easyJet PLC Annual Financial Report

Data : 04/12/2019 @ 13:06
Fonte : UK Regulatory (RNS & others)
Titolo : Easyjet Plc (EZJ)
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easyJet PLC Annual Financial Report

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RNS Number : 6785V

easyJet PLC

04 December 2019

4 December 2019

easyJet plc

(the "Company")

Annual Report and Accounts

Further to the Final Results announcement released on 19 November 2019, the Company confirms that the Annual Report and Accounts for the year ended 30 September 2019 ("2019 Annual Report") has been published today and is available on the Company's website at http://2019annualreport.easyjet.com. It has also been submitted to the National Storage Mechanism and will shortly be available at www.morningstar.co.uk/uk/NSM.

The appendix to this announcement contains additional information which has been extracted from the 2019 Annual Report for the purposes of compliance with the FCA's Disclosure & Transparency Rules and should be read together with the Final Results announcement, which can be found at http://corporate.easyjet.com/investors/regulatory-news.

Together these constitute the information required by DTR 6.3.5 to be communicated to the media in unedited full text through a Regulatory Information Service. This information is not a substitute for reading the full 2019 Annual Report.

For further details please contact easyJet plc:

 
 Institutional investors and analysts: 
 Michael Barker     Investor Relations          +44 (0) 7985 890 939 
 Holly Grainger     Investor Relations          +44 (0) 7583 101 913 
 
 Media: 
 Anna Knowles       Corporate Communications    +44 (0) 7985 873 313 
 Dorothy Burwell    Finsbury                    +44 (0) 207 251 3801 
                                                +44 (0) 7733 294 930 
 

LEI: 2138001S47XKWIB7TH90

Appendix: additional information required by DTR 6.3.5

Page and note references in this appendix refer to page numbers and notes in the 2019 Annual Report.

Directors' Responsibilities and Statements

The following responsibility statement is extracted from the Statement of Directors' Responsibilities on page 120 of the 2019 Annual Report and Accounts and is repeated here solely for the purpose of complying with DTR 6.3.5. The statement relates to the full 2019 Annual Report and Accounts and not the extracted information presented in this announcement or the Final Results announcement.

The Directors are responsible for preparing the Annual Report, the Directors' remuneration report and the accounts in accordance with applicable law and regulations.

Company law requires the Directors to prepare accounts for each financial year. Under that law the Directors have prepared the Group and Company accounts in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU). Under company law the Directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group and the Company for that period.

In preparing these accounts, the Directors are required to:

   --      select suitable accounting policies and then apply them consistently; 
   --      make judgements and accounting estimates that are reasonable and prudent; 

-- state whether applicable IFRS as adopted by the EU have been followed, subject to any material departures disclosed and explained in the accounts; and

-- prepare the accounts on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's and the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and the Company. This enables them to ensure that the accounts and the Directors' remuneration report comply with the Companies Act 2006 and, as regards the Group accounts, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Group and the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of, amongst other things, the financial and corporate governance information provided on the easyJet website (corporate.easyjet.com). Legislation in the United Kingdom governing the preparation and dissemination of accounts may differ from legislation in other jurisdictions.

The Directors consider that the Annual Report and Accounts, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Group's and the Company's position and performance, business model and strategy.

Each of the Directors, whose names and functions are listed on pages 68 and 71, confirm that, to the best of their knowledge:

-- the Group and Company accounts, which have been prepared in accordance with IFRS as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group and Company; and

-- the strategic report, included in the Annual Report, includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

In accordance with section 418 of the Companies Act 2006, each Director in office at the date the Directors' report is approved, confirms that:

-- so far as the Director is aware, there is no relevant audit information of which the Company's auditor is unaware; and

-- he/she has taken all the steps that he/she ought to have taken as a Director in order to make himself/herself aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

The Annual Report on pages 1 to 120 was approved by the Board of Directors and authorised for issue on 18 November 2019 and signed on its behalf by:

JOHAN LUNDGREN Chief Executive ANDREW FINDLAY Chief Financial Officer

Principal Risks and Uncertainties

The risks and uncertainties set out below are extracted from the pages 38 to 47 of the 2019 Annual Report and Accounts and are repeated here solely for the purpose of complying with DTR 6.3.5.

Our risk Profile

The key risks reviewed by the Board fall into seven broad themes listed in alphabetical order:

   -- Asset efficiency and effectiveness - making the best use of capacity/slots and fleet mix in the right airports at 
      the right prices, and driving value through our supply chain 
 
   -- Environment and sustainability - the impacts of climate change on our business and operations, carbon credit 
      programmes, regulation/taxation, and changing consumer and colleague expectations 
 
   -- Legislative/regulatory landscape - being aware of, and compliant with, legislation and regulation affecting our 
      business 
 
   -- Macro-economic and geopolitical - events that can affect our financial performance including supply/demand 
      imbalance, general economic trends, Brexit, as well as impact of fuel cost, foreign exchange rates, and 
      counterparty performance 
 
   -- People - having the right people through talent acquisition, retention, engagement, and succession planning 
 
   -- Safety, security, and operations - the delivery of a safe and secure operation which meets the needs and 
      expectations of our customers 
 
   -- Technology and cyber - the availability, security, compliance and performance of website and critical 
      technologies, and the protection of company and customer data 

Changes in the year

Our principal risks and uncertainties continue to evolve over time. As we evolve our strategy in a dynamic industry against a backdrop of political and economic uncertainty, new risks emerge and we adapt our response activities as our risk exposure changes. The roll out of the new corporate risk framework has been a catalyst for reviewing the presentation of a number of these risks, including the new themes set out above. The following changes in our risk profile have been approved by the Board.

Since 30 September 2018, risks associated with the following three themes have increased:

   --      Asset efficiency and effectiveness 
   --      Environment and sustainability 
   --      Technology and cyber 

These risks, together with our response plans, are monitored regularly through our governance structure. Further detail on the risks, the potential causes and consequences, together with key controls and mitigations are detailed on the following pages.

This year, we have incorporated our 'third-party service providers' risk into a broader 'continuity of services' risk, due to the outsourced nature of our business model and the similarity in management response.

Having reviewed our environment and sustainability risk profile and including emerging risks, we have identified a number of different risks, each with its own characteristics these relate to:

   --      Carbon trading schemes 
   --      Climate change 
   --      Changes in the legislative/regulatory environment 

Further detail is outlined on page 41.

Brexit

easyJet has continued its preparations for Brexit. The focus has been on ensuring that our network is unaffected by Brexit and that our operations are uninterrupted by any eventual Brexit outcome, including a potential no deal exit. The cross functional Brexit programme continues to oversee Brexit planning, led by the General Counsel. The Board has also had oversight of the preparations and is regularly briefed.

Over the last three years easyJet has put in place a series of measures to protect our flying rights regardless of the eventual Brexit outcome, these include:

-- Implementing a new operating model, with easyJet operating as a pan-European airline group with three operating airlines: in Austria, Switzerland and the UK. This will ensure we can continue to maintain our network after Brexit.

-- Focusing our investor relations programme on ensuring that we remain majority EU27 owned and controlled and putting in place a contingency plan to ensure that we remain compliant with the requirement that EU airlines are majority owned and controlled by EU nationals.

-- Ensuring that our operation is robust to the UK leaving EASA, the European Aviation Safety Agency, including by transferring our EU27 based pilots to Austrian pilot licences and ensuring we have sufficient pilots and cabin crew of EU27 nationality.

-- Continuing to engage with European governments, aviation regulators and the European Commission on Brexit issues.

Of particular focus over the last year has been ensuring that easyJet is robust to a no deal Brexit outcome and that flights are able to continue between the EU and the UK. We successfully worked with the EU and UK governments to ensure that there is a legislative framework in place for flights to continue even in the event of a no deal Brexit. Alongside this the EU and UK have put in place the necessary arrangements to govern safety issues.

To further support the robustness of our operation to a no deal outcome we have invested in operational measures to ensure that there is no reliance on EU/UK trading links in case these are disrupted, including putting in place stores for spare parts within the EU27.

A no deal Brexit carries potential financial risks for instance from changes in airport and tax charging structures and any unexpected outcomes. Alongside this there remains uncertainty about the economic effects of a no deal Brexit.

ASSET EFFICIENCY AND EFFECTIVENESS

We maintain our competitive cost advantage by making the best use of capacity/slots and fleet mix in the right airports at the right prices, and driving value through our supply chain.

 
                        Potential                                                   Potential consequences                                   Controls and mitigations 
                         causes 
 AIRPORT 
 INFRASTRUCTURE           *    Increased competitor capacity                          *    Weakened customer proposition                      *    Where easyJet is affected by industrial action or 
 Flying to primary                                                                                                                                 other service interruption by a key supplier, 
 airports is                                                                                                                                       resources are deployed to manage this as effectively 
 an important             *    Environmental restrictions/ pressure restricting       *    Loss of market share                                    as possible. See the significant operational 
 element of our                airport expansions                                                                                                  disruption risk on page 46 for further details. 
 customer 
 proposition.                                                                         *    Inefficient use of crew/aircraft 
 The airports             *    Delays in airport infrastructure expansion                                                                     *    Sophisticated processes and systems to ensure slot 
 to which we                                                                                                                                       transactions are made in an efficient and effective 
 fly may already                                                                      *    Significant increase in costs                           manner. 
 be or may become         *    Increase in airport charges 
 congested. 
 Links to our                                                                                                                                 *    Effective cross-functional governance to ensure 
 plan                     *    Changes in regulation                                                                                               optimal business decisions are made. 
 1, 2, 5 
 B, D 
                          *    Ineffective slot management                                                                                    *    easyJet places emphasis on the management of airport 
                                                                                                                                                   capacity through a dedicated airport development team 
                                                                                                                                                   who ensure close collaboration on capacity plans. The 
                                                                                                                                                   team helps influence the development of appropriate 
                                                                                                                                                   capacity increases in a cost efficient and timely 
                                                                                                                                                   manner. 
 
 
                                                                                                                                              *    Managing aircraft gauge to improve our ability to 
                                                                                                                                                   grow. 
                       ----------------------------------------------------------  -------------------------------------------------------  ------------------------------------------------------------ 
 CONTINUITY 
 OF SERVICES              *    Failure of critical IT system                         *    System unavailability for customers and/or staff    *    The four key areas of business resilience (IT and 
 easyJet is dependent                                                                                                                              processes, people, premises, and suppliers) all form 
 on a mixture                                                                                                                                      part of easyJet's functional business and airport 
 of critical              *    Significant external incident (terrorism, weather,    *    Inability to access key buildings/facilities             Business Continuity Plans. 
 IT systems and                activism) 
 processes, 
 employees,                                                                          *    Unavailability of critical staff                    *    Critical IT systems are identified with ongoing 
 buildings/facilities     *    Failure of third party                                                                                              efforts to match the business needs with recovery 
 and third-party                                                                                                                                   capabilities. The risk of system unavailability is 
 suppliers. A                                                                        *    Reliance on inadequate supplier recovery plans           now mitigated further, thanks to the adoption of the 
 loss of one              *    Industrial action                                                                                                   cloud, in addition to easyJet's two data-centres. 
 or more of the 
 above components                                                                    *    Operational disruption 
 could lead to                                                                                                                                *    Incident Management and Resilience teams are in place 
 significant                                                                                                                                       and ready to respond to any IT related incident. 
 disruption to 
 operations and 
 could have an                                                                                                                                *    Time-critical staff have been identified via Business 
 adverse                                                                                                                                           Impact Assessments and Business Continuity Plans, 
 reputational,                                                                                                                                     with regularly tested recovery desks allocated at 
 financial or                                                                                                                                      alternate locations, should the usual place of work 
 legal impact.                                                                                                                                     be unavailable. An increased provision of laptops and 
 Links to our                                                                                                                                      tablets also enables greater mobility and remote ways 
 plan                                                                                                                                              of working. 
 2, 3, 5 
 A, B, D, E 
                                                                                                                                              *    Enhanced procurement processes include risk 
                                                                                                                                                   assessments aligned with business objectives. These 
                                                                                                                                                   require relevant third-parties to have their own 
                                                                                                                                                   Business Continuity/Disaster Recovery plans and we 
                                                                                                                                                   are implementing a process to review a sample of 
                                                                                                                                                   these each year. 
 
 
                                                                                                                                              *    Maintain close working relationships with key 
                                                                                                                                                   stakeholders including, but not limited to, airport 
                                                                                                                                                   authorities and slot coordinators lobbying where 
                                                                                                                                                   appropriate. 
                       ----------------------------------------------------------  -------------------------------------------------------  ------------------------------------------------------------ 
 NON-DELIVERY 
 OF STRATEGIC            *    Resource dedicated to change delivery and oversight     *    Business benefits not realised                     *    Complex, large-scale programmes have been initiated, 
 INITIATIVES                                                                                                                                       prioritised and are managed through the Project 
 The business                                                                                                                                      Management Office. 
 continues to            *    Changes in organisation's priorities (may be driven     *    Financial underperformance 
 undertake a                  by internal or external factors) 
 number of                                                                                                                                    *    A project management framework, which sets out 
 initiatives                                                                          *    Inefficient use of resource                             approval processes, governance requirements, and key 
 to support its          *    Scope change/time available                                                                                          ongoing processes and controls, is followed by all 
 strategy.                                                                                                                                         projects and programmes, and reviews are undertaken 
 Links to our                                                                                                                                      to ensure continuous improvement in this approach. 
 plan 
 2, 3, 4 
 D, E                                                                                                                                         *    Each strategic initiative has an executive sponsor 
                                                                                                                                                   from the AMB and its own steering group which 
                                                                                                                                                   provides oversight and challenge to the project, 
                                                                                                                                                   monitors progress against programme objectives and 
                                                                                                                                                   ensures that decisions are made at the appropriate 
                                                                                                                                                   level. 
 
 
                                                                                                                                              *    Key strategic initiatives are managed by experienced 
                                                                                                                                                   programme managers, complemented by appropriate 
                                                                                                                                                   subject matter specialist resource where appropriate. 
 
 
                                                                                                                                              *    A Project Management Office is in place to oversee 
                                                                                                                                                   delivery of projects and programmes, including the 
                                                                                                                                                   allocation of support resource, budget tracking and 
                                                                                                                                                   realisation of benefits. 
 
 
                                                                                                                                              *    The AMB meets twice monthly. The executive sponsor 
                                                                                                                                                   provides routine updates and can use this as an 
                                                                                                                                                   escalation channel for any issue resolution. 
 
 
                                                                                                                                              *    The Board also receives updates on key strategic 
                                                                                                                                                   initiatives including any risks or issues associated 
                                                                                                                                                   with their delivery. 
 
 
                                                                                                                                              *    The Internal Audit function provides independent 
                                                                                                                                                   programme assurance over our most significant 
                                                                                                                                                   initiatives, drawing upon independent subject matter 
                                                                                                                                                   expertise where appropriate. 
                       ----------------------------------------------------------  -------------------------------------------------------  ------------------------------------------------------------ 
 SINGLE FLEET 
 SUPPLIER                 *    Delays in the delivery of new aircraft                 *    Schedule reductions/cancellations                  *    There are approximately 8,500 A320 family (A319, 
 easyJet is dependent                                                                                                                              A320, A321) aircraft operating, with a proven track 
 on Airbus as                                                                                                                                      record for safety and reliability. 
 its sole supplier        *    Technical/mechanical issues                            *    Grounding of all/part of the fleet 
 for aircraft. 
 The Board considers                                                                                                                          *    Introduction of the A320neo in part mitigates this 
 that the                 *    Fluctuating second hand market                         *    Loss of customer confidence                             single fleet supplier risk as the aircraft is 
 efficiencies                                                                                                                                      equipped with a different engine type. 
 achieved by 
 operating a                                                                          *    Financial impact when aircraft leave the fleet 
 single fleet                                                                                                                                 *    easyJet continues to work closely with Airbus to 
 type outweigh                                                                                                                                     ensure full visibility of the delivery schedule for 
 the risks associated                                                                                                                              new aircraft. In the event that there are material 
 with easyJet's                                                                                                                                    delays, appropriate mitigation is put in place; for 
 single fleet                                                                                                                                      example short-term wet lease arrangements are used to 
 strategy.                                                                                                                                         minimise any operational impact. 
 Links to our 
 plan 
 3, 5                                                                                                                                         *    easyJet operates a rigorous established aircraft 
 A, D                                                                                                                                              maintenance programme. Maintenance schedules are 
                                                                                                                                                   approved by the relevant regulatory body. 
 
 
                                                                                                                                              *    easyJet regularly reviews the second hand market and 
                                                                                                                                                   has a number of different options when looking at 
                                                                                                                                                   fleet exit strategies. Sale and leaseback facilitates 
                                                                                                                                                   the exit of aircraft from the fleet by transferring 
                                                                                                                                                   residual value risk, and also provides flexibility in 
                                                                                                                                                   managing the fleet size. 
                       ----------------------------------------------------------  -------------------------------------------------------  ------------------------------------------------------------ 
 

ENVIRONMENT AND SUSTAINABILITY

The impacts of climate change on our business and operations, carbon credit programmes, regulation/taxation, and changing consumer and colleague expectations. easyJet's promise in Our Plan is to be a safe and responsible airline. This is what guides our approach to sustainability, whether that be related to climate change, health and safety, diversity, or employee engagement. More information is in the Sustainability section on page 48.

 
                 Potential                            Potential                                                     Controls and mitigations 
                  causes                               consequences 
 CARBON 
 TRADING          *    Political change                 *    Closure of existing scheme                              *    easyJet influences future and existing policy and 
 SCHEMES                                                                                                                  regulations which affect the airline industry through 
 Adverse                                                                                                                  a number of different channels, including working 
 changes          *    Uncertainty driven by Brexit     *    Loss of free allocations, leading to significant cos         with relevant industry bodies to assist in this; 
 to carbon                                             t 
 trading                                                     impact 
 schemes,         *    International alignment                                                                       *    easyJet look to optimise fuel usage to reduce 
 including                                                                                                                emissions and therefore reduce the potential impact 
 the existence                                          *    Introduction of new schemes                                  of those schemes, for example ensuring optimal 
 and/or cost      *    External pressure groups                                                                           routings as well as using climb, descent and landing 
 of the                                                                                                                   techniques to improve efficiency; and 
 scheme.                                                *    Inability to hedge in line with fuel policy 
 Links to our 
 plan                                                                                                                *    easyJet has an appropriate hedging strategy (to the 
 2, 3,                                                                                                                    extent possible). 
 A, B, D, E 
                -----------------------------------  ------------------------------------------------------------  ------------------------------------------------------------ 
 CLIMATE 
 CHANGE            *    Increased CO2 emissions        *    Adverse customer experience                              *    easyJet continues to bring Airbus neo aircraft into 
 Weather                                                                                                                  its fleet which are significantly more fuel efficient 
 patterns                                                                                                                 than the standard variant; 
 including,                                            *    Injury to customers 
 but 
 not limited                                                                                                         *    easyJet aircraft use only one engine when taxiing on 
 to, winds,                                            *    Operational disruption (including airspace and runway         the ground; 
 storms,                                                    closures) 
 extreme 
 temperatures,                                                                                                       *    easyJet operates flights with a high load factor, and 
 are becoming                                          *    Aircraft damage                                               is a short-haul operator, which has a lower carbon 
 increasingly                                                                                                             impact per passenger kilometre than airlines whose 
 difficult to                                                                                                             operations include a significant amount of long-haul 
 predict.                                                                                                                 flight; and 
 Links to our 
 plan 
 2, 5, 3                                                                                                             *    Disruption management measures include advanced 
 A, B, C, D,                                                                                                              winter planning, standby crews and aircraft, as well 
 E                                                                                                                        as the continual review of flight plans to ensure the 
                                                                                                                          optimal routings. In addition, to reduce the time it 
                                                                                                                          takes to resolve aircraft technical faults, easyJet 
                                                                                                                          has a contract for two light aircraft and crew to 
                                                                                                                          transport engineers and spare parts around its 
                                                                                                                          network, with dedicated engineers on standby to 
                                                                                                                          travel. 
                -----------------------------------  ------------------------------------------------------------  ------------------------------------------------------------ 
 ECO-TAXES 
 Future policy     *    Political change                *    Significant increase in cost of existing aviation       *    By engaging with key stakeholders, easyJet seeks to 
 measures and                                                taxes/levies                                                 reach a common understanding on the drive to impose 
 regulation to                                                                                                            policy measures and regulation to address the impact 
 tackle the        *    External pressure groups                                                                          of aviation on climate change; 
 impact                                                 *    Future expansion of taxes/levies 
 of aviation 
 on climate        *    Customer demand                                                                              *    easyJet continues to explain its environmental 
 change                                                 *    Policies to constrain growth/capacity                        performance, and the further action it is taking, to 
 could impact                                                                                                             its customers and other stakeholders. For example, 
 easyJet's                                                                                                                this has included highlighting the introduction of 
 business                                               *    Increasing noise curfews                                     the A320neo and A321neo aircraft and their reduced 
 if they                                                                                                                  emissions compared to previous generation aircraft, 
 impose                                                                                                                   and work with partners in regards to new technologies 
 limitations                                            *    Pressure on margins                                          to radically reduce the carbon footprint of flying; 
 and cost on 
 how easyJet 
 operates and                                                                                                        *    easyJet is able to operate flexible routings in the 
 the services                                                                                                             event of constraints being brought in; and 
 it can 
 provide. 
 Links to our                                                                                                        *    The new generation Airbus A320neo and A321neo 
 plan                                                                                                                     aircraft are 50% quieter during takeoff and landing 
 2, 4                                                                                                                     than the equivalent previous generation aircraft. 
 A, B, D, E 
                -----------------------------------  ------------------------------------------------------------  ------------------------------------------------------------ 
 

LEGISLATIVE/REGULATORYLANDSCAPE

The airline industry is heavily regulated and there is a continual need to keep well informed and adapt (as required) to any legislative or regulatory changes across the jurisdictions in which easyJet operates.

 
                                                              Potential causes                                           Potential                                  Controls and mitigations 
                                                                                                                          consequences 
 BRAND LICENSE 
 AND MAJOR SHAREHOLDER                                          *    Shareholder activism                                 *    Eventual loss of the brand licence    *    Active shareholder engagement programme; 
  *    easyJet has two major shareholders (easyGroup 
       Holdings Limited and Polys Holdings Limited) which, 
       as a concert party, control approximately 33% of its     *    Actions of easyGroup or other easyGroup licensees                                               *    Regular engagement with easyGroup Holdings Limited 
       ordinary shares.                                                                                                                                                   alongside other major shareholders; 
 
 
  *    easyJet does not own its company name or branding,                                                                                                            *    Relationship agreement with easyGroup and Polys 
       which is licensed from easyGroup Ltd. The licence                                                                                                                  Holdings in line with the controlling shareholder 
       includes certain minimum service levels that easyJet                                                                                                               regime set out in the Financial Conduct Authority's 
       must meet in order to retain the right to use the                                                                                                                  Listing Rules; 
       name and brand. 
 
                                                                                                                                                                     *    Representatives from the Board and senior management 
 Links to our                                                                                                                                                             take collective responsibility for addressing issues 
 plan                                                                                                                                                                     arising from any activist approach adopted by the 
 3                                                                                                                                                                        major shareholder. The objective is to address issues 
 A                                                                                                                                                                        when they arise and anticipate and plan for potential 
                                                                                                                                                                          future activism; 
 
 
                                                                                                                                                                     *    Quarterly meeting of senior representatives from both 
                                                                                                                                                                          sides, attended by the Chief Financial Officer and 
                                                                                                                                                                          the Company Secretary and Group General Counsel, to 
                                                                                                                                                                          actively manage brand-related issues as they arise; 
                                                                                                                                                                          and 
 
 
                                                                                                                                                                     *    easyJet makes contributions to the joint brand 
                                                                                                                                                                          protection fund. 
                                                             ---------------------------------------------------------  -----------------------------------------  ------------------------------------------------------------ 
 LEGAL/REGULATORY 
  NON-COMPLIANCE                                                *    New or changes to existing legislation/regulation     *    Sustained adverse media coverage     *    Compliance framework including, but not limited to, 
  Failure to comply                                                                                                                                                       policies, procedures, and mandatory training 
  with legislation                                                                                                                                                        programmes; 
  and regulation,                                               *    Employee/agent ignorance                              *    Fines/regulatory sanctions 
  such as local 
  consumer laws,                                                                                                                                                     *    easyJet has an in-house team of Legal experts to 
  new case law                                                  *    Rogue employee/agent behaviour                        *    Reduction in future revenue               advise on legal issues and developments, and to 
  or policy changes                                                                                                                                                       assist the business in interpreting any formal 
  in relation                                                                                                                                                             regulatory requirements. Where appropriate, this 
  to customer                                                                                                              *    Operational disruption                    expertise is supplemented with specialist external 
  compensation,                                                                                                                                                           support relevant to a specific discipline or 
  environmental                                                                                                                                                           jurisdiction; 
  or airport regulation,                                                                                                   *    Loss of operating licence 
  in the jurisdictions 
  in which easyJet                                                                                                                                                   *    Panel of external legal advisers, both in the UK and 
  operates, could                                                                                                          *    Significant spike in costs                in key easyJet markets, are briefed to keep easyJet 
  have an adverse                                                                                                                                                         informed of any changes or new legislation and to 
  reputational                                                                                                                                                            assist easyJet in developing appropriate responses to 
  and financial                                                                                                            *    Share price movement                      such legislation; 
  impact. 
  Links to our 
  plan                                                                                                                     *    Loss of colleague/customer trust     *    easyJet influences future and existing policy and 
  2, 3, 4                                                                                                                                                                 regulations which affect the airline industry through 
  A, B                                                                                                                                                                    a number of different channels, including working 
                                                                                                                                                                          with relevant industry bodies to assist in this; and 
 
 
                                                                                                                                                                     *    easyJet adapts to new legislation and regulation, 
                                                                                                                                                                          where possible adapting existing compliance 
                                                                                                                                                                          frameworks (for example mandatory training programmes 
                                                                                                                                                                          and clear policies and associated guidance). 
                                                             ---------------------------------------------------------  -----------------------------------------  ------------------------------------------------------------ 
 

MACRO-ECONOMIC AND GEOPOLITICAL

The airline industry can be sensitive to macro-economic and geopolitical conditions. These risk events can affect our financial performance including supply/demand imbalance, general economic trends, Brexit (discussed on page 18), as well as impact of fuel cost, foreign exchange rates, and counterparty performance.

 
                 Potential causes                                               Potential                                                  Controls and mitigations 
                                                                                 consequences 
 SUPPLY/DEMAND 
 IMBALANCE         *    Increased capacity                                        *    Loss of market positions (relative market share)     *    Enhancements to our Commercial organisation to 
 easyJet's                                                                                                                                       provide even further focus on existing and new 
 success                                                                                                                                         initiatives to optimise the revenue position. 
 in the highly     *    Industry consolidation                                    *    Pressure on margins 
 competitive 
 European                                                                                                                                   *    Weekly trading meeting to review performance - 
 short-haul        *    Increased competition from other airlines and             *    Adverse financial position                                attended by senior managers, including members of the 
 aviation               transport providers                                                                                                      AMB. 
 market 
 is built on                                                                      *    Share price movement 
 our key           *    Government interventions                                                                                            *    Relentless focus on maintaining easyJet's competitive 
 competitive                                                                                                                                     advantages. 
 advantages: 
 our network,      *    Fall in consumer demand (including but not limited to 
 cost base,             macro-economic conditions and environmental concerns)                                                               *    The Network Development Forum, a cross-functional 
 brand,                                                                                                                                          panel of senior managers, including members of the 
 digital                                                                                                                                         AMB, approves the allocation of assets around the 
 innovation        *    Internal growth plans                                                                                                    network in the context of expected market conditions. 
 and efficient 
 and robust 
 capital                                                                                                                                    *    Competitor and consolidation activity is monitored in 
 structure.                                                                                                                                      detail by the Network team, enabling strategic 
 Links to our                                                                                                                                    decision making on key market positions. 
 plan 
 1, 2, 3, 4, 
 5                                                                                                                                          *    Fleet framework arrangements, together with the 
 B, D                                                                                                                                            Group's leasing policy, provide easyJet with 
                                                                                                                                                 significant flexibility in respect of scaling the 
                                                                                                                                                 fleet according to business requirements. 
                -------------------------------------------------------------  ---------------------------------------------------------  ------------------------------------------------------------ 
 VOLATILITY IN 
 FINANCIAL         *    Market price risk: volatility in jet fuel prices,        *    Insufficient cash to meet financial obligations as     *    The Finance Committee (a committee of the plc Board) 
 MARKETS                foreign exchange rates, carbon prices, inflation              they fall due and/or the inability to fund the              oversees the Group's treasury and funding policies 
 easyJet is             rates or interest rates                                       business when needed leading to insolvency                  and activities. See page 94 for further details. 
 exposed 
 to a variety 
 of financial      *    Counter-party risk: default of counter parties used      *    Significant increase in costs                          *    Treasury policy sets out plc Board approved 
 markets,               for depositing surplus cash and hedging                                                                                   strategies for market price risk management, 
 volatility                                                                                                                                       counter-party credit risk management and liquidity 
 in which                                                                                                                                         risk management. Monthly reporting on all treasury 
 could             *    Liquidity risk: inability to raise funds when                                                                             activity including reporting on compliance with 
 give rise to           required                                                                                                                  treasury policy. 
 adverse 
 pressure 
 on the cash                                                                                                                                 *    Maintaining a liquidity buffer supported by cash, a 
 flows of the                                                                                                                                     revolving credit facility (provided by a group of 
 group.                                                                                                                                           relationship banks) and a business interruption 
 Links to our                                                                                                                                     insurance policy. 
 plan 
 1, 3, 5 
 D                                                                                                                                           *    Ability to access diverse sources of funding to 
                                                                                                                                                  support liquidity requirements. 
 
 
                                                                                                                                             *    Rolling hedging programmes on jet fuel and foreign 
                                                                                                                                                  exchange market price exposure. 
                -------------------------------------------------------------  ---------------------------------------------------------  ------------------------------------------------------------ 
 

PEOPLE

Having the right people is a key part of Our Plan. In today's environment, we need to create an inclusive and energising environment that attracts the right people and inspires everyone to learn and grow.

 
                Potential causes                             Potential                                             Controls and mitigations 
                                                              consequences 
 INDUSTRIAL 
 ACTION           *    Adverse employee experience             *    Sustained adverse media coverage                 *    easyJet seeks to maintain positive working 
 easyJet, and                                                                                                             relationships with all trade unions and other 
 the aviation                                                                                                             representative bodies and has a framework in place 
 industry in      *    Changes to terms and conditions         *    Operational disruption                                for consulting and engaging with trade unions and 
 general, has                                                                                                             consultative bodies. 
 a 
 significant      *    Political unrest                        *    Significant spike in costs 
 number of                                                                                                           *    In the event of industrial action or expected 
 employees                                                                                                                disruption, easyJet has processes to mitigate the 
 who are                                                       *    Reduction in future revenue                           impact to our operations. The Operations department 
 members                                                                                                                  also has specific procedures to deal with such 
 of trade                                                                                                                 events. 
 unions.                                                       *    Share price movement 
 Each of the 
 European 
 countries                                                     *    Loss of colleague/customer trust 
 in which 
 easyJet 
 operates has 
 localised 
 employment 
 terms and 
 conditions. 
 As such its 
 pilots and 
 crew 
 are members 
 of 22 trade 
 unions 
 across 
 eight 
 countries. 
 There are 
 also 
 an 
 additional 
 11 
 consultative 
 bodies 
 including 
 five Works 
 Councils 
 and a 
 European 
 Works 
 Council 
 that operate 
 under EU 
 legislative 
 guidance. 
 Links to our 
 plan 
 2, 4 
 A, B, C 
               -------------------------------------------  ----------------------------------------------------  ----------------------------------------------------------- 
 TALENT 
 ACQUISITION      *    Uncompetitive remuneration packages     *    Sustained inability to deliver key strategic    *    Benchmarking of reward packages. 
 AND                                                                initiatives 
 RETENTION 
 In today's       *    Lack of career progression                                                                   *    Quarterly employee listing tool with action plans to 
 shifting                                                      *    Increased costs                                      address issues raised. 
 environment, 
 we need to       *    Outdated ways of working 
 place                                                                                                              *    Talent mapping of senior employees to ensure 
 even more                                                                                                               continued investment and development of top talent. 
 focus 
 on 
 recruiting                                                                                                         *    Succession planning of key roles. 
 the right 
 people 
 and building                                                                                                       *    Diversity and inclusion strategy. 
 the right 
 talent. 
 Links to our                                                                                                       *    Strategic programme to enhance ways of working for 
 plan                                                                                                                    head office staff. 
 3, 4 
 C 
               -------------------------------------------  ----------------------------------------------------  ----------------------------------------------------------- 
 

SAFETY, SECURITY AND OPERATIONS

easyJet's number one priority is the safety and security of its customers, colleagues, and contractors. The delivery of a safe and secure operation which meets the needs and expectations of our customers is critical to our business.

 
                                                               Potential causes                               Potential                                            Controls and mitigations 
                                                                                                               consequences 
 SIGNIFICANT 
  SAFETY OR SECURITY                                             *    Flight safety incident                    *    Significant injury/loss of life                  *    Functional Safety Action Groups from across the 
  EVENT                                                                                                                                                                    airline are chaired by the appropriate senior manager 
   *    easyJet's number one priority is the safety and                                                                                                                    and are responsible for the identification, 
        security of its customers, colleagues, and               *    Health and safety incident                *    Sustained adverse media coverage                      evaluation and control of safety-related risks. 
        contractors. 
 
                                                                 *    Major security threat                     *    Reduction in future revenue                      *    The easyJet Safety Board meets monthly to review 
   *    The Safety Committee (a committee of the Board)                                                                                                                    safety, security and compliance performance across 
        provides oversight of the management of easyJet's                                                                                                                  all Air Operator Certificates (AOC) chaired by the 
        safety processes and systems. See pages 85-86 for                                                       *    Fines/regulatory sanctions                            CEO, attended by the three AOC accountable managers 
        further details.                                                                                                                                                   and periodically by AOC regulators. 
 
                                                                                                                *    Operational disruption 
   *    The easyJet Safety Board, chaired by the Chief                                                                                                                *    Safety Review Boards are held locally and are open 
        Executive and including the Chief Operating Officer                                                                                                                for the local regulator to attend. 
        and AOC Accountable Managers, is responsible for                                                        *    Significant spike in costs 
        directing overall safety and security policy and 
        governance. The Safety Board meets every month to                                                                                                             *    A Safety Policy is published that promotes the 
        review safety performance and any emerging security                                                     *    Share price movement                                  incident reporting process and supports this safety 
        issues.                                                                                                                                                            culture; 
 
 
  Links to our                                                                                                                                                        *    easyJet operates a Safety Management System using 
  plan                                                                                                                                                                     leading software systems to: 
  2, 4 
  A 
                                                                                                                                                                      *    report incidents and identify events; 
 
 
                                                                                                                                                                      *    identify hazards and threats and take appropriate 
                                                                                                                                                                           risk-mitigating actions; 
 
 
                                                                                                                                                                      *    collect and analyse safety data (enabling potential 
                                                                                                                                                                           areas of risk to be projected); and 
 
 
                                                                                                                                                                      *    enable learning from easyJet and industry 
                                                                                                                                                                           events/incidents to be captured and embedded into 
                                                                                                                                                                           future risk mitigations. 
 
 
                                                                                                                                                                      *    Timely, credible and reliable information upon which 
                                                                                                                                                                           to base operational decisions. 
 
 
                                                                                                                                                                      *    easyJet has an emergency response process and 
                                                                                                                                                                           performs crisis management exercises. 
 
 
                                                                                                                                                                      *    Hull (all risks) and liabilities insurance (including 
                                                                                                                                                                           spares) is held. 
 
 
                                                                                                                                                                      *    Security cleared specialists continually review 
                                                                                                                                                                           geopolitical developments across the easyJet network 
                                                                                                                                                                           in particular those countries deemed to be higher 
                                                                                                                                                                           risk and report back to the Board any areas of 
                                                                                                                                                                           concern. 
 
 
                                                                                                                                                                      *    easyJet maintains an inspection regime of all our 
                                                                                                                                                                           airports to ensure the security elements are being 
                                                                                                                                                                           effectively managed. 
                                                              ---------------------------------------------  ---------------------------------------------------  -------------------------------------------------------------- 
 SIGNIFICANT 
 OPERATIONAL                                                    *    Adverse weather                           *    Customer dissatisfaction                           *    Key strategic project, Operational Resilience, 
 DISRUPTION                                                                                                                                                                 focusing on: 
  *    This year there has been a significant reduction in 
       disruption events (three hour delays, cancellations      *    Industrial action                         *    Compensation ad welfare payable to customers 
       and overnight delays). Events within easyJet's                                                                                                                  *    Building appropriate resilience into the flying 
       control ('non-extraordinary') have reduced against                                                                                                                   schedule; 
       2018 by 25%, as a result of the Operational              *    Technology failure                        *    Inefficient use of crew/aircraft 
       Resilience programme and a range of easyJet 
       interventions, and events outside of easyJet's                                                                                                                  *    Aircraft and crew standby; 
       control (e.g. weather, strikes) have reduced by 34%.     *    Supplier failure                          *    Adverse media coverage 
 
                                                                                                                                                                       *    Operations Control Centre reporting on the day of 
  *    On Time Performance has remained stable against 2018,    *    Infrastructure failure                    *    Share price movement                                    operations, including customer communication; 
       despite a significant reduction in cancellations. 
 
                                                                *    Airspace/airport restrictions/ closure                                                            *    Airport performance and strategic supply chain; 
  *    The European Air Traffic Control system experienced 
       fewer total delay minutes than in 2018. easyJet 
       flight planning interventions further reduced the                                                                                                               *    Air traffic control system lobbying and flight 
       proportion of these delay minutes that impacted                                                                                                                      planning enhancements; and 
       easyJet. En-route delay minutes reduced, largely 
       driven by fewer ATC strikes than in 2018. Airport 
       delay minutes worsened. The ATC system still                                                                                                                    *    The use of data across the operation to predict and 
       performed worse than 2017.                                                                                                                                           manage events and aid decision support. 
 
 
 Links to our                                                                                                                                                          *    There is also continued focus on the EU261 claims 
 plan                                                                                                                                                                       management process which has been further 
 2, 3, 5                                                                                                                                                                    strengthened during the year by increasing the size 
 B, D, E                                                                                                                                                                    of the team handling legal claims. 
 
 
                                                                                                                                                                       *    New incident and crisis management framework to 
                                                                                                                                                                            further enhance the effectiveness of response. 
 
 
                                                                                                                                                                       *    Liquidity buffer to better manage the impact of 
                                                                                                                                                                            downturns in business or temporary curtailment of 
                                                                                                                                                                            activities (see the volatility in financial markets 
                                                                                                                                                                            risk outlined on page 43). 
 
 
                                                                                                                                                                       *    Business interruption insurance which provides some 
                                                                                                                                                                            cover for very significant shock events such as 
                                                                                                                                                                            extreme weather, air traffic management issues and 
                                                                                                                                                                            loss of access to key airports. The policy would 
                                                                                                                                                                            allow us to claim in the event of a very substantial 
                                                                                                                                                                            number of cancellations. This is included within our 
                                                                                                                                                                            definition of liquidity. 
                                                              ---------------------------------------------  ---------------------------------------------------  -------------------------------------------------------------- 
 

TECHNOLOGY AND CYBER

The nature of these risks, easyJet's reliability on technology (particularly online devices) and the ever-increasing sophistication of serious organised crime groups, terrorists, nation states and even lone parties means that, despite all the mitigation detailed, easyJet will inevitably retain an element of vulnerability regarding the availability, confidentiality and integrity of its information and data.

 
                  Potential causes                         Potential                                   Controls and mitigations 
                                                            consequences 
 DATA BREACH 
 A data breach      *    Cyber attack                       *    Sustained adverse media coverage        *    A data and cyber risk governance structure exists to 
 involves the                                                                                                 regularly review the data and cyber risk landscape 
 unauthorised                                                                                                 and determine required action to take place in order 
 access to          *    Third party incident               *    Fines/regulatory sanctions                   to manage risk effectively. 
 customer 
 or employee 
 data.              *    User error                         *    Third party liability/class actions     *    Dedicated Information Security team who proactively 
 Protecting                                                                                                   monitor threats and respond to incidents. 
 that data and 
 its privacy        *    Misconfigured systems              *    Reduction in future revenue 
 remains a                                                                                               *    Employee education and awareness programme including 
 priority                                                                                                     a network of champions, online training and awareness 
 for easyJet.                                               *    Operational disruption                       campaigns. 
 Links to our 
 plan 
 2, 5                                                       *    Significant spike in costs              *    Security logging and monitoring. 
 A, B, D 
 
                                                            *    Share price movement                    *    Vulnerability scanning and penetration testing. 
 
 
                                                            *    Loss of colleague/customer trust        *    Ongoing General Data Protection Regulation (GDPR) 
                                                                                                              programme to ensure compliance with GDPR regulations 
                                                                                                              in support of the Data Protection Officer (DPO). 
                 ---------------------------------------  ------------------------------------------  ------------------------------------------------------------- 
 FAILURE OF 
 CRITICAL          *    Cyber attack                         *    Sustained adverse media coverage       *    Monitoring and alerting of availability of critical 
 TECHNOLOGY                                                                                                   technologies and their inter-dependencies. 
 easyJet relies 
 on a number       *    Hardware failure                     *    Reduction in future revenue 
 of critical                                                                                             *    Security logging and monitoring. 
 technologies 
 that are key      *    Aged infrastructure                  *    Fines/regulatory sanctions 
 to the                                                                                                  *    Vulnerability scanning and penetration testing. 
 delivery 
 of essential      *    Data Centre Outage                   *    Operational disruption 
 business                                                                                                *    Business Interruption Insurance in place. 
 processes. 
 These include,    *    Third Party Outage                   *    Significant spike in costs 
 but are not                                                                                             *    IT Change Management Process embedded to assess risk 
 limited to,                                                                                                  of all changes to technology including changes made 
 operational,      *    Technological Dependency Failure     *    Share price movement                        by third party providers. 
 commercial and 
 financial 
 systems.          *    IT change                                                                        *    Critical technologies are either cloud hosted, hosted 
 A critical                                                                                                   across two data centres or at third party provider 
 technology                                                                                                   locations with necessary failover protocols and 
 failure                                                                                                      security perimeters in place. 
 includes 
 any technical 
 failure which                                                                                           *    IT Major Incident Management team is in place to 
 is sufficient                                                                                                respond rapidly to any unforeseen critical technology 
 enough to                                                                                                    incidents including those of a security nature. 
 interrupt 
 critical 
 business                                                                                                *    IT Supplier Relationship Management process to ensure 
 operations                                                                                                   that third party services and associated risks are 
 (which                                                                                                       regularly reviewed and assessed. 
 may include 
 one or more 
 systems). This                                                                                          *    easyJet are progressing the delivery of a hosting and 
 includes                                                                                                     network programme that will further improve the 
 system                                                                                                       resiliency of core infrastructure and cloud 
 unavailability                                                                                               connectivity capabilities. 
 or a failure 
 which results 
 in the loss 
 or corruption 
 of data. 
 Links to our 
 plan 
 2, 3 
 A, B, D, E 
                 ---------------------------------------  ------------------------------------------  ------------------------------------------------------------- 
 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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