REG - easyJet PLC - Final Results
29/11/2022 07:00
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RNS Number : 9028H easyJet PLC 29 November 2022
29 November 2022
easyJet plc
Results for the twelve months ending 30 September 2022
easyJet achieves record bounce back delivering best ever headline EBITDAR for
Q422 through the airline's focused network allocation, much improved revenue
capability and financial strength - all of this provides the platform to
deliver strong shareholder returns
- Achieved record headline EBITDAR in Q4 of £674 million (Q4 2021:
£82 million profit)
- FY22 headline loss before tax of £178 million (Reported loss
before tax of £208 million)
- Operational performance in Q4 better than Q4 2019, with fewer on
the day cancellations
- Financial strength - £0.7bn net debt with £3.6bn in cash and
money market deposits
- Business transformation delivering:
o holding more slots than ever where returns are highest
o delivering on destination base strategy - 21 aircraft now based in
destination
o enhanced ancillaries delivered 59% yield uplift vs FY19
o easyJet holidays delivers £38 million profit before tax
- Q123 RPS growth expected to be >20% YoY
Commenting on the results, Johan Lundgren, easyJet Chief Executive said:
"easyJet has achieved a record bounce back this summer with a performance
which underlines that our transformation is delivering. The summer saw easyJet
achieve its highest ever earnings for a single quarter with headline EBITDAR
of £674 million, ancillaries up by 59% on FY19 and easyJet holidays well on
its way to its £100m target.
"easyJet does well in tough times. Legacy carriers will struggle in this
high-cost environment. Consumers will protect their holidays but look for
value and across its primary airport network, easyJet will be the
beneficiary as customers vote with their wallets.
"Over the next year, we are targeting customer growth and are well placed to
drive returns and margins while maintaining a rigorous focus on cost. With one
of the strongest balance sheets in European aviation, we are ready to take
opportunities as they present themselves.
"We have a clear strategy to drive returns for our shareholders and have
significant confidence in our plan today and that it will deliver going
forward."
Overview
easyJet, alongside the whole industry, has faced multiple headwinds throughout
the 2022 financial year from Omicron, the impact of Russia's invasion of
Ukraine, and operational challenges as demand returned at scale following the
widespread removal of travel restrictions across Europe. Despite this, easyJet
has delivered a significantly improved performance with headline EBIT profit
of £3 million (2021: £1,036 million loss) which includes incremental
disruption costs of £78 million compared to FY19. The headline loss before
tax in the year was £178 million (2021: £1,136 million) which includes a
£64 million loss from balance sheet revaluations.
The business transformation is delivering with easyJet achieving a record
headline EBITDAR of £674 million in Q4 2022 with load factors returning to
92% and seat capacity to 26 million. Ancillary products and easyJet holidays
are fully embedded and delivering incremental returns to the business.
easyJet is continuing to allocate aircraft to the markets where demand is
strongest enabled by slot growth at primary airports. Over the past 12 months
we have seen growth at Gatwick, Porto, Lisbon and the Greek islands. Each of
these airports has delivered returns above the network average in FY22.
For winter, which is typically a loss-making period, easyJet is investing in
building additional resilience. This investment allows for summer 23
preparations to start earlier in response to the tight labour market, where we
have already begun our seasonal recruitment campaign. Alongside this, we now
have a dedicated team in place to process employment reference checks as
efficiently as possible. easyJet, like all airlines, is seeing cost pressures
including fuel, strengthened US dollar and wage inflation.
Peak holiday weeks this winter, such as October half term and Christmas week
in the UK, are back to normal levels of volume. Through these key periods,
ticket yields are showing strength on the prior year, with the Christmas
period's ticket yield currently up c. 18%. Visibility over bookings in the
second half remains low, however Easter booked ticket yields are strong and
booked load factors for Easter are ahead of the prior year.
easyJet goes into the 2023 financial year with one of the strongest balance
sheets in European aviation. This financial strength, combined with our
leading low-cost proposition at primary airports provides a key differentiator
for customers, making it easy for customers to switch towards value. easyJet's
historic performance in a challenging economic environment where the consumer
was squeezed has been strong, as evidenced in 2008/09 during the global
financial crisis when easyJet delivered increased margins(1) as well as
capacity growth.
Financial Summary
- Headline loss before tax of £178 million (2021: £1,136 million
loss)
o Total revenue increased by 296% to £5,769 million (2021: £1,458 million)
predominantly due to the increase in capacity flown and ancillary products
continuing to deliver incremental revenue.
o Group headline costs increased by 129% to £5,947 million (2021: £2,594
million), primarily due to the increase in flown capacity.
- Reported loss before tax of £208 million (2021: £1,036 million
loss).
o Non-headline loss of £30 million (2021: £100 million gain). Non-headline
items consist primarily of losses from the sale and leaseback of aircraft and
the return of slots in the year at Berlin Brandenburg airport following the
right-sizing of our operations from 18 to 11 aircraft.
( ) 2022 2021 Change
favourable/(adverse)
Capacity(2) (millions of seats) 81.5 28.2 189%
Passengers(3) (millions) 69.7 20.4 242%
Load factor(4) (%) 85.5 72.5 13ppts
Average sector length (km) 1,193 1,184 1%
Total revenue (£ million) 5,769 1,458 296%
Headline EBITDAR (£ million) 569 (551) 203%
Headline EBIT (£ million) 3 (1,036) 100%
Headline loss before tax (£ million) (178) (1,136) 84%
Reported loss before tax (£ million) (208) (1,036) 80%
Airline revenue per seat (£) 66.23 50.54 31%
Airline revenue per seat at constant currency(5) (£) 67.33 50.54 33%
Airline EBITDAR cost ex fuel per seat (£) 44.09 56.62 22%
Airline EBITDAR cost ex fuel per seat at constant currency(5) (£) 44.38 56.62 22%
Airline headline loss before tax per seat (£) (2.65) (39.87) 93%
Holidays contribution (£m) 38 (12) 417%
Headline EBITDAR Margin (%) 9.9 (37.8) 48ppts
Headline ROCE (%) 0.1 (25.5) 26ppts
Outlook
- Based on current trading, easyJet expects the following over the
2023 financial year:
- Q1 RPS growth expected to be up >20% YoY
- Q1 load factor growth c.+10 ppts YoY
- Earlier summer 23 ramp up for resilience
- H1 fuel price up >50% YoY
- Market wide inflationary pressure
- H2 early bookings look positive with Easter ticket yields showing
strength YoY
- Capacity
o H1 c.38m seats, c.25% increase YoY
o H2 c.56m seats, c.9% increase YoY
o Q4 capacity around pre-pandemic levels
- easyJet holidays targeting >30% customer growth YoY
Fuel & FX Hedging:
Jet Fuel H1'23 H2'23 H1'24 USD H1'23 H2'23 H1'24
Hedged position 74% 51% 25% Hedged position 77% 54% 27%
Average hedged rate ($/MT) 814 903 922 Average hedged rate (USD/GBP) 1.29 1.24 1.19
Current spot ($/MT) at 28.11.22 c.1,000 Current spot (USD/GBP) at 28.11.22 c.1.21
Carbon obligation 100% covered for CY22 at €17/MT and 77% covered for CY23
at €31/MT
USD Lease payments hedged for the next three years at 1.33
Capex hedged for the next 12 months in EUR & USD
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 FGS Global
+44 (0)7947 740 551 / (0)207 251 3801
Dorothy Burwell FGS Global
+44 (0)7733 294 930 / (0)207 251 3801
Conference call
There will be an analyst presentation at 09:00am GMT on 29 November 2022 at
Nomura, One Angel Lane, London, EC4R 3AB.
Alternatively, a webcast of the presentation will be available both live and
for replay (please register on the following link):
https://stream.brrmedia.co.uk/broadcast/635fec3ac1db5d073071cde5
(https://stream.brrmedia.co.uk/broadcast/635fec3ac1db5d073071cde5)
Alternatively dial in details are as follows: 0808 109 0700/+44 (0) 33 0551
0200 quoting easyJet when prompted.
Revenue
Total revenue increased by 296% to £5,769 million (2021: £1,458 million) in
line with capacity increasing to 81.5 million seats (2021: 28.2 million), due
to the relaxation of pandemic-related travel restrictions relative to the
prior year, strong growth in the easyJet holidays business and the step change
in our ancillary offering.
Passenger revenue increased by 282% to £3,816 million (2021: £1,000 million)
as we flew increased levels of capacity compared to the same period last year.
Passenger RPS increased by 32% to £46.80 (2021: £35.48) as demand returned,
with travel restrictions easing through the year and easyJet's primary airport
network driving yield growth.
Group ancillary revenue increased by 326% to £1,953 million (2021: £458
million) as capacity increased and as easyJet holidays continues its rapid
growth. Airline ancillary revenue per seat also increased by 29% to £19.43
(2021: £15.06) as we continue to see incremental benefits from ancillary
products which have been launched since H1 of FY21.
Costs
Group headline costs excluding fuel and FX gains increased by 106% to £4,604
million (2021: £2,233 million), driven by an increase in capacity flown as
well as incremental disruption costs of £78 million compared to FY19 and
one-off resilience actions taken in order to ensure a stable operation during
the fourth quarter.
easyJet recorded a £64 million loss from foreign exchange on balance sheet
revaluations (2021: £10 million gain), related to the impact of a weaker
sterling on our net foreign currency-denominated liabilities.
Airline headline cost per seat at constant currency decreased by 25% to
£68.11 (2021: £90.73). Headline Airline cost per seat excluding fuel at
constant currency decreased by 32% to £52.66 (2021: £77.57).
Non-headline Items
Non-headline items are those where, in management's opinion, separate
reporting provides a better understanding to users of the financial statements
of easyJet's underlying trading performance, and which are significant by
virtue of their size and/or nature. These costs are separately disclosed and
further detail can be found in the notes to the financial statements. A Group
non-headline loss before tax of £30 million (FY 2021: £100 million gain) was
recognised in the financial year. The significant items consisted of a £21
million loss as a result of the sale and leaseback of 10 aircraft and a £10
million loss from returning slots in the year at Berlin Brandenburg airport
following the rightsizing of the operations from 18 to 11 aircraft.
Balance Sheet
During FY22 easyJet repaid £300 million of commercial paper, clearing the
final balance under the CCFF scheme. $100 million was also voluntarily repaid
on the UKEF in April ahead of its maturity in FY26. As at 30 September 2022
our net debt position was £0.7 billion (30 September 2021: £0.9 billion)
including cash and cash equivalents and money market deposits of £3.6 billion
(30 September 2021: £3.5 billion).
Fleet
easyJet's total fleet as at 30 September 2022 comprised 320 aircraft
(excluding three A319 aircraft held on a zero rent basis) (30 September 2021:
308 aircraft excluding 12 aircraft held on a zero rent basis). The increase
was driven principally by nine aircraft ending their zero-rental period and
re-entering the operational fleet, delivery of eight new A320neo family
aircraft, and seven lease additions while 12 aircraft left the fleet, as
easyJet continues its journey of retiring older aircraft and benefitting from
the A320neo family of aircraft with their superior fuel efficiency and greater
number of seats.
We have an agreed order book consisting of 168 firm orders, 135 for A320neo
aircraft and 33 A321neo aircraft. This includes the aircraft purchase
approved earlier this year, securing 56 aircraft deliveries with the
conversion of 18 A320neo's into A321's for delivery between FY26 and FY29.
In order to meet our long-term fleet requirements, we will continue to keep
all options under review going forward.
The average gauge of the fleet is now 179 seats per aircraft, compared to 178
seats at 30 September 2021. The average age of the fleet increased to 9.3
years (30 September 2021: 8.6 years).
Fleet as at 30 September 2022 (excluding aircraft on a zero-rent basis)
Owned Leased Total % of fleet Changes since Sep-21 Future deliveries Purchase options Purchase rights
A319 35 59 94 29% (3) - - -
A320 105 62 167 52% 7 - - -
A320 neo 37 7 44 14% 7 135(a) - 3
A321 neo 4 11 15 5% 1 33(a) - -
181 139 320(b) 168 - 3
Percentage of total fleet 57% 43%
a) easyJet retains the option to alter the aircraft type of future deliveries,
subject to providing sufficient notification to the OEM.
b) At 30 September 2022, easyJet was storing three operating leased aircraft
which have been acquired for future operations. These are held at zero rent
and are excluded from the fleet numbers.
Our flexible fleet plan allows us to expand or contract the size of the fleet
depending on the demand outlook.
Number of aircraft FY22 FY23 FY24 FY25
Current contractual maximum - 336 336 346
Actual aircraft 320 - - -
Current contractual minimum - 333 318 308
New aircraft deliveries - 7 21 23
Capital Expenditure
Over the next three years easyJet's gross capital expenditure is expected to
be as follows:
FY23 FY24 FY25
Gross capital expenditure (£ million) c.900 c.1,500 c.1,600
Capex is comprised of new fleet delivery payments, maintenance related
expenditure as well as lease payments and other capital expenditure such as IT
development. Our capex projections assume 7 deliveries in FY23, 21 deliveries
in FY24 and 23 deliveries in FY25.
Strategy Update
easyJet has refined its strategy to drive our purpose of making low-cost
travel easy. Our strategy has four strategic priorities that will build on
our structural advantages in the European aviation market, helping easyJet
move closer towards its destination of being Europe's most loved airline,
winning for customers, shareholders and our people. Our strategic priorities
are set out below:
· Building Europe's best network
· Transforming our revenue capability
· Delivering ease and reliability
· Driving our low-cost model
Building Europe's best network
easyJet has a strong network of leading number one and number two positions in
primary airports, which has proven to be amongst the highest yielding in the
market, as demonstrated this summer. This enables us to be efficient with our
network choices, with an emphasis on maximising returns.
easyJet continues to optimise its network to ensure capacity is deployed in
the markets where we see the strongest demand and returns. This was done
throughout FY22 where 2.1 million seats were re allocated around the network,
and in Q4 delivered a 10% uplift on contribution per block hour compared to Q4
19.
We will seek to strengthen our position in key markets as the competitive
landscape evolves. This has been demonstrated at Lisbon where we won a further
9 daily slot pairs, making us the second largest airline at the airport from
this Winter. This adds to slot additions at Gatwick, Porto and the Greek
Islands, which all returned greater than the network average return in FY22.
Our focused network strategy can be summarised as follows:
1. Lead in our Core Markets
easyJet prioritises slot-constrained airports as these are where customers
want to fly to and from and as a result have superior demand and yield
characteristics. In our core markets, we are able to achieve cost leadership
and preserve scale. We provide a balanced network portfolio across domestic,
city and leisure destinations. Our scale enables us to provide a market
leading network and schedule.
2. Investment in Destination Leaders
We will build on our existing leading positions in Western Europe's top
leisure destinations to provide network breadth and flexibility. This will
also unlock cost benefits, enabling us to manage seasonality and support the
growth of easyJet holidays. It also ensures that easyJet remains top of mind
for customers and is seen as the 'local airline' for governments and
hoteliers.
3. Build our network in Focus Cities
easyJet is building a network of key cities, broadening our presence across
Europe. This is a low-risk way of serving large origin markets. We will base
assets in Focus Cities where it makes sense from a cost perspective.
Transforming our revenue capability
easyJet recognises that the continued evolution of our product portfolio
represents a significant opportunity to build on spend per customer,
delivering enhanced sustainable returns.
Airline Ancillaries:
Cabin bags and our leisure fare, amongst other ancillary products, have
continued to deliver incremental revenue through the period. During the year
we also launched inflight retail, our new retail brand & proposition, with
September being its first full month of operation. This has resulted in direct
sourcing and contracting for our on-board retail offering and is tailoring the
product offering to our customers.
Further opportunities have been identified internally as easyJet continues to
maximise unit revenues. In FY23 we will implement closed loop Wi-Fi on all of
our aircraft. This will facilitate enhanced marketing revenue generation
through our partners, as well as enabling order to seat - which is planned to
be launched later in the 2023 financial year. easyJet also plans to launch
pre-order capability, and our duty-free proposition during the coming year.
We are partnering with Datalex, a leading provider of omnichannel airline
retail solutions, to enable us to realise the benefits of total basket
optimisation from FY24.
easyJet holidays:
easyJet holidays continues its rapid growth, becoming a major player within
the sector and delivering customer growth of 83% vs FY19 and profit before tax
of £38 million in FY22. The business is targeting customer growth of >30%
for the coming year and remains on track to deliver the medium-term target of
£100 million plus profit before tax.
As the holidays business grows in scale, we plan to make targeted investments
to strengthen the business. We will continually optimise our yields on
packages sold, whilst developing the cities proposition - allowing easyJet
holidays to reduce the cyclical disparity of a traditional tour operator. We
will also unlock the technology supporting the business to allow for new
source markets at the appropriate juncture. We expect these investments to be
fully embedded within the business by FY24.
Delivering ease and reliability
easyJet aims to deliver a seamless and digitally enabled customer journey at
every stage and is continuously working to enhance the customer experience.
During the year, easyJet launched its twilight bag drop allowing customers to
drop hold baggage off the evening before their flight, removing a part of the
journey on the day of travel.
During the second half of the year, easyJet took action to alleviate the
pressure on our operations and improve the operational performance of the
airline, resulting in on the day cancellations in the fourth quarter being
below that of the same period in FY19. Over the fourth quarter easyJet took
the position as the number 1 most preferred airline brand in the UK, with
number 2 positions in key markets such as France, Switzerland and Italy.
There has been a significant focus on improving the control and decision
making we have across our operations, namely through the addition of terminal
and fleet manager roles at London Gatwick, enabling quick and agile decisions
to be made in the airport, where staff are closer to and more informed of the
operations.
We continue to see the return of business travel and easyJet's business travel
on domestic routes reached 95% of FY19 capacity in Q4. This was due to the
quicker return to business travel by SME's, which account for 75% of easyJet's
business travel, compared to larger corporates. easyJet's high frequency,
primary airport focussed, network remains well positioned to service business
travel as we see demand continue to increase.
Driving our low-cost model
easyJet has a cost advantage over its major competitors on the primary network
that it operates. The current inflationary environment will impact all
airlines and therefore is not expected to affect easyJet's ability to retain
our historical cost advantage. Alongside cost actions, a focus on margins
through network optimisation, effective pricing management and ancillaries
driving yields higher all help to offset inflation.
easyJet has delivered a number of cost actions:
· Seasonality focus:
o A proportion of pilots have voluntarily moved to seasonal contracts,
reducing the fixed cost overheads in this area of the business.
o The growth of our seasonal bases has resulted in 21 aircraft operating for
8 months of the year, removing the cost of operating through winter.
· Insourcing of line maintenance: line maintenance has been insourced
at LGW, BER, GLA, EDI, and BRS; enabling easyJet to have greater control over
the maintenance, reducing the cost incurred and improving on the quality of
maintenance fulfilled.
· Collective labour agreements: 80% of pilot and 60% of crew agreements
have all been renewed during the 2022 financial year.
· Major hedging position built: easyJet's hedging positions for fuel,
FX, and ETS, are significant and at very favourable rates to the current spot
rates.
Cost remains a core focus of the business with a number of areas of focus for
the coming year:
· Achieving fuel savings: unlocking descent profile optimisation across
the majority of our fleet through the use of upgraded technology.
· Completion of labour agreements: several pilot and cabin crew labour
agreements are in negotiation across the network.
· Increasing automation of self-service management: thereby increasing
digitalisation of customer flows and reducing the need for contact centre
support.
· Up-gauging of the fleet: efficiency benefits will be unlocked as
A319s leave the fleet, being replaced by A320 family aircraft. Around 40% of
the 94 A319s currently in the fleet will be replaced over the next three
years.
Sustainability
In the fourth quarter, easyJet announced its roadmap to achieving net-zero by
2050. The roadmap is aligned to the Science Based Targets initiative (SBTi),
with easyJet being the first low-cost airline to announce its interim target,
of a 35% carbon emission intensity reduction by 2035(7), which is validated by
the SBTi.
The long-term roadmap sees easyJet transition from carbon offsetting, which
has been a valuable interim measure but is not recognised under the SBTi
framework, towards investments that drive in-sector emission reductions to
deliver our net zero roadmap.
We plan to achieve our ambitious roadmap through the combination of six
drivers: fleet renewal, operational efficiencies, airspace modernisation,
sustainable aviation fuel, zero carbon emission aircraft and carbon removal
technology. For further information on our roadmap, please see
https://corporate.easyjet.com/corporate-responsibility/net-zero-pathway
(https://corporate.easyjet.com/corporate-responsibility/net-zero-pathway) .
Since this announcement we have made a step forward with our partner
Rolls-Royce who have achieved a world first - successfully running a modern
aircraft engine on hydrogen. This is a major step towards proving that
hydrogen can be a zero carbon aviation fuel of the future - a key element of
our net zero roadmap.
Our sustainability strategy is underpinned by strong sustainability governance
and monitoring at Board level to make sure the strategy is delivered, with
remuneration also being linked to sustainability and the delivery of the key
steps towards delivering our roadmap.
easyJet has received IATA IEnvA Stage 2 certification, making us the first
low-cost carrier worldwide with a fully IATA IEnvA certified Environmental
Management System (EMS). This follows our successful completion of the IATA
IEnvA Stage 1 implementation, assessment, and certification earlier this year,
as well as enhancing our ratings achieved across indices including CDP, MSCI
& Sustainalytics.
Our People
David Morgan has been appointed as Chief Operating Officer on a permanent
basis. David has been an integral part of the easyJet leadership team since he
joined as Chief Pilot in 2016 from Wizz Air where he held the same role. David
remains an active pilot.
easyJet continues to have a strong reputation as an employer of choice. Our
people are a key source of differentiation, and this helps to deliver
excellent customer experience and loyalty.
Our Glassdoor rating of employee satisfaction is 4.0(6) (out of 5.0), which is
the highest within the travel and tourism sector, illustrating our
market-leading position.
We have constructively worked in partnership with our employee representative
bodies across Europe in order to support the operation. We recognise that the
wider economic environment of rising inflation and the increased cost of
living has and continues to be challenging for our people and we continue to
work with our trade union partners in order to support our people whilst
maintaining control of our cost base.
In FY22 some of the key deliverables include:
· Readiness and operational resilience: We recruited around 1,650 cabin
crew to deliver the flying programme against a difficult labour market across
the network, particularly in the UK. Meanwhile, in the face of challenges
related to processing employment referencing across the industry we reacted
quickly by setting up an in-house team to supplement our partners. This new
model will allow easyJet to manage all referencing checks end-to-end.
· Employee experience: Working with our employee representative groups
across Europe we continued to support new ways of working - including
flexibility of employment contracts and the continuation of our hybrid working
model for our office-based colleagues.
· Learning and development: We have introduced a new People Management
development programme to help develop our manager and leader capabilities
throughout all First Line Leaders, while continuing to develop our approach to
early careers including the re-launch of our engineering apprenticeships. In
addition, we have also utilised our Apprenticeship levy to support a range of
head office roles.
· Health and Wellbeing: We have implemented a new UK occupational
health provision and mobile enabled support for all employees while also
delivering comprehensive mental health awareness training for all employees
and managers.
· Diversity and inclusion: Implementation of a new Equal Opportunities
and Inclusion Policy.
Board
There have been a number of changes to our Board during the year. Ryanne van
der Eijk, Harald Eisenächer and Dr Detlef Trefzger joined the Board as
Independent Non-Executive Directors on 1 September 2022, and Nick Leeder stood
down on 30 September 2022.
Andreas Bierwirth has decided not to seek re-election at the Company's next
Annual General Meeting in line with corporate governance best practice, having
served for nearly nine years. Julie Southern has also decided not to seek
re-election at the next AGM having been appointed Chair designate at RWS
Holdings plc.
Dividends
Given a reported loss, the Board will not be recommending payment of a
dividend in respect of the year to 30 September 2022. The Board is mindful
of the importance of capital returns to shareholders and will reassess the
potential for, and structure of future shareholder cash returns when the
market conditions and financial performance of the Group allows.
Footnotes
(1) Based on earnings before interest at constant currency.
(2) Capacity based on actual number of seats flown.
(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) 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.
(5) Constant currency is calculated by comparing 2022 financial year
performance translated at the 2021 financial year effective exchange rate to
the 2021 financial year reported performance, excluding foreign exchange gains
and losses on balance sheet revaluations.
(6) As at 30 September 2022
(7) easyJet plc commits to reduce well-to-wake GHG emissions related to jet
fuel from owned and leased operations by 35% per revenue tonne kilometre (RTK)
by FY2035 from a FY2019 base year. The target boundary includes biogenic
emissions and removals from bioenergy feedstocks. Non-CO2e effects which may
also contribute to aviation induced warming are not included in this target.
Our Financial Results
Headline loss before tax of £178 million for the year ended 30 September 2022
was a significant reduction on the loss of £1,136 million for the year ended
30 September 2021. This improvement was driven by increased capacity and
yields as customer confidence to travel returned once Covid-19 related
restrictions were lifted across Europe, along with enhanced contribution from
our ancillary product offering and easyJet holidays. easyJet flew 69.7 million
passengers in the year ended 30 September 2022 (2021: 20.4 million), up 242%
on the prior year, reflecting that return of confidence. Load factor for the
year was 85.5% (2021: 72.5%). Capacity for the year was 78% of the level of
the pre-pandemic year, FY19, and the load factor of 85.5% was 6 ppt lower.
Trading in the first half of the financial year was impacted by the emergence
of the Omicron variant of Covid-19. Trading had been relatively strong in
October and early November but then travel restrictions were re-imposed at
different times across Europe from mid-November and remained in place until
starting to be relaxed in February-April 2022, the timing and precise degree
of relaxation varying from country to country. The total number of
passengers carried in H1 increased by 471% to 23.4 million (H1 2021: 4.1
million) with a 13.6 percentage point increase in load factor to 77.3% (H1
2021: 63.7%). Capacity for H1 was 66% of FY19 and the load factor of 77.3% was
12.8 ppt lower.
The other major event which occurred during H1 was the Russian invasion of
Ukraine in February 2022. Whilst this did not impact easyJet's network
directly as we do not fly to or over Ukraine, it has had an indirect effect
through the increase in oil prices and therefore jet fuel prices which has
occurred since then.
Trading in our third quarter started to pick-up as the Omicron-related travel
restrictions fell away across Europe and consumer confidence to travel
returned. In Q3 easyJet flew 22 million passengers, more than seven times
higher than the same period in the previous financial year, representing 87%
of FY19 capacity. Load factors continued to build over the quarter, reaching
highs of 92% in June. The unprecedented ramp up across the aviation industry,
coupled with a tight labour market, resulted in widespread operational
challenges culminating in higher levels of cancellations in Q3 than normal and
consequently higher disruption expenses were incurred. The industry's
challenges were reflected in the flight caps announced at two significant
airports, London Gatwick and Amsterdam. Alongside these capacity caps,
easyJet took swift action to reduce our capacity and build resilience into
Q4. As a result, disruption in Q4 was much reduced and in line with
historical levels.
After the operational issues experienced across the industry in Q3, the fourth
quarter was characterised by more stable operations with load factors of 92%
being achieved. Headline EBITDAR in Q4 was the strongest quarterly headline
EBITDAR in the history of the Group, helping take the full year headline EBIT
result to breakeven. Headline EBITDAR achieved for the year of £569 million
was £1,120 million better than the result in the prior year when easyJet
recorded an EBITDAR loss of £551 million. Similarly, total loss after tax for
the year ended 30 September 2022 of £169 million was an improvement from the
loss of £858 million in the year ended 30 September 2021.
Amounts presented at constant currency throughout this section are an
alternative performance measure and are not determined in accordance with
International Financial Reporting Standards but provide relevant and
comparative reporting for readers of these financial statements.
Financial overview
£ million (Reported) - Group 2022 2021
Group revenue 5,769 1,458
Headline costs excluding fuel, balance sheet FX and ownership costs (3,921) (1,638)
Fuel (1,279) (371)
Headline EBITDAR 569 (551)
Depreciation, amortisation & dry leasing costs (566) (485)
Headline EBIT 3 (1,036)
Net finance charges (117) (110)
Balance sheet foreign exchange (loss)/gain (64) 10
Group headline loss before tax (178) (1,136)
Being:
Airline headline loss before tax (216) (1,124)
Holidays headline profit/(loss) before tax 38 (12)
Headline tax credit 31 236
Group headline loss after tax (147) (900)
Non-headline items (30) 100
Non-headline tax credit/(charge) 8 (58)
Group total loss after tax (169) (858)
£ per seat - Airline only ((1)) 2022 2021
Airline revenue 66.23 50.54
Headline costs excluding fuel, balance sheet FX and ownership costs (44.09) (56.62)
Fuel (15.68) (13.16)
Headline EBITDAR 6.46 (19.24)
Depreciation, amortisation & dry leasing costs (6.89) (17.12)
Headline EBIT (0.43) (36.36)
Net finance charges (1.45) (3.83)
Balance sheet foreign exchange (loss)/gain (0.77) 0.32
Airline headline loss before tax (2.65) (39.87)
Headline tax credit 0.38 8.39
Airline headline loss after tax (2.27) (31.48)
Non-headline items (0.36) 3.53
Non-headline tax credit/(charge) 0.10 (2.07)
Airline total loss after tax (2.53) (30.02)
(1) All per seat metrics are for the Airline business only, as the inclusion
of hotel-related revenue and costs from the holidays business will distort the
RPS and CPS metrics as these are not directly correlated to the seats flown by
the Airline. Our easyJet holidays business forms a separate operating segment
to the Airline, and easyJet holidays' key metrics are included under key
statistics.
The total number of passengers carried increased by 242% to 69.7 million
(2021: 20.4 million), which was driven by a 189% increase in seats flown to
81.5 million seats (2021: 28.2 million seats) and a 13.0 percentage point
increase in load factor to 85.5% (2021: 72.5%). This reflects the increased
capacity following the reduction in travel restrictions across Europe over the
year, and the associated strengthening in customer demand as the recovery from
Covid-19 continues. Note that capacity for the year was 78% of the level of
the pre-pandemic year, FY19, and the load factor of 85.5% was 6 ppt lower.
Total revenue increased by 296% to £5,769 million (2021: £1,458 million) and
by 302% at constant currency. Airline revenue per seat increased by 31% to
£66.23 (2021: £50.54) and increased by 33% at constant currency. The
increase in Airline revenue per seat is a consequence of increased loads,
reflecting the growth in demand through the year as travel restrictions eased
across Europe, and strong performance from both bag and seat initiatives which
contributed to an Airline ancillary revenue per seat increase at constant
currency of 31%. Note that airline ancillary revenue is now 15% higher than it
was in FY19 despite passenger numbers being 27% lower.
Total headline costs excluding fuel, balance sheet exchange movements and
ownership costs increased by 139% to £3,921 million (2021: £1,638 million)
mainly as a result of the volume of flying and general cost pressures. Costs
were also impacted by the disruption seen throughout the year; wet lease costs
of £23 million (2021: £nil) were incurred to support operational resilience
and £205 million EU261 compensation and welfare costs were also incurred
(2021: £7m credit arising from the release of a Covid specific welfare
provision). In addition, wet leases were required to provide coverage for new
slots at Gatwick and Porto at a cost of £30 million (2021: £nil million).
This year also saw a significant reduction in furlough schemes as government
support wound down across Europe with £8 million support received in 2022
compared to £134 million support in the prior year. The cost impact was
partly mitigated by continued operational cost focus including maintaining a
proportion of captains on seasonal contracts and a release of airport charge
accruals of £18 million (2021: £4 million) as the return of activity has
reduced some of the uncertainty and risks which were previously accrued for.
On an Airline cost per seat basis total headline costs excluding fuel, balance
sheet foreign exchange movements and ownership costs decreased by 22% to
£44.09 (2021: £56.62) and 22% at constant currency. This was mainly a result
of increased flying, as fixed operating costs were being spread across more
flying capacity, combined with easyJet's continued focus on cost, as noted
above, which has also contributed to the favourable movement.
Over the year the translation of revenue and costs, including fuel, from
foreign currency has had a net adverse impact of £88 million (2021: £22
million credit) on the Group income statement, with a further income statement
charge of £64 million (2021: £9 million credit) from the translation of
foreign currency denominated monetary assets and liabilities on the statement
of financial position. Conversely, ownership costs benefited from the movement
in US dollar interest rates with a credit of £71 million (2021: £20 million
credit) from the discounted maintenance reserves provision which uses
long-term US dollar interest rates to set the discount rate.
Additionally, within ownership costs is the first full year impact of the
change in estimation for the useful economic lives (UEL) of the owned CEO
fleet from 23 to 18 years and the amended approach to residual value
estimation. This increased the depreciation charge in the year by £50 million
(2021: £13 million, 3 months' impact).
Airline fuel cost per seat increased by 19% to £15.68 (2021: £13.16) and by
17% at constant currency. This is a result of both the significant increase in
the post hedge fuel price due to the war in Ukraine and an increased average
sector length compared to the prior year, arising from the destination mix
shifting towards beach in the current financial year. The impact of higher
fuel prices was partly offset by the carry forward of the allocated free ETS
(Emission Trading Systems) certificates from the prior year which were not
utilised due to the reduced flying volumes in prior year, and in-year
allocation of free credits.
easyJet holidays performed strongly, with this summer being its first season
of trading relatively unaffected by Covid-19 under its revised operating
model. Overall, it contributed incremental revenue of £368 million (2021:
£34 million) to the Group from 1.1 million customers (including affiliates),
delivering £38 million of headline profit before tax (2021: £12 million
loss).
A non-headline charge of £30 million (2021: £100 million gain) was
recognised in the year, consisting of a £21 million loss on the sale and
leaseback of 10 aircraft (2021: £65 million gain from 35 aircraft and two
engines), a £10 million loss on disposal of landing rights surrendered as a
consequence of the reduction in our operations at Berlin and a £1 million net
fair value adjustment credit for hedge discontinuation (2021: £26 million
charge). Restructuring charges were net £nil million (2021: £61 million
credit) as the £10 million provision arising from the announcement of the
downsizing of our operations at the Berlin base has been offset by releases
following the finalisation of restructuring programmes initiated in the prior
year. Full details can be found in note 5 to the financial statements.
Corporate tax has been recognised at an effective rate of 18.7% (2021: 17.2%),
resulting in an overall tax credit of £39 million (2021: £178 million
credit). This splits into a tax credit of £31 million on the headline losses
and a tax credit of £8 million on the non-headline items. Whilst the
non-headline loss is £30 million, after the necessary tax adjustments the tax
adjusted non-headline items amount to a loss of £22 million, which results in
the non-headline tax credit of £8 million for the year.
Loss per share
2022 2021
Pence per share Pence per share Change in pence per share
Basic headline loss per share (19.6) (166.9) 147.3
Basic total loss per share (22.4) (159.0) 136.6
Basic headline loss per share decreased by 147.3 pence and basic total loss
per share decreased by 136.6 pence as a consequence of the lower loss
generated during the year.
Return on capital employed (ROCE)
Reported £m 2022 2021
Headline profit/(loss) before interest and tax 3 (1,036)
UK corporation tax rate 19% 19%
Normalised headline operating profit/(loss) after tax (NOPAT) 2 (839)
Average shareholders' equity 2,586 1,741
Average net debt 790 1,570
Average adjusted capital employed 3,376 3,311
Headline Return on capital employed 0.1% (25.5%)
Total Return on capital employed (0.6%) (22.4%)
ROCE is calculated by taking headline profit/(loss) before interest and tax,
applying tax at the prevailing UK corporation tax rate at the end of the
financial year, and dividing by average capital employed. Capital employed is
shareholders' equity plus net debt.
Headline ROCE for the year was 0.1%, an improvement of 25.6 percentage points
on the prior year, largely driven by the change from a headline loss before
interest and tax to a headline profit before interest and tax for the year.
Total ROCE for the year was (0.6)%, an improvement of 21.8 percentage points
on the prior year. The total ROCE was adverse to the headline ROCE due to
non-headline items generating a £30 million charge before tax in the income
statement, as noted earlier.
Summary net debt reconciliation
The table presents cash flows on a net cash basis. This presentation is
different to the GAAP presentation of the statement of cash flows in the
financial statements as it includes non-cash movements on debt facilities.
2022 2021* Change
£ million £ million £ million
Operating loss (27) (910) 883
Net tax (paid)/received (4) 1 (5)
Net working capital movement 101 (538) 639
Increase in unearned revenue 197 232 (35)
Depreciation and amortisation 564 480 84
Net capital expenditure (530) (149) (381)
Net proceeds from sale and lease back of aircraft 87 836 (749)
Increase in lease liability (53) (693) 640
Repayment of capital element of leases (206) (261) 55
Net funding activities 53 1,144 (1,091)
Purchase of own shares for employee share schemes (9) (6) (3)
Net decrease in restricted cash 7 5 2
Other (including the effect of exchange rate movements) 60 74 (14)
Decrease in net debt 240 215 25
Net debt at the beginning of the year (910) (1,125) 215
Net debt at end of year (670) (910) 240
* There has been recategorisation of items in FY21 to better reflect line item
classification.
Net debt as at 30 September 2022 was £670 million (30 September 2021: £910
million) and comprised cash and cash equivalents and money market deposits of
£3,640 million (30 September 2021: £3,536 million), borrowings of £3,197
million (30 September 2021: £3,367 million) and lease liabilities of £1,113
million (30 September 2021: £1,079 million).
The unearned revenue inflow of £197 million (2021: £232 million) has
stabilised as customer bookings start to normalise in response to the removal
of Covid-19 travel restrictions and as flying schedules return to near
pre-pandemic levels. Net working capital movement has increased by £639
million to a £101 million inflow compared to the prior year outflow of £538
million. This increase was predominantly due to increased flying volumes
which have led to activity-related increases in trade payables. Furthermore,
the prior year saw an unusually large level of supplier payments as a catch-up
effect from the initial lockdown period, when many supplier accounts were put
onto phased payment plans as part of our cash protection measures. The trade
payables movement was partially offset by increases in trade receivables,
including marketing income, again arising from the increased volume of
activity. Additionally, working capital includes provision movements and the
prior year had a significant reduction in provisions with the release of
restructuring provisions and other movements.
Net capital expenditure in the year of £530 million (2021: £149 million) is
predominantly the final delivery payments for the acquisition of eight
aircraft in the year (2021: nil aircraft), but also includes significant
advance payments for long life parts. The sale and leaseback of 10 aircraft in
2022 (2021: 35 aircraft and two engines) resulted in a net cash inflow of £87
million compared to the more significant sale and leaseback programme in 2021
which generated proceeds of £836 million. Repayment of the capital element of
leases of £206 million (2021: £261 million) has decreased by £55 million as
a result of the prior year having additional deferred payments from H2 2020
included, and the increase in lease liability of £53 million (2021: £693
million) has reduced compared to prior year with the reduced volume of sale
and leasebacks.
In the prior year the net funding activities of £1,144 million predominantly
related to the rights issue, with final funding received this financial year.
Exchange rates
The proportion of revenue and headline costs denominated in currencies other
than sterling is outlined below:
Revenue Costs
2022 2021 2022 2021
Sterling 51% 34% 32% 45%
Euro 38% 52% 37% 29%
US dollar 1%* 0% 25% 21%
Other (principally Swiss franc) 10% 14% 6% 5%
Average headline exchange rates** 2022 2021
Euro - revenue €1.18 €1.14
Euro - costs €1.18 €1.15
US dollar $1.32 $1.36
Swiss franc CHF 1.25 CHF 1.20
Closing exchange rates** 2022 2021
Euro €1.14 €1.16
US dollar $1.11 $1.35
Swiss franc CHF 1.09 CHF 1.26
*our customers have the option of paying for flights in US dollars
**exchange rates quoted are post-hedging and for revenue and headline costs
The Group's foreign currency risk management policy aims to reduce the impact
of fluctuations in exchange rates on future cash flows.
This year has seen considerable volatility in exchange rates and the weakening
of sterling against both the euro and US dollar. Over the year the translation
of revenue and costs, including fuel, from foreign currency has had a net
adverse impact of £88 million on the Group income statement. The income
statement includes a further charge of £64 million from the translation
impact of foreign currency denominated monetary assets and liabilities on the
statement of financial position
Headline exchange rate impact
Euro Swiss franc US dollar Other Total
Favourable/(adverse) £ million £ million £ million £ million £ million
Total revenue (97) 6 3 (2) (90)
Fuel - - (20) - (20)
Headline costs excluding fuel 46 (14) (11) 1 22
Headline total before tax (51) (8) (28) (1) (88)
easyJet recognises a significant element of revenue across its network in
euros, and therefore a stronger sterling vs euro at average rates has reduced
revenue through the year, only partly offset by the converse impact on costs.
easyJet's cost base also includes US dollar denominated costs, particularly
fuel and lease payments, and therefore post-hedge US dollar strengthening has
increased the sterling value of those headline costs.
FINANCIAL PERFORMANCE
Revenue
2022 2021
£m Group £ million £ million
Passenger revenue 3,816 1,000
Ancillary revenue (excluding package holiday revenue) 1,585 424
easyJet holidays revenue* 368 34
Total revenue 5,769 1,458
* easyJet holidays revenue includes the elimination of intercompany airline
transactions
Total revenue increased by 296% to £5,769 million (2021: £1,458 million) and
302% at constant currency. This was a combined result of increased customer
volumes and a focus on yield optimisation resulting in improved ticket yield,
with ancillary yield performing strongly. The total number of passengers
carried increased by 242% to 69.7 million (2021: 20.4 million), which was
driven by a 189% increase in seats flown to 81.5 million seats (2021: 28.2
million seats) and a 13.0 percentage point increase in load factor to 85.5%
(2021: 72.5%). This reflects the increased capacity following the reduction in
travel restrictions across Europe over the year, and the associated
strengthening in customer demand as the recovery from Covid-19 continues.
Additionally, within revenue there was a £22 million credit (2021: £10
million) arising from the release of aged contract liabilities within other
payables, split £19 million against passenger revenue and £3 million against
ancillary revenue.
Total Airline revenue per seat of £66.23 was 33% ahead of 2021 at constant
currency and load factors of 85.5% were 13.0 percentage points ahead.
Likewise, total yield of £77.48 was 13% favourable when compared against 2021
at constant currency, with passenger yields 14% favourable and ancillary
yields 11% favourable.
Ancillary revenue of £1,585 million was 274% ahead of 2021, and 279% at
constant currency. This was principally due to a good performance on
initiatives with strong attachment across both bags and seats, favourable
yield and the increase in passenger numbers compared to 2021. Note that
airline ancillary revenue is now 15% higher than it was in FY19 despite
passenger numbers being 27% lower.
easyJet holidays revenue increased by 1,082% to £368 million (2021: £34
million) with strong yields and growth in customer numbers to 1.1 million
(2021: 0.1 million) as the holidays offer resonated with customers in its
first full summer season of trading under its new operating model.
Headline costs excluding fuel
2022 2021
Group Airline Group Airline
£ million £ per seat £ million £ per seat
Operating costs and income
Airports, ground handling, holidays accommodation, and other operating costs 1,716 17.70 446 15.01
Crew 767 9.40 495 17.56
Navigation 339 4.16 102 3.62
Maintenance 301 3.69 222 7.90
Selling and marketing 173 1.88 60 1.94
Other costs 635 7.38 319 10.80
Other income (10) (0.12) (6) (0.21)
3,921 44.09 1,638 56.62
Ownership costs
Aircraft dry leasing 2 0.04 5 0.20
Depreciation 539 6.60 456 16.19
Amortisation 25 0.25 24 0.74
Net finance charges 117 1.45 110 3.83
683 8.34 595 20.95
Foreign exchange loss / (gain) 64 0.77 (10) (0.32)
747 9.11 585 20.63
Headline costs excluding fuel 4,668 53.20 2,223 77.25
Headline cost per seat excluding fuel for the Airline decreased by 31% to
£53.20 (2021: £77.25), and also decreased by 32% at constant currency.
Included within the Group headline costs excluding fuel of £4,668 million is
£330 million (2021: £46 million) related to the holidays business, the cost
increase primarily being activity related due to the growth of the business
compared to last year.
Operating costs and income
Airports, ground handling and other operating costs increased by 285% to
£1,716 million (2021: £446 million), and Airline cost per seat increased by
18% to £17.70 (2021: £15.01), and by 19% at constant currency. Within the
result for the year is a release of airport charge accruals of £18 million
(2021: £4 million) as the return of flying activity has reduced some of the
contract uncertainty and risks which were previously being accrued for.
Together with increased marketing activity the release helped offset an
overall increase in airport rates and operating costs associated with improved
load factors, and an increase in passenger and security charges that drove a
cost increase on a per seat basis.
Crew costs increased by 55% to £767 million (2021: £495 million), but
Airline cost per seat decreased by 46% to £9.40, and Airline cost per seat
also decreased by 46% at constant currency. This cost per seat decrease was
primarily due to fixed payroll costs being spread over higher flying
capacity, partially offset by the reduction in furlough schemes in the year
(£8 million support 2022 vs £134 million support 2021) and additional
one-off crew payments, including retention bonuses. To help mitigate some of
the cost pressures, a proportion of captains remained on seasonal contracts.
Navigation costs increased by 232% to £339 million (2021: £102 million), and
Airline cost per seat increased by 15% to £4.16 (2021: £3.62) and by 17% at
constant currency, as a result of an increase in the sector length of our
commercial flying compared to the comparative year and an increase in
EuroControl rates effective from January 2022.
Maintenance costs increased by 36% to £301 million (2021: £222 million), and
Airline cost per seat decreased by 53% to £3.69 (2021: £7.90) and decreased
by 53% at constant currency. This cost per seat decrease was driven by the
fixed element of our maintenance costs which have been spread over increased
capacity in the year, whilst also having a reduction in repair costs and
cleaning costs.
Selling and marketing costs increased by 188% to £173 million (2021: £60
million). This was due to a combination of factors: £37 million of the
increase was from increased marketing spend and the focus on easyJet holidays
as a result of the revival of travel post-pandemic; whilst £76 million of the
increase was on sale and distribution costs, predominantly the result of
credit card bookings and associated fees increasing as activity returned.
Other costs increased by 99% to £635 million (2021: £319 million), and
Airline cost per seat decreased by 32% to £7.38 (2021: £10.80), and by 31%
at constant currency. Other costs include the impact of the significant
disruption experienced in the year, with EU261 compensation and welfare costs
of £205 million (2021: £7m net credit arising from the release of a Covid
specific welfare provision). These compensation payments per customer were
over double the level experienced pre-pandemic. In addition, wet lease costs
of £23 million (2021: £nil) were incurred to maintain capacity. Wet lease
arrangements were also used to support the new slots secured in Gatwick and
Porto, increasing our route offer, at a cost of £30 million (2021: £nil
million). The significant driver in the decrease in the cost per seat is that
fixed costs are being spread over higher flown capacity.
Ownership costs
Depreciation costs increased by 18% to £539 million (2021: £456 million),
and Airline cost per seat decreased by 59% to £6.60 (2021: £16.19). This
increase was driven by higher maintenance-related depreciation as a result of
increased flying hours, combined with an increase in the number of leased
aircraft, and the change in UEL estimation for CEO aircraft in the prior year,
the first full year impact being to increase the depreciation charge by £50
million in the year (2021: £13 million, 3 months impact). The overall
increase in depreciation costs was partially offset by the regular discounting
of the maintenance provision which resulted in a credit to the income
statement of £71 million (2021: credit £20 million), principally due to the
increase in US dollar interest rates over the year.
Net finance charges increased marginally by 6% to £117 million (2021: £110
million), and Airline cost per seat decreased by 62% to £1.45 (2021: £3.83).
The decrease per seat is a consequence of the higher capacity, partially
offset by increased interest costs.
Foreign exchange loss / (gain) moved to a loss of £64 million (2021: £10
million credit) with the increased impact of the retranslation of foreign
currency denominated monetary assets and liabilities arising from the currency
movements in the year, with sterling being weaker against both the US dollar
and euro on 30 September 2022 compared to 30 September 2021.
Fuel
2022 2021
Group Airline Group Airline
£ million £ per seat £ million £ per seat
Fuel 1,279 15.68 371 13.16
Fuel costs for 2022 were £1,279 million, compared to £371 million in 2021.
The higher costs were driven both by the 189% rise in flying volumes as well
as the significant increase arising from the unhedged portion of fuel
purchases as a consequence of the upward pressure on fuel prices over the
year. Fuel cost per seat of £15.68 was a 19% increase on the prior year, and
a 17% increase at constant currency.
During the year the average market price payable for jet fuel increased by 92%
from $554 per tonne in 2021 to $1,063 per tonne in 2022. This was
substantially mitigated by the hedging undertaken by the Group, with the
overall post hedge fuel price for 2022 of $705 per tonne being only 12% higher
than the post hedge fuel price of $631 per tonne achieved in 2021. The fuel
cost includes an offset of allocated free ETS certificates, with a significant
proportion of carbon costs in the year met by carried forward and in-year
allocations.
The Group uses jet fuel derivatives to hedge against significant increases in
jet fuel prices to mitigate cash and income statement volatility in the short
term. In order to manage the risk exposure, jet fuel derivative contracts are
used in line with the Board approved policy to hedge up to 18 months of
estimated exposures in advance, with approximately 60% hedged on average in
the first 12 months.
Summary consolidated statement of financial position
2022 2021 Change
£ million £ million £ million
Goodwill and other non-current intangible assets 582 582 -
Property, plant and equipment (excluding RoU assets) 3,676 3,639 37
Right of use (RoU) assets 953 1,096 (143)
Derivative financial instruments 442 203 239
Equity investment 31 30 1
Other assets (excluding cash and money market deposits) 1,022 619 403
Unearned revenue (1,043) (846) (197)
Trade and other payables (1,685) (1,128) (557)
Other liabilities (excluding debt) (775) (646) (129)
Capital employed 3,203 3,549 (346)
Cash and money market deposits* 3,640 3,536 104
Debt (excluding lease liabilities) (3,197) (3,367) 170
Lease liabilities (1,113) (1,079) (34)
Net debt (670) (910) 240
Net assets 2,533 2,639 (106)
* Excludes restricted cash
Since 30 September 2021 net assets have decreased by £106 million.
The net book value of property, plant and equipment excluding right of use
assets, has increased by £37 million, the impact of the sale and leaseback of
10 aircraft being offset by the eight new owned aircraft brought into the
fleet in the year and the depreciation charge for the year.
At 30 September 2022, right of use (RoU) assets amounted to £953 million
(2021: £1,096 million) and lease liabilities amounted to £1,113 million
(2021: £1,079 million) which reflects additions during the year as a result
of aircraft sale and leasebacks, as well as the impact of lease payments,
extensions and depreciation on RoU assets.
There has been a £239 million increase in the net asset value of derivative
financial instruments, with a closing net asset balance of £442 million
(2021: £203 million asset). The movement is largely due to mark-to-market
gains on US dollar hedges and cross currency interest rate swaps as a result
of the weakened pound against the US dollar and euro in comparison to the
rates at 30 September 2021. This gain was partially offset by a reduction in
the asset value of jet fuel hedges compared to 30 September 2021.
Other assets have increased by £403 million, mainly driven by increased
current intangible assets reflecting the ETS credits held as a result of
increased flying and therefore carbon emissions (and pending surrender in
2023), and increased trade and other receivables.
Unearned revenue increased by £197 million, reflecting improved customer
confidence and strong future bookings compared to the prior year.
Trade and other payables have increased by £557 million predominantly as a
result of higher activity and volumes, and an increase in ETS payables due to
higher credit prices, partially offset by a reduction in voucher liabilities
with customers having greater opportunities to utilise these vouchers during
2022.
Other liabilities have increased by £129 million, mainly as a result of
increased provisions, in particular for maintenance with the increase in
flying over the year, and also the provision for customer claims reflecting
the higher volume of disruption events in the year.
Debt has decreased by £170 million mainly as a result of the repayment of the
final £300 million of the Covid Corporate Financing Facility (CCFF) in the
year, plus the $100 million partial repayment of the UKEF facility, offset by
weaker sterling at 30 September 2022 increasing the translated value of the
debt.
As at 30 September 2022, 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
2022 2021 Increase/ (decrease)
Operating measures
Seats flown (millions) 81.5 28.2 189.0%
Passengers (millions) 69.7 20.4 241.7%
Load factor 85.5% 72.5% 13.0ppt
Available seat kilometres (ASK) (millions) 97,287 33,348 191.7%
Revenue passenger kilometres (RPK) (millions) 84,874 23,594 259.7%
Average sector length (kilometres) 1,193 1,184 0.8%
Sectors ('000) 456 156 192.3%
Block hours ('000) 938 311 201.6%
easyJet holidays passengers (thousands) (1) 805 58 1,287.9%
Number of aircraft owned/leased at end of year 320 308 3.9%
Average number of aircraft owned/leased during year 321 331 (3.0%)
Number of aircraft operated at end of year 310 239 29.7%
Average number of aircraft operated during year 255 198 28.8%
Number of routes operated at end of year 988 927 6.6%
Number of airports served at end of year 153 153 0.0%
2022 2021 Favourable/ (adverse)
Financial measures
Total return on capital employed (0.6%) (22.4%) 21.8ppt
Headline return on capital employed 0.1% (25.5%) 25.6ppt
Airline total loss before tax per seat (£) (3.01) (36.33) (91.7%)
Airline headline loss before tax per seat (£) (2.65) (39.87) (93.4%)
Airline total loss before tax per ASK (pence) (0.25) (3.11) (92.0%)
Airline headline loss before tax per ASK (pence) (0.22) (3.41) (93.5%)
Revenue
Airline revenue per seat (£) 66.23 50.54 31.0%
Airline revenue per seat at constant currency (£) ((3)) 67.33 50.54 33.2%
Airline revenue per ASK (pence) 5.55 4.37 27.0%
Airline revenue per ASK at constant currency (pence) ((3)) 5.64 4.37 29.1%
Airline revenue per passenger (£) ((2)) 77.48 69.72 11.1%
Airline revenue per passenger at constant currency (£) ((2) (3)) 78.77 69.72 13.0%
Costs
Per seat measures
Airline headline cost per seat (£) 68.88 90.41 (23.8%)
Airline total cost per seat (£) 69.24 86.87 (20.3%)
Airline headline cost per seat excluding fuel (£) 53.20 77.25 (31.1%)
Airline headline cost per seat excluding fuel at constant currency (£) ((3)) 52.66 77.57 (32.1%)
Airline total cost per seat excluding fuel (£) 53.56 73.72 (27.3%)
Airline total cost per seat excluding fuel at constant currency (£) ((3)) 53.02 74.04 (28.4%)
Per ASK measures
Airline headline cost per ASK (pence) 5.77 7.64 (24.5%)
Airline total cost per ASK (pence) 5.80 7.34 (21.0%)
Airline headline cost per ASK excluding fuel (pence) 4.46 6.53 (31.7%)
Airline headline cost per ASK excluding fuel at constant currency (pence) 4.41 6.55 (32.7%)
((3))
Airline total cost per ASK excluding fuel (pence) 4.49 6.23 (27.9%)
Airline total cost per ASK excluding fuel at constant currency (pence) ((3)) 4.45 6.26 (28.9%)
(1) Total holiday customers including affiliates is 1.1 million (FY21: 0.1
million).
(2) Prior year comparative restated to show correct figure.
(3) Constant currency metrics restate FY22 using FY21 rates, and excludes the
impact of foreign exchange revaluations from both current year and prior year
results.
Going Concern and Viability Statement
Assessment of prospects
The Strategic Report in the annual report and accounts sets out the activities
of the Group and the factors likely to impact its future development,
performance and position. The Finance Review in the annual report and accounts
sets out the financial position of the Group, cash flows, liquidity position
and borrowing activity. The notes to the accounts include the objectives,
policies and procedures for managing capital, financial risk management
objectives, details of financial instruments and hedging activities, and
exposure to credit risk and liquidity risk.
In accordance with the requirements of the 2018 UK Corporate Governance Code,
the Directors have assessed the long term prospects of the Group, taking into
account its current position and a range of internal and external factors,
including the principal risks. The Directors have determined that a three-year
period is an appropriate timeframe for this viability assessment. In
concluding on a three-year period, the Directors considered the reliability of
forecast information, the duration and 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)
As at September 2022 Maturity date Available funds (drawn and undrawn)
Eurobonds February 2023 €500m
October 2023 €500m
June 2025 €500m
March 2028 €1,200m
Revolving credit facility September 2025 (*) $400m
UKEF backed facility January 2026 $1,770m
* Option to extend to September 2027 at lender's consent
The fleet plan - the plan retains some flexibility to adjust the size of the
fleet in response to opportunities or risks
Strength of the balance sheet and unencumbered assets - this sustainable
strength gives us access to capital markets
Risk assessment - see detailed risk assessment in the annual report and
accounts.
Stress testing
The corporate risk management framework facilitates the identification,
analysis, and response to plausible 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 and the controls and mitigations
identified.
Both individually and combined these potential risks are unlikely to require
significant additional management actions to support the business to remain
viable, however, there could be actions that management would deem necessary
to reduce the impact of the risks. The stress testing scenarios identified in
the table 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 through to June 2024.
As at 30 September 2022 easyJet has a net debt position of £0.7 billion
including cash and cash equivalents and money market deposits of £3.6
billion, with unrestricted access to £4.7 billion of liquidity and has
retained ownership of 57% of the total fleet with 41% being unencumbered.
The Directors have reviewed the financial forecasts and funding requirements
with consideration given to the potential impact of severe but plausible
downside risks. easyJet has modelled a base case representing management's
best estimation of how the business plans to perform over the period. The
future impact of climate change on the business has been incorporated into
strategic plans, including the estimated financial impact within the base case
cash flow projections of the future estimated price of ETS permits, the
phasing out of the free ETS permits from 2024, the expected price and quantity
required of Sustainable Aviation Fuel usage and fleet renewals.
The business is exposed to fluctuations in fuel prices and foreign exchange
rates. easyJet is currently c.74% hedged for fuel in H1 of FY23 at c.US$814
per metric tonne, c.51% hedged for H2 FY23 at c.US$903 and c.25% hedged for H1
FY24 at c.US$922.
In modelling the impact of severe but plausible downside risks, the Directors
have considered demand suppression leading to a reduction in ticket yield of
5% and reduced capacity of 5% as well as sensitivities on fuel price (increase
of $100 per metric tonne), operational costs (additional inflation assumed on
all costs), re-occurrence of additional disruption costs (at year ended 30
September 2022 levels) and delays in the delivery of strategic revenue
initiatives. These impacts have been modelled across the whole going concern
period. In addition, this downside-model also includes a grounding of 25% of
the fleet for one month in the peak trading month of August to cover the range
of severe but plausible risks that could result in significant operational
disruption. This downside scenario resulted in a significant reduction in
liquidity but still maintained sufficient headroom on external liquidity
requirements.
After reviewing the current liquidity position, committed funding facilities,
the base case and severe but plausible downside financial forecasts
incorporating the uncertainties described above, the Directors have a
reasonable expectation that the Group has sufficient resources to continue in
operation for the foreseeable future. For these reasons the Directors
continue to adopt the going concern basis of accounting in preparing the
Group's financial statements.
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 2025. In making this
statement, the Directors have made the following key assumptions:
1. easyJet has access to a variety of funding options including capital
markets, aircraft financing and bank or government debt. The stress testing
demonstrates that the current funding with refinancing of the existing bonds
would be sufficient to retain liquidity in both the base and downside cases.
2. In assessing viability, it is assumed that the detailed risk
management process as outlined in the annual report and accounts captures all
plausible risks, and that in the event that multiple risks occur, all
available actions to mitigate the impact to the Group would be taken on a
timely basis and have the intended impact.
3. There is no prolonged grounding of a substantial portion of the fleet
greater than included in the downside risk scenario. This includes a grounding
of 25% of the fleet for one month in the peak trading month of August to cover
the range of severe but plausible risks that could result in significant
operational disruption.
The key risks that are most likely to have a significant impact on 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 viability Risks considered Management action and Board considerations
Safety, security, and operations 1. Significant safety or security incident · Operational disruption and increase of costs (1, 2) · easyJet Safety Board meet monthly. Functional Safety Action Groups in place
across the business (1,2)
2. Pandemic · Significant media coverage and/or partial grounding of fleet leading to a
reduction in future revenue of up to 10% (1,2) · Hull and Liability insurance in place (1,2,3)
3. Significant operational disruption
· Fines/regulatory sanctions (1) · A safety policy is published (1,2)
· Increased EU261 compensation (3) · Biosecurity standards group in place (2)
· Operational Resilience actions (3)
Asset efficiency and effectiveness 4. Single aircraft type operation · Scheduled reductions/cancellations or partial grounding of fleet leading to · Enterprise Project Management Office in place to oversee delivery of
a reduction in revenue of up to 10% (4,7) projects (5)
5. Non-delivery of strategic initiatives
· Inefficient use of resources leading to financial underperformance (5) · Monitoring of airport capacity (6)
6. Airport Infrastructure
· Loss of market share due to increased competitor capacity (6,7) · Introduction of A320neo aircraft (4)
7. Continuity of services
· Significant increase in costs (6) · Work closely with Airbus to retain some flexibility in fleet planning (4)
· Operational disruption, modelled by a downside risk scenario (4,6,7) · Airport business continuity plans in place (7)
Legislative/regulatory landscape 8. Brand licence · Loss of brand licence (8) · Regular engagement with easyGroup holdings and proactive management of
brand-related issues (8)
9. Changing landscape · Sustained adverse media coverage leading to reduction in revenue of up to
10% (8,10) · Compliance framework in place including mandatory training (9)
10. Shareholder activism
· Significant spike in operational costs (9) · Use of In-house and external legal advisors (9)
· Fines/regulatory sanctions (9) · Active shareholder engagement programme (10)
People 11. Industrial action · Operational disruption leading to increased costs and loss of revenue of · Positive and on-going relationship with trade unions and employee workforce
up to 10% (11) (11)
12. Talent acquisition and retention within the Group
· Sustained inability to deliver strategic initiatives by up to 50% (12) · Regular employee surveys and action groups to focus on well-being, talent
and retention (12)
· Creation of Retention program (12)
· Hybrid working (12)
Environment and sustainability 13. Climate change transition · Increased costs including ETS, SAF, additional legal and technology costs · Framework in place - the pathway to net zero (13 a-d)
and increased cost of maintenance and replacement of aircraft (13 a,b,d)
a) future environmental legislation and technology
· Contracting for SAF volumes (13 a)
· Reduction in revenue of up to 10% due to customer demand (13 c)
b) changes to carbon trading scheme · More fuel efficient A320 and A321 NEO's (13 a)
c) changing consumer demand · Investing in both hydrogen and electric aircraft initiatives (13 a)
d) increased taxation
Technology and digital safety 14. Failure of critical technologies · Loss of the website leading to reduction in revenue of up to 10% (14) · Ongoing monitoring of critical technologies and interdependencies (14)
15. Significant digital safety event · Significant spike in costs relating to legal and settlement costs (15) · IT major incident management team in place (15)
· Data and cyber risk governance structure exist to regularly review data and
risk (15)
· Dedicated Information Security team (15)
Macro-economic and geopolitical 16. Competitive environment · Reduction in earnings and cash and/or increase in costs due to loss of · Strategic planning to ensure flying schedules are responsive to demand (16)
competitive advantage (16)
17. Volatility in financial markets
· Competitor monitoring systems and processes in place (16)
· Modelling excluding uncommitted funding (16, 17)
· Consideration of various sensitivities and stress testing to the forecast
· Fuel sensitivities to +$100 MT/tonne on forecast levels, adverse foreign presented to the board on an ongoing basis (16,17)
exchange rate movement by 10% and fluctuating carbon prices. Cost inflation
estimates increased up to 10% (17) · Finance Committee oversees the Group treasury and funding policies (17)
· Liquidity buffer maintained (16,17)
· Rolling hedging programme in place (17)
Consolidated income statement
Year ended 30 September
2022 2021
Headline Non-headline (note 2) Total Headline Non-headline (note 2) Total
Notes £ million £ million £ million £ million £ million £ million
Passenger revenue 3,816 - 3,816 1,000 - 1,000
Ancillary revenue 1,953 - 1,953 458 - 458
Total revenue 5 5,769 - 5,769 1,458 - 1,458
Fuel (1,279) - (1,279) (371) - (371)
Airports, ground handling, holidays accommodation, and other operating costs (1,716) - (1,716) (446) - (446)
Crew (767) - (767) (495) - (495)
Navigation (339) - (339) (102) - (102)
Maintenance (301) - (301) (222) - (222)
Selling and marketing (173) - (173) (60) - (60)
Other costs (635) (30) (665) (319) 47 (272)
Other income 10 - 10 6 79 85
EBITDAR 569 (30) 539 (551) 126 (425)
Aircraft dry leasing (2) - (2) (5) - (5)
Depreciation 7 (539) - (539) (456) - (456)
Amortisation of intangible assets (25) - (25) (24) - (24)
Operating profit/(loss) 3 (30) (27) - (1,036) 126 (910)
Interest receivable and other financing income * 26 - 26 40 33 73
Interest payable and other financing charges (143) - (143) (150) (59) (209)
Foreign exchange (loss)/gain * (64) - (64) 10 - 10
Net finance charges (181) - (181) (100) (26) (126)
Loss before tax (178) (30) (208) (1,136) 100 (1,036)
Tax credit/(charge) 3 31 8 39 236 (58) 178
Loss for the year (147) (22) (169) (900) 42 (858)
Loss per share, pence
Basic 4 (22.4) (159.0)
Diluted 4 (22.4) (159.0)
* Interest receivable and other financing income, and foreign exchange
(loss)/gain recognised in the prior year has been re-presented.
Consolidated statement of comprehensive income
Year ended Year ended
30 September 2022 30 September 2021
Notes £ million £ million
Loss for the year (169) (858)
Other comprehensive income/(loss)
Items that may be reclassified to the income statement:
Cash flow hedges
Fair value gains in the year 774 477
Gains transferred to income statement (730) (17)
Hedge discontinuation (gains)/losses transferred to income statement (5) 25
Related tax charge 3 (11) (93)
Cost of hedging 8 (3)
Related tax (charge)/credit 3 (2) 1
Items that will not be reclassified to the income statement:
Remeasurement gain of post-employment benefit obligations 41 5
Related deferred tax credit 3 (10) (4)
Fair value gains/(loss) on equity investment 1 (3)
66 388
Total comprehensive loss for the year (103) (470)
Consolidated statement of financial position
As at 30 September 2022 As at 30 September 2021
Notes £ million £ million
Non-current assets
Goodwill 365 365
Other intangible assets 217 217
Property, plant and equipment 7 4,629 4,735
Derivative financial instruments 127 86
Equity investment 31 30
Restricted cash 3 1
Other non-current assets 91 135
Deferred tax assets 3 62 39
5,525 5,608
Current assets
Trade and other receivables 367 291
Intangible assets 495 140
Derivative financial instruments 423 185
Restricted cash 4 13
Money market deposits 126 -
Cash and cash equivalents 3,514 3,536
4,929 4,165
Current liabilities
Trade and other payables (1,685) (1,128)
Unearned revenue (1,042) (844)
Borrowings 8 (437) (300)
Lease liabilities (247) (189)
Derivative financial instruments (86) (31)
Current tax payable 3 (5) (2)
Provisions for liabilities and charges 9 (176) (183)
(3,678) (2,677)
Net current assets 1,251 1,488
Non-current liabilities
Borrowings 8 (2,760) (3,067)
Unearned revenue (1) (2)
Lease liabilities (866) (890)
Derivative financial instruments (22) (37)
Non-current deferred income (4) (4)
Post-employment benefit obligation (1) (37)
Provisions for liabilities and charges 9 (589) (420)
(4,243) (4,457)
Net assets 2,533 2,639
Shareholders' equity
Share capital 207 207
Share premium 2,166 2,166
Hedging reserve 170 156
Cost of hedging reserve 5 (1)
Translation reserve (6) -
(Accumulated losses)/Retained earnings (9) 111
Total equity 2,533 2,639
Consolidated statement of changes in equity
Share Share premium Hedging reserve Cost of hedging reserve Translation reserve Retained earnings/ (accumulated losses) Total
capital
£ million £ million £ million £ million £ million £ million £ million
At 1 October 2021 207 2,166 156 (1) - 111 2,639
Loss for the period - - - - - (169) (169)
Other comprehensive income - - 28 6 - 32 66
Total comprehensive (loss)/income - - 28 6 - (137) (103)
Transfers to property, plant & equipment - - (14) - - - (14)
Share incentive schemes
Employee share schemes - value of employee services - - - - - 26 26
Purchase of own shares - - - - - (9) (9)
Currency translation differences - - - - (6) - (6)
At 30 September 2022 207 2,166 170 5 (6) (9) 2,533
Retained earnings
Share Share premium Hedging reserve Cost of hedging reserve Translation reserve Total
capital
£ million £ million £ million £ million £ million £ million £ million
At 1 October 2020 125 1,051 (236) 1 (2) 960 1,899
Loss for the period - - - - - (858) (858)
Other comprehensive (loss)/profit - - 392 (2) - (2) 388
Total comprehensive (loss)/income - - 392 (2) - (860) (470)
Net proceeds from rights issue 82 1,115 - - - - 1,197
Share incentive schemes
Employee share 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
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 £1,235 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 £91 million of proceeds outstanding, which were
subsequently received in October 2021. Costs of £38 million were incurred on
the rights issue.
At 30 September 2022 amounts in the cost of hedging reserve comprised of a £7
million gain related to cross-currency basis (2021: £nil) and a £2 million
loss related to the time value of options (2021: £1 million loss).
Consolidated statement of cash flows
Year ended Year ended
30 September 2022 30 September 2021
Notes £ million £ million
Cash flows from operating activities
Cash generated from/(used in) operations 10 892 (755)
Interest and other financing charges paid * (130) (127)
Interest and other financing income received 11 1
Settlement of derivatives * 7 (155)
Net tax (paid)/received (4) 1
Net cash generated from/(used in) operating activities 776 (1,035)
Cash flows from investing activities
Purchase of property, plant and equipment 7 (501) (140)
Purchase of non-current other intangible assets (29) (9)
Net (increase)/decrease in money market deposits 11 (126) 32
Net proceeds from sale and leaseback of aircraft 87 836
Net cash (used in)/generated from investing activities (569) 719
Cash flows from financing activities
Proceeds from issue of ordinary share capital 91 1,144
Share issue transaction costs (38) -
Purchase of own shares for employee share schemes (9) (6)
Proceeds from debt financing 11 - 1,804
Repayment of bank loans and other borrowings 11 (377) (1,045)
Repayment of capital element of leases 11 (206) (261)
Decrease in restricted cash 7 5
Net cash (used in)/generated from financing activities (532) 1,641
Effect of exchange rate changes 303 (73)
Net (decrease)/increase in cash and cash equivalents (22) 1,252
Cash and cash equivalents at beginning of year 3,536 2,284
Cash and cash equivalents at end of year 3,514 3,536
* Historically cash settlement of derivatives relating to cash flows for
ineffective and discontinued hedging derivatives and fair value derivatives
through profit and loss have been presented on the face of the consolidated
statement of cash flows within interest and other financing charges paid. In
order to give greater clarity to the users of the financial statements, these
derivatives have been presented as a separate line within the consolidated
statement of cash flows for the current and prior year.
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 and package holiday Group operating
principally in Europe. The Company is a public limited company (company number
03959649), incorporated and domiciled in the United Kingdom, whose shares are
listed on the London Stock Exchange under the ticker symbol EZJ. The
registered office address is Hangar 89, London Luton Airport, Luton,
Bedfordshire, LU2 9PF.
On 31 December 2020, IFRS as adopted by the European Union at that date was
brought into UK law and became UK-adopted International Accounting Standards,
with future changes being subject to endorsement by the UK Endorsement Board.
easyJet plc transitioned to UK-adopted International Accounting Standards in
its consolidated financial statements on 1 October 2021. This change
constitutes a change in accounting framework. However, there is no impact on
recognition, measurement or disclosure in the period reported as a result of
the change in framework. The consolidated financial statements of easyJet plc
have been prepared in accordance with UK-adopted International
Accounting Standards and with the requirements of the Companies Act 2006 as
applicable to companies reporting under those standards.
Basis of preparation
This consolidated financial information has been prepared in accordance with
the Listing Rules of the Financial Conduct Authority.
The financial information set out in this document does not constitute
statutory financial statements for easyJet plc for the two years ended 30
September 2022 but is extracted from the 2022 Annual Report and Financial
statements.
The financial statements have been prepared on a going concern basis. In
adopting the going concern basis for preparing these financial statements, the
Directors have considered easyJet's business activities, together with factors
likely to affect its future development and performance, as well as easyJet's
principal risks and uncertainties through to June 2024.
As at 30 September 2022 easyJet has a net debt position of £0.7 billion
including cash and cash equivalents and money market deposits of £3.6
billion, with unrestricted access to £4.7 billion of liquidity and has
retained ownership of 57% of the total fleet with 41% being unencumbered.
The Directors have reviewed the financial forecasts and funding requirements
with consideration given to the potential impact of severe but plausible
downside risks. easyJet has modelled a base case representing management's
best estimation of how the business plans to perform over the period. The
future impact of climate change on the business has been incorporated into
strategic plans, including the estimated financial impact within the base case
cash flow projections of the future estimated price of ETS permits, the
phasing out of the free ETS permits from 2024, the expected price and quantity
required of Sustainable Aviation Fuel usage and fleet renewals.
The business is exposed to fluctuations in fuel prices and foreign exchange
rates. easyJet is currently c.74% hedged for fuel in H1 of FY23 at c.US$814
per metric tonne, c.51% hedged for H2 FY23 at c.US$903 and c.25% hedged for H1
FY24 at c.US$922.
In modelling the impact of severe but plausible downside risks, the Directors
have considered demand suppression leading to a reduction in ticket yield of
5% and reduced capacity of 5% as well as sensitivities on fuel price (increase
of $100 per metric tonne), operational costs (additional inflation assumed on
all costs), re-occurrence of additional disruption costs (at year ended 30
September 2022 levels) and delays in the delivery of strategic revenue
initiatives. These impacts have been modelled across the whole going concern
period. In addition, this downside-model also includes a grounding of 25% of
the fleet for one month in the peak trading month of August to cover the range
of severe but plausible risks that could result in significant operational
disruption. This downside scenario resulted in a significant reduction in
liquidity but still maintained sufficient headroom on external liquidity
requirements.
After reviewing the current liquidity position, committed funding facilities,
the base case and severe but plausible downside financial forecasts
incorporating the uncertainties described above, the Directors have a
reasonable expectation that the Group has sufficient resources to continue in
operation for the foreseeable future. For these reasons the Directors
continue to adopt the going concern basis of accounting in preparing the
Group's financial statements.
The Annual Report and Financial statements for 2021 has been delivered to the
Registrar of Companies.
The Annual Report and Financial statements for 2022 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 2022.
Critical accounting judgements and estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make judgements as to
the application of accounting standards to the recognition and presentation of
material transactions, assets and liabilities within the Group, and the use of
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements, and the reported amounts
of income and expenses during the reporting period. Estimations are based on
management's best evaluation of a range of assumptions; however events or
actions may mean that actual results ultimately differ from those estimates,
and these differences may be material. The estimates and the underlying
assumptions are reviewed regularly.
Critical accounting judgements
The following are the critical judgements, apart from those involving
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
(note 2)
Non-headline items are those where, in management's opinion, their separate
reporting provides an additional understanding to users of the financial
statements of easyJet's underlying trading performance, and which are
significant by virtue of their size and/or nature. In considering the
categorisation of an item as non-headline, management's judgement includes,
but is not limited to, a consideration of:
· whether the item is outside of the principal activities of the
easyJet Group (being to provide point-to-point airline services and package
holidays);
· the specific circumstances which have led to the item arising,
including, if extinguishing an item from the statement of financial position,
whether that item was first generated via headline or non-headline activity.
The rebuttable presumption being that when subsequently extinguishing an item
from the statement of financial position, any impact on the income statement
should be reflected in the same way as that which was used in the initial
creation of the item;
· the likelihood and potential regularity of recurrence; and,
· whether the item is unusual by virtue of its size.
Non-headline items may include impairments, amounts relating to corporate
acquisitions and disposals, expenditure on major restructuring programmes and
the gain or loss resulting from the initial recognition of sale and leaseback
transactions.
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 the holders of the
remaining 51% of the shares have no entitlement to any dividends from that
holding and the Company has an option to acquire those shares for a
pre-determined minimal consideration.
Vouchers issued
It is currently easyJet policy in the event of flight cancellations to offer
customers the option to accept vouchers in lieu of cash refunds. The liability
for these vouchers is classified as other payables until the voucher is
redeemed against a future booking when it is reclassified to unearned revenue.
Vouchers issued by easyJet holidays have a 12-month redemption period and any
vouchers not redeemed by their expiry date are recognised in the consolidated
income statement as revenue. Over the course of the pandemic, and the
following period of recovery, the expiry date for easyJet holidays vouchers
was extended on a number of occasions to allow customers more time to utilise
the vouchers.
For airline flight vouchers, to date no vouchers have expired as expiry dates
have been extended to ensure customers have the maximum opportunity to utilise
their vouchers. Additionally, no breakage has been recognised for airline
vouchers as it is judged that customer behaviour, and therefore redemption
levels, has not yet normalised post pandemic given the flight disruption seen
as the industry starts to return to pre-pandemic levels of flying. For
vouchers issued to customers in countries where regulations stipulate unused
vouchers should be refunded to the customer before the expiry of the statutory
period, the required refunds have been made.
Applying breakage to the balance of the airline flight vouchers at 30
September 2022 at a rate of 10% would result in a reduction in the liability
of c.£11 million.
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 evaluated with reference to external valuations specific
to the easyJet fleet and assessed to be at fair value. The accounting
treatment would have been different if the transactions had not been at fair
value (refer to the leases accounting policy in the Group Financial
Statements).
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 nine 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 General Data Protection Regulation (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 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, and no
provision has been made.
Critical accounting estimates
The following critical accounting estimates involve a higher degree of
judgement or complexity and are the major sources of estimation uncertainty
that have a significant risk of resulting in a material adjustment to the
carrying amounts of assets and liabilities within the next year.
Owned aircraft carrying values - £3,598 million (note 7)
The key estimates used in arriving at aircraft carrying values are the useful
economic lives and residual values of the owned aircraft.
Aircraft are depreciated over their useful economic life to their residual
values in line with the property, plant and equipment accounting policy. The
useful economic life is based on easyJet's long-term fleet plan and intended
utilisation of the current fleet which include long term assumptions of market
conditions and customer demands which by their nature are inherently
uncertain.
Residual value estimates for aircraft are based on independent aircraft
valuations. The valuations are based on an assessment of the current and
future state of the global marketplace for specific aircraft assets. Should
the marketplace for an asset class deteriorate unpredictably, there could be a
risk that the recoverable amount for some aircraft assets would fall below
their current carrying value or that residual values are subject to downward
adjustment. If the market expectation of residual value of the easyJet
aircraft varied by +/- 10% this would result in an approximate +/- £6 million
impact on annual depreciation rates.
Owned and leased aircraft asset recoverable amounts are included in the
Airline CGU and are therefore subject to review for impairment annually or
when there is an indication of impairment within the Airline CGU.
Aircraft maintenance provisions - £636 million (note 9)
easyJet incurs liabilities for maintenance costs arising during the lease term
of leased aircraft. These costs arise from legal and constructive contractual
obligations relating to the condition of the aircraft when it is returned to
the lessor. To discharge these obligations, it is usual for easyJet to carry
out at least one heavy maintenance check on each of the engines and the
airframe of the aircraft during the lease term. A material provision
representing the estimated cost of this obligation is built up over the course
of the lease.
The estimates and assumptions used in the calculation of the provision are
reviewed at least annually, and when information becomes available that is
capable of causing a material change to an estimate, such as renegotiation of
end of lease return conditions, increased or decreased aircraft utilisation,
or changes in the cost of heavy maintenance services and expected uplift in
future prices. Given the 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. The most critical estimates in the
calculation of the provision are considered to be the future utilisation of
the aircraft and the expected increase in the cost of the heavy maintenance
checks. Should inflation rates be c.2% higher than the currently estimated
rates in all periods for which they are not yet contractually fixed or
currently under negotiation, this would increase the provision by c.£6
million.
The rates used to discount the provision to arrive at a present value are
based on observable market rates and are therefore at less risk of management
estimation.
Goodwill and landing rights - £523 million
It is management's judgement that there are two separate cash generating units
which generate largely independent cash flows, being easyJet's airline route
network and its holidays business. The recoverable amount of goodwill and
landing rights has been determined based on value in use calculations for the
airline route network 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 and exchange rates, long-term
economic growth rates for the principal countries in which it operates, and
its pre-tax weighted average cost of capital. Strategic plans include
assessments of the future impact of climate change on easyJet to the extent
these can be estimated. This includes, for example the future estimated price
of ETS permits, the phasing out of the free ETS permits from 2024, the
expected price and quantity required of Sustainable Aviation Fuel usage and
fleet renewals. The impact of longer-term climate change risks that are not
part of the strategic plans have been considered as part of the stress testing
and plausible scenarios modelled.
Fuel price and exchange rates continue to be volatile in nature and the
ability to pass these changes on to the customer is a critical judgement that
requires estimation. The assumptions used are sensitive to significant changes
in these rates. In addition, assumptions over customer demand levels could
have a significant effect on the impairment assessment performed. Any future
events that would lead to extended travel restrictions or fleet grounding may
impact future impairment or useful economic life assessments. The stress
testing considered as part of the overall impairment assessment takes into
account different assumptions for these key estimates.
Recoverability of deferred tax assets - £443 million (note 3)
The deferred tax asset balances include £443 million (2021: £425 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 include the expected impact of climate change on
easyJet, and the future financial impact within cash flow projections,
including the future estimated price of ETS permits, the phasing out of the
free ETS permits from 2024, the expected price and quantity required of
Sustainable Aviation Fuel usage and fleet renewals.
The tax losses for which a deferred tax asset has been recognised are expected
to be utilised within the next eight years, assessed by 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 period over which the loss is utilised has been stress tested by assessing
probable future taxable income for the next three years, based on the same
risk weightings to those applied above, but assuming no profit growth from the
end of a three year forecast period. The resultant reduction in forecast
taxable profit calculated on this basis would extend the tax loss utilisation
period by one year.
The tax losses can be carried forward indefinitely and have no expiry date.
Other payables - Liability for contract with customers - £158 million
Other contract liabilities include amounts transferred from unearned revenue
to other payables due to the cancellation of flights. This liability includes
customer vouchers outstanding and amounts where customers have not yet
requested a refund, voucher, or flight transfer. These liabilities are judged
to be contract liabilities as they arise from performance obligations where
payment has been received from the customer but the performance obligation has
not been met. The judgement applied to the voucher liability is described
under critical accounting judgements. For balances where customers have not
yet requested a refund, voucher or flight transfer, management has judged that
sufficient time has passed to assess the element of this liability where the
likelihood of the contractual right being exercised is considered to be
remote. This has been estimated to apply to balances aged over 24 months and
of low value, and these liabilities have been taken to the consolidated income
statement as revenue. A 5% increase in this breakage would result in an
additional £1 million of revenue being recognised.
Defined benefit pension assumptions - £140 million gross obligation
The Swiss pension scheme meets the requirements under IAS 19 to be recognised
as a defined benefit pension scheme and the net pension obligation is
recognised on the consolidated statement of financial position. The
measurement of scheme assets and obligations are calculated by an independent
actuary in line with IAS 19. The financial and demographic assumptions used in
the calculation are determined by management following consultation with the
independent actuary with consideration of external market movements and
inputs. The calculation is most sensitive to movements in the discount rate
applied, which has been subject to significant volatility.
Provisions for customer claims - £80 million (note 9)
easyJet incurs liabilities for amounts payable to customers who make claims in
respect of flight delays and cancellations, performance, quality issues, and
personal injury and illness experienced whilst on holiday and refunds of air
passenger duty or similar charges, for which claims could be made up to six
years after the event. The key estimation in the provision is the passenger
claim rates, in particular during periods of disrupted flying. The estimation
carries a level of uncertainty as it is based on customer behaviour. The basis
of all estimates included in the provision are reviewed at least annually and
when information becomes available that may result in a material change to the
estimate. Should customer claims for disruption events be 5% higher than
estimated this would result in an addition to the year end provision of £5
million.
New and revised standards and interpretations
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 adjustments as a result of adopting these standards. The
amendments that became applicable for annual reporting periods commencing on
or after 1 January 2021, and did not have a material impact were:
· IFRS 3 Reference to the conceptual framework
· IAS 37 Onerous contracts - Cost of fulfilling a contract
· IAS 16 PPE Proceeds before intended use amendments
· IFRS 1, IFRS 9 and IFRS 16 Annual improvements to IFRS standards
· Interest rate benchmark reform - Phase 2 - amendments to IFRS 9, IAS
39, IFRS 7, IFRS 4 and IFRS 16
During the current reporting period, the Group has adopted the 'Interest Rate
Benchmark Reform Phase 2' amendments to IFRS 9, and IFRS 7 and has applied
this to the specific hedging relationship identified. Three cross currency
interest rate swaps are used to convert the entire €500 million fixed rate
Eurobond maturing in February 2023 to a sterling floating rate exposure. All
three swaps originally were based on three-month LIBOR. Following the
cessation of GBP LIBOR, the floating interest transitioned to the ISDA
Fallback Rate for fixings from January 2022.
The Group has elected to apply the phase 2 reliefs and has amended its hedge
designation and documentation to reflect these changes which are required by
IBOR reform. Such amendments did not give rise to the hedge relationship being
discontinued.
The LIBOR transition working group which was formed in the prior year
continues to consider the wider impacts on the business of these changes. No
other material impacts have emerged during the period.
There are no new or revised standards that have not been applied that would
materially impact these financial statements in the current reporting period.
2. Non-headline items
An analysis of the amounts presented as non-headline is given below:
Year ended Year ended
30 September 2022 30 September 2021
£ million £ million
Sale and leaseback loss/(gain) 21 (65)
Restructuring release - (61)
Loss on disposal of landing rights 10 -
Fair value adjustment and hedge discontinuation (credit)/charge (1) 26
Total non-headline charge/(credit) before tax 30 (100)
Tax (credit)/charge on non-headline items (8) 58
Total non-headline charge/(credit) after tax 22 (42)
Sale and leaseback loss/(gain)
During the year, easyJet completed the sale and leaseback of 10 A319 aircraft
(2021: 7), nil A320 (2021: 24), nil A321 (2021: 4) and nil engines (2021: 2).
The income statement impact of the sale and leaseback of the 10 aircraft was a
£21 million loss recognised in other costs (2021: £79 million gain
recognised in other income offset by £14 million loss recognised in other
costs).
Restructuring
The restructuring processes initiated during the pandemic are largely
complete, which has resulted in the majority of the remaining provision held
for these programmes being remeasured and a credit of £10 million (2021: £61
million credit) being recognised during the year as non-headline within other
costs where the initial expense was recognised. Whilst these processes were
brought to completion, during the year new plans were announced to reduce the
level of activity at our base at Berlin Brandenburg airport, and as a result
of this downsizing a restructuring provision of £10 million has been
recognised as non-headline within other costs, resulting in a net £nil
movement in the non-headline restructuring provision. As at 30 September 2022
there were unpaid amounts of £15 million (2021: £18 million) for all
consultations which have not been finalised and settled.
In addition, the downsizing of activity and restructuring at the Berlin
Brandenburg base has resulted in easyJet returning a number of the landing
right "slots" held at this airport. Landing rights at Tegel airport were
acquired as part of the acquisition of Air Berlin's operations at the airport
in October 2017, and subsequently transferred to the new Berlin airport. The
landing rights have been held at cost on the statement of financial position
as an intangible asset. A number of slots ceased to be operated during the
pandemic but were not disposed of at that point due to the suspension of slot
utilisation rules during that time. On emergence from the pandemic the slots
were not re-started, and utilisation of the landing rights has further reduced
with the downsizing of easyJet's activity at the base. These landing rights
have been returned to the Berlin slot regulator in the financial year. All
slots held at the airport were acquired together through a separate
acquisition of an intangible asset, and therefore an allocation of the
purchase price to the surrendered slots has been estimated. As no
consideration was received in return for giving back the slots the reduction
constitutes a loss on disposal of an intangible asset.
Hedge discontinuation
Hedge discontinuation relates to hedge accounting ineffectiveness for items
currently held in fair value and cash flow hedge relationships, and the
cumulative fair value of financial 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
value of derivatives held in a hedge relationship. Due to the reduced level of
commercial flying over the pandemic, easyJet had been in an over-hedged
position from both a jet fuel and FX perspective. Where forecast exposures
were no longer expected to occur, these previously hedged amounts no longer
qualified for hedge accounting. This resulted in a £1 million net credit
(2021: £25 million charge) related to these discontinued derivatives held in
other comprehensive income being immediately recorded in the income statement.
Additionally, in the prior year fair value adjustments of £1 million charge
were recorded related to hedge ineffectiveness on hedges of foreign currency
denominated borrowings.
Tax on non-headline items
After the necessary tax adjustments which principally relate to the sale and
leaseback transactions in both the current and comparative periods, the tax
adjusted non-headline items amount to a loss of £22 million (2021: gain of
£42 million) which results in a tax credit of £8 million (2021: £58 million
charge) for the year.
3. Tax credit
Tax on loss on ordinary activities
2022 2021
£ million £ million
Current tax
Adjustments in respect of prior years - 5
Foreign tax 7 4
Total current tax charge 7 9
Deferred tax
Temporary differences relating to property, plant and equipment (50) (36)
Other temporary differences (2) (189)
Adjustments in respect of prior years 2 7
Remeasurement of opening balances due to change in tax rates 4 31
Total deferred tax credit (46) (187)
Total tax credit (39) (178)
Effective tax rate 18.7% 17.2%
Reconciliation of the total tax credit
The tax for the year is lower than (2021: lower than) the standard rate of
corporation tax in the UK as set out below:
2022 2021
£ million £ million
Loss before tax (208) (1,036)
Tax credit at 19.0% (2021: 19.0%) (40) (197)
Income not chargeable for tax purposes:
Expenses not deductible for tax purposes 5 2
Share-based payments 2 2
Adjustments in respect of prior years - current tax - 5
Adjustments in respect of prior years - deferred tax 2 7
Difference in applicable rates for current and deferred tax (12) (54)
Attributable to rates other than standard UK rate 1 2
Change in substantively enacted tax rate 4 31
Movement in provisions (1) (1)
IFRS 16 restricted gain - 25
Total tax credit (39) (178)
Current tax payable at 30 September 2022 amounted to £5 million (2021: £2
million payable). £4 million of this is in relation to an amendment to the
tax return for easyJet Airline Company Ltd for the year ended 30 September
2019 with the balance primarily related to tax payable in other European
jurisdictions.
During the year ended 30 September 2022 net cash tax paid amounted to £4
million (2021: £1 million net cash tax received).
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.
Tax on items recognised directly in other comprehensive income/(loss) or
shareholders' equity:
2022 2021
£ million £ million
Charge/(credit) to other comprehensive income/(loss)
Deferred tax on change in fair value of cash flow hedges (13) (93)
Deferred tax on post-employment benefit (10) (4)
Deferred tax
The net deferred tax (asset)/liability in the statement of financial position
is as follows:
Accelerated capital allowances Short-term timing differences Fair value (gains)/ losses Share-based payments
Post-employment benefit obligation Trading loss
Total
£ million £ million £ million £ million £ million £ million £ million
At 1 October 2021 373 (26) 51 (3) (9) (425) (39)
Charged/(credited) to income statement (32) - 4 2 (2) (18) (46)
Charged to other comprehensive loss - - 13 - 10 - 23
At 30 September 2022 341 (26) 68 (1) (1) (443) (62)
Deferred tax assets/liabilities expected to be settled:
£ million
Current -
Non-current (62)
At 30 September 2022 (62)
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against
current tax liabilities and it is the intention to settle these on a net
basis.
Accelerated capital allowances Short-term timing differences Fair value (gains)/losses Share-based payments
Post-employment
benefit obligation Trading loss Total
£ million £ million £ million £ million £ 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 to other comprehensive income - - 93 - 4 - 97
At 30 September 2021 373 (26) 51 (3) (9) (425) (39)
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.
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 antidilutive potential shares. Where share
options are exercisable based on performance criteria and those performance
criteria have been met during the year, these options are included in the
calculation of dilutive potential shares. The calculation of diluted loss per
share does not assume conversion, exercise, or other issue of potential
ordinary shares that would have an antidilutive effect on earnings per share.
Headline basic and diluted loss per share are also presented, based on
headline loss for the year.
Loss per share is based on:
2022 2021
£ million £ million
Headline loss for the year (147) (900)
Total loss for the year (169) (858)
2022 2021
million million
Weighted average number of ordinary shares used to calculate basic loss per 753 539
share
Weighted average number of ordinary shares used to calculate diluted loss per 753 539
share
2022 2021
Loss per share pence pence
Basic (22.4) (159.0)
Diluted (22.4) (159.0)
2022 2021
Headline loss per share pence pence
Basic (19.6) (166.9)
Diluted (19.6) (166.9)
5. Segmental and geographical revenue reporting
Segmental Analysis:
Year ended 30 September 2022
Airline Holidays Intergroup Group
transactions
£ million £ million £ million £ million
Passenger revenue 3,816 - - 3,816
Ancillary revenue 1,585 495 (127) 1,953
Total revenue 5,401 495 (127) 5,769
Operating costs excl fuel (3,596) (452) 127 (3,921)
Fuel (1,279) - - (1,279)
Balance sheet FX revaluation (63) (1) - (64)
Ownership costs (679) (4) - (683)
Headline (loss)/profit before tax (216) 38 - (178)
Non-headline items (30) - - (30)
Total (loss)/profit before tax (246) 38 - (208)
Year ended 30 September 2021
Airline Holidays Intergroup Group
transactions
£ million £ million £ million £ million
Passenger revenue 1,000 - - 1,000
Ancillary revenue 424 41 (7) 458
Total revenue 1,424 41 (7) 1,458
Operating costs excl fuel (1,595) (50) 7 (1,638)
Fuel (371) - - (371)
Balance sheet FX revaluation 10 - - 10
Ownership costs (592) (3) - (595)
Headline loss before tax (1,124) (12) - (1,136)
Non-headline items 100 - - 100
Total loss before tax (1,024) (12) - (1,036)
The presentation of this note has been expanded to include further detail on
revenue and the cost impact of balance sheet foreign exchange revaluations.
This reflects the increased granularity of the internal reporting to the Chief
Operating Decision Maker and plc Board.
As described in note 1 in the Group Financial Statements, airline revenue is
recognised at a point in time (when the flight takes place). The holidays
revenue detailed in this note includes flight revenue which is also recognised
at the time the flight takes place with the accommodation element of the
revenue recognised over time, aligned to the duration of the holiday.
The intergroup transactions column represents revenue and cost transactions
between Airline and Holidays for the flight element of holiday packages. These
intercompany transactions are eliminated on consolidation; note that in the
annual report, holidays sales and costs are stated net of this intergroup
consolidation adjustment.
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 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:
2022 2021
£ million £ million
United Kingdom 2,845 413
Southern Europe 1,669 619
Northern Europe 1,163 411
Other 92 15
5,769 1,458
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.
easyJet holiday's revenue is generated wholly from the United Kingdom.
easyJet's non-current assets principally comprise its fleet of 181 (2021: 183)
owned and 139 (2021: 125) leased aircraft, giving a total fleet of 320 at 30
September 2022 (2021: 308). In addition to this easyJet was storing 3 aircraft
under power by the hour agreements (2021: 12). 27 aircraft (2021: 27) are
registered in Switzerland, 132 (2021: 110) are registered in Austria, 4 (2021:
13) are registered in the Cayman Islands, and the remaining 160 (2021: 170)
are registered in the United Kingdom.
6. Dividends
No dividend was paid in the year ending 30 September 2022 or 30 September
2021.
7. Property, plant and equipment
Owned assets Right of use assets
Aircraft and spares Land and Buildings Other Aircraft and spares Other Total
£ million £ million £ million £ million £ million £ million
Cost
1 October 2021 4,802 44 55 2,335 45 7,281
Additions 414 - 28 120 - 562
Transfers(2) - - (14) - - (14)
Aircraft sold and leased back (216) - - 25 - (191)
Disposals (12) - (1) (64) - (77)
At 30 September 2022 4,988 44 68 2,416 45 7,561
Accumulated depreciation
At 1 October 2021 1,243 - 19 1,255 29 2,546
Charge for the year 255 - 9 269 6 539
Aircraft sold and leased back (102) - - - - (102)
Disposals (6) - - (45) - (51)
At 30 September 2022 1,390 - 28 1,479 35 2,932
Net book value
At 30 September 2022 3,598 44 40 937 10 4,629
At 1 October 2021 3,559 44 36 1,080 16 4,735
Owned assets Right of use assets
Aircraft and spares Land and Buildings Other Aircraft and spares Other Total
£ million £ million £ million £ million £ million £ 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 * (828) - (15) 559 - (284)
Disposals * (66) - (2) - - (68)
At 30 September 2021 4,802 44 55 2,335 45 7,281
Accumulated depreciation
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 * (153) - - - - (153)
Disposals * (41) - - - - (41)
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
The net book value of aircraft includes £297 million (2021: £132 million)
relating to advance payments for future deliveries. This amount is not
depreciated.
The net book value of aircraft spares is £81 million (2021: £67 million).
As at 30 September 2022, easyJet was contractually committed to the
acquisition of four LEAP engines (2021: 0) and 168 (2021: 101) Airbus 320
family aircraft, with a total estimated list price(1) of US$ 21.9 billion
(2021: US$ 12.3 billion) before escalations and discounts for delivery in
financial years 2023 (7 aircraft), 2024 (21 aircraft), 2025 (23 aircraft) and
2026 to 2029 (117 aircraft).
*£33 million of cost and £33 million of accumulated depreciation from
components disposed of in the year ended 30 September 2021 were identified
which were previously included as disposals, which have now been presented
in Aircraft sold and leased back, reflecting the aircraft with which they
were associated.
The 'Other' categories are comprised of leasehold improvements, computer
hardware, leasehold property, fixtures, fittings and equipment, and work in
progress in respect of tangible projects. The work in progress as at 30
September 2022 was £20 million (2021: £10 million).
Assets of £908 million (2021: £934 million) are pledged as security for the
drawn portion of the UKEF backed facility.
(1) 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 2022 of 11.2% (or
2.7% CAGR).
(2) Transfers are from work in progress on other owned assets to computer
software intangible assets.
8. Borrowings
Current Non-current Total
£ million £ million £ million
At 30 September 2022
Eurobonds 437 1,919 2,356
Term loan (UK Export Finance backed facility) - 841 841
437 2,760 3,197
Current Non-current Total
£ million £ million £ million
At 30 September 2021
Eurobonds - 2,303 2,303
Commercial Paper (Covid Corporate Financing Facility) 300 - 300
Term loan (UK Export Finance backed facility) - 764 764
300 3,067 3,367
Amounts above are shown net of issue costs or discounted amounts which are
amortised at the effective interest rate over the life of the debt
instruments.
The remaining Covid Corporate Financing Facility (CCFF) of £300 million was
repaid in November 2021.
9. Provisions for liabilities and charges
Maintenance provisions Provisions for customer claims Restructuring Other provisions Total provisions
£ million £ million £ million £ million £ million
At 1 October 2021 550 21 18 14 603
Exchange adjustments 93 3 - - 96
Release of provisions - (15) (10) (1) (26)
Additional provisions recognised 141 236 10 21 408
Related to aircraft sold and leased back 6 - - - 6
Updated discount rates net of unwind of discount (71) - - - (71)
Utilised (83) (165) (3) - (251)
At 30 September 2022 636 80 15 34 765
The maintenance provisions provide for maintenance costs arising from legal
and constructive obligations relating to the condition of the aircraft when
returned to the lessor. Provisions for customer claims comprise amounts
payable to customers who make claims in respect of flight delays and
cancellations, performance, quality issues, and personal injury and illness
experienced whilst on holiday, and refunds of air passenger duty or similar
charges. Restructuring and other provisions include amounts in respect of
potential liabilities for employee-related matters and litigation which arose
in the normal course of business.
2022 2021
£ million £ million
Current 176 183
Non-current 589 420
765 603
The split of the current/non-current maintenance provision is based on the
expected maintenance event timings. If actual aircraft usage varies from
expectation the timing of the utilisation of the maintenance provision could
result in a material change in the classification between current and
non-current. Maintenance provisions are expected to be utilised within nine
years.
Within other provisions are provisions for litigation matters. The split of
these provisions between current/non-current is based on the dates of expected
court judgements. Provisions for customer claims and restructuring provisions
could be fully utilised within one year from 30 September 2022 and therefore
are classified as current.
10. Reconciliation of operating loss to cash generated from/(used in)
operations
2022 2021
£ million £ million
Operating loss (27) (910)
Adjustments for non-cash items:
Depreciation 539 456
Loss on disposal of property, plant and equipment 7 30
Loss/(gain) on sale and leaseback 21 (65)
Amortisation of intangible assets 25 24
Share-based payments 26 16
Loss on disposal of landing rights 10 -
Changes in working capital and other items of an operating nature:
Increase in trade and other receivables (151) (8)
Increase in current intangible assets (43) (74)
Increase/(decrease) in trade and other payables 258 (187)
Increase in unearned revenue 197 232
Post employment benefit contributions (1) (7)
Decrease in provisions (7) (294)
Decrease in other non-current assets 64 24
(Decrease)/increase in derivative financial instruments (26) 9
Decrease in non-current deferred income - (1)
Cash generated from/(used in) operations 892 (755)
11. Reconciliation of net cash flow to movement in net debt
1 October 2021 Foreign exchange New debt raised in the year Other and loan issue costs Net 30 September 2022
cash flow
£ million £ million £ million £ million £ million £ million
Cash and cash equivalents 3,536 303 - - (325) 3,514
Money market deposits - - - - 126 126
3,536 303 - - (199) 3,640
Eurobond (2,303) (48) - (5) - (2,356)
Commercial Paper (Covid Corporate Financing Facility) (300) - - - 300 -
Term loan (UK Export Finance backed facility) (764) (150) - (4) 77 (841)
Lease liabilities (1,079) (197) (53) 10 206 (1,113)
(4,446) (395) (53) 1 583 (4,310)
Net debt (910) (92) (53) 1 384 (670)
12. Government Grants and assistance
During the year ended 30 September 2021 easyJet Airline Company Limited
continued to utilised the Coronavirus Job Retention Scheme implemented by the
UK government, where those employees designated as being 'furloughed workers'
were eligible to have 80 per cent of their wage costs paid up to a maximum
amount of £2,500 per month. In the same period, easyJet companies utilised
similar schemes provided by governments in Portugal, Germany, Netherlands,
France, Italy and Switzerland. This continued into the year ended 30 September
2022 for Germany, France and Switzerland. The total amount of such relief
received by the Group in the year ended 30 September 2022 amounted to £8
million (2021: £134 million) and is offset within employee costs in the
income statement. There are no unfulfilled conditions or contingencies
relating to these schemes.
In November 2021 easyJet repaid the remaining £300 million of the Covid
Corporate Finance Facility (CCFF).
On 8 January 2021 easyJet Airline Company Limited signed a five-year term loan
facility of $1.87 billion (with easyJet plc as a Guarantor), underwritten by a
syndicate of banks and supported by a partial guarantee from UK Export Finance
under their Export Development Guarantee scheme. The Export Development
Guarantee scheme for commercial loans is available to
qualifying UK companies, does not carry preferential rates or require state
aid approval, but does contain some restrictive covenants including dividend
payments. However, these restrictive covenants are compatible with easyJet's
existing policies. In April 2022 easyJet repaid $100 million of this facility
reducing the overall UKEF facility size from $1.87 billion to $1.77 billion.
13. Contingent liabilities and commitments
Contingent liabilities
easyJet is involved in a number of disputes and litigation cases which arose
in the normal course of business. The potential outcome of these disputes and
litigations can cover a range of scenarios, and in complex cases reliable
estimates of any potential obligation may not be possible.
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 nine 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.
Additionally, there is a possibility of a claim being made by a third party
supplier, for what would be a material recovery. Management have assessed the
likelihood of a case being brought, easyJet's response and likelihood of a
successful defence and at this stage do not consider it appropriate to provide
for such a possibility.
Contingent commitments
At 30 September 2022 easyJet had outstanding letters of credit and performance
bonds totalling £43 million (2021: £72 million), of which £10 million
(2021: £43 million) expires within one year. The fair value of these
instruments at each year end was negligible.
No amount is recognised on the statement of financial position in respect of
any of these financial instruments as it is not probable that there will be an
outflow of resources and the fair value has been assessed to be £nil.
As part of the commitment to voluntary carbon offsetting, easyJet currently
has contractual commitments to purchase Verified Emission Reductions worth £4
million (2021: £11 million) in total until December 2022.
Following approval of the resolution, at the general meeting on 21 July 2022,
a firm commitment has been agreed with Airbus to substantially complete the
2013 Airbus Agreement. The commitment includes:
· The conversion of six purchase options and 50 purchase rights to a
firm order of 56 A320neo family aircraft with deliveries scheduled between
FY26 and Q1 FY29.
· The conversion of previous firm orders of 18 A320neo aircraft planned
for delivery between FY24 and FY27 to 18 A321neo aircraft deliveries.
The purchase firms up easyJet's order book with Airbus to calendar year 2028,
continuing the Company's fleet refresh, as the 156 seat A319s and older A320s
(180 and 186 seat) leave the business and new A320 (186 seat) and A321neo (235
seat) aircraft enter providing up-gauging, cost, and sustainability
enhancements to the business. Additionally, easyJet has a commitment with CFM
to purchase four LEAP engines over the next two years.
On 26 September 2022, easyJet announced its pathway to net zero. This roadmap
references several partnerships with other commercial companies to explore
certain technologies which may assist with the overall goal to decarbonise the
aviation industry. The majority of these partnerships are in fact agreements
to work together on the areas identified and do not involve a financial
commitment from easyJet other than the time and effort involved in the
collaboration over an agreed period. Where there may be areas requiring a
financial commitment from easyJet in the future, these are still subject to
negotiation and there is no binding commitment on easyJet at the date of
publication of these financial statements.
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 2022.
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 £1 million per annum to this fund and easyGroup contributes
£100,000 per annum. If easyJet contributes more than £1 million per annum,
easyGroup will match its contribution in the ratio of 1:10 up to a limit of
£5 million contributed by easyJet and £500,000 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:
2022 2021
£ million £ million
Annual royalty 14 4
Brand protection (legal fees paid through easyGroup to third parties) 2 1
16 5
At 30 September 2022, £11.1 million (2021: £0.1 million) of the above
aggregate amount was included in trade and other payables.
At 30 September 2022 £nil million (2021: £5.3 million) is due from related
parties and is included within trade and other receivables.
15. Events after the statement of financial position date
On 25 November 2022 the plc Board approved;
· Six aircraft sale & leaseback transactions to take place in the
first half of the year ending 30 September 2023; and
· the acceleration of three Airbus A320neo deliveries from FY25 to
FY24; this is a change to the commitments profile stated in note 11 of the
consolidated financial statements.
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