REG - easyJet PLC - Final Results
28/11/2023 07:00
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RNS Number : 8488U easyJet PLC 28 November 2023
28 November 2023
easyJet plc
Results for the twelve months ending 30 September 2023
Record H2'23 financial performance with a positive outlook for FY24
· Record H2 profit before tax despite challenging external operating
environment
- FY23 headline profit before tax of £455 million (£633 million
year on year improvement)
- easyJet holidays profits grew 221%, delivering £122 million
profit before tax
· Positive outlook for FY24
- October RPS +12% (Q1 RPS expected to be ahead YoY despite being
impacted by Middle East conflict)
- Q2 to Q4 RPS all ahead YoY
- H1 CPS ex fuel to be broadly flat YoY
- easyJet holidays expected to grow >35% in FY24 with ASP up high
single digits
· Remain on track to deliver disciplined growth of c.9% in FY24
- H1'24 c. 42m seats, +11% YoY
- H2'24 c. 59m seats, +8% YoY
· Financial strength
- £41 million net cash with £4.7 billion liquidity
- BBB/Baa3 credit ratings, both with positive outlook
· Dividends reinstated
- 4.5p per share payable in early 2024
- Expect pay out to increase to 20% of headline PAT on FY24's result
- Potential to increase level of future returns to be assessed over
the coming years
Commenting on the results, Johan Lundgren, easyJet's Chief Executive Officer,
said:
"Our record summer performance demonstrates the success of our strategy and
that demand for easyJet remains strong as customers choose us for our network
and value.
"We see a positive outlook for this year with airline and holidays bookings
both ahead year on year and recent consumer research highlights that around
three quarters of Britons plan to spend more on their holidays versus last
year with travel continuing to be the top priority for household discretionary
spending.
"We are confident about the future and the opportunity ahead, focusing on
capital discipline and driving our low cost model to achieve our ambitious
medium term targets."
Overview
easyJet achieved a record performance during summer 2023, despite high fuel
costs and the challenges arising from the external operational environment,
thanks to initiatives implemented over the past year and a half. Supported by
strong consumer demand and easyJet's leading brand position, the Company's
success is driven by the low-risk expansion at primary airports, significant
increases in ancillary revenue, market beating growth for easyJet holidays and
a constant focus on cost. This led to a pre-tax headline profit of £455
million for the 2023 financial year, an improvement of £633m year on year.
Medium-term targets
easyJet has ambitious and credible medium-term targets, that provide the
building blocks to achieve a Group PBT per seat of between £7 to £10. The
levers to achieving this are: reducing winter losses, growing easyJet holidays
to deliver over £250 million of PBT and the cost savings that our current
Airbus order book will deliver from fleet efficiency and upgauging. In
addition to the delivery of our strategy, these targets are integral to
achieving easyJet's ambition to deliver more than £1 billion PBT.
Shareholder Returns
Considering easyJet's strong financial results in FY23 and robust liquidity
position, the board is proposing an ordinary dividend of 4.5 pence per share,
amounting to £34 million, at the upcoming Annual General Meeting. This
represents 10% of the after-tax headline profit. The expectation is that this
will rise to 20% of headline profits after tax in FY24, payable in early 2025.
The Board is committed to maintaining regular returns to shareholders, with
the level of future return to be assessed over the coming years, taking into
account market conditions, capex requirements and progress towards the Group's
new medium-term targets.
Proposed aircraft purchase and conversion
easyJet has an existing order book with Airbus to FY29 for a further 158
A320neo family aircraft still to be delivered. Alongside this, as announced on
12 October 2023, easyJet has entered into conditional arrangements with Airbus
to secure the delivery of a further 157 aircraft (56 A320neo & 101
A321neo) between FY29 - FY34 as well as 100 purchase rights (the "Proposed
Purchase"). This provides easyJet with the ability to complete its fleet
replacement programme of A319 aircraft and replace approximately half of the
A320ceo aircraft as well as providing the foundation for disciplined growth.
The Company is in exclusive negotiations with CFM for the supply of engines
for the Proposed Purchase.
easyJet has also agreed to exercise conversion rights within its current order
book to convert 35 A320neo deliveries into A321neo aircraft (the
"Conversion"). This alongside the Proposed Purchase will deliver lower fuel
burn, CO(2) emissions and operating costs per seat.
A circular is expected to be published on 29 November 2023 giving further
details of the Proposed Purchase and seeking shareholder approval at a General
Meeting on 19 December 2023.
FY23 Financial Summary
- Headline profit before tax of £455 million (2022: £178 million
loss)
o Total revenue increased by 42% to £8,171 million (2022: £5,769 million)
predominantly due to pricing strength, increased flown capacity, improved load
factors and the continued growth of easyJet holidays.
o Group headline costs increased by 30% to £7,716 million (2022: £5,947
million), primarily due to the increase in flown capacity, significantly
increased fuel costs and industry wide inflationary pressures, combined with
resilience measures as part of the summer 2023 ramp up preparations and 15 wet
lease aircraft which were within the fleet for the month of October. The
continued growth of easyJet holidays, with 77% customer growth has seen costs
increase, although at a slower rate than revenue resulting in improved
margins.
- Reported profit before tax of £432 million (2022: £208 million
loss)
o Non-headline loss of £23 million (2022: £30 million loss). Non-headline
items consist primarily of returning final slots at Berlin Brandenburg airport
following the rightsizing of the operation from 18 to 11 aircraft and an
adjustment to right of use asset depreciation to correct a historic non-cash
foreign currency translation error.
Fuel & FX Hedging
Jet Fuel H1'24 H2'24 H1'25 USD H1'24 H2'24 H1'25
Hedged position 76% 51% 25% Hedged position 76% 53% 27%
Average hedged rate ($/MT) 867 823 832 Average hedged rate (USD/GBP) 1.22 1.24 1.24
Current spot ($/MT) at 27.11.23 c.900 Current spot (USD/GBP) at 27.11.23 c.1.25
- Carbon obligation including free allowances
o 100% covered for CY23 at €42/MT
o 86% covered for CY24 at €41/MT
- USD Lease payments hedged for the next three years at 1.29
- Capex hedged for the next 12 months in EUR & USD
Key Stats
( ) 2023 2022 Change
favourable/(adverse)
Capacity(1) (millions of seats) 92.6 81.5 14%
Passengers(2) (millions) 82.8 69.7 19%
Load factor(3) (%) 89% 86% 3ppt
Average sector length (km) 1,224 1,193 3%
Airline revenue per seat (£) 79.84 66.23 21%
Airline RASK (p) 6.52 5.54 18%
Fuel cost per seat (£) 21.95 15.68 (40)%
Airline headline cost ex fuel per seat (£) 54.30 53.20 (2)%
Airline headline cost per seat (£) 76.25 68.88 (11)%
Airline headline CASK ex fuel (p) 4.44 4.45 0%
Airline EBITDAR per seat (£) 10.96 6.46 70%
Airline EBIT per seat (£) 3.94 (0.43) 1,016%
Airline headline PBT/(LBT) per seat (£) 3.59 (2.65) 235%
Group headline PBT/(LBT) per seat 4.91 (2.19) 324%
Holidays passengers (m) 1.9 1.1 77%
Holidays profit before tax (£m) 122 38 221%
Headline EBITDAR Margin 14% 10% 4ppts
Headline ROCE 13% 0% 13ppts
Dividend (pence per share) 4.5 0 -
Outlook
The 2024 financial year has begun positively with strong year-on-year profit
growth in October and revenue per seat on early bookings for Q2-Q4 pleasingly
ahead of last year. There's also strong growth in easyJet holidays' bookings
for all periods on sale, continuing the upward trend. Consequently, easyJet
aims for continued progress towards our medium-term profitability ambitions.
Early winter results for FY24 will see an impact from the conflict in the
Middle East, which started on 7th October. In our planned winter schedule,
flights to Israel, Jordan (both temporarily paused) and Egypt represented 4%
of capacity and 10% ASKs. Additionally there was a broader impact on near term
flight searches and bookings across the industry, though this seems to be
coming back with a recent improvement in trading. Accordingly, despite
positive underlying strength, easyJet does not currently expect its Q1 loss to
improve year on year. The present booking strength for summer 2024, coupled
with supply constraints in Europe, provide a positive outlook for the year as
a whole.
For further details please contact easyJet plc:
Institutional investors and analysts:
Michael Barker Investor
Relations +44 (0) 7985 890
939
Adrian Talbot Investor
Relations +44 (0) 7971 592
373
Media:
Anna Knowles Corporate Communications
+44 (0) 7985 873 313
Olivia Peters Teneo
+44 (0) 20 7353 4200
Harry Cameron Teneo
+44 (0) 20 7353 4200
Conference call
There will be an analyst presentation at 09:00am GMT on 28 November 2023 at
Nomura, One Angel Lane, London, EC4R 3AB.
Alternatively, a webcast of the presentation will be available both live and
for replay (please register on the following link):
https://brrmedia.news/EZJ_FY23 (https://brrmedia.news/EZJ_FY23)
Alternatively dial in details are as follows: Dial in details are as follows:
0808 109 0700/+44 (0) 33 0551 0200 quoting 'easyJet full year results' when
prompted.
Revenue
Total revenue saw a significant rise of 42%, reaching £8,171 million,
compared to £5,769 million in 2022. This is primarily due to an increase in
capacity to 92.6 million seats from 81.5 million in 2022, coupled with strong
ticket yield and a continued increase in ancillary revenue generation.
Passenger revenue climbed by 37% to £5,221 million, up from £3,816 million
in 2022, as we operated with higher capacity compared to the prior financial
year. The Passenger Revenue Per Seat (RPS) also saw a 20% increase to £56.37,
up from £46.80 in 2022. This growth is driven by easyJet's optimised network
at primary airports, as demand remained strong through the year.
Group ancillary revenue saw a 51% increase to £2,950 million, up from £1,953
million in 2022. This is due to increased capacity and the rapid growth of
easyJet holidays (with a 77% YoY increase in customers). Airline ancillary
revenue per seat also rose by 21% to £23.47, compared to £19.43 in 2022.
This is a result of easyJet's ongoing efforts to increase conversion and
revenue management, generating additional revenue for the airline.
Costs
Group headline costs, excluding fuel, rose by 22% to £5,683 million, up from
£4,668 million in 2022. This increase is attributed to higher capacity,
industry-wide inflation, rapid expansion of easyJet holidays, and resilience
measures implemented ahead of Summer 2023.
easyJet reported a gain of £27 million from foreign exchange on balance sheet
revaluations, benefiting from the strengthening of sterling against the USD
during the period on our net USD-denominated liabilities. This compares to a
£64 million loss recorded in 2022.
Headline Airline cost per seat, excluding fuel, saw a marginal increase of 2%
to £54.30 from £53.20 in 2022, aligning closely with the sector length
increase of 3%. This is despite inflation being seen across the cost base,
including within airport, navigation and staffing expenses, and a 3-percentage
point increase in load factor observed during the year, which affects per
passenger charges within airports.
Non-Headline Items
Non-headline items are those where, in management's opinion, separate
reporting provides an additional understanding to users of the financial
statements of easyJet's underlying trading performance, and which are
significant by virtue of their size and/or nature. These costs are separately
disclosed and further detail can be found in the notes to the financial
statements. Group non headline loss of £23 million (2022: £30 million loss)
was recognised in the 2023 financial year. The significant items are the
return of final slots at Berlin Brandenburg airport following the rightsizing
of the operation from 18 to 11 aircraft and an adjustment to right of use
asset depreciation to correct an historic non-cash foreign currency
translation error.
Balance Sheet
During the 2023 financial year easyJet has focused on reducing its gross debt.
This has included the repayment of a €500 million bond in February 2023 and
the refinancing of the $1.8bn UKEF facility where an additional $950 million
of gross debt was repaid. During the first quarter of the 2024 financial year,
easyJet has also repaid a €500 million Eurobond which matured in October
2023.
As at 30 September 2023 our net cash position was £41 million (30 September
2022: £670 million net debt) including cash and cash equivalents and money
market deposits of £2.9 billion (30 September 2022: £3.6 billion).
Fleet
easyJet's total fleet as at 30 September 2023 comprised 336 aircraft (30
September 2022: 320 aircraft, excluding three A319 aircraft held on a zero
rent basis). The increase was driven by:
· Delivery of ten new A320neo aircraft, including accelerating two FY25
scheduled orders into FY23.
· Acquisition of eight mid-life A320 leased aircraft.
· Re-entry into the fleet of one former easyJet A319 aircraft, and the
return to service of three aircraft held on a zero-rental agreement in 2022.
Six older leased aircraft exited the fleet at the end of their lease-term
(three A319 aircraft, and three A320 aircraft), as easyJet continues its
journey of retiring older, less efficient, aircraft whilst benefitting from
the A320neo family aircraft with their superior fuel efficiency and greater
number of seats.
easyJet already has 69 A320neo family aircraft within its fleet and an
existing order book with Airbus to FY29 for a further 158 A320neo family
aircraft still to be delivered. Alongside this, easyJet has now entered into
conditional arrangements with Airbus to secure the delivery of a further 157
aircraft (56 A320neo & 101 A321neo) between FY29 - FY34 as well as 100
purchase rights (the "Proposed Purchase"). This provides easyJet with the
ability to complete its fleet replacement programme of A319 aircraft and
replace approximately half of the A320ceo aircraft, alongside providing the
foundation for disciplined growth.
The average age of the fleet increased to 9.9 years (30 September 2022: 9.3
years). The average gauge of the fleet is currently 179 seats per aircraft (30
September 2022: 179 seats).
Fleet as at 30 September 2023
Owned Leased Total % of fleet Changes since Sep-22 Firm
Orders
A319 29 66 95 28% 1 -
A320 103 69 172 51% 5 -
A320neo 47 7 54 16% 10 90(a)
A321neo 4 11 15 5% - 68(a)
183 153 336 ( ) 158
Percentage of total fleet 54% 46%
a) easyJet retains the option to alter the aircraft type of
future deliveries, subject to providing sufficient notification to the OEM.
The presented number assumes the conversion of 35 A320neo deliveries into
A321neo deliveries as set out in the proposed aircraft purchase and conversion
section of this release. It does not reflect the proposed aircraft order from
FY29 to FY34.
Our flexible fleet plan allows us to expand or contract the size of the fleet
depending on the demand outlook.
Number of aircraft FY24 FY25 FY26
Current contractual maximum 346 373 395
Base fleet plan 346 358 370
Current contractual minimum 337 338 313
New aircraft deliveries 16 19 27
Gross capital expenditure (£'m) c.1,300 c.1,500 c.1,900
Capex is comprised of new fleet delivery payments, maintenance related
expenditure, lease payments and other capital expenditure such as IT
development.
Strategy
easyJet's purpose is to make low-cost travel easy. Our strategy is built
around four key priorities that leverage our structural benefits in the
European aviation market. These strategic initiatives guide easyJet towards
its goal of becoming Europe's most loved airline, delivering value for our
customers, shareholders, and people. The details of our strategic priorities
are as follows:
· Building Europe's best network
· Transforming our revenue capability
· Driving our low-cost model
· Delivering ease and reliability
Building Europe's best network
easyJet has a strong network of number one and number two positions in primary
airports, which has proven to be amongst the highest yielding in the market.
This allows us to make efficient network choices, focusing on maximising
returns.
easyJet constantly reviews its network to ensure capacity is allocated to
markets where demand and returns are highest. From Summer 2019 to 2023, we've
reallocated 47 aircraft, leading to stronger returns at bases where aircraft
have been added and at those where capacity has been streamlined. Alongside
this, we've expanded customer options by introducing over 80 new routes this
year. Our investment into Italy and capacity rationalisation in Berlin saw
routes mature during FY23, delivering an 45% and 83% profit improvement
respectively. We expect to see continued route maturity in these locations
through FY24 alongside maturity from the investments we made through FY23 in
Porto and Lisbon.
We aim to further strengthen our position in key markets as the competitive
landscape evolves. easyJet remains ready for opportunistic growth alongside
growth on our existing network, through leveraging slot growth in core markets
and upgauging which allows expansion at slot constrained airports. In 2023,
42% of capacity was in fully constrained airports (+5 ppts vs 2019) and 39% of
capacity was in airports that are constrained at peak times (+9 ppts vs 2019),
which demonstrates our increased concentration at airports that deliver the
highest returns.
Our focused network strategy can be summarised as follows:
1. Lead in our Core Markets
easyJet prioritises slot-constrained airports as these are where customers
want to fly to and from, which as a result have superior demand and yield
characteristics. In our core markets, we are able to achieve cost leadership
and preserve scale. We provide a balanced network portfolio across domestic,
city and leisure destinations. Our scale enables us to provide a market
leading network and schedule.
2. Investment in Destination Leaders
We will build on our existing leading positions in Western Europe's top
leisure destinations to provide network breadth and flexibility. This will
also unlock cost benefits, enabling us to manage seasonality and support the
growth of easyJet holidays. It also ensures that easyJet remains top of mind
for customers and is seen as the 'local airline' for governments and
hoteliers.
3. Build our network in Focus Cities
easyJet is building a network of key cities, broadening our presence across
Europe. This is a low-risk way of serving large origin markets. We will base
assets in Focus Cities where it makes sense from a cost perspective.
Transforming revenue
easyJet recognises that the continued evolution of our product portfolio
represents a significant opportunity to build on spend per customer and
deliver enhanced sustainable returns.
Airline Ancillaries:
Cabin bags and our leisure bundles, amongst other ancillary products, have
continued to deliver incremental revenue through the period. Additionally,
easyJet's inflight retail offering, introduced last year, has resulted in a
profit per seat increase of +42% in FY23 compared to the former model. These
initiatives have led to the Airline's ancillary yield being £11.95 higher
than the same period in 2019.
Integrated pricing has been implemented for cabin and hold bags on 16% of the
network, delivering a £0.43 per seat benefit on the test routes, with the
roll out to be continued to the rest of the network in FY24. This is a step
towards the long-term strategy of total basket optimisation. Further
initiatives are underway with data science in revenue management, gauge
optimisation and e-commerce enabling us to unlock further merchandising
capability.
easyJet holidays:
easyJet holidays continues its rapid growth, becoming a major player within
the sector and doubling its UK market share year on year. easyJet holidays has
recorded 77% customer growth year on year and a profit before tax of £122
million in the 2023 financial year.
As the holidays business grows in scale, targeted investments will continue to
be made to strengthen the customer base. Future initiatives are underway to
optimise pricing alongside enhancing the product offering through room options
and ancillary products.
The UK market has further opportunities for growth in Leisure, City Breaks and
new products, to continue to increase our market share. Our multi-currency
technology platform also enables easy and rapid expansion into other source
markets. This year we launched Switzerland, which is on sale for departures
from early 2024. We already have a leading leisure network from Geneva and
Basel to destinations including the Balearics, Canaries and Greece, where
Switzerland's package holiday market of 1.1 million customers offers an
excellent opportunity for easyJet holidays to continue its growth.
Moving into the 2024 financial year, easyJet holidays expects to grow by more
than 35% taking its UK market share from 5% to 7%. The business will also
launch French and German source markets as the holidays business continues to
expand its presence as a pan European holiday company.
Driving our low-cost model
easyJet has a cost advantage over its major competitors within its primary
airport network. Alongside cost actions, easyJet is focused on improving
margins through its network optimisation, effective pricing management and
ancillaries driving higher yields.
easyJet has delivered a number of cost actions:
· Descent profile optimisation software: the upgraded technology
retrofit has been completed on our CEO aircraft, achieving fuel savings
through lower thrust and fuel burn during descent not only providing a cost
saving but also achieving a permanent carbon emissions saving.
· Insourcing line maintenance at LGW, BER, GLA, EDI, BHX, BFS, MAN and
BRS: enabling easyJet to have greater control over maintenance, reducing cost
incurred and improving the quality of maintenance fulfilled.
o Since opening our Berlin hangar in January, we have seen a 38% average
cost saving per aircraft visit.
o Line maintenance insourcing at Birmingham, Manchester and Belfast
resulting in line maintenance being fully insourced in the UK.
· Increasing automation of self-service management: increasing
digitalisation of customer flows and reducing the need for contact centre
support.
o 80% of customers are now using the self-service platform as our Generative
AI tool is assisting customer queries, resulting in a 50% reduction in
response processing times and a 30% reduction in processing cost of each email
received.
Cost remains a core emphasis for the business for the coming year, with cost
benefits to come through:
· Fleet upgauging: As we replace A319s with A320 family aircraft, we
will unlock efficiency benefits, increasing the average gauge from 179 to the
low 190s by FY28 and to the low 200s by FY34. The delivery of NEO aircraft
from easyJet's new and existing orders will also bring additional fuel and
airport incentive benefits.
· Increased productivity: capacity restoration through Winter 24 will
promote productivity and additional cost savings. Further efficiency will be
driven through data and IA.
Delivering ease and reliability
easyJet aims to deliver a seamless and digitally enabled customer journey at
every stage and is continuously working to enhance the customer experience.
The focus areas to deliver ease in the customer experience are:
· Communications: providing helpful and timely information flows and
creating cohesion across the end-to-end experience.
· Airport journey: improving the airport experience by optimising core
processes including boarding and bag drop like providing twilight check in at
more airports and the application of technology enhancements such as biometric
automation to reduce queuing.
· Inflight offering: creating a more personalised service enabled
through the use of connected technology and enhancing the current crew's
engagement.
· Disruption management: focusing on improvements to streamline
policies, simplify processes and automate solutions, alongside more efficient
communications via connected devices.
easyJet also aims to deliver reliable performance through:
· Process oversight: a focus on base driven reporting, with station
level ownership and control.
· Prior to departure: optimising planning activities such as crew
rostering and standby allocation.
· On the day turn execution: key to delivery, with elements including
supply chain, event communications management, hand luggage policies and
inventory optimisation.
Despite the operational challenges seen during the year, we executed on our
plan for FY23, ranking either first or second in on time performance in our
top 10 airports. Our focus on resilience will continue as we look ahead to
FY24, we are investing to ensure we are well prepared for external challenges
that may happen in Summer 24.
Gatwick continues to be a clear focus, and we have looked to further optimise
our schedule and increased the level of standby aircraft here.
Our enhanced use of technology is also being applied to improve and speed up
every aspect of the customer experience. More than three quarters of
customers exclusively use our digital self-service platforms to self-serve,
and we have also implemented A.I to help speed up the time it takes to resolve
customer queries.
Sustainability
There are many benefits of travel and tourism. It connects people, countries
and cultures and supports the aspirations and livelihoods of millions of
people. If lost, it would have a devastating global impact on economic
prosperity and social mobility. Clearly, we need to find a balance that both
lowers the impact of aviation and safeguards these benefits. This is why we
developed and published a SBTi-aligned net zero roadmap, and secured
validation from SBTi for our interim target of 35% greenhouse gas emissions
intensity reduction by 2035 (against a FY19 baseline). We are collaborating in
multiple cross-sector partnerships and have invested multimillions of pounds
in the development of zero carbon emission technology. It is very pleasing to
see that this work is being recognised, with each of our ratings from CDP,
Sustainalytics and MSCI either improving or being maintained. During 2023 we
were also included into FTSE 4 Good.
We're also making significant breakthroughs. We partnered with Rolls-Royce to
set a world first by successfully running a modern aero engine on green
hydrogen. A test on a key component in a Pearl 700 engine in September further
proves hydrogen's suitability for aviation, and - in addition to continued
partnerships with Airbus, GKN Aerospace and Cranfield Aerospace Solutions -
easyJet has played the lead role in establishing the Hydrogen in Aviation
Alliance (HIA) to help ensure the infrastructure and supply exists, so we can
capitalise on this opportunity when it becomes available.
We're also making substantial operational efficiencies. A fifth of our fleet
comprises the highly efficient NEO aircraft and we've invested heavily in
state-of-the-art software to drive flight efficiencies - all of which are
contributing to easyJet's best-ever carbon intensity performance in FY23.
Looking beyond our operations, we continue to support the vital work of UNICEF
and many charitable and local community focused projects. At the same time,
easyJet holidays is working to maximise the socio-economic benefits of tourism
to destination communities, while managing environmental impacts.
Sustainability is at the heart of our strategy and everyone at easyJet is
dedicated to building a sustainable and thriving aviation sector that will
serve and benefit countless generations to come.
Our People
easyJet continues to have a market leading reputation as an employer of
choice, as evidenced through our Glassdoor rating of 4.2.
In a recruitment market that remains competitive, we continue to improve how
we attract and retain diverse talent that reflects the communities we serve.
We have evolved our Employee Value Proposition (EVP) and launched a more
compelling careers website to deliver a much-improved candidate experience and
to convert more of the interest generated by our recruitment advertising into
applications.
When people join easyJet, our proactive and rewarding health and wellbeing
strategy empowers them to take small, easy steps to better wellbeing every
day. By giving colleagues the tools, support and confidence they need to take
care of themselves and each other, they will have the energy to enable us to
perform at our best and win together.
By building an inclusive culture and living our behaviours, we create a place
where everyone can not only be themselves but also thrive, grow to their full
potential and be at their best.
Footnotes
(1) Capacity based on actual number of seats flown.
(2) Represents the number of earned seats flown. Earned seats include seats
which are flown whether or not the passenger turns up, as easyJet is a
no-refund airline and once a flight has departed, a no-show customer is
generally not entitled to change flights or seek a refund. Earned seats also
include seats provided for promotional purposes and to staff for business
travel.
(3) Represents the number of passengers as a proportion of the number of seats
available for passengers. No weighting of the load factor is carried out to
recognise the effect of varying flight (or "sector") lengths.
OUR FINANCIAL RESULTS
The year was characterised by a strong trading environment, culminating in a
record summer for the Group, supported by an excellent contribution from
easyJet holidays.
Headline profit before tax of £455 million for the year ended 30 September
2023 was an improvement of £633 million on the loss of £178 million for the
year ended 30 September 2022, with total revenue of £8,171 million, £2,402
million ahead of the prior year. The year was characterised by a strong
trading environment, culminating in a record summer for the Group. This result
was supported by an excellent contribution from easyJet holidays, which has
started to demonstrate its potential for the future.
easyJet flew 82.8 million passengers in the year (2022: 69.7 million), up 19%
on the previous year, this being the first year with no travel restrictions
since 2019. Strong yields and airline revenue per seat (RPS) recovery (15% and
21% increase respectively over the prior year) were key drivers of success in
the year. Load factor for the year was 89.3% (2022: 85.5%), an improvement of
3.8 percentage points, and capacity was 14% ahead of the prior year. easyJet
holidays delivered package holidays for 1.9 million customers (including agent
commission passengers, 2022: 1.1 million), generating incremental revenue of
£776 million (2022: £368 million) and delivering £122 million of headline
profit before tax (2022: £38 million). The year was also characterised by
industry-wide cost challenges coming off the back of persistently high levels
of inflation. Despite the resilience measures that easyJet undertook, we also
saw significant disruption including the impact of ATC failures and external
industrial action in several of our markets.
Trading in the first half of the financial year, with the absence of the prior
year pandemic-related travel restrictions, saw capacity increase by 25% to
37.9 million seats flown (H1 2022: 30.3 million) and strong yields delivering
a record first half RPS result of £66.46 (H1 2022: £47.61). The total number
of passengers carried in H1 increased by 41% to 33.1 million (H1 2022: 23.4
million) with load factors at 87.5%, a 10.2 percentage point increase on the
comparative period (H1 2022: 77.3%). Disruption due to external industrial
action has been a feature throughout the year, starting in the first half of
the financial year with French ATC strikes resulting in flight cancellations
and an impact on on-time performance. In March alone only five days were
unaffected by strike action.
Second half trading saw a continuation of strong yields and RPS results, and a
Q4 load factor of 91.6%. July and August revenues of over £1 billion in each
month were a record, as was headline EBIT in Q4, the strongest quarterly
headline EBIT in easyJet's history. This was despite significant disruption
over the summer period, with ongoing industrial action and significant ATC
challenges across Europe, in particular at Gatwick Airport. easyJet took
action to thin the flying schedule at Gatwick over the peak trading period in
order to mitigate ATC issues and ensure flights flew to schedule, protecting
the customer experience by limiting on-the-day cancellations.
Fuel prices remained high throughout the year and experienced significant
volatility, ranging from c. $700 to $1,100 per metric tonne. The industry
faced significant inflationary cost pressures in addition to the cost of the
disruption in the year. Notwithstanding, with a focus on cost management,
productivity, and increased capacity, the airline cost per seat (CPS)
excluding fuel for the year of £54.30, was an increase of only 2% on the
prior year (2022: £53.20). With the increase in average sector length
factored in, airline headline cost per available seat kilometre (CASK)
excluding fuel at 4.44 pence was marginally lower than the prior year (2022:
4.45 pence).
The strong revenues and cost management delivered a headline EBITDAR
achievement for the year of £1,130 million, £561 million greater than the
prior year (2022: £569 million), and a statutory profit before tax for the
year of £432 million, an improvement from the loss of £208 million in the
previous year.
Where amounts are presented at constant currency these values are an
alternative performance measure (APM) and are not determined in accordance
with International Financial Reporting Standards (IFRS), but provide relevant
and comparative reporting for readers of these financial statements.
Definitions of APMs and reconciliations to IFRS measures are set out in the
Glossary in the annual reports and accounts.
Performance summary
£ million (reported) - Group 2023 2022
Total revenue 8,171 5,769
Headline costs excluding fuel, balance sheet FX and ownership costs(1) (5,008) (3,921)
Fuel (2,033) (1,279)
Headline EBITDAR 1,130 569
Depreciation, amortisation and dry leasing costs (654) (566)
Headline EBIT 476 3
Net finance charges (48) (117)
Foreign exchange gain/(loss) 27 (64)
Headline profit/(loss) before tax 455 (178)
Being:
Airline headline profit/(loss) before tax 333 (216)
Holidays headline profit before tax 122 38
Headline tax (charge)/credit (114) 31
Headline profit/(loss) after tax 341 (147)
Non-headline items (23) (30)
Non-headline tax credit 6 8
Total profit/(loss) after tax 324 (169)
£ million (reported) - Group 2023 2022
Headline profit/(loss) before tax per seat £4.91 £(2.19)
£ per seat - Airline only (2) 2023 2022
Airline revenue 79.84 66.23
Headline costs excluding fuel, balance sheet FX and ownership costs(1) (46.93) (44.09)
Fuel (21.95) (15.68)
Headline EBITDAR 10.96 6.46
Depreciation, amortisation and dry leasing costs (7.02) (6.89)
Headline EBIT 3.94 (0.43)
Net finance charges (0.63) (1.45)
Foreign exchange gain/(loss) 0.28 (0.77)
Airline headline profit/(loss) before tax 3.59 (2.65)
Headline tax (charge)/credit (1.22) 0.38
Airline headline profit/(loss) after tax 2.37 (2.27)
Non-headline items (0.24) (0.36)
Non-headline tax credit 0.06 0.10
Airline total profit/(loss) after tax 2.19 (2.53)
1) Ownership costs are defined as depreciation, amortisation and dry
leasing costs, plus net finance charges.
2) These per seat metrics are for the airline business only, as
the inclusion of hotel-related revenue and costs from the holidays business
will distort the RPS and CPS metrics as they are not directly correlated to
the seats flown by the airline. Our easyJet holidays business forms a separate
operating segment to the airline, and easyJet holidays' key metrics are
included under key statistics.
The total number of passengers carried in the financial year increased by 19%
to 82.8 million (2022: 69.7 million), driven by a 14% increase in seats flown
to 92.6 million seats (2022: 81.5 million seats) and a 3.8 percentage point
increase in load factor to 89.3% (2022: 85.5%). This reflects the increased
capacity from a year with no travel restrictions, an expanded network offer,
and the increased customer demand. Capacity was impacted by disruption in the
year, with specific measures such as pre-emptive thinning to provide schedule
resilience, and the capacity caps introduced at Gatwick in the fourth quarter
as the airport struggled with a shortage of staffing in the control tower
operated by NATS.
Total revenue increased by 42% to £8,171 million (2022: £5,769 million) and
by 40% at constant currency. Airline RPS increased by 21% to £79.84 (2022:
£66.23) and increased by 19% at constant currency, reflecting both increased
load and strong ticket yield. The increase in airline RPS was balanced across
passenger and ancillary revenue, and included revenue from the revised
in-flight retail offer. As noted above, the airline performance was
complemented by strong holidays performance with net revenue (i.e. excluding
flight revenue which is reported under airline revenue) of £776 million.
Total headline costs excluding fuel, balance sheet exchange movements and
ownership costs increased by 28% to £5,008 million (2022: £3,921 million)
mainly as a result of the volume of flying and general industry cost
pressures. Costs were also impacted by the disruption seen throughout the year
with increased costs to deliver operational resilience and £211 million EU261
compensation and welfare costs incurred for airline passengers (2022: £205
million). However, the airline CPS of £46.93, was only 6% higher than the
prior year (2022: £44.09), 4% at constant currency, and accommodates an
increase in average sector length of 3% versus FY22. The CPS benefited from
fixed operating costs spread across greater flying capacity in addition to
easyJet's continued focus on operational cost reduction with a number of cost
reduction projects delivered in the year. The projects included the
retrofitting of descent profile optimisation software across the fleet,
reducing fuel burn, and the launch of enhancements to our customer
self-service disruption management tool, which has provided cost and customer
experience benefits with regards to the management of disruption within the
year.
Total fuel costs increased by 59% to £2,033 million for the year (2022:
£1,279 million), which on an airline CPS basis represented a 40% increase to
£21.95 (2022: £15.68), 31% at constant currency. The price of jet fuel
remains high due to the increase in global demand with the resumption of
pre-pandemic levels of flying and increased economic activity, along with the
restricted supply from OPEC+ due to production cuts. The CPS metric also
reflects the increase in average sector length compared to the prior year,
with an increase of leisure routes in the destination mix.
Similar to the prior financial year, the movement in exchange rates in the
year, and the translation of foreign currency denominated revenue and costs
including fuel, has had a notable impact on the consolidated income statement.
This has resulted in a net debit impact of £115 million (2022: £88 million)
across costs and revenue, and an income statement credit of £27 million
(2022: £64 million charge) from the translation of foreign currency
denominated monetary assets and liabilities on the statement of financial
position. Ownership costs benefited from the movement in US dollar interest
rates with a credit of £30 million (2022: £71 million) from the discounted
maintenance reserves provision, which uses long-term US dollar interest rates
to set the discount rate.
During the financial year, the drawn element of the UKEF facility and the
February 2016 €500 million Eurobond were repaid, considerably reducing
easyJet's gross debt. This benefited net interest costs in the second half of
the financial year, whilst there was also a positive impact from higher
interest rates on cash balances throughout the whole year, resulting in the
net finance charge for the year of £48 million being 59% lower than the prior
year (2022: £117 million).
easyJet holidays continued to perform strongly, with a significant growth in
customer numbers and its low fixed-cost operating model. Overall, incremental
revenue from easyJet holidays of £776 million was more than double (111%) the
previous year's revenue contribution (2022: £368 million), with 1.9 million
customers (including agent commission passengers, 2022: 1.1 million)
delivering £122 million of headline profit before tax (2022: £38 million).
The headline profit before tax per seat for the Group was £4.91 (2022: £2.19
loss). The airline's headline profit before tax per seat improved from a loss
of £2.65 in the prior year to a profit of £3.59 this year, driven by the
improvement in RPS as described earlier. This was tempered by the headline CPS
increasing by 11%, primarily due to the increase in fuel costs on a per seat
basis increasing 31% at constant currency. However, airline headline CPS
excluding fuel only rose by 2% at constant currency, as strong cost management
and increased flying (which reduces fixed costs per seat) offset the
inflationary headwinds the sector overall has been exposed to. Holidays
contributed £1.32 to the Group's headline profit before tax per seat, up from
£0.46 in FY22, as a consequence of its increased profitability driven by its
growth in customer numbers.
A non-headline charge of £23 million (2022: £30 million) was recognised in
the year consisting of a £19 million correction on an historical foreign
currency translation error of right of use asset depreciation, a £nil million
loss on the sale and leaseback of eight aircraft (2022: £21 million loss from
ten aircraft), a £3 million loss (2022: £10 million loss) on the final
disposal of landing rights surrendered as a consequence of the reduction in
our operations at Berlin Airport, and a net £1 million of restructuring
charges (2022: £nil million) reflecting the change in estimation of the final
settlement of restructuring programmes initiated in prior years.
Corporate tax has been recognised at an effective rate of 25.1% (2022: 18.7%),
resulting in an overall tax charge of £108 million (2022: £39 million
credit). This splits into a tax credit of £6 million on the non-headline
losses and a tax charge of £114 million on headline items.
Profit/(loss) per share
2023 2022
Pence per share Pence per share Change in pence per share
Basic headline profit/(loss) per share 45.4 (19.6) 65.0
Basic total profit/(loss) per share 43.1 (22.4) 65.5
Basic headline profit per share increased by 65.0 pence and basic total profit
per share increased by 65.5 pence over the loss per share in the prior
financial year as a consequence of the profit generated in the current
financial year.
Return on capital employed (ROCE)
Reported £million 2023 2022(1)
Headline profit before interest, foreign exchange gain/(loss) and tax 476 3
UK corporation tax rate 25% 19%
Normalised headline operating profit after tax (NOPAT) 357 2
Average shareholders' equity (excluding the hedging and cost of hedging 2,517 2,421
reserves)
Average net debt 315 790
Average capital employed 2,832 3,211
Headline return on capital employed 12.6% 0.1%
Total return on capital employed 12.0% (0.7%)
1) The average capital employed and ROCE percentage has been restated
to exclude the hedging and cost of hedging reserves.
ROCE is calculated by taking headline profit before interest, foreign exchange
gain/(loss) and tax, applying tax at the prevailing UK corporation tax rate at
the end of the financial year, and dividing by average capital employed.
Capital employed is defined as shareholders' equity excluding hedging and cost
of hedging reserves plus net debt.
Headline ROCE for the year of 12.6% is significantly ahead of the prior year
(2022: 0.1%). This reflects the move into a strong headline profit position in
the year combined with the reduction in net debt from the profits generated
and the positive working capital movement in the year driven by the increase
in unearned revenue. Total ROCE of 12.0% (2022: (0.7%)) is reduced by the
non-headline charge in the year, and is greater than prior year where the FY22
non-headline charge resulted in an operating loss.
Summary net cash/(debt) reconciliation
The below table presents cash flows on a net cash basis. This presentation is
different to the presentation of the statement of cash flows in the
consolidated financial statements as it includes non-cash movements on debt
facilities.
2023 2022 Change
£ million £ million £ million
Operating profit/(loss) 453 (27) 480
Net tax paid (12) (4) (8)
Net working capital movement excluding unearned revenue (19) 101 (120)
Unearned revenue movement 458 197 261
Depreciation and amortisation 673 564 109
Net capital expenditure (754) (530) (224)
Net proceeds from sale and leaseback of aircraft 76 87 (11)
Increase in lease liability (208) (43) (165)
Net funding activities - 53 (53)
Purchase of own shares for employee share schemes (15) (9) (6)
Other (including the effect of exchange rate movements) 59 (149) 208
Net decrease in net debt 711 240 471
Net debt at the beginning of the year (670) (910) 240
Net cash/(debt) at the end of the year 41 (670) 711
Net cash as at 30 September 2023 was £41 million (30 September 2022: £670
million net debt) and comprised cash, cash equivalents and money market
deposits of £2,925 million (30 September 2022: £3,640 million), borrowings
of £1,895 million (30 September 2022: £3,197 million) and lease liabilities
of £989 million (30 September 2022: £1,113 million).
Net working capital outflow, excluding unearned revenue, of £19 million in
the year (2022: £101 million inflow) predominantly reflects the increased
holding of Emissions Trading System (ETS) allowances for the remaining FY23
flying liability and FY24 forward purchase of allowances.
The unearned revenue movement of £458 million (2022: £197 million) has
increased as customer booking behaviour has normalised in the year, and
easyJet has increased available capacity and stimulated improved levels of
demand, including for the easyJet holidays offer. In addition, the inflow
reflects the improved ticket and ancillary yields achieved.
The increase in depreciation and amortisation to £673 million (2022: £564
million) predominantly reflects the increase in leased aircraft maintenance
costs, recognised through depreciation, with the rise in flying volumes and
greater numbers of leased aircraft. Additionally, the prior financial year
benefited from a significant movement in the discount rate on maintenance
reserves (based predominantly on US dollar short-term and long-term rates)
which reduced the overall maintenance charge, whereas the change in the rate
this financial year has been less pronounced.
Net capital expenditure in the year of £754 million (2022: £530 million)
reflects the investment in fleet renewal and growth in the overall size of the
fleet. The expenditure is across ten new aircraft (2022: eight), pre-delivery
payments for future aircraft, capital expenditure on long life parts, engines
and aircraft spares, and maintenance additions. The sale and leaseback of
eight aircraft in the year resulted in a net cash inflow of £76 million
compared to the ten sale and leasebacks in FY22 which generated proceeds of
£87 million. Lease additions (including the eight sale and leaseback
aircraft) and lease extensions are the key drivers for the increase in the
lease liability by £208 million (which excludes exchange rate impact and
lease payments).
In the prior year, the net funding activities of £53 million relate to final
funding income from the rights issue in FY21.
The £208 million movement in 'Other' predominantly reflects a movement in net
interest, as interest received in this financial year is significantly higher
due to increased interest rates, and the foreign exchange impact in the year.
Exchange rates
The proportion of revenue and headline costs denominated in currencies other
than sterling is outlined below alongside the exchange rates in the year:
Revenue Headline costs(1)
2023 2022 2023 2022(1)
Sterling 55% 51% 32% 32%
Euro 35% 38% 35% 37%
US dollar 1%(2) 1% 27% 25%
Other (principally Swiss franc) 9% 10% 6% 6%
Average headline exchange rates(3) 2023 2022
Euro - revenue €1.15 €1.18
Euro - costs €1.15 €1.18
US dollar $1.24 $1.32
Swiss franc CHF 1.14 CHF 1.25
Closing exchange rates 2023 2022
Euro €1.15 €1.14
US dollar $1.22 $1.11
Swiss franc CHF 1.12 CHF 1.09
1) 2022 figures have been restated to exclude the impact of
non-headline costs.
2) Our customers have the option of paying for flights in US dollars.
3) Exchange rates quoted are post-hedging applied to revenue and
headline costs.
Headline exchange rate impact
Euro Swiss franc US dollar Other Total
Favourable/(adverse) £ million £ million £ million £ million £ million
Total revenue 66 46 1 1 114
Fuel (4) - (125) - (129)
Headline costs excluding fuel (63) (24) (17) 4 (100)
Headline total before tax(1) (1) 22 (141) 5 (115)
1) Excludes the impact of balance sheet revaluations.
The Group's Foreign Currency Risk Management policy aims to reduce the impact
of fluctuations in exchange rates on future cash flows. Refer to note 26 in
the financial statements for more details.
easyJet recognises a significant element of revenue, 35%, across its network
in euros, and therefore a weaker sterling versus euro on average, when
compared to the prior year, has resulted in a stronger sterling denominated
revenue (and similarly with Swiss francs). However, this has been offset by
increased costs due to the stronger euro compared to the prior year.
Additionally, easyJet's cost base is 27% US dollar denominated, notably fuel
and aircraft lease payments, and therefore the post-hedge US dollar rate
strengthening compared to the prior year has also increased headline costs. On
a net position, the movement in average exchange rates between the current and
prior years has resulted in an adverse foreign currency impact of £115
million on the consolidated income statement.
Conversely, in-year movements in closing exchange rates resulted in easyJet
benefitting from the translation of foreign currency denominated monetary
assets and liabilities held on the statement of financial position, primarily
due to sterling strengthening against the US dollar over the course of the
year, resulting in a net gain of £27 million (2022: £64 million loss).
FINANCIAL PERFORMANCE
Revenue
£ million - Group 2023 2022
Passenger revenue 5,221 3,816
Ancillary revenue 2,174 1,585
Holidays incremental revenue¹ ² 776 368
Total revenue 8,171 5,769
1) easyJet holidays numbers include elimination of intercompany
airline transactions
2) The presentation of Group revenue has been amended to split out
holidays incremental revenue; refer to note 1 in the financial statements.
Total revenue increased by 42% to £8,171 million (2022: £5,769 million) and
40% at constant currency.
The increase in revenue was a combined result of increased customer volumes, a
focus on yield optimisation resulting in strong ticket yield, and continued
growth in our ancillary offer. The total number of passengers carried
increased by 19% to 82.8 million (2022: 69.7 million), arising from a
combination of a 14% increase in seats flown to 92.6 million seats (2022: 81.5
million seats) and a 3.8 percentage point increase in load factor to 89.3%
(2022: 85.5%). This reflects the increased capacity on offer with the return
to flying in the absence of pandemic-related travel restrictions. Similar to
the prior year, within revenue there was a £47 million credit (2022: £22
million) arising from the release of aged contract liabilities within other
payables, with £40 million recognised in passenger revenue and £7 million in
ancillary revenue.
Total airline RPS of £79.84 was 21% ahead of prior year (2022: £66.23), 19%
at constant currency, and total yield of £89.36 was 15% favourable (2022:
£77.48), 14% at constant currency, with passenger yield 13% and ancillary
yield 14% favourable at constant currency.
Airline ancillary revenue of £2,174 million was 37% ahead of the previous
financial year (2022: £1,585 million), 35% at constant currency, as a result
of both passenger numbers and improved yields. Refreshed ancillary offers and
pricing initiatives have contributed to the continued growth of this revenue
stream as an increasing proportion of our customers choose to buy our flexible
product offering. Within ancillary revenue the relaunch of the in-flight
retail offer has delivered an additional £22 million of partner revenue
compared to the prior financial year with improved spend per seat alongside
higher passenger numbers.
easyJet holidays' incremental revenue increased by 111% to £776 million
(2022: £368 million) and now accounts for 9% of total revenue. The growth is
attributable to improved yields and growth in customer numbers to 1.9 million
(including agent commission passengers, 2022: 1.1 million).
Headline costs excluding fuel
2023 2022
Group Airline Group Airline
£ million £ per seat £ million £ per seat
Operating costs and income
Airports and ground handling 1,800 19.44 1,443 17.70
Crew 941 10.16 767 9.40
Navigation 422 4.56 339 4.16
Maintenance 341 3.69 301 3.69
Holidays direct operating costs 582 n/a 273 n/a
Selling and marketing 232 2.04 173 1.88
Other costs 695 7.09 635 7.38
Other income (5) (0.05) (10) (0.12)
5,008 46.93 3,921 44.09
Ownership costs
Aircraft dry leasing - - 2 0.04
Depreciation 625 6.75 539 6.60
Amortisation 29 0.27 25 0.25
Net interest and other financing income and charges 48 0.63 117 1.45
702 7.65 683 8.34
Foreign exchange (gain)/loss (27) (0.28) 64 0.77
675 7.37 747 9.11
Headline costs excluding fuel 5,683 54.30 4,668 53.20
Headline CPS excluding fuel for the airline increased by 2% to £54.30 (2022:
£53.20), and by 2% at constant currency.
Included within the Group headline costs excluding fuel of £5,683 million is
£654 million (2022: £330 million) related to the Holidays business, the cost
increase primarily being activity related due to the growth of the business.
Headline operating costs and income
Airports and ground handling operating costs increased by 25% to £1,800
million (2022: £1,443 million), an increase of 10% to £19.44 (2022: £17.70)
on an airline CPS basis, 7% at constant currency. The year has seen a
significant overall increase in airport rates, both contractual and
regulatory, reflecting that easyJet largely flies from slot-constrained and
regulated airports. In addition, with airport and ground handling costs being
linked to volumes, operating costs associated with improved load factors, as
well as higher passenger and security charges, drove a cost increase on a per
seat basis.
Crew costs increased by 23% to £941 million (2022: £767 million), an
increase of 8% to £10.16 (2022: £9.40) on an airline CPS basis, 6% at
constant currency. This CPS increase reflects the current highly inflationary
CPI environment, increased costs invested in resilience to mitigate
disruption, post-pandemic pay deals and an increase in sector length. This has
been offset by productivity gains in the year and the benefit of allocating
the fixed element of crew costs over greater capacity.
Navigation costs increased by 24% to £422 million (2022: £339 million), a
rise of 10% to £4.56 (2022: £4.16) on an airline CPS basis, 7% at constant
currency, as a result of the increases in both Eurocontrol rates and an
increase in the sector length of our commercial flying compared to the
previous year.
Maintenance costs increased by 13% to £341 million (2022: £301 million), but
remained flat at £3.69 (2022: £3.69) on an airline CPS basis, and decreased
by 4% at constant currency. This reflects that whilst flying hours have
increased in the year, there is a benefit from the fixed element of
maintenance costs being apportioned over the increased capacity.
Group selling and marketing costs increased by 34% to £232 million (2022:
£173 million), which for the airline resulted in an increase of 9% to £2.04
(2022: £1.88) on a CPS basis, 6% at constant currency. The increase is
predominantly in selling costs which result from increased credit card
bookings on increased sales, higher credit card fees, and an element of
increased airport commission.
Group other costs increased by 9% to £695 million (2022: £635 million),
which for the airline was a reduction of 4% to £7.09 (2022: £7.38) on a CPS
basis, and 4% reduction at constant currency. Other costs include the impact
of the disruption experienced in the year, with net £211 million disruption
compensation and welfare costs incurred (2022: £205 million) after a £24
million release (2022: £3 million pre-pandemic liability release) of a
liability held for prior year disruption costs where customer compensation
claims have not matched our initial estimations. In the prior year, easyJet
also incurred significant wet lease costs; the absence of such costs this year
has been offset by increased employee costs and benefits, and an investment in
cybersecurity and merchandising technology in the year.
Headline ownership costs
Depreciation costs increased by 16% to £625 million (2022: £539 million), a
2% increase to £6.75 (2022: £6.60) on a CPS basis, and 2% at constant
currency. The increase in depreciation costs compared to prior year is due to
the increased maintenance provision for leased aircraft, reflecting higher
flying volumes and the change in the discount rate arising from movements in
US dollar interest rates, as well as an increase in the leasehold fleet. The
cost on a CPS basis has benefited from the increased maintenance cost being
allocated across an increased seat capacity.
Group net interest and other financing income and charges decreased by 59% to
£48 million (2022: £117 million), which amounted to a 57% decrease on an
airline CPS basis to £0.63 (2022: £1.45) reflecting the benefit from higher
interest rates on cash deposits in the period, and the reduction in gross
debt.
Foreign exchange gains in the year were £27 million (2022: £64 million
loss), being the benefit of the retranslation of foreign currency denominated
monetary assets and liabilities arising from currency movements, with sterling
being stronger against both the US dollar and euro at 30 September 2023
compared to 30 September 2022.
Fuel
2023 2022
Group Airline Group Airline
£ million £ per seat £ million £ per seat
Fuel 2,033 21.95 1,279 15.68
Fuel costs for the year increased by 59% to £2,033 million, compared to
£1,279 million in 2022, a 40% increase on a CPS basis to £21.95 (2022:
£15.68), 31% on a constant currency basis. The increase in flying volumes,
resulting in a 17% increase in block hours in the year, 3% increase in average
sector length (1,224km from 1,193km) and increased load factor, has
contributed (on an absolute basis), in addition to the increase in post-hedge
fuel prices over the year.
The Group uses jet fuel derivatives to hedge against increases in jet fuel
prices to mitigate cash and income statement volatility. In order to manage
the risk exposure, jet fuel derivative contracts are used in line with the
Board-approved policy to hedge up to 18 months of forecast exposures.
During the financial year, the average market price payable for jet fuel
reduced by 16% from $1,063 per tonne in 2022 to $897 per tonne in 2023. The
overall post-hedge fuel price in the year was $867 per tonne (2022: $705), the
23% increase compared to FY22 being due to the fuel cost at the time the FY23
hedges were entered into. Approximately 80% of jet fuel was hedged in 2023.
Additionally, the cost of compliance with emission trading schemes increased
with a greater level of flying and the higher cost of allowances coupled with
the previous year comparative including the carry forward of unused ETS
allowances from the years impacted by pandemic-related restrictions.
Group profit/(loss) after tax
£ million (reported) ─ Group 2023 2022
Headline profit/(loss) before tax 455 (178)
Headline tax (charge)/credit (114) 31
Headline profit/(loss) after tax 341 (147)
Non-headline items before tax (23) (30)
Non-headline tax credit 6 8
Total profit/(loss) after tax 324 (169)
Non-headline items
A non-headline charge of £23 million (2022: £30 million) was recognised in
the year. This consisted of a £19 million correction on an historical foreign
currency translation error of right of use asset depreciation, £3 million
loss on disposal for a further and final surrender of landing rights as a
consequence of the reduction in our operations at Berlin Airport (2022: £10
million) and net restructuring charges of £1 million (2022: £nil million)
resulting from the impact of additional costs arising from previously
announced restructuring programmes in Germany. The sale and leaseback of eight
aircraft in the period generated a £nil million loss (2022: £21 million loss
from ten aircraft).
Corporate tax
Corporate tax has been recognised at an effective rate of 25.1% (2022: 18.7%),
resulting in an overall tax charge of £108 million (2022: £39 million
credit). This splits into a tax charge of £114 million on the headline losses
and a tax credit of £6 million on the non-headline items, the right of use
asset depreciation non-headline charge being tax deductible and therefore
creating a tax credit.
Summary consolidated statement of financial position
2023 2022 Change
Re-presented(1)
£ million £ million £ million
Goodwill and other non-current intangible assets 641 582 59
Property, plant and equipment (excluding right of use assets) 3,936 3,682 254
Right of use assets 928 947 (19)
Derivative financial instruments 153 442 (289)
Equity investment 31 31 -
Other assets (excluding cash and money market deposits) 1,159 1,022 137
Unearned revenue (1,501) (1,043) (458)
Trade and other payables (1,764) (1,759) (5)
Other liabilities (excluding debt) (837) (701) (136)
Capital employed 2,746 3,203 (457)
Cash and money market deposits(2) 2,925 3,640 (715)
Debt (excluding lease liabilities) (1,895) (3,197) 1,302
Lease liabilities (989) (1,113) 124
Net cash/(debt) 41 (670) 711
Net assets 2,787 2,533 254
1) The liability for compensation and reimbursements for airline
customer delays and cancellations has been re-presented from provisions for
liabilities and charges to liabilities within other payables.
2) Excludes restricted cash.
Since 30 September 2022 net assets have increased by £254 million.
The net book value of goodwill and other non-current intangible assets has
increased in the year by £59 million, reflecting significant investment in
the year on software development and applications, with a focus on digital
safety and security, optimising commercial platforms and customer
applications, and implementing aircraft descent optimisation software.
The property, plant and equipment (excluding right of use assets) net book
value has increased by £254 million, the impact of the sale and leaseback of
eight aircraft and the depreciation charge for the year being offset by the
ten new owned aircraft brought into the fleet in the year.
At 30 September 2023, right of use assets amounted to £928 million (2022:
£947 million) and lease liabilities amounted to £989 million (2022: £1,113
million). Whilst there have been a number of new leases, including aircraft
sale and leaseback transactions, and lease extensions, the relatively static
position of lease assets and liabilities arises from a number of lease
returns, and the fact that new leases are being entered into for shorter lease
periods as easyJet manages the exit of A319 aircraft from the fleet.
There has been a £289 million decrease in the net asset value of derivative
financial instruments, with a closing net asset balance of £153 million
(2022: £442 million). The movement is due to a decrease in currency assets,
including cross currency swaps, as a result of the stronger pound against the
US dollar and euro in comparison to the rates at 30 September 2022. This
reduction was partially offset by a gain in the asset value of jet fuel hedges
compared to 30 September 2022 as a result of an increase in the jet fuel
forward curve.
Other assets have increased by £137 million, mainly driven by increased
current intangible assets reflecting the ETS allowances held as a result of
increased flying and the increased cost of the allowances.
Unearned revenue increased by £458 million, reflecting customer behaviour
returning to a more forward booking position, improved yields, and FY24
capacity availability.
Other liabilities have increased by £136 million as a result of increased
provisions, in particular for maintenance with the increase in flying over the
year, but also because deferred tax is now in a liability position with the
return to profit in the year.
Debt has decreased by £1,302 million as a result of the repayment of the
drawn element of the UKEF facility, and repayment of a €500 million Eurobond
in the year, with no additional debt entered into.
KEY STATISTICS
OPERATING MEASURES
2023 2022 Increase/ (decrease)
Seats flown (millions) 92.6 81.5 14%
Passengers (millions) 82.8 69.7 19%
Load factor 89.3% 85.5% 3.8ppt
Available seat kilometres (ASK) (millions) 113,334 97,287 16%
Revenue passenger kilometres (RPK) (millions) 102,984 84,874 21%
Average sector length (kilometres) 1,224 1,193 3%
Sectors (thousands) 519 456 14%
Block hours (thousands) 1,094 938 17%
easyJet holidays passengers (thousands)(1) 1,893 1,072 77%
Number of aircraft owned/leased at end of year 336 320 5%
Average number of aircraft owned/leased during year 328 321 2%
Average number of aircraft operated per day during year 276 255 8%
Number of routes operated at end of year 1,018 988 3%
Number of airports served at end of year 155 153 1%
FINANCIAL MEASURES 2023 2022 Favourable/ (adverse)
Total return on capital employed 12.0% (0.7%) 12.7ppt
Headline return on capital employed 12.6% 0.1% 12.5ppt
Group total profit/(loss) before tax per seat (£) 4.67 (2.55) 283%
Group headline profit/(loss) before tax per seat (£) 4.91 (2.19) 324%
Airline total profit/(loss) before tax per seat (£) 3.35 (3.01) 211%
Airline headline profit/(loss) before tax per seat (£) 3.59 (2.65) 235%
Airline headline profit/(loss) before tax per ASK (pence) 0.29 (0.22) 232%
easyJet holidays total profit before tax (£ millions) 122 38 221%
Revenue
Airline revenue per seat (£) 79.84 66.23 21%
Airline revenue per seat at constant currency (£) 78.60 66.23 19%
Airline revenue per ASK (pence) 6.52 5.54 18%
Airline revenue per ASK at constant currency (pence) 6.42 5.54 16%
Airline revenue per passenger (£) 89.36 77.48 15%
Airline revenue per passenger at constant currency (£) 87.98 77.48 14%
Costs
Per seat measures
Airline headline cost per seat (£) 76.25 68.88 (11%)
Airline headline cost per seat excluding fuel (£) 54.30 53.20 (2%)
Airline headline cost per seat excl fuel at constant currency (£) 53.58 52.43 (2%)
Per ASK measures
Airline headline cost per ASK (pence) 6.23 5.77 (8%)
Airline headline cost per ASK excluding fuel (pence) 4.44 4.45 0%
Airline headline cost per ASK exc fuel at constant currency (pence) 4.38 4.39 0%
1) Holidays passenger numbers excluding agency commission
passengers are 1.6 million (FY22 0.8m).
Refer to the Glossary in the annual report and accounts for further detail.
Going Concern and Viability Statement
Assessment of prospects
The strategic report in the annual report and accounts sets out the activities
of the Group and the factors likely to impact its future development,
performance and position. The Finance Review in the annual report and accounts
sets out the financial position of the Group, cash flows, liquidity position
and borrowing activity. The notes to the accounts include the objectives,
policies and procedures for managing capital, financial risk management
objectives, details of financial instruments and hedging activities and
exposure to credit risk and liquidity risk.
In accordance with the requirements of the 2018 UK Corporate Governance Code,
the Directors have assessed the long-term prospects of the Group, taking into
account its current position, the updated medium-term targets set out in the
strategic plan and a range of internal and external factors, including the
principal risks. The Directors have determined that a three-year period is an
appropriate timeframe for this viability assessment. In concluding on a
three-year period, the Directors considered the reliability of forecast
information, the current macro-economic and market conditions and longer-term
management incentives. However, it is noted that the high-level fleet plan
used by easyJet is necessarily over a longer period to enable future planning
of aircraft deliveries underpinning the plans for fleet modernisation, future
growth, cost efficiencies and sustainability improvements. This longer-term
planning is evidenced this year by the latest proposed aircraft purchase
transaction which, if approved by shareholders, will secure aircraft
deliveries for the period FY29-34.
The assessment of the prospects of the Group includes the following factors:
· The strategic plan - which takes into consideration growth expected
by way of creating value through the business model, market conditions, future
commitments, cash flow, expected impact of key risks, funding requirements and
maturity of existing financing facilities (see below).
As at September 2023 Maturity date Available funds (drawn and undrawn)
Eurobonds October 2023 €500m
June 2025 €500m
March 2028 €1,200m
Revolving credit facility September 2025(1) $400m
Undrawn UKEF backed facility June 2028 $1,750m
1) Option to extend to September 2026 at lender's consent.
· The fleet plan - the plan retains some flexibility to adjust the size
of the fleet in response to opportunities or risks.
· Strength of the balance sheet and unencumbered assets - this
sustainable strength gives us access to capital markets.
· Risk assessment - see detailed risk assessment in the annual report
and accounts.
Stress testing
The corporate risk management framework facilitates the identification,
analysis, and response to plausible risks, including emerging risks, as our
business evolves in an increasingly volatile environment. Through our
corporate risk management process, a robust assessment of the principal risks
facing the organisation has been performed and the controls and mitigations
identified.
Both individually and combined these potential risks are unlikely to require
significant additional management actions to support the business to remain
viable, however, there could be actions that management would deem necessary
to reduce the impact of the risks. The stress testing scenarios identified in
the table on the subsequent pages show that there is sufficient liquidity
under all scenarios. In the first four scenarios one of the assumptions is
that the existing Eurobonds are refinanced, whereas in the last scenario no
refinancing of existing Eurobonds is assumed.
Going concern statement
The financial statements have been prepared on a going concern basis. In
adopting the going concern basis for preparing these financial statements, the
Directors have considered easyJet's business activities, together with factors
likely to affect its future development and performance, as well as easyJet's
principal risks and uncertainties through to June 2025.
As at 30 September 2023, easyJet had a net cash position of £41 million
including cash and cash equivalents of £2.9 billion, with unrestricted access
to £4.7 billion of liquidity, and has retained ownership of 54% of the total
fleet, all of which are unencumbered.
The Directors have reviewed the financial forecasts and funding requirements
with consideration given to the potential impact of severe but plausible
risks. easyJet has modelled a base case representing management's best
estimation of how the business plans to perform over the period. The future
impact of climate change on the business has been incorporated into strategic
plans, including the estimated financial impact within the base case cash flow
projections of the future estimated price of ETS allowances, the phasing out
of the free ETS allowances from 2024, the expected price and quantity required
of Sustainable Aviation Fuel (SAF) usage and fleet renewals.
The business is exposed to fluctuations in fuel prices and foreign exchange
rates. easyJet is currently c.76% hedged for fuel in H1 of FY24 at c.$867 per
metric tonne, c.51% hedged for H2 FY24 at c.$823 and c.25% hedged for H1 FY25
at c.$832.
In modelling the impact of severe but plausible downside risks, the Directors
have considered demand suppression leading to a reduction in ticket yield of
5% and a reduction in Holidays contribution of 5%. The model also includes the
recurrence of additional disruption costs (at FY22 levels), an additional $50
per metric tonne on the fuel price, 1.5% additional operating cost inflation
and an adverse movement on the US dollar rate. These impacts have been
modelled across the whole going concern period. In addition, this downside
model also includes a grounding of 25% of the fleet for the duration of the
peak trading month of August, to cover the range of severe but plausible risks
that could result in significant operational disruption. This downside
scenario resulted in a significant reduction in liquidity but still maintained
sufficient headroom on external liquidity requirements.
The Directors also considered a separate downside model that included the
operational disruption and adverse US dollar rate but, instead of the yield
reduction, modelled increased costs (additional 3% inflation assumed on
operating costs) and an additional $100 per metric tonne on the fuel price
compared to the base case. This scenario was not as severe and as such still
resulted in sufficient headroom. It was not deemed plausible to combine yield
reduction and the higher cost and fuel increases based on an analysis of
historical information across the airline industry.
After reviewing the current liquidity position, committed funding facilities,
the base case and severe but plausible downside financial forecasts
incorporating the uncertainties described above, the Directors have a
reasonable expectation that the Group has sufficient resources to continue in
operation for the foreseeable future. For these reasons, the Directors
continue to adopt the going concern basis of accounting in preparing the
Group's financial statements.
Viability Statement
Based on the assessment performed, the Directors have a reasonable expectation
that the Company and the Group will be able to continue in operation and meet
all liabilities as they fall due up to September 2026. In making this
statement, the Directors have made the following key assumptions:
1. easyJet has access to a variety of funding options including capital
markets, aircraft financing and bank or government debt. The stress testing
demonstrates that the current funding with refinancing of the existing
Eurobonds would be sufficient to retain liquidity in both the base and
downside scenarios (excluding the specific lack of funding scenario).
2. In assessing viability, it is assumed that the detailed risk
management process as outlined in the annual report and accounts captures all
plausible risks, and that in the event that multiple risks occur, all
available actions to mitigate the impact to the Group would be taken on a
timely basis and have the intended impact.
3. There is no prolonged grounding of a substantial portion of the fleet
greater than included in the downside and alternative downside scenarios. This
includes a grounding of 25% of the fleet for the duration of the peak trading
month of August, to cover the range of severe but plausible risks that could
result in significant operational disruption.
The key risks that are most likely to have a significant impact on easyJet's
viability have been considered in the stress testing across multiple scenarios
and are shown in the table below. The assumptions applied to the models are
based on plausible but severe impacts of the risks, as assessed by review of
the current macro-economic position and historical information across the
airline industry. The principal risks have continued to be assessed for any
changes in the risk environment. The actions in place to mitigate against
these risks are included in the Risk section in the annual report and
accounts.
Scenario Modelled Description Assumptions applied Corporate risk covered
Demand suppression and operational disruption Downside scenario covering multiple risks that may lead to a reduction in Across the whole period: Breach of regulatory requirements
demand, resulting in a prolonged yield reduction over the period. In addition,
this scenario combines risks that also would lead to operational disruption - reduction in ticket yield of 5% Significant safety or security event
and/or short-term grounding of the fleet.
- reduction in Holidays contribution of 5% Significant digital security event
- additional disruption costs (based on FY22 levels). Network and primary airport risks
One -off: Significant operational disruption
- a grounding of 25% of the fleet for the duration of the peak
trading month of August.
Increase in costs and operational disruption Scenario covers multiple risks that would result in an increase in costs Across the whole period: Breach of regulatory requirements
across the period or a significant spike in costs. In addition, this scenario
combines risks that also would lead to operational disruption and/or - additional $100 per metric tonne on the fuel price Significant safety or security event
short-term grounding of the fleet.
- increased costs (additional inflation assumed on all costs) Significant operational disruption
- additional disruption costs (based on FY22 levels) Significant digital security event
- an adverse movement on the US dollar rate. Network and primary airport risks
Macro-economic conditions
One-off:
- a grounding of 25% of the fleet for the duration of the peak
trading month of August.
Climate change Scenario covers climate-based risks that would result in both a reduction in Across the whole period: Climate change transition risks
demand and increased costs. This includes SAF and ETS costs, capex and
maintenance costs due to technology changes and additional costs for - reduction in demand - reduced yields or capacity
regulatory and legal challenge.
- increased fuel costs (SAF and ETS)
- increased maintenance costs
- new taxes.
Failure to deliver on plans Scenario covers the risks that would result in easyJet being unable to deliver Across the whole period: Non-delivery of strategic initiatives
on its plans for the period.
- reduced initiatives income Talent acquisition and retention risks
- increased costs
- reduction in ticket yield of 5%
- reduction in Holidays contribution of 5%.
Lack of Funding Scenario covers the risk that would result in no further funding being Across the whole period: Macro-economic conditions
available to easyJet during the period.
- uncommitted funding excluded.
Consolidated income statement
Year ended 30 September
2023 2022
Headline Non-headline (note 2) Total Headline Non-headline (note 2) Total
Notes £ million £ million £ million £ million £ million £ million
Passenger revenue 5,221 - 5,221 3,816 - 3,816
Ancillary revenue¹
Airline ancillary revenue 2,174 - 2,174 1,585 - 1,585
Holidays incremental revenue 776 - 776 368 - 368
Total ancillary revenue 2,950 - 2,950 1,953 - 1,953
Total revenue 5 8,171 - 8,171 5,769 - 5,769
Fuel (2,033) - (2,033) (1,279) - (1,279)
Airports and ground handling(1) (1,800) - (1,800) (1,443) - (1,443)
Crew (941) - (941) (767) - (767)
Navigation (422) - (422) (339) - (339)
Maintenance (341) - (341) (301) - (301)
Holidays direct operating costs (excluding flights)(1) (582) - (582) (273) - (273)
Selling and marketing (232) - (232) (173) - (173)
Other costs (695) (10) (705) (635) (30) (665)
Other income 5 6 11 10 - 10
EBITDAR 1,130 (4) 1,126 569 (30) 539
Aircraft dry leasing - - - (2) - (2)
Depreciation 7 (625) (19) (644) (539) - (539)
Amortisation of intangible assets (29) - (29) (25) - (25)
Operating profit/(loss) 476 (23) 453 3 (30) (27)
Interest receivable and other financing income 132 - 132 26 - 26
Interest payable and other financing charges (180) - (180) (143) - (143)
Foreign exchange gain/(loss) 27 - 27 (64) - (64)
Net finance charges (21) - (21) (181) - (181)
Profit/(loss) before tax 455 (23) 432 (178) (30) (208)
Tax (charge)/credit 3 (114) 6 (108) 31 8 39
Profit/(loss) for the year 341 (17) 324 (147) (22) (169)
Earnings/(loss) per share, pence
Basic 4 43.1 (22.4)
Diluted 4 42.7 (22.4)
1) Revenue and expenditure of easyJet holidays recognised in the prior
year has been re-presented, see note 1 for details.
Consolidated statement of comprehensive income
Year ended Year ended
30 30 September 2022
September 2023
Notes £ million £ million
Profit/(loss) for the year 324 (169)
Other comprehensive (loss)/income
Items that may be reclassified to the income statement:
Cash flow hedges
Fair value (losses)/gains in the year (19) 774
Gains transferred to income statement (51) (730)
Hedge ineffectiveness/discontinuation loss/(gain) transferred to income 1 (5)
statement
Related deferred tax credit/(charge) 3 12 (11)
Cost of hedging (9) 8
Related deferred tax credit/(charge) 3 2 (2)
Items that will not be reclassified to the income statement:
Remeasurement (loss)/gain of post-employment benefit obligations (8) 41
Related deferred tax charge 3 (1) (10)
Fair value gains on equity investment - 1
(73) 66
Total comprehensive income/(loss) for the year 251 (103)
1) The liability for compensation and reimbursements for airline
customer delays and cancellations has been re-presented from provisions for
liabilities and charges to liabilities within other payables. Refer to note 1
for further detail.
Consolidated statement of financial position
As at 30 As at 30 September 2022
September 2023 (re-presented)
Notes £ million £ million
Non-current assets
Goodwill 365 365
Other intangible assets 276 217
Property, plant and equipment 7 4,864 4,629
Derivative financial instruments 35 127
Equity investment 31 31
Restricted cash 2 3
Other non-current assets 138 91
Deferred tax assets 3 - 62
5,711 5,525
Current assets
Trade and other receivables 343 367
Intangible assets 676 495
Derivative financial instruments 186 423
Restricted cash - 4
Money market deposits - 126
Cash and cash equivalents 2,925 3,514
4,130 4,929
Current liabilities
Trade and other payables(1) (1,764) (1,759)
Unearned revenue (1,498) (1,042)
Borrowings 8 (433) (437)
Lease liabilities (217) (247)
Derivative financial instruments (54) (86)
Current tax payable 3 (3) (5)
Provisions for liabilities and charges(1) 9 (175) (102)
(4,144) (3,678)
Net current (liabilities)/assets (14) 1,251
Non-current liabilities
Borrowings 8 (1,462) (2,760)
Unearned revenue (3) (1)
Lease liabilities (772) (866)
Derivative financial instruments (14) (22)
Non-current deferred income (4) (4)
Post-employment benefit obligation (7) (1)
Provisions for liabilities and charges 9 (626) (589)
Deferred tax liabilities 3 (22) -
(2,910) (4,243)
Net assets 2,787 2,533
Shareholders' equity
Share capital 207 207
Share premium 2,166 2,166
Hedging reserve 113 170
Cost of hedging reserve (2) 5
Translation reserve 72 (6)
Retained earnings/(accumulated losses) 231 (9)
Total equity 2,787 2,533
Consolidated statement of changes in equity
Share Share premium Hedging reserve Cost of hedging reserve Translation reserve Retained earnings/ (accumulated losses) Total equity
capital
£ million £ million £ million £ million £ million £ million £ million
At 1 October 2022 207 2,166 170 5 (6) (9) 2,533
Profit for the year - - - - - 324 324
Other comprehensive loss - - (57) (7) - (9) (73)
Total comprehensive income/(loss) - - (57) (7) - 315 251
Share incentive schemes
Employee share schemes - value of - - - - - 18 18
employee services
Purchase of own shares - - - - - (15) (15)
Currency translation transfer(1) - - - - 78 (78) -
At 30 September 2023 207 2,166 113 (2) 72 231 2,787
Retained earnings/ (accumulated losses)
Share Share premium Hedging reserve Cost of hedging reserve Translation reserve Total equity
capital
£ million £ million £ million £ million £ million £ million £ million
At 1 October 2021 207 2,166 156 (1) - 111 2,639
Loss for the year - - - - - (169) (169)
Other comprehensive income - - 28 6 - 32 66
Total comprehensive (loss)/income - - 28 6 - (137) (103)
Transfers to property, plant & equipment - - (14) - - - (14)
Share incentive schemes
Employee share schemes - value of - - - - - 26 26
employee services
Purchase of own shares - - - - - (9) (9)
Currency translation differences - - - - (6) - (6)
At 30 September 2022 207 2,166 170 5 (6) (9) 2,533
1) The translation reserves transfer relates to a correction of a
historical error in the retranslation of monetary assets and liabilities in
overseas subsidiaries on consolidation. The cumulative amount of exchange
differences on these balances were previously presented within retained
earnings/(accumulated losses) in the consolidated statement of changes in
equity and the consolidated statement of financial position. However, these
exchange differences should have been presented as part of the translation
reserve. This has resulted in a £78 million transfer between retained
earnings/(accumulated losses) and the translation reserve to more accurately
present the cumulative foreign exchange gains recognised on consolidation. The
nature of the error is considered to not constitute a material error on a
qualitative basis and therefore the impact has been adjusted in the current
year. There is no change in brought forward or carried forward total equity
from this change and no restatement of the consolidated statement of financial
position or consolidated statement of changes in equity has been made.
The hedging reserve comprises the effective portion of the cumulative net
change in the fair value of cash flow hedging instruments relating to highly
probable transactions that are forecast to occur after the year end.
At 30 September 2023, amounts in the cost of hedging reserve comprised of a
£3 million gain related to cross-currency basis (2022: £7 million gain) and
a £5 million loss related to the time value of options (2022: £2 million
loss).
Consolidated statement of cash flows
Year ended Year ended
30 September 30 September 2022
2023
Notes £ million £ million
Cash flows from operating activities
Cash generated from operations 10 1,509 892
Interest and other financing charges paid (162) (130)
Interest and other financing income received 125 11
Settlement of derivatives 91 7
Net tax paid 3 (12) (4)
Net cash generated from operating activities 1,551 776
Cash flows from investing activities
Purchase of property, plant and equipment 7 (677) (501)
Purchase of non-current other intangible assets (77) (29)
Net decrease/(increase) in money market deposits 11 126 (126)
Net proceeds from sale and leaseback of aircraft 76 87
Net cash used in investing activities (552) (569)
Cash flows from financing activities
Proceeds from issue of ordinary share capital - 91
Share issue transaction costs - (38)
Purchase of own shares for employee share schemes (15) (9)
Repayment of bank loans and other borrowings 11 (1,192) (377)
Repayment of capital element of leases 11 (218) (206)
Decrease in restricted cash 5 7
Net cash used in financing activities (1,420) (532)
Effect of exchange rate changes (168) 303
Net decrease in cash and cash equivalents (589) (22)
Cash and cash equivalents at beginning of year 3,514 3,536
Cash and cash equivalents at end of year 2,925 3,514
Notes to the financial statements
1. Accounting policies, judgements and estimates
Statement of compliance
easyJet plc (the 'Company') and its subsidiaries ('easyJet' or the 'Group' as
applicable) is a low-cost airline carrier operating principally in Europe. The
Company is a public limited company (company number 03959649), incorporated
and domiciled in the United Kingdom, whose shares are listed on the London
Stock Exchange under the ticker symbol EZJ. The address of its registered
office is Hangar 89, London Luton Airport, Luton, Bedfordshire, LU2 9PF,
England.
The consolidated financial statements of easyJet plc have been prepared in
accordance with UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006 as applicable to companies reporting
under those standards.
Basis of preparation
This consolidated financial information has been prepared in accordance with
the Listing Rules of the Financial Conduct Authority.
The financial information set out in this document does not constitute
statutory financial statements for easyJet plc for the two years ended 30
September 2023 but is extracted from the 2023 Annual Report and Financial
statements.
The financial statements have been prepared on a going concern basis. In
adopting the going concern basis for preparing these financial statements, the
Directors have considered easyJet's business activities, together with factors
likely to affect its future development and performance, as well as easyJet's
principal risks and uncertainties through to June 2025.
As at 30 September 2023, easyJet has a net cash position of £41 million
including cash and cash equivalents of £2.9 billion, with unrestricted access
to £4.7 billion of liquidity, and has retained ownership of 54% of the total
fleet, all of which are unencumbered.
The Directors have reviewed the financial forecasts and funding requirements
with consideration given to the potential impact of severe but plausible
risks. easyJet has modelled a base case representing management's best
estimation of how the business plans to perform over the period. The future
impact of climate change on the business has been incorporated into strategic
plans, including the estimated financial impact within the base case cash flow
projections of the future estimated price of Emissions Trading System (ETS)
allowances, the phasing out of the free ETS allowances from 2024, and the
expected price and quantity required of Sustainable Aviation Fuel (SAF) usage
and fleet renewals.
The business is exposed to fluctuations in fuel prices and foreign exchange
rates. easyJet is currently c.76% hedged for fuel in H1 of FY24 at c.$867 per
metric tonne, c.51% hedged for H2 FY24 at c.$823 and c.25% hedged for H1 FY25
at c.$832.
In modelling the impact of severe but plausible downside risks, the Directors
have considered demand suppression leading to a reduction in ticket yield of
5% and a reduction in Holidays contribution of 5%. The model also includes the
reoccurrence of additional disruption costs (at FY22 levels), an additional
$50 per metric tonne on the fuel price, 1.5% additional operating cost
inflation and an adverse movement on the US dollar rate. These impacts have
been modelled across the whole going concern period. In addition, this
downside model also includes a grounding of 25% of the fleet for the duration
of the peak trading month of August, to cover the range of severe but
plausible risks that could result in significant operational disruption. This
downside scenario resulted in a significant reduction in liquidity but still
maintained sufficient headroom on external liquidity requirements.
The Directors also considered a separate downside model that included the
operational disruption and adverse US dollar rate but, instead of the yield
reduction, modelled increased costs (additional 3% inflation assumed on
operating costs) and an additional $100 per metric tonne on the fuel price
compared to the base case. This scenario was not as severe and as such still
resulted in sufficient headroom. It was not deemed plausible to combine yield
reduction and the higher cost and fuel increases based on an analysis of
historical information across the airline industry.
After reviewing the current liquidity position, committed funding facilities,
the base case and severe but plausible downside financial forecasts
incorporating the uncertainties described above, the Directors have a
reasonable expectation that the Group has sufficient resources to continue in
operation for the foreseeable future. For these reasons, the Directors
continue to adopt the going concern basis of accounting in preparing the
Group's financial statements.
The Annual Report and Accounts for 2022 has been delivered to the Registrar of
Companies.
The Annual Report and Accounts for 2023 will be delivered to the Registrar of
Companies in due course. The auditors' report on those financial statements
was unqualified and neither drew attention to any matters by way of emphasis
nor contained a statement under either section 498(2) of Companies Act 2006
(accounting records or returns inadequate or financial statements not agreeing
with records and returns), or section 498(3) of Companies Act 2006 (failure to
obtain necessary information and explanations).
Accounting policies
The accounting policies adopted are consistent with those described in the
Annual Report and Accounts for the year ended 30 September 2023.
Change in presentation
Presentation of easyJet holidays
The presentation of the consolidated income statement has been amended in
order to provide more relevant information to the users of the financial
statements, reflecting the increasing significance of the Holidays operating
segment. Holidays revenues have historically been presented within 'Ancillary
revenue', whilst associated costs have been presented within the 'Airports,
ground handling, holidays accommodation, and other operating costs' line.
Ancillary revenue has now been split into ancillary revenue attributable to
airline passengers and Holidays incremental revenue, which is the revenue from
holidays' customers net of flight revenue; the passenger revenue and airline
ancillary revenue attributable to holidays' customers being included in the
passenger revenue and airlines ancillary revenue lines respectively.
Additionally, a new cost line 'Holidays direct operating costs' is shown which
includes costs specific to the Holidays business such as accommodation costs
and airport transfers.
The prior year has been presented on a consistent basis, which has resulted in
the re-presentation of the consolidated income statement as below.
Year ended 30 September 2022
(Previously reported) (Re-presented)
Headline Non-headline (note 2) Total Headline Non-headline (note 2) Total
£ million £ million £ million £ million £ million £ million
Revenue
Passenger revenue 3,816 - 3,816 3,816 - 3,816
Airline ancillary - - - 1,585 - 1,585
Holidays incremental revenue - - - 368 - 368
Ancillary revenue 1,953 - 1,953 1,953 - 1,953
Total revenue 5,769 - 5,769 5,769 - 5,769
Expenditure
Airports and ground handling - - - (1,443) - (1,443)
Airports, ground handling, holidays accommodation, and other operating costs (1,716) - (1,716) - - -
Holidays direct operating costs (excluding flights) - - - (273) - (273)
Total (1,716) - (1,716) (1,716) - (1,716)
Presentation of the liability for compensation for airline customer delays and
cancellations
In previous reporting periods easyJet has classified the liability for
compensation and reimbursements for airline customers arising from flight
delays and cancellations as a provision. In response to a ruling by the
International Financial Reporting Interpretations Committee (IFRIC) that
compensation for delays gives rise to variable consideration, this liability
has been re-presented from provisions for liabilities and charges to
liabilities within trade and other payables. This impacts both the statement
of financial position and the accompanying notes to the financial statements.
The prior year statement of financial position has been re-presented as
described below, and the impact on accompanying notes is described in those
notes. Specifically, for note 9, as a result of this re-presentation, the
provision for holidays' customer compensation for quality issues, personal
injury and illness, and the provision for refunds of air passenger duty and
similar charges have been re-presented as 'Other provisions'.
As at 30 September 2022
Previously reported Re-presented
£ million £ million
Current liabilities
Trade and other payables (1,685) (1,759)
Provisions for liabilities and charges (176) (102)
Remaining other current liabilities (1,817) (1,817)
(3,678) (3,678)
The value of the liability for the year ending 30 September 2021 was not
material and therefore the 1 October 2021 opening balance in the relevant
comparative notes has not been re-presented.
Critical accounting judgements and estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make judgements as to
the application of accounting standards to the recognition and presentation of
material transactions, assets and liabilities within the Group, and the use of
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements, and the reported amounts
of income and expenses during the reporting period. Estimations are based on
management's best evaluation of a range of assumptions, however, events or
actions may mean that actual results ultimately differ from those estimates,
and these differences may be material. The estimates and the underlying
assumptions are reviewed regularly.
Critical accounting judgements
The following are the critical judgements, apart from those involving
estimation (which are dealt with separately below), that the Directors have
made in the process of applying the Group's accounting policies and that have
the most significant effect on the amounts recognised and presented in the
financial statements.
Classification of income or expenses between headline and non-headline (note
2)
Non-headline items are those where, in management's opinion, their separate
reporting provides an additional understanding to users of the financial
statements of easyJet's underlying trading performance, and which are
significant by virtue of their size and/or nature. In considering the
categorisation of an item as non-headline, management's judgement includes,
but is not limited to, a consideration of:
· whether the item is outside of the principal activities of the
easyJet Group (being to provide point-to-point airline services and package
holidays);
· the specific circumstances which have led to the item arising,
including, if extinguishing an item from the statement of financial position,
whether that item was first generated via headline or non-headline activity.
The rebuttable presumption being that when subsequently extinguishing an item
from the statement of financial position, any impact on the income statement
should be reflected in the same way as that which was used in the initial
creation of the item;
· if the item is irregular in nature; and,
· whether the item is unusual by virtue of its size.
Non-headline items may include impairments, amounts relating to corporate
acquisitions and disposals, expenditure on major restructuring programmes and
the gain or loss resulting from the initial recognition of sale and leaseback
transactions.
Consolidation of easyJet Switzerland S.A.
Judgement has been applied in consolidating easyJet Switzerland S.A. as a
subsidiary on the basis that the Company exercises a dominant influence over
the undertaking. A non-controlling interest has not been reflected in the
consolidated financial statements on the basis that the holders of the
remaining 51% of the shares have no entitlement to any dividends from that
holding and the Company has an option to acquire those shares for a
predetermined minimal consideration.
Critical accounting estimates
The following critical accounting estimates include judgements or complexity
and are the major sources of estimation uncertainty that have a significant
risk of resulting in a material adjustment to the carrying amounts of assets
and liabilities within the next year.
Owned aircraft carrying values - £3,846 million (2022: £3,598 million) (note
7)
The key estimates used in arriving at aircraft carrying values are the UELs
and residual values of the owned aircraft.
Aircraft are depreciated over their UEL to their residual values in line with
the Property, Plant and Equipment Accounting Policy. The UEL is based on
easyJet's long-term fleet plan and intended utilisation of the current fleet
which include long-term assumptions of market conditions and customer demands,
which by their nature are inherently uncertain.
Residual value estimates for aircraft are based on independent aircraft
valuations. The valuations are based on an assessment of the current and
future state of the global marketplace for specific aircraft assets. Should
the marketplace for an asset class deteriorate unpredictably, there could be a
risk that the recoverable amount for some aircraft assets would fall below
their current carrying value or that residual values are subject to downward
adjustment. If the market expectation of residual value of the easyJet
aircraft varied by +/- 10% this would result in an approximate +/- £7 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 - £753 million (2022: £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
the renegotiation of end of lease return conditions, increased or decreased
aircraft utilisation, or changes in the cost of heavy maintenance services and
the expected uplift in future prices.
A significant portion of the future maintenance costs and cost increases are
under contract and provide certainty to the provision. Where cost increases
are not under contract, an estimation of the likely future increases are made
in the calculation of the provision. Given the significant value of the
provision, the provision is sensitive to changes in the future increase of
uncontracted costs. An additional 4% cost uplift on uncontracted costs over
the future years used in the provision would result in a £28 million increase
in the provision. Additionally, with many maintenance costs incurred in US
dollars, the provision remains sensitive to changes in the GBP/USD exchange
rate. A significant +/- 10 cent change in the GBP/USD exchange rate would
impact the provision by -£48 million/+£56 million respectively.
The rates used to discount the provision to arrive at a present value are
based on observable market rates as an estimate of the relevant risk free
rate.
The provision can also be materially influenced by the maintenance status of
aircraft when they enter the easyJet fleet. To give flexibility to the fleet
plan easyJet may lease 'mid-life' aircraft. When mid-life aircraft enter the
fleet, a 'catch-up' maintenance provision is created to reflect the
maintenance obligation for the flying cycles undertaken before the aircraft
entered the easyJet fleet. The trigger for such increases to the provision is
the lease contract and as such any future mid-life lease events are not
reflected in the current provision. It is of note that where contractually
agreed a mid-life delivery asset is also created when the mid-life leased
aircraft enter the fleet, creating a separate related asset on the statement
of financial position.
Goodwill and landing rights - £520 million (2022: £523 million)
It is management's judgement that there are two separate CGUs which generate
largely independent cash flows, these being easyJet's Airline route network
and its Holidays business. The recoverable amount of goodwill and landing
rights has been determined based on value in use calculations for the airline
route network CGU as they are wholly attributable to it. The value in use is
determined by discounting future cash flows to their present value. When
applying this method, easyJet relies on a number of key estimates including
the ability to meet its strategic plans, future fuel prices and exchange
rates, long-term economic growth rates for the principal countries in which it
operates, and its pre-tax weighted average cost of capital. Strategic plans
include assessments of the future impact of climate change on easyJet to the
extent these can be estimated. This includes, for example, the future
estimated price of ETS allowances, the phasing out of the free ETS allowances
from 2024, the expected price and quantity required of SAF usage and currently
estimated fleet renewals. The impact of longer-term climate change risks that
are not part of the strategic plans has been considered as part of the stress
testing and plausible scenarios modelled.
Fuel prices and exchange rates continue to be volatile in nature and the
ability to pass these changes on to the customer is a critical judgement that
requires estimation. In addition, assumptions over customer demand levels
could have a significant effect on the impairment assessment performed. Any
future events that would lead to extended travel restrictions or fleet
grounding may impact future impairment or useful economic life assessments.
The stress testing considered as part of the overall impairment assessment
takes into account different assumptions for these key estimates.
Recoverability of deferred tax assets - £442 million (2022: £443 million)
(note 3)
The deferred tax asset balances include £442 million (2022: £443 million)
arising on full recognition of the UK trading tax losses accumulated at the
statement of financial position date. The Group has concluded that these
deferred tax assets will be fully recoverable against the unwind of taxable
temporary differences and future taxable income based on the long-term
strategic plans of the Group. Where applicable the financial projections used
in assessing future taxable income are consistent with those used elsewhere
across the business, for example in the assessment of going concern. These
assessments include the expected impact of climate change on easyJet, and the
future financial impact within cash flow projections, including the future
estimated price of ETS allowances, the phasing out of the free ETS allowances
from 2024, the expected price and quantity required of SAF usage and fleet
renewals.
The tax losses for which a deferred tax asset has been recognised are expected
to be utilised within the next six years, assessed by considering probable
forecast future taxable income. The probable forecast future taxable income
includes the impact of the expected unwind of taxable temporary differences as
well as the effect of Full Expensing Relief for qualifying capital
expenditure. Probable forecast future taxable income includes an incremental
and increasing risk weighting to represent higher levels of uncertainty in
future periods.
The period over which the loss is utilised has been stress tested by assessing
probable future taxable income for the next three years, based on the same
risk weightings to those applied above, but assuming no profit growth from the
end of a three year forecast period. The resultant reduction in forecast
taxable profit calculated on this basis would extend the tax loss utilisation
period by one year.
The tax losses can be carried forward indefinitely and have no expiry date.
In the 22 November 2023 Autumn Statement it was announced that full expensing
relief, introduced in the Finance (No.2) Act 2023, for qualifying expenditure
incurred from 1 April 2023 to 31 March 2026 will be made permanent. It is not
substantively enacted at the statement of financial position date but the
Group is assessing the impact it may have on the recoverability of deferred
tax assets for subsequent financial years.
Defined benefit pension assumptions - £152 million gross obligation (2022:
£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.
Liability for compensation payments - £62 million (2022: £74 million)
easyJet incurs liabilities for amounts payable to customers who make claims in
respect of flight delays and cancellations, for which claims could be made up
to six years after the event, and for reimbursement of reasonable expenses
incurred as a result of flight delays and cancellations. The key estimation in
the liability is the passenger claim rate for compensation payments. The
estimation carries a level of uncertainty as it is based on customer
behaviour. The basis of the estimates included in the liability are reviewed
at least annually and when information becomes available that may result in a
material change to the estimate. Should the claim rate for compensation paid
to customers increase by 2% across the six-year liability period, it would
result in an addition to the year end provision of £15 million.
Vouchers issued - £58 million (2022: £111 million)
It is currently easyJet policy in the event of flight cancellations to offer
customers the option to accept vouchers in lieu of cash refunds. The liability
for these vouchers is classified under other payables until the voucher is
redeemed against a future booking, when it is reclassified to unearned
revenue.
For airline flight vouchers, where the likelihood of the contractual right
being exercised is considered to be remote, immaterial breakage has been
applied. This has been estimated based on the utilisation rates experienced to
date, and these liabilities have been taken to the consolidated income
statement as revenue. The breakage was applied in the first half of the
financial year ahead of a significant voucher expiry deadline later in the
financial year. That deadline was subsequently been extended into the next
financial year to allow customers the maximum opportunity to utilise their
vouchers. Utilisation patterns since this extension do not suggest that the
breakage recognition should be reversed.
For vouchers issued to customers in countries where regulations stipulate
unused vouchers should be refunded to the customer before the expiry of the
statutory period, the required refunds have been made.
Applying breakage to the balance of the remaining airline flight vouchers at
30 September 2023 at a rate of 10% would result in a reduction in the
liability of c.£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 2022, and did not have a material impact were:
· Amendments to IFRS 3 - Business Combinations - Reference to the
conceptual framework
· Amendments to IAS16 - Property, plant and equipment - Proceeds before
intended use
· Amendments to IAS37 - Provisions, contingent liabilities and
contingent assets - Onerous contracts: Cost of fulfilling a contract
· Annual improvements to IFRS 1, IFRS 9, IAS 41 and illustrative
examples accompanying IFRS 16 Leases
There are no standards that are issued but not yet effective that would be
expected to have a material impact on the entity in the current or future
reporting periods and on foreseeable future transactions.
2. Non-headline items
An analysis of the amounts presented as non-headline is given below:
Year ended Year ended
30 September 30 September 2022
2023
£ million £ million
Sale and leaseback loss - 21
Restructuring charge 1 -
Loss on disposal of landing rights 3 10
Fair value adjustment and hedge discontinuation credit - (1)
Correction of prior year error 19 -
Total non-headline charge before tax 23 30
Tax credit on non-headline items (6) (8)
Total non-headline charge after tax 17 22
Sale and leaseback loss
During the year, easyJet completed the sale and leaseback of eight A319
aircraft (2022: ten). There was a £nil million impact in the income statement
(£6 million loss recognised in other costs offset by £6 million gain
recognised in other income) for the sale and leaseback of the eight aircraft
during the year (2022: £21 million loss recognised in other costs).
Restructuring
As a result of the downsizing of operations at Berlin Brandenburg Airport,
announced in the previous financial year, in the current year easyJet returned
an additional number of landing right 'slots' held at the airport relating to
our summer 2023 flying schedule. As noted last year, the slots in Berlin were
acquired as part of the acquisition of Air Berlin's operations in 2017. An
allocation of the purchase price to the surrendered slots has been estimated
and, as no consideration was received in return for giving back the slots,
recognised as a loss on disposal of an intangible asset. This resulted in a
non-headline restructuring charge of £3 million (2022: £10 million).
Additionally, net restructuring charges of £1 million (2022: £nil million)
representing additional costs arising from previously announced restructuring
programmes in Germany, have been incurred in the period. As at 30 September
2023, there were unpaid amounts of £6 million (2022: £15 million)
representing remaining redundancy cases which have not been finalised and
settled at the end of the financial year.
Hedge discontinuation
Hedge discontinuation relates to the cumulative fair value of financial
derivatives at the time of being discontinued from a previous hedge accounting
relationship. No hedges were discontinued in the year ended 30 September 2023.
In accordance with IFRS 9, hedge effectiveness testing is performed on a
regular, periodic basis. For cash flow hedges this includes an assessment of
highly probable future cash exposures with the amount compared to the notional
value of derivatives held in a hedge relationship. In the year ending 30
September 2022, this resulted in a £1 million net credit related to these
discontinued derivatives held in other comprehensive income being immediately
recorded in the income statement.
Correction of prior year error
In performing a review of foreign currency translation, an immaterial error
was identified in a third-party system relating to aircraft lease
modifications which occurred in FY21 and the depreciation of the corresponding
right of use assets. The required correction to the statement of financial
position at 30 September 2023 of £19 million has been posted to depreciation
on those right of use assets. This has been disclosed as a non-headline item
as it is an irregular, immaterial error originating in an earlier financial
year.
Tax on non-headline items
After the necessary tax adjustments, which principally relate to the sale and
leaseback transactions in both the current and comparative periods, there is a
non-headline tax credit of £6 million (2022: £8 million) for the year.
3. Tax (charge)/credit
Tax on profit/(loss) on ordinary activities
2023 2022
£ million £ million
Current tax
Foreign tax 11 7
Total current tax charge 11 7
Deferred tax
Temporary differences relating to property, plant and equipment 76 (50)
Other temporary differences 24 (2)
Adjustments in respect of prior years (3) 2
Remeasurement of opening balances due to change in tax rates - 4
Total deferred tax charge/(credit) 97 (46)
Total tax charge/(credit) 108 (39)
Effective tax rate 25.1% 18.7%
Reconciliation of the total tax charge/(credit)
The tax for the year is higher than (2022: lower than) the standard rate of
corporation tax in the UK as set out below:
2023 2022
£ million £ million
Profit/(loss)before tax 432 (208)
Tax charge/(credit) at 22.0% (2022: 19.0%) 95 (40)
Income not chargeable for tax purposes:
Expenses not deductible for tax purposes 8 5
Share-based payments (3) 2
Adjustments in respect of prior years - deferred tax (3) 2
Difference in applicable rates for current and deferred tax 12 (12)
Attributable to rates other than standard UK rate (1) 1
Change in substantively enacted tax rate - 4
Movement in provisions - (1)
Total tax charge/(credit) 108 (39)
Current tax payable at 30 September 2023 amounted to £3 million (2022: £5
million payable) which is solely related to tax payable in other European
jurisdictions.
During the year ended 30 September 2023, net cash tax paid amounted to £12
million (2022: £4 million net cash tax paid).
The Finance Act 2021 confirmed an increase of the UK corporation tax rate from
19% to 25% with effect from 1 April 2023 and as such, the blended statutory
current tax rate for the year ended 30 September 2023 is 22%. Temporary
differences have been measured using the enacted tax rates that are expected
to apply when the liability is settled or the asset is realised, which is 25%.
On 20 June 2023, Finance (No.2) Act 2023 was substantively enacted in the UK,
introducing a global minimum effective tax rate of 15%. The legislation
implements a domestic top-up tax and a multinational top-up tax, effective for
accounting periods starting on or after 31 December 2023. This will therefore
apply to the Group for the year ended 30 September 2025 onwards. The Group has
applied the exception allowed by an amendment to IAS 12 to recognising and
disclosing information about deferred tax assets and liabilities related to
top-up income taxes.
Tax on items recognised directly in other comprehensive (loss)/income or
shareholders' equity:
2023 2022
£ million £ million
Charge/(credit) to other comprehensive (loss)/income
Deferred tax on change in fair value of cash flow hedges 14 (13)
Deferred tax on post-employment benefit (1) (10)
Deferred tax
The net deferred tax (asset)/liability in the statement of financial position
is as follows:
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 2022 341 (26) 68 (1) (1) (443) (62)
Charged/(credited) to income statement 73 27 - (3) (1) 1 97
Charged to other comprehensive loss - - (14) - 1 - (13)
At 30 September 2023 414 1 54 (4) (1) (442) 22
Deferred tax liabilities expected to be settled:
£ million
Within 12 months -
After more than 12 months 22
At 30 September 2023 22
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax
liabilities and it is the intention to settle these on a net basis.
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 income - - 13 - 10 - 23
At 30 September 2022 341 (26) 68 (1) (1) (443) (62)
4. Earnings/(loss) per share
Basic earnings/(loss) per share has been calculated by dividing the total
profit/(loss) for the year by the weighted average number of shares in issue
during the year after adjusting for shares held in employee benefit trusts.
To calculate diluted earnings/(loss) per share, the weighted average number of
ordinary shares in issue has been adjusted to assume conversion of all
dilutive potential shares. Share options granted to employees where the
exercise price is less than the average market price of the Company's ordinary
shares during the year are considered to be dilutive potential shares. Where
share options are exercisable based on performance criteria and those
performance criteria have been met during the year, these options are included
in the calculation of dilutive potential shares. The calculation of diluted
loss per share does not assume conversion, exercise, or other issue of
potential ordinary shares that would have an antidilutive effect on earnings
per share.
Headline basic and diluted earnings/(loss) per share are also presented, based
on headline profit/(loss) for the year.
Earnings/(loss) per share is based on:
2023 2022
£ million £ million
Headline profit/(loss) for the year 341 (147)
Total profit/(loss) for the year 324 (169)
2023 2022
million million
Weighted average number of ordinary shares used to calculate basic 751 753
earnings/(loss) per share
Weighted average number of ordinary shares used to calculate diluted 758 753
earnings/(loss) per share
2023 2022
Earnings/(loss) per share pence pence
Basic 43.1 (22.4)
Diluted 42.7 (22.4)
2023 2022
Headline earnings/(loss) per share pence pence
Basic 45.4 (19.6)
Diluted 45.0 (19.6)
5. Segmental and geographical revenue reporting
Segmental analysis:
Year ended 30 September 2023
Airline Holidays Intergroup Group
transactions
£ million £ million £ million £ million
Passenger revenue 5,221 - - 5,221
Ancillary revenue 2,174 1,047 (271) 2,950
Total revenue 7,395 1,047 (271) 8,171
Airline operating costs including fuel (5,537) - - (5,537)
Holidays direct operating costs - (842) 260 (582)
Selling and marketing (189) (43) - (232)
Other costs and other income (654) (47) 11 (690)
Amortisation, depreciation and dry leasing (649) (5) - (654)
Net interest (payable)/receivable and other financing income/(charges) (59) 11 - (48)
Foreign exchange gain 26 1 - 27
Headline profit before tax 333 122 - 455
Non-headline items (23) - - (23)
Total profit before tax 310 122 - 432
Year ended 30 September 2022 (re-presented)
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
Airline operating costs including fuel (4,129) - - (4,129)
Holidays direct operating costs* - (400) 127 (273)
Selling and marketing* (153) (20) - (173)
Other costs and other income (593) (32) - (625)
Amortisation, depreciation and dry leasing* (562) (4) - (566)
Net interest (payable)/receivable and other financing income/(charges)* (117) - - (117)
Foreign exchange loss (63) (1) - (64)
Headline (loss)/profit before tax (216) 38 - (178)
Non-headline items (30) - - (30)
Total (loss)/profit before tax (246) 38 - (208)
The presentation of this note has been expanded in the current year to provide
further information to the users of the financial statements; additional
financial statement line items are marked in the above table with an *. Note
that airline operating costs including fuel comprises operating costs that
relate solely to the airline segment, and similarly holidays direct operating
costs are costs specific to the Holidays segment. All other costs are incurred
by both the Airline and Holidays segments.
The prior year has been re-presented in order to show the information on a
consistent basis. This revised presentation reflects the increased granularity
of the Holidays segment available to the CODM and plc Board.
As described in note 1, airline revenue is recognised at a point in time (when
the flight takes place). The Holidays revenue detailed in this note includes
both flight revenue, recognised at the time the flight takes place, and
remaining ancillary revenue which is recognised over time, aligned to the
duration of the holiday. The holidays flight revenue is included in this note
within ancillary revenue (with the associated intergroup transaction) aligned
to the presentation of revenue to the CODM and plc Board.
The intergroup transactions column represents revenue and cost transactions
between Airline and Holidays for the flight element of holiday packages. These
intercompany transactions are eliminated on consolidation.
Assets and liabilities are not allocated to individual segments and are not
separately reported to, or reviewed by, the CODM, and therefore have not been
disclosed.
Geographical revenue:
2023 2022
(re-presented)
£ million £ million
United Kingdom 4,345 2,845
France 852 674
Switzerland 791 626
Northern Europe (excluding Switzerland) 610 537
Southern Europe (excluding France) 1,434 995
Other 139 92
8,171 5,769
easyJet has assessed the materiality of geographical revenues and has
disclosed revenues by country of origin where such revenues are in excess of
10% of total revenue. For the year ended 30 September 2023, this included
separate presentation of France and Switzerland which were previously included
in Southern Europe and Northern Europe respectively. The prior year has
therefore been re-presented in order to show the information on a consistent
basis.
Geographical revenue is allocated according to the location of the first
departure airport on each booking.
Southern Europe comprises countries lying wholly or mainly south of the border
between Italy and Switzerland.
easyJet holidays' revenue is generated wholly from the United Kingdom.
easyJet's non-current assets principally comprise its fleet of 183 (2022: 181)
owned and 153 (2022: 139) leased aircraft, giving a total fleet of 336 at 30
September 2023 (2022: 320). easyJet stored nil aircraft under power by the
hour agreements (2022: 3). 27 aircraft (2022: 27) are registered in
Switzerland, 128 (2022: 132) are registered in Austria, nil (2022: 4) are
registered in the Cayman Islands, and the remaining 181 (2022: 160) are
registered in the United Kingdom.
6. Dividends
No dividend was paid in the year ending 30 September 2023 or 30 September
2022.
An ordinary dividend in respect of the year ended 30 September 2023 of 4.5
pence per share, or £34 million, based on 10% headline profit after tax, is
to be proposed at the forthcoming Annual General Meeting. These financial
statements do not reflect this proposed dividend.
7. Property, plant and equipment
Owned assets Right of use assets
Aircraft and spares Land and buildings Other Aircraft and spares Other Total
£ million £ million £ million £ million £ million £ million
Cost
1 October 2022 4,988 44 68 2,416 45 7,561
Additions 604 - 14 292 18 928
Aircraft sold and leased back (165) - - 44 - (121)
Disposals¹ (31) - (4) (100) (15) (150)
At 30 September 2023 5,396 44 78 2,652 48 8,218
Accumulated depreciation
At 1 October 2022 1,390 - 28 1,479 35 2,932
Charge for the year 263 - 8 368 5 644
Aircraft sold and leased back (86) - - - - (86)
Disposals¹ (17) - (4) (100) (15) (136)
At 30 September 2023 1,550 - 32 1,747 25 3,354
Net book value
At 30 September 2023 3,846 44 46 905 23 4,864
At 1 October 2022 3,598 44 40 937 10 4,629
Owned assets Right of use assets
Aircraft and spares Land and buildings Other Aircraft and spares Other Total
£ million £ million £ million £ million £ million £ million
Cost
At 1 October 2021 4,802 44 55 2,335 45 7,281
Additions(2) 414 - 14 120 - 548
Aircraft sold and leased back (216) - - 25 - (191)
Disposals (12) - (1) (64) - (77)
At 30 September 2022 4,988 44 68 2,416 45 7,561
Accumulated depreciation
At 1 October 2021 1,243 - 19 1,255 29 2,546
Charge for the year 255 - 9 269 6 539
Aircraft sold and leased back (102) - - - - (102)
Disposals (6) - - (45) - (51)
At 30 September 2022 1,390 - 28 1,479 35 2,932
Net book value
At 30 September 2022 3,598 44 40 937 10 4,629
At 1 October 2021 3,559 44 36 1,080 16 4,735
The net book value of aircraft includes £569 million (2022: £414 million)
relating to advance payments for future deliveries and life limited parts not
yet in use. This amount is not depreciated.
The net book value of aircraft spares is £112 million (2022: £81 million).
The 'Other' categories are principally comprised of leasehold improvements,
computer hardware, leasehold property, fixtures, fittings and equipment, and
work in progress in respect of property, plant and equipment projects. The
work in progress as at 30 September 2023 was £14 million (2022: £20
million).
As at 30 September 2023, easyJet was contractually committed to the
acquisition of two CFM LEAP engines (2022: four), and 158 (2022: 168) Airbus
A320 family aircraft, with a total estimated list price³ of $18.1 billion
(2022: $19.2 billion) before escalations and discounts, for delivery in
financial years 2024 (16 aircraft), 2025 (19 aircraft) and 2026 to 2029 (123
aircraft).
At the year end date easyJet had a commitment for six aircraft lease
contracts, where the aircraft had not been delivered, with a combined value of
£67 million. Subsequent to 30 September 2023 two aircraft have been delivered
reducing the commitment to £45 million.
1) Right of use asset disposals includes the transactions to remove
the fully depreciated assets from the statement of financial position when the
leased assets are returned. The gross value of the cost and associated
accumulated depreciation was £100 million.
2) £(14)million Other asset values previously recorded as transfers
have been reclassified as additions.
3) As Airbus no longer publishes list prices, the last available list
price published in January 2018 has been used for the estimated list price and
the prior year comparator has been restated to be on the same basis.
8. Borrowings
Current Non-current Total
£ million £ million £ million
At 30 September 2023
Eurobonds 433 1,462 1,895
433 1,462 1,895
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
Amounts above are shown net of issue costs or discounted amounts which are
amortised at the effective interest rate over the life of the debt
instruments.
The February 2016 Eurobond with a carrying value of £437 million was repaid
in February 2023. In addition, the Term loan (UK Export Finance backed
facility) with a carrying value of £841 million was repaid in June 2023 and
the facility was cancelled. At the same time easyJet entered into a new
undrawn facility for $1.75 billion. The October 2016 Eurobond with a carrying
value of £433 million has been repaid in October 2023.
9. Provisions for liabilities and charges
Maintenance provisions Restructuring Other provisions Total provisions
£ million £ million £ million £ million
At 1 October 2022 (re-presented)¹ 636 15 40 691
Exchange adjustments (44) - - (44)
Release of provisions - (5) (6) (11)
Additional provisions recognised 257 6 17 280
Updated discount rates net of unwind of discount (30) - - (30)
Utilised (66) (10) (9) (85)
At 30 September 2023 753 6 42 801
Year ended 30 September 2022 (re-presented)¹ Maintenance provisions Restructuring Other provisions Total provisions
£ million £ million £ million £ million
At 1 October 2021 550 18 16 584
Exchange adjustments 93 - - 93
Release of provisions - (10) (1) (11)
Additional provisions recognised 141 10 31 182
Related to aircraft sold and leased back 6 - - 6
Updated discount rates net of unwind of discount (71) - - (71)
Utilised (83) (3) (6) (92)
At 20 September 2022 636 15 40 691
The maintenance provisions provide for maintenance costs arising from legal
and constructive obligations relating to the condition of the aircraft when
returned to the lessor. Restructuring and other provisions include amounts in
respect of potential liabilities for employee-related matters and litigation
which arose in the normal course of business.
2023 2022(1)
£ million £ million
Current 175 102
Non-current 626 589
801 691
1) The liability for compensation and reimbursements for airline
customer delays and cancellations has been re-presented from provisions for
liabilities and charges to liabilities within other payables. Refer to note 1
for further detail.
The split of the current/non-current maintenance provision is based on the
expected maintenance event timings. If actual aircraft usage varies from
expectation the timing of the utilisation of the maintenance provision could
result in a material change in the classification between current and
non-current. Maintenance provisions are expected to be utilised within nine
years.
Within other provisions are provisions for litigation matters. The split of
these provisions between current/non-current is based on the dates of expected
court judgements. Provisions for restructuring could be fully utilised within
one year from 30 September 2023 and therefore are classified as current.
10. Reconciliation of operating profit/(loss) to cash generated from
operations
2023 2022
(re-presented)
£ million £ million
Operating profit/(loss) 453 (27)
Adjustments for non-cash items:
Depreciation 644 539
Loss on disposal of property, plant and equipment 14 7
Loss on sale and leaseback - 21
Amortisation of intangible assets 29 25
Share-based payments 18 26
Loss on disposal of other intangible assets 3 10
Changes in working capital and other items of an operating nature:
Increase in trade and other receivables (16) (151)
Increase in current intangible assets (179) (43)
Increase in trade and other payables(1) 120 312
Increase in unearned revenue 458 197
Post employment benefit contributions (2) (1)
Decrease in provisions(1) (7) (61)
(Increase)/decrease in other non-current assets (40) 64
Increase/(decrease) in other derivative financial instruments 14 (26)
Cash generated from operations 1,509 892
1) The liability for compensation and reimbursements for airline
customer delays and cancellations has been re-presented from provisions for
liabilities and charges to liabilities within other payables. Refer to note 1
for further detail.
11. Reconciliation of net cash flow to movement in net cash/(debt)
01 October 2022 Foreign exchange New debt raised in the year Other¹ Net 30 September 2023
cash flow
£ million £ million £ million £ million £ million £ million
Cash and cash equivalents 3,514 (168) - - (421) 2,925
Money market deposits 126 - - - (126) -
3,640 (168) - - (547) 2,925
Eurobond (2,356) 28 - (11) 444 (1,895)
Term loan (UK Export Finance backed facility) (841) 105 - (12) 748 -
Lease liabilities (1,113) 94 (126) (62) 218 (989)
(4,310) 227 (126) (85) 1,410 (2,884)
Net (debt)/cash (670) 59 (126) (85) 863 41
1) Other includes deferred fees, lease extensions and rate changes.
12. Government Grants and assistance
During the year ended 30 September 2023, easyJet Airline Company Limited
continued to claim 'activité partielle longue durée', long-term partial
activity (APLD), a scheme implemented by the French Government under which,
subject to agreement with trade unions, it is possible to reduce the activity
of employees, within the limit of 50% of their legal working time, while
maintaining a compensation funded by the Government. The total amount claimed
by easyJet companies in the year ended 30 September 2023 amounted to £3
million (2022: £8 million, received through this scheme and similar 'furlough
schemes' operated by the Governments of Switzerland and Germany) and is offset
within employee costs in the income statement. There are no unfulfilled
conditions or contingencies relating to this scheme.
On 8 January 2021, easyJet Airline Company Limited signed a five-year term
loan facility of $1.87 billion (with easyJet plc as a Guarantor), underwritten
by a syndicate of banks and supported by a partial guarantee from UK Export
Finance under their Export Development Guarantee scheme. The Export
Development Guarantee scheme for commercial loans is available to qualifying
UK companies, does not carry preferential rates or require state aid approval,
but does contain some restrictive covenants including dividend payments.
However, these restrictive covenants are compatible with easyJet's existing
policies. In April 2022, easyJet repaid $100 million of this facility,
reducing the overall UKEF facility size from $1.87 billion to $1.77 billion
and in June 2023 this facility was repaid and terminated. A new five-year
undrawn facility of $1.75 billion was entered into in June 2023. Embedded
within the facility is a sustainability key performance indicator linked to a
reduction in carbon emission intensity in line with easyJet's SBTi validated
target, with a margin adjustment mechanism (upward or downward) conditional on
the achievement of specific milestones. Other than the sustainability linkage
the facility is on similar terms to the 2021 agreement.
13. Contingent liabilities and commitments
Contingent liabilities
easyJet is involved in a number of disputes and litigation cases which arose
in the normal course of business. The potential outcome of these disputes and
litigations can cover a range of scenarios, and in complex cases reliable
estimates of any potential obligation may not be possible.
easyJet has previously disclosed an investigation by the Information
Commissioner's Office (ICO) into a cyberattack and subsequent data breach that
took place in 2020. The ICO has advised in this financial year that no further
action will be taken and the investigation against easyJet is now closed. Due
to the uncertainty surrounding the investigation no provision had been made
for an estimated outcome from the case, and as such there is no impact on the
financial statements of the ICO's decision to close the investigation.
Although the ICO investigation is closed, the associated class action filed in
May 2020 in the UK High Court by a law firm representing a class of customers
affected by the data breach arising from the cyberattack, remains in place.
Similarly, other claims have been commenced or are threatened in certain other
courts and jurisdictions. The merit, likely outcome and potential impact of
these actions are subject to significant uncertainties and therefore the Group
is unable to currently assess the likely outcome or quantum of the claims, and
as such a provision is not included in these financial statements.
Additionally, there is a possibility of a claim being made by a third-party
supplier, for what would be a material recovery. Management have assessed the
likelihood of a case being brought, easyJet's response and likelihood of a
successful defence, and at this stage do not consider it appropriate to
provide for such a possibility.
Contingent commitments
Letters of credit and performance bonds
At 30 September 2023, easyJet had outstanding letters of credit and
performance bonds totalling £45 million (2022: £43 million), of which £12
million (2022: £10 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.
Aircraft orders
easyJet's current order book with Airbus extends to calendar year 2028 and
will deliver 158 aircraft (90 A320neo and 68 A321neo). This will continue the
Company's fleet modernisation, as the 156 seat A319 and some A320ceo aircraft
(180 or 186 seat) leave the business and new A320neo (186 seat) and A321neo
(235 seat) aircraft enter, providing upgauging, cost and sustainability
enhancements. Further, easyJet has a commitment with CFM to purchase two LEAP
engines in FY24.
In addition, easyJet has entered into conditional arrangements with Airbus to
secure the delivery of a further 157 aircraft (56 A320neo and 101 A321neo)
between FY29 and FY34 as well as 100 purchase rights (the 'Proposed
Purchase'). This provides easyJet with the ability to complete its fleet
replacement programme of A319 aircraft and replace approximately half of the
A320ceo aircraft, alongside providing the foundation for disciplined growth.
The conditional arrangement includes easyJet's agreement with Airbus to
exercise conversion rights of 35 A320neo deliveries into A321neo aircraft (the
'Conversion'). Alongside the Proposed Purchase this arrangement will deliver
lower fuel burn, lower CO2 emissions and lower operating costs per seat.
The scale of the Proposed Purchase and the Conversion means that both are
conditional on shareholder approval at a general meeting of the shareholders
which will be held in December 2023.
Based on latest list prices for aircraft published in January 2018, the
Proposed Purchase and the Conversion are expected to result in an aggregate
commitment of approximately $19.9 billion, which will be spread over a number
of years. The aggregate actual price for the aircraft would be substantially
lower because of certain price concessions granted by Airbus.
At the year end date easyJet had a commitment for six aircraft lease
contracts, where the aircraft had not been delivered, with a combined value of
£67 million. Subsequent to 30 September 2023 two aircraft have been delivered
reducing the commitment to £45 million.
Pathway to net zero
On 26 September 2022, easyJet announced its pathway to net zero. This roadmap
references several partnerships with other commercial companies to explore
certain technologies which may assist with the overall goal to decarbonise the
aviation industry. The majority of these partnerships are in fact agreements
to work together on the areas identified and do not involve a financial
commitment from easyJet other than the time and effort involved in the
collaboration over an agreed period. Where there is a signed agreement
requiring a financial commitment from easyJet in the future, any future
payments are contingent on project progress or product / service delivery and
are therefore not certain, hence no liability has been recognised for these
payments.
14. Related party transactions
The Company licences the easyJet brand from easyGroup Limited ('easyGroup'), a
wholly owned subsidiary of easyGroup Holdings Limited, an entity in which
easyJet's founder, Sir Stelios Haji-Ioannou, holds a beneficial controlling
interest. The Haji-Ioannou family concert party shareholding (being easyGroup
Holdings Limited and Polys Holding Limited) holds, in total, approximately
15.27% of the issued share capital of easyJet plc as at 30 September 2023.
Under the Amended Brand Licence signed in October 2010 and approved by the
shareholders of easyJet plc in December 2010, an annual royalty of 0.25% of
total revenue is payable by easyJet to easyGroup. The full term of the
agreement is 50 years.
easyJet and easyGroup established a fund to meet the annual costs of
protecting the 'easy' (and related marks) and the 'easyJet' brands. easyJet
contributes up to £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 easyJet's permitted usage of the brand was slightly extended; and (iii)
a letter dated 2 February 2018 in which easyGroup agreed that certain
affiliates of easyJet have the right to use the brand.
The amounts included in the income statement, within other costs, for these
items are as follows:
2023 2022
£ million £ million
Annual royalty 20 14
Brand protection (legal fees paid through easyGroup to third parties) 1 2
21 16
At 30 September 2023, £6.0 million (2022: £11.1 million) was payable to
easyGroup.
15. Events after the statement of financial position date
After the statement of financial position date of 30 September 2023,
• in October 2023, the October 2016 Eurobond of
€500 million was repaid;
• in October 2023, three A319 aircraft were sold and
leased back with gross proceeds of £32 million; and
• in November 2023, easyJet signed two aircraft
leases with a combined value of £12 million.
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