------------------- ------------ ------------ ---------- ------------ ----------------- -------- --------
Fair
Accelerated Short-term value Post-employment
capital timing gains/ Share-based benefit Trading
allowances differences (losses) payments obligation loss Total
GBP GBP GBP
GBP million GBP million million GBP million GBP million million million
---------------------- ------------- ------------ ---------- ------------ ----------------- -------- --------
At 1 October 2019 308 (1) 14 (8) (8) - 305
Charged/(credited)
to income statement 78 (6) - 5 - (275) (198)
Charged/(credited)
to other
comprehensive
income - - (57) 1 - - (56)
At 30 September
2020 386 (7) (43) (2) (8) (275) 51
---------------------- ------------- ------------ ---------- ------------ ----------------- -------- --------
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 intention to settle these on a
net basis.
4. Loss per share
Basic loss per share has been calculated by dividing the total
loss for the year by the weighted average number of shares in issue
during the year after adjusting for shares held in employee benefit
trusts.
On 9 September 2021 the Company invited its shareholders to
subscribe to a rights issue of 301,260,394 ordinary shares at an
issue price of 410 pence per share on the basis of 31 shares for
every 47 fully paid ordinary shares held, with such shares issued
on 28 September 2021. As a result of this rights issue in September
2021, the comparative loss per share has been restated having
applied the relevant bonus factor to the calculator of the weighted
average number of shares.
The rights issue resulted in GBP1,235 million of gross proceeds.
Shared totalling 280.2 million were taken up by existing
shareholders (93%) with the remaining rump of 21 million shares
being underwritten. As at 30 September 2021, there were GBP91
million of proceeds outstanding, which have been subsequently
received.
To calculate diluted loss per share, the weighted average number
of ordinary shares in issue has been adjusted to assume conversion
of all dilutive potential shares. Share options granted to
employees where the exercise price is less than the average market
price of the Company's ordinary shares during the year are
considered to be 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 earnings per share does not assume conversion, exercise, or
other issue of potential ordinary shares that would have an
antidilutive effect on earnings per share.
Headline basic and diluted loss per share are also presented,
based on headline loss for the year.
Loss per share is based on:
2021 2020
GBP million GBP million
---------------------------------------------------- ------------ ------------
Headline loss for the year (900) (725)
Total profit for the year (858) (1,079)
----------------------------------------------------- ------------ ------------
2021 2020
million million
---------------------------------------------------- ------------ ------------
Weighted average number of ordinary shares used to
calculate basic loss per share 539 484
----------------------------------------------------- ------------ ------------
Weighted average number of ordinary shares used to
calculate diluted loss per share 539 484
----------------------------------------------------- ------------ ------------
2021 2020
Earnings per share pence pence
---------------------------------------------------- ------------ ------------
Basic (159.0) (222.9)
Diluted (159.0) (222.9)
----------------------------------------------------- ------------ ------------
2021 2020
Headline earnings per share pence pence
---------------------------------------------------- ------------ ------------
Basic (166.9) (149.7)
Diluted (166.9) (149.7)
----------------------------------------------------- ------------ ------------
5. Segmental and geographical revenue reporting
Segmental Analysis:
Year ended 30 September 2021
--------------------------- --------------------------------------------------------
Intergroup
Airline Holidays transactions Group
GBP million GBP million GBP million GBP million
--------------------------- ------------ ------------ -------------- ------------
Revenue 1,424 41 (7) 1,458
Operating costs excl fuel (1,595) (50) 7 (1,638)
Fuel (371) - - (371)
Ownership costs (582) (3) - (585)
--------------------------- ------------ ------------ -------------- ------------
Headline loss before tax (1,124) (12) - (1,136)
Non-headline items 100 - - 100
--------------------------- ------------ ------------ -------------- ------------
Total loss before tax (1,024) (12) - (1,036)
--------------------------- ------------ ------------ -------------- ------------
Year ended 30 September 2020
--------------------------- --------------------------------------------------------
Intergroup
Airline Holidays transactions Group
GBP million GBP million GBP million GBP million
--------------------------- ------------ ------------ -------------- ------------
Revenue 2,995 18 (4) 3,009
Operating costs excl fuel (2,520) (45) 4 (2,561)
Fuel (721) - - (721)
Ownership costs (562) - - (562)
--------------------------- ------------ ------------ -------------- ------------
Headline loss before tax (808) (27) - (835)
Non-headline items (441) 3 - (438)
--------------------------- ------------ ------------ -------------- ------------
Total loss before tax (1,249) (24) - (1,273)
--------------------------- ------------ ------------ -------------- ------------
The intergroup transaction column represents intercompany
revenues from Airline to Holidays which are recorded at arm's
length and are eliminated on consolidation. Individual cost lines
are not reported separately as these are not key metrics reported
to the Chief Operating Decision Maker (CODM). Assets and
liabilities are not allocated to individual segments and are not
separately reported to or reviewed by the CODM, and therefore these
have not been disclosed. Interest income and expenditure are not
allocated to segments as this activity is driven by the central
treasury function which manages the cash position of the Group.
Geographical revenue:
2021 2020
GBP million GBP million
----------------------- ------------ ------------
United Kingdom 413 1,154
Southern Europe 619 1,065
Northern Europe 411 740
Other 15 50
------------------------ ------------ ------------
1,458 3,009
----------------------- ------------ ------------
Geographical revenue is allocated according to the location of
the first departure airport on each booking.
Southern Europe comprises countries lying wholly or mainly south
of the border between Italy and Switzerland, plus France.
Holiday's revenue is generated wholly from the United
Kingdom.
easyJet's non-current assets principally comprise its fleet of
183 (2020: 215) owned and 125 (2020: 127) leased aircraft, giving a
total fleet of 308 at 30 September 2021 (2020: 342). In addition to
this easyJet was storing 12 aircraft under power by the hour
agreements (2020: nil). 27 aircraft (2020: 29) are registered in
Switzerland, 119 (2020: 125) are registered in Austria and the
remaining 174 (2020: 188) are registered in the United Kingdom.
6. Dividends
No dividend was paid in the year ending 30 September 2021. An
ordinary dividend of 43.9 pence per share, or GBP174 million, in
respect of the year ended 30 September 2019 was paid in the year
ended 30 September 2020.
7. Property, plant and equipment
Right of use assets
held under leasing
Owned assets arrangements Total
------------------------------------ ------------------------ --------------
Land Aircraft
Aircraft and and
and spares Buildings Other spares Other Total
GBP GBP GBP GBP
million million million million GBP million GBP million
------------- ----------- ---------- ----------- ---------- ------------ --------------
Cost
At 1 October
2020 5,520 44 44 1,692 37 7,337
Additions 112 - 28 148 8 296
Transfers 64 - - (64) - -
Aircraft sold
and
leased back (795) - (15) 559 - (251)
Disposals (99) - (2) - - (101)
-------------- ----------- ---------- ----------- ---------- ------------ --------------
At 30
September
2021 4,802 44 55 2,335 45 7,281
Accumulated
depreciation
and
impairment
At 1 October
2020 1,187 - 12 1,062 23 2,284
Charge for
the year 227 - 7 216 6 456
Transfers 23 - - (23) - -
Aircraft sold
and
leased back (120) - - - - (120)
Disposals (74) - - - - (74)
-------------- ----------- ---------- ----------- ---------- ------------ --------------
At 30
September
2021 1,243 - 19 1,255 29 2,546
Net book
value
-------------
At 30
September
2021 3,559 44 36 1,080 16 4,735
-------------- ----------- ---------- ----------- ---------- ------------ --------------
At 1 October
2020 4,333 44 32 630 14 5,053
-------------- ----------- ---------- ----------- ---------- ------------ --------------
Right of use assets
held under leasing
arrangements under
Owned assets IFRS 16
Land
Aircraft and Aircraft
and spares Buildings Other and spares Other Total
GBP GBP GBP
million million GBP million million GBP million GBP million
------------- ----------- ---------- ------------
Cost
At 1 October
2019 5,720 34 76 1,298 34 7,162
Additions 559 - 100 64 3 726
Transfers 107 10 (113) (41) - (37)
Aircraft sold
and
leased back (851) - - 371 - (480)
Disposals (15) - (19) - - (34)
-------------- ----------- ---------- ------------
At 30
September
2020 5,520 44 44 1,692 37 7,337
Accumulated
depreciation
and
impairment
At 1 October
2019 1,147 - 18 818 16 1,999
Charge for
the year 251 - 5 222 7 485
Transfers 15 - - (15) - -
Impairment - - - 37 - 37
Aircraft sold
and
leased back (220) - - - - (220)
Disposals (6) - (11) - - (17)
-------------- ----------- ---------- ------------
At 30
September
2020 1,187 - 12 1,062 23 2,284
Net book
value
-------------
At 30
September
2020 4,333 44 32 630 14 5,053
-------------- ----------- ---------- ------------
At 1 October
2019 4,573 34 58 480 18 5,163
-------------- ----------- ---------- ------------
The net book value of aircraft includes GBP132 million (2020:
GBP281 million) relating to advance and option payments for future
deliveries. This amount is not depreciated.
As at 30 September 2021, easyJet was contractually committed to
the acquisition of 101 (2020: 101) Airbus 320 family aircraft, with
a total estimated list price* of US$ 12.31 billion (2020: US$ 12.16
billion) before escalations and discounts for delivery in financial
years 2022 (8 aircraft), 2023 (7 aircraft) and 2024 (18
aircraft).
The 'Other' categories comprise of leasehold improvements,
computer hardware, leasehold property and fixtures, fittings and
equipment and work in progress in respect of tangible and
intangible projects.
Assets of GBP934 million are pledged as security for the drawn
portion of the UKEF backed facility (2020: GBP1,066 million pledged
as security for the Revolving Credit Facility and term loans).
* Airbus no longer publishes list prices. The estimated list
price is based on the last available list price published in
January 2018 and escalated by Airbus' standard escalation from
January 2018 to January 2021 of 7.3% (or 2.38% CAGR).
8. Borrowings
Current Non-current Total
GBP million GBP million GBP million
At 30 September 2021
Eurobonds - 2,303 2,303
Commercial Paper (Covid Corporate
Financing Facility) 300 - 300
Commercial Paper (UK Export Finance) - 764 764
300 3,067 3,367
Current Non-current Total
GBP million GBP million GBP million
At 30 September 2020
Eurobonds - 1,356 1,356
Drawn down amounts on Revolving Credit
Facility 387 - 387
Commercial Paper (Covid Corporate
Financing Facility) 600 - 600
Bank loans - 388 388
987 1,744 2,731
----------------------------------------
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.
On 7 January 2016, the UK Listing Authority approved a
prospectus relating to the establishment of a GBP3,000 million Euro
Medium Term Note Programme of easyJet plc. Under this programme, on
9 February 2016 easyJet plc issued notes amounting to EUR500
million for a seven-year term with a fixed annual coupon rate of
1.750%. On 18 October 2016 easyJet plc issued additional notes
amounting to EUR500 million for a seven-year term with a fixed
annual coupon rate of 1.125%. On 11 June 2019 easyJet plc issued
additional notes amounting to EUR500 million for a six-year term
with a fixed annual coupon rate of 0.875%.
On 10 February 2015 easyJet signed a $500 million Revolving
Credit Facility which was due to mature in February 2022. On 9
April 2020 easyJet fully drew down this $500 million Revolving
Credit Facility, secured against aircraft assets. This was repaid
in January 2021.
On 6 April 2020 easyJet issued a GBP600 million Commercial Paper
through the Covid Corporate Financing Facility (CCFF). This is an
unsecured, short-term paper issued at a discount, of which GBP300
million was repaid in March 2021 and the remaining GBP300 million
was repaid in November 2021. On 16 April 2020 easyJet secured two
term loans with separate counterparty banks for GBP200 million and
$245 million respectively. Both loans were secured against aircraft
assets and were due to mature in February 2022, but have since been
repaid as set out below.
In January 2021 easyJet entered into a new five-year term loan
facility of $1.87 billion underwritten by a syndicate of banks and
supported by a partial guarantee from UK Export Finance under their
Export Development Guarantee scheme. easyJet drew down $1.05
billion from the UKEF backed facility in January, utilising these
funds to repay and cancel the fully drawn $500 million Revolving
Credit Facility and repaying term loans of $245 million and GBP200
million.
easyJet issued a EUR1.2 billion 7 year bond with an annual
coupon of 1.875% in March 2021, under its Euro Medium Term Note
(EMTN) Programme. The bond was issued out of easyJet FinCo B.V
registered in the Netherlands and was guaranteed by easyJet Airline
Company Limited (EACL) and easyJet plc.
On 9 September 2021 easyJet signed a $400 million Revolving
Credit Facility with a minimum four-year term, which was undrawn as
at 30 September 2021.
9. Provisions for liabilities and charges
Provisions
Maintenance for customer Other Total
provisions claims Restructuring provisions provisions
GBP million GBP million GBP million GBP million GBP million
At 1 October 2020 597 39 101 2 739
Exchange adjustments (23) - (3) - (26)
Credited to income statement (20) (14) (65) (99)
Charged to income statement 71 4 - 12 87
Related to aircraft sold
and leased back 132 - - - 132
Unwinding of discount (20) - - - (20)
Utilised (187) (8) (15) - (210)
At 30 September 2021 550 21 18 14 603
Maintenance provisions comprise of maintenance costs arisen from
legal and constructive obligations relating to the condition of the
aircraft when returned to the lessor. Provisions for customer
claims comprise amounts payable to customers who make claims in
respect of flight delays and cancellations, and refunds of air
passenger duty or similar charges. Restructuring and other
provisions include amounts in respect of potential liabilities for
employee-related matters and litigation which arose in the normal
course of business.
2021 2020
GBP million GBP million
--------------------------- -------------------------- --------------------------
Current 183 407
Non-current 420 332
---------------------------- -------------------------- --------------------------
603 739
--------------------------- -------------------------- --------------------------
The split of the current / non-current maintenance provision is based
on the current 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 12 years.
Provisions for customer claims, restructuring, and other provisions
are generally expected to be utilised within one year.
10. Reconciliation of operating loss to cash used in
operations
2021 2020
GBP million GBP million
Operating loss (910) (899)
Adjustments for non-cash items:
Depreciation 456 485
Gain on disposal of property, plant and equipment
and intangibles 30 30
Gain on sale and leaseback (65) (38)
Amortisation of intangible assets 24 18
Share-based payments 16 17
Impairment - 37
Changes in working capital and other items of an operating
nature:
(Increase)/decrease in trade and other receivables (8) 101
Decrease in current intangible assets (74) 46
(Decrease)/increase in trade and other payables (187) 173
Increase/(decrease) in unearned revenue 232 (455)
Post employment benefit contributions (7) -
Increase/(decrease) in provisions (294) 150
Decrease in other non-current assets 24 9
Decrease in derivative financial instruments 9 (215)
Decrease in non-current deferred income (1) (1)
Cash used in operations (755) (542)
------------------------------------------------------------- ----------- -----------
11. Reconciliation of net cash flow to movement in net cash
New debt Other
Fair value raised loan Net
1 October and foreign in the issue cash 30 September
2020 exchange year costs flow 2021
GBP million GBP million GBP million GBP million GBP million GBP million
Cash and cash
equivalents 2,284 (73) - - 1,325 3,536
Money market deposits 32 - - - (32) -
2,316 (73) - - 1,293 3,536
Eurobond (1,356) 24 (971) - - (2,303)
Drawn down amounts
on Revolving Credit
Facility (387) - - - 387 -
Commercial Paper (Covid
Corporate Financing
Facility) (600) - - - 300 (300)
Bank loans (388) 76 (833) 23 358 (764)
Lease Liabilities (710) 63 (693) - 261 (1,079)
(3,441) 140 (2,497) 23 1,329 (4,446)
Net debt (1,125) 90 (2,497) 23 2,599 (910)
12. Government Grants and assistance
During the years ended 30 September 2020 and 2021, easyJet
Airline Company Limited utilised of the Coronavirus Job Retention
Scheme implemented by the UK government, where those employees
designated as being 'furloughed workers' are eligible to have 80
per cent of their wage costs paid up to a maximum amount of
GBP2,500 per month. In the same period, easyJet Group (companies)
utilised similar schemes provided by governments in Portugal,
Germany, Netherlands, France, Italy and Switzerland. The total
amount of such relief received by the Group amounted to GBP134
million (2020: GBP116 million) and is offset within employee costs
in the income statement. There are no unfulfilled conditions or
contingencies relating to these schemes.
On 6 April 2020, easyJet issued a commercial paper through the
Covid Corporate Finance Facility (CCFF) implemented by the UK
government. Under the CCFF, easyJet received GBP600 million, with
interest incurred at the prevailing market rate. The facility is
classified within borrowings in the statement of financial
position. On 5 March 2021 easyJet repaid GBP300 million of the CCFF
liability, with the remaining GBP300 million was repaid in November
2021.
On 8 January 2021 easyJet signed a five-year term loan facility
of $1.87 billion, underwritten by a syndicate of banks and
supported by a partial guarantee from UK Export Finance under their
Export Development Guarantee Scheme. The Export Development
Guarantee scheme for commercial loans is available to qualifying UK
companies, does not carry preferential rates or require state aid
approval, and contains some restrictive covenants including
dividend payments, however these are compatible with easyJet's
existing dividend policy.
13. Contingent liabilities and commitments
easyJet is involved in a number of disputes and litigation which
arose in the normal course of business. The likely outcome of these
disputes and litigation cannot be predicted, and in complex cases
reliable estimates of any potential obligation may not be
possible.
On 19 May 2020, easyJet announced that it had been the target of
a cyber-attack from a highly sophisticated source. The email
addresses and travel details of approximately 9 million customers
were accessed and for a very small subset of customers (2,208),
credit card details were accessed.
The cyber-attack continues to be under investigation by the
Information Commissioner's Office (ICO). As the cyber-attack took
place before the United Kingdom left the European Union, the Group
expects the ICO to be investigating on behalf of all EU data
protection authorities as lead supervisory authority under the
GDPR. Any penalty or enforcement action will need to be reviewed
and approved by the other EU data protection authorities under the
GDPR's cooperation process. In addition, in May 2020, a class
action claim was filed in the UK High Court by a law firm
representing a class of affected customers and claims have also
been commenced or threatened in certain other courts and
jurisdictions.
The merit, likely outcome and potential impact on the Group of
the continued investigation by the ICO, group action and other
claims are still subject to a number of significant uncertainties
and therefore the Group is unable to assess the likely outcome or
quantum of the claims as at the date of these financial
statements.
At 30 September 2021 easyJet had outstanding letters of credit
and performance bonds totalling GBP72 million (2020: GBP120
million), of which GBP43 million (2020: GBP89 million) expires
within one year. The fair value of these instruments at each year
end was negligible.
No amount is recognised in 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.
As part of the commitment to voluntary carbon offsetting,
easyJet currently has contractual commitments to purchase Verified
Emission Reductions worth GBP11 million (2020: GBP29 million) in
total until December 2022.
14. Related party transactions
The Company licenses the easyJet brand from easyGroup Limited
('easyGroup'), a wholly owned subsidiary of easyGroup Holdings
Limited, an entity in which easyJet's founder, Sir Stelios
Haji-Ioannou, holds a beneficial controlling interest. The
Haji-Ioannou family concert party shareholding (being easyGroup
Holdings Limited and Polys Holding Limited) holds, in total,
approximately 15.27% of the issued share capital of easyJet plc as
at 30 September 2021.
Key management personnel who were existing shareholders were
part of the rights issue that took place during the year, the issue
price was 410 pence per share on the basis of 31 shares for every
47 fully paid ordinary shares held.
Under the Amended Brand Licence signed in October 2010 and
approved by the shareholders of easyJet plc in December 2010, an
annual royalty of 0.25% of total revenue is payable by easyJet to
easyGroup. The full term of agreement is 50 years.
easyJet and easyGroup established a fund to meet the annual
costs of protecting the 'easy' (and related marks) and the
'easyJet' brands. easyJet contributes up to GBP1 million per annum
to this fund and easyGroup contributes GBP100,000 per annum. If
easyJet contributes more than GBP1 million per annum, easyGroup
will match its contribution in the ratio of 1:10 up to a limit of
GBP5 million contributed by easyJet and GBP500,000 contributed by
easyGroup.
Three side letters have been entered into: (i) a letter dated 29
September 2016 in which easyGroup consented to easyJet acquiring a
portion of the equity share capital in Founders Factory Limited;
(ii) a letter dated 26 June 2017 in which the easyJet's permitted
usage of the brand was slightly extended; and (iii) a letter dated
02 February 2018 in which easyGroup agreed that certain affiliates
of easyJet have the right to use the brand.
The amounts included in the income statement, within other
costs, for these items were as follows:
2021 2020
GBP million GBP million
Annual royalty 4 8
Brand protection (legal fees paid through easyGroup
to third parties) 1 1
5 9
At 30 September 2021, GBP0.1 million (2020: GBP0.1 million) of
the above aggregate amount was included in trade and other
payables.
At 30 September 2021 GBP5.3 million (2020: GBP8.5 million) is
due from related parties and is included within trade and other
receivables.
15. Events after the balance sheet date
On 18 November 2021, the remaining GBP300 million Commercial
paper issued through the Covid Corporate Financing Facility (CCFF)
was repaid.
On 29 November 2021, a firm commitment was agreed with Airbus in
respect of an additional 19 aircraft with deliveries between
financial years 2025 and 2028. This results in 118 firm Airbus A320
NEO family aircraft outstanding orders on this date. The 19 firm
deliveries consist of:
-- Seven aircraft which easyJet had the option not to take up.
This option not to take up has been relinquished and the aircraft
are now confirmed as firm deliveries between financial years 2025
and 2026;
-- Seven purchase option aircraft in respect of which easyJet
has exercised its option to purchase. This results in firm
deliveries for these aircraft between financial years 2025 and
2026; and
-- Five purchase right aircraft that have been converted into
aircraft with firm delivery dates in financial year 2027, which
results in easyJet's purchase right aircraft reducing from 58 to
53.
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END
FR FIFVRLVLIVIL
(END) Dow Jones Newswires
November 30, 2021 02:00 ET (07:00 GMT)
Grafico Azioni Easyjet (LSE:EZJ)
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Da Mar 2024 a Apr 2024
Grafico Azioni Easyjet (LSE:EZJ)
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