REG - easyJet PLC - Half-year Report
18/05/2023 07:00
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RNS Number : 8010Z easyJet PLC 18 May 2023
18 May 2023
easyJet plc
Results for the six months ending 31 March 2023
Strong demand for summer 23 continues on easyJet's enhanced primary network
which, alongside its transformed revenue generation, is leading to an expected
acceleration in the delivery of its medium-term targets
- Headline loss before tax of £411 million (Reported loss before
tax of £415 million)
- Financial strength - £0.2 billion net debt with £3.5 billion in
cash and money market deposits
- Booking strength
o Q3 RPS expected to be +20% YoY
o Booking window returns towards normalised levels
§ Q3 - 73% booked: +1ppts vs FY22
§ Q4 - 36% booked: +3ppts vs FY22
o easyJet holidays expects to make >£80 million PBT in FY23
- easyJet holidays to launch second source market (Switzerland), for
holidays departing in early 2024. Multi-currency technology platform enables
rapid expansion into other source markets
- Expect H2 headline cost per seat ex fuel to be broadly flat year
on year
- Business transformation is expected to accelerate the delivery of
existing medium term targets:
o Mid teen EBITDAR margin
o Low to mid teen ROCE
o Holidays to make £100 million + PBT contribution
o Grow capacity back to 105 million seats
§ Launching Birmingham base for FY24
Commenting on the results, Johan Lundgren, easyJet Chief Executive said:
"easyJet's optimised network combined with the strong demand seen for flights
and holidays, enhanced revenue capabilities and operational resilience, means
we enter the summer with confidence. Recent research has shown that travel is
the number one priority for household discretionary spend with customers
safeguarding their holidays and increasingly opting for low cost airlines and
brands which provide great value.
"easyJet holidays expects to deliver full year profits of more than £80
million as it continues its rapid growth in the UK alongside its entry into
the European package holiday market. From summer it will start selling
holidays in Switzerland which will be the first of a number of planned new
European markets.
"All of this progress should result in the acceleration in the delivery of our
medium-term targets while we continue to also capture the opportunities ahead.
This includes the addition of a new base in the UK, in Birmingham, which will
not only provide more choice and connectivity for consumers but also the
creation of hundreds of jobs."
Overview
easyJet is starting to benefit from actions taken over the past 18 months.
This has been driven by the low risk growth at primary airports and Berlin
performance which has strengthened following its rightsizing. easyJet will
continue to allocate aircraft to the most profitable routes based on demand,
following the 50 aircraft which have been reallocated over the past two years.
These actions, coupled with the step changed revenue generation from ancillary
products, growth at easyJet holidays and a continued focus on cost is enabling
the expected acceleration of the delivery of our medium-term targets.
This summer sees the additional Lisbon slots being utilised for their first
peak period. In the Greek Islands, where easyJet has added +67% capacity,
there has been no margin dilution. Ancillary revenue continues to drive
incremental contribution to the Group, with airline ancillary yield +£10.65
vs H1 2019, demonstrating the strength of easyJet's products, alongside
pricing enhancements.
easyJet holidays expects to make a profit of >£80 million this year,
having seen +200% customer growth year on year in the first half. The
continued success it has achieved within the UK will be built on, alongside
the launch into the Swiss market this summer, for holidays departing in early
2024. Our multi-currency technology platform enables easy expansion into
additional European source markets with very low risk.
Financial Summary
- Headline loss before tax of £411 million (H1 2022: £545
million)
o Total revenue increased by 80% to £2,689 million (H1 2022: £1,498
million) predominantly due to pricing strength, increased flown capacity,
improved load factors and ancillary products continuing to deliver incremental
revenue.
o Group headline costs increased by 52% to £3,100 million (H1 2022: £2,043
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 23 ramp up preparations and 15 wet
lease aircraft which were within the fleet for the month of October.
- Reported loss before tax of £415 million (H1 2022: £557
million).
o Non-headline loss of £4 million (H1 2022: £12 million). Non-headline
items consist primarily of returning final slots at Berlin Brandenburg airport
following the rightsizing of the operation from 18 to 11 aircraft.
Fuel & FX Hedging
Jet Fuel H2'23 H1'24 H2'24 USD H2'23 H1'24 H2'24
Hedged position 75% 52% 22% Hedged position 77% 55% 23%
Average hedged rate ($/MT) 885 868 806 Average hedged rate (USD/GBP) 1.24 1.21 1.23
Current spot ($/MT) at 17.05.23 c.720 Current spot (USD/GBP) at 17.05.23 c.1.25
- Carbon obligation 96% covered for CY23 at €41/MT
- USD Lease payments hedged for the next three years at 1.30
- Capex hedged for the next 12 months in EUR & USD
Key Stats
( ) H1 2023 H1 2022 Change
favourable/(adverse)
Capacity(1) (millions of seats) 37.9 30.3 25%
Passengers(2) (millions) 33.1 23.4 41%
Load factor(3) (%) 87.5 77.3 10.2ppt
Average sector length (km) 1,192 1,131 5%
Airline revenue per seat (£) 66.46 47.61 40%
Airline revenue per ASK (p) 5.58 4.21 33%
Airline revenue per ASK at constant currency(4) (p) 5.49 4.21 30%
Fuel cost per seat (£) 20.43 11.94 (71)%
Airline headline cost ex fuel per seat (£) 57.15 53.48 (7)%
Airline headline cost per seat (£) 77.55 65.42 (19)%
Airline headline CASK ex fuel (p) 4.80 4.73 (2)%
Airline headline CASK ex fuel at constant currency(4) (p) (4.72) (4.74)xx 0%
Airline EBITDAR per seat (£) (2.12) (6.78) 69%
Airline EBIT per seat (£) (10.60) (15.88) 33%
Airline headline loss before tax per seat (£) (11.12) (17.80) 38%
Holidays passengers (m) 0.6 0.2 200%
Holidays profit before tax (£m) 10 (5) 300%
Headline EBITDAR Margin (2.6%) (13.9%) 11.3ppts
Headline ROCE (12%) (12%) 0ppts
Outlook
- Q3 RPS expected to be +20% YoY
- Booking window returns towards normalised level
o Q3 - 73% booked: +1ppts vs FY22
o Q4 - 36% booked: +3ppts vs FY22
- Expect headline cost per seat ex fuel to be broadly flat year on
year
- Expected acceleration in the delivery of medium-term targets
- Capacity
o H2 c.56m seats, c.9% increase YoY
o Q4 capacity around pre-pandemic levels
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
Harry Cameron Teneo +44 (0)20 7353 4200
Olivia Peters Teneo +44 (0)20 7353 4200
Conference call
There will be an analyst presentation at 09:00am GMT on 18 May 2022 at Nomura,
One Angel Lane, London, EC4R 3AB.
Alternatively, a webcast of the presentation will be available both live and
for replay (please register on the following link):
https://stream.brrmedia.co.uk/broadcast/645d10337935152b5ae756d0
(https://stream.brrmedia.co.uk/broadcast/645d10337935152b5ae756d0)
Alternatively dial in details are as follows: 0808 109 0700/+44 (0) 33 0551
0200 quoting easyJet half year results when prompted.
Revenue
Total revenue increased by 80% to £2,689 million (H1 2022: £1,498 million)
partly due to capacity increasing to 37.9 million seats (H1 2022: 30.3
million), but also due to ticket yield strength and the continued step change
in ancillary revenue generation.
Passenger revenue increased by 78% to £1,749 million (H1 2022: £985 million)
as we flew increased levels of capacity compared to the same period last year.
Passenger RPS increased by 42% to £46.24 (H1 2022: £32.49) as easyJet's
optimised primary airport network continues to drive yield growth as demand
remains strong.
Group ancillary revenue increased by 83% to £940 million (H1 2022: £513
million) as capacity increased and as easyJet holidays continues its rapid
growth (customers +200% YoY). Airline ancillary revenue per seat also
increased by 34% to £20.22 (H1 2022: £15.12) as easyJet's embedded ancillary
products have transformed the revenue generation of the airline's ancillaries.
Costs
Group headline costs excluding fuel and FX gains increased by 40% to £2,354
million (H1 2022: £1,683 million), driven by an increase in capacity flown,
industry wide inflationary pressure, the rapid growth of easyJet holidays and
resilience actions taken in preparation for summer 23.
easyJet recorded a £27 million gain from foreign exchange on balance sheet
revaluations (H1 2022: £2 million gain), benefitting from the strengthening
of sterling versus the USD over the period on our net USD denominated
liabilities.
Headline Airline cost per seat excluding fuel at constant currency increased
by 5% to £56.27 (H1 2022: £53.57), broadly in line with the sector length
increase of 5%. This is despite inflation impacting the cost base, within
airports, navigation and staff costs and the 10-percentage point increase in
load factor seen during the period which impacts per passenger charges within
airports.
Non-Headline Items
Non-headline items are those where, in management's opinion, separate
reporting provides a better understanding to users of the financial statements
of easyJet's underlying trading performance, and which are significant by
virtue of their size and/or nature. These costs are separately disclosed and
further detail can be found in the notes to the interim financial information.
A Group non-headline loss before tax of £4 million (H1 2022: £12 million
loss) was recognised in the first half. The significant item is the return of
final slots at Berlin Brandenburg airport following the rightsizing of the
operation from 18 to 11 aircraft.
Balance Sheet
During the first half, easyJet repaid a €500 million bond.
As at 31 March 2023 our net debt position was c.£0.2 billion (30 September
2022: £0.7 billion) including cash and cash equivalents and money market
deposits of £3.5 billion (30 September 2022: £3.6 billion).
Fleet
easyJet's total fleet as at 31 March 2023 comprised 328 aircraft (30 September
2022: 320 aircraft, excluding three A319 aircraft held on a zero rent basis).
The increase was driven by:
· Delivery of five new A320neo aircraft, including accelerating two
FY25 scheduled orders into FY23.
· Acquisition of three 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.
Four older leased aircraft exited the fleet at the end of their lease-term
(two A319 aircraft, and two 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.
We have an agreed order book consisting of 163 firm orders, 130 for A320neo
aircraft and 33 A321neo aircraft. This includes the aircraft purchase
approved in Summer 22, securing 56 aircraft deliveries with the conversion of
18 A320neo aircraft into A321neo aircraft for delivery between FY26 and FY29.
In addition to the accelerated delivery of two aircraft from FY25 to FY23,
easyJet has agreed to take a further two FY25 aircraft deliveries in FY24.
easyJet also has a contractual commitment to lease 11 further mid-life A320
aircraft, for delivery between now and Q1 FY24.
In order to meet our long-term fleet requirements, we will continue to keep
all options under review going forward.
The average age of the fleet increased to 9.7 years (30 September 2022: 9.3
years). The average gauge of the fleet is now 179 seats per aircraft (30
September 2022: 179 seats).
Fleet as at 31 March 2023
Owned Leased Total % of fleet Changes since Sep-22 Firm Reconfirmation Purchase Rights
Orders Aircraft
A319 29 67 96 29% 2 - - -
A320 105 63 168 51% 1 - - -
A320neo 42 7 49 15% 5 130(a) 2 1
A321neo 4 11 15 5% - 33(a) - -
180 148 328 ( ) 163 2 1
Percentage of total fleet 55% 45%
a) easyJet retains the option to alter the aircraft type of
future deliveries, subject to providing sufficient notification to the OEM.
Our flexible fleet plan allows us to expand or contract the size of the fleet
depending on the demand outlook.
Number of aircraft H1 23 FY23 FY24 FY25 FY26
Current contractual maximum - 336 349 373 380
Actual aircraft 328 - - - -
Current contractual minimum - 331 319 312 299
New aircraft deliveries 5* 8 18 27 28
Gross capital expenditure (£'m) c.1,000 c.1,500 c.1,700 c.1,800
*Two aircraft are held within work in progress at 31 March as modifications
are completed prior to entering into the operations.
Capex is comprised of new fleet delivery payments, maintenance related
expenditure as well as lease payments and other capital expenditure such as IT
development.
Strategy Update
easyJet's purpose is to make low-cost travel easy. Underpinning this purpose
is our strategy which has four strategic priorities that build on our
structural advantages in the European aviation market, helping easyJet move
closer towards its destination of being Europe's most loved airline, winning
for customers, shareholders and our people. Our strategic priorities are set
out below:
· Building Europe's best network
· Transforming our revenue capability
· Driving our low-cost model
· Delivering ease and reliability
Building Europe's best network
easyJet has a strong network of leading number one and number two positions in
primary airports, which has proven to be amongst the highest yielding in the
market. This enables us to be efficient with our network choices, with an
emphasis on maximising returns.
easyJet continues to optimise its network to ensure capacity is deployed in
the markets where we see the strongest demand and returns. This is
demonstrated by the optimisation at Berlin, improving profitability(6) by c.
190% through focusing on key city pairs and leisure flows, removal of German
domestics and increasing utilisation. We have also increased customer choice
by entering new markets such as Tunisia.
We seek to further strengthen our position in key markets as the competitive
landscape evolves. easyJet has continued to leverage slot growth on our
existing network, which has enabled aircraft to be re deployed across the
network over the last 18 months; +9 into the Greek Islands, +7 in Portugal
(across Lisbon and Porto) and +20 at Gatwick.
Our focused network strategy can be summarised as follows:
1. Lead in our Core Markets
easyJet prioritises slot-constrained airports as these are where customers
want to fly to and from and as a result have superior demand and yield
characteristics. In our core markets, we are able to achieve cost leadership
and preserve scale. We provide a balanced network portfolio across domestic,
city and leisure destinations. Our scale enables us to provide a market
leading network and schedule.
2. Investment in Destination Leaders
We will build on our existing leading positions in Western Europe's top
leisure destinations to provide network breadth and flexibility. This will
also unlock cost benefits, enabling us to manage seasonality and support the
growth of easyJet holidays. It also ensures that easyJet remains top of mind
for customers and is seen as the 'local airline' for governments and
hoteliers.
3. Build our network in Focus Cities
easyJet is building a network of key cities, broadening our presence across
Europe. This is a low-risk way of serving large origin markets. We will base
assets in Focus Cities where it makes sense from a cost perspective.
Transforming our revenue capability
easyJet recognises that the continued evolution of our product portfolio
represents a significant opportunity to build on spend per customer,
delivering enhanced sustainable returns.
Airline Ancillaries:
Cabin bags and our leisure bundles, amongst other ancillary products, have
continued to deliver incremental revenue through the period. Alongside this,
easyJet's inflight retail brand and proposition, which launched last year, is
delivering growth across all KPIs; conversion, spend per seat and profit per
seat, and is allowing us to tailor product offering to our customers. These
initiatives have contributed to the Airline's ancillary yield being £10.65
higher than the same period in 2019.
In the first half of this year, we implemented closed loop Wi-Fi on all our
aircraft. This has facilitated enhanced marketing revenue generation
opportunities through our partners and enables the launch of order to seat
capability ahead of peak summer. easyJet also plans to unlock pre-order
capability later this year, with a focus on the duty-free proposition.
easyJet holidays:
easyJet holidays continues its rapid growth, becoming a major player within
the sector, expecting customer growth of >60% year on year and is expecting
to deliver a profit before tax in excess of £80 million in the 2023 financial
year. This growth is being delivered through strong customer satisfaction of
87%, with 70% of customers likely to re book.
As the holidays business grows in scale, targeted investments will be made to
strengthen the customer base. This has been demonstrated at Gatwick where
marketing spend has been focused, targeting easyJet's largest base of
aircraft. Future initiatives are underway to optimise pricing alongside
enhancing the product offering through room options and ancillary products.
Our multi-currency technology platform enables easy and rapid expansion into
other source markets, where we will unlock the Swiss market next. Switzerland
will go on sale this summer 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 provides an opportunity for easyJet holidays to continue
its rapid growth.
Driving our low-cost model
easyJet has a cost advantage over its major competitors on the primary network
that it operates. Alongside cost actions, easyJet is focused on margin 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 commenced 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 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 41% average
cost saving per aircraft visit.
· Increasing automation of self-service management: increasing
digitalisation of customer flows and reducing the need for contact centre
support.
o Over 70% of disrupted customers are now using the self-service platform,
reducing disruption costs by enabling customers to self-select alternative
flights and accommodation.
Cost remains a core emphasis for the business for the coming year, with cost
benefits to come through:
· Increased productivity: capacity restoration through summer 23
and further winter capacity restoration in FY24 to promote productivity and
cost savings.
· Up-gauging of the fleet: efficiency benefits will be unlocked as
A319s leave the fleet, being replaced by A320 family aircraft. The increased
mix of NEO aircraft will see additional fuel and airport incentive benefits as
easyJet's order book of 163 A320neo family aircraft enter the fleet.
Delivering ease and reliability
easyJet has a loyal customer base, with 78% of seats booked by returning
customers. Customer satisfaction of 79% has returned to historical levels as
our crew provide our customers with the warmest onboard experience.
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.
Sustainability
In September 2022, easyJet announced its roadmap to achieving net-zero by
2050. The roadmap is aligned to the Science Based Targets initiative (SBTi),
with easyJet being the first low-cost airline to announce its interim target,
of a 35% carbon emission intensity reduction by 2035(5), which is validated by
the SBTi.
The long-term roadmap sees easyJet transition from carbon offsetting, which
has been a valuable interim measure but is not recognised under the SBTi
framework, towards investments that drive in-sector emission reductions to
deliver our net zero roadmap.
We plan to achieve our ambitious roadmap through the combination of six
drivers: fleet renewal, operational efficiencies, airspace modernisation,
sustainable aviation fuel, zero carbon emission aircraft and carbon removal
technology. For further information on our roadmap, please see
https://corporate.easyjet.com/corporate-responsibility/net-zero-pathway
(https://corporate.easyjet.com/corporate-responsibility/net-zero-pathway) .
Since this announcement we have made a step forward with our partner
Rolls-Royce achieving a world first - successfully running a modern aircraft
engine on hydrogen. This is a major milestone towards proving that hydrogen
can be a zero carbon aviation fuel of the future - a key element of our net
zero roadmap.
Our sustainability strategy is underpinned by strong sustainability governance
and monitoring at Board level to make sure the strategy is delivered, with
remuneration also being linked to sustainability and the delivery of the key
steps towards delivering our roadmap.
easyJet has received IATA IEnvA Stage 2 certification, making us the first
low-cost carrier worldwide with a fully IATA IEnvA certified Environmental
Management System (EMS). This follows our successful completion of the IATA
IEnvA Stage 1 implementation, assessment, and certification earlier this
financial year, as well as enhancing our ratings achieved across indices
including CDP, MSCI & Sustainalytics.
Our People
easyJet continues to have a market leading reputation as an employer of
choice, as evidenced through our Glassdoor rating of 3.9, the highest within
the travel and tourism sector. Our people are a key source of differentiation,
and this helps to deliver excellent customer experience and loyalty. Our
employee engagement has increased to 7.3, an increase of 4% on last year.
As we journey towards our destination to be Europe's most loved airline, for
our people this means being a place to work that is loved because we're a
place where you belong, you can do your best work, thrive and grow your
career.
We have spent considerable time in the first half of this year, working with
our leaders to create the most inclusive culture - connecting people to our
strategy, purpose and promises. Our focus continues to prioritise activity
that ensures our readiness and operational resilience for the summer ahead,
while also positively contributing to our colleague experience. This enables
easyJet to attract and retain the best people.
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.
(4) Constant currency is calculated by comparing 2023 financial year
performance translated at the 2022 financial year effective exchange rate to
the 2022 financial year reported performance, excluding foreign exchange gains
and losses on balance sheet revaluations.
(5) easyJet plc commits to reduce well-to-wake GHG emissions related to jet
fuel from owned and leased operations by 35% per revenue tonne kilometre (RTK)
by FY35 from a FY19 base year. The target boundary includes biogenic emissions
and removals from bioenergy feedstocks. Non-CO2e effects which may also
contribute to aviation induced warming are not included in this target.
(6) Based on expected contribution per block hour for FY23
OUR FINANCIAL RESULTS
Headline loss before tax of £411 million for the six months ended 31(st)
March 2023 was a reduction of £134 million on the loss of £545 million for
the comparative period ended 31(st) March 2022. This improvement was driven by
increased capacity, load factors and yields with all travel restrictions now
lifted, pent up demand being realised and enhanced contribution from our
ancillary product offering and easyJet holidays. easyJet flew 33.1 million
passengers in the six months ended 31(st) March 2023 (H1 2022: 23.4 million),
up 41% on the comparative period as post pandemic recovery continues at pace.
The period has been characterised by strong yields and airline revenue per
seat (RPS) recovery (23% and 40% increase over the comparative period
respectively) alongside industry-wide cost challenges. Load factor for the
period was 87.5% (H1 2022: 77.3%), just 2.7 percentage points (ppt) lower than
the comparable pre-pandemic period, H1 2019, with capacity over H1 2023 at 82%
the level of H1 2019. easyJet holidays took 0.6 million customers (including
affiliates) away in the period (H1 2022: 0.2 million), generating incremental
revenue of £173 million (H1 2022: £54 million) and delivering £10 million
of headline profit before tax (H1 2022: £5 million loss).
Revenue of £2,689 million (H1 2022: £1,498 million) reflects strong trading
with increased capacity versus the comparative period and strong yield
performance. H1 2022 performance was heavily impacted by the emergence of
Omicron, with limitations on travel impacting the key Christmas trading period
and most of Q2 2022. H1 2023 trading is characterised by increased capacity,
loads and yield as demand has strengthened with trading to date setting new
airline RPS records (for the first half of a financial year) due to strong
yield performance. Achieving this has seen loads slightly behind the
pre-pandemic period, H1 2019, but our offer remained competitive in the market
and reflects our focus on sustaining prices whilst looking to be cost and
resource efficient and adapting our network where appropriate.
Fuel prices continue to be at a higher level in H1 2023 compared to the
comparative period, which coupled with general inflation across Europe has
impacted business costs. Additionally, proposed French government pension
reforms have been a key factor in widespread industrial action in France
which, due to the involvement of French Air Traffic Control (ATC), has
impacted air travel by causing disruption to flights utilising French
airspace. This has impacted our on-time performance and led to some
cancellations, with the associated costs and disruption for our customers. In
March, only five days were unaffected by this industrial action, and
disruption is expected to continue in Q3.
Amounts presented at constant currency throughout this section are an
alternative performance measure and are not determined in accordance with
International Financial Reporting Standards but provide relevant and
comparative reporting for readers of these financial statements.
H1 2023 H1 2022
FINANCIAL OVERVIEW
£ million (Reported) ─ Group
Group revenue 2,689 1,498
Headline costs excluding fuel, FX gain and ownership (1) (1,985) (1,344)
Fuel (773) (362)
Headline EBITDAR (69) (208)
Depreciation, amortisation & dry leasing costs (323) (278)
Headline EBIT (392) (486)
Net finance charges (46) (61)
Foreign exchange gain 27 2
Group headline loss before tax (411) (545)
Being:
Airline headline (loss) before tax (421) (540)
Holidays headline profit / (loss) before tax 10 (5)
£ per seat ─ Airline only ((2)) H1 2023 H1 2022
Airline revenue 66.46 47.61
Headline costs excluding fuel, FX gain and ownership (48.15) (42.45)
Fuel (20.43) (11.94)
Headline EBITDAR (2.12) (6.78)
Depreciation, amortisation & dry leasing costs (8.48) (9.11)
Headline EBIT (10.60) (15.89)
Net finance charges (1.22) (2.01)
Foreign exchange gain 0.70 0.09
Airline headline loss before tax (11.12) (17.80)
Headline tax credit 2.84 3.94
Airline headline loss after tax (8.28) (13.86)
Non-headline items (0.10) (0.40)
Non-headline tax credit 0.02 0.10
Airline total loss after tax (8.36) (14.16)
(1) Ownership costs defined as depreciation, amortisation and dry leasing
costs plus net finance charges.
(2) All per seat metrics are for the airline business only, as the inclusion
of hotel-related revenue and costs from the holidays business will distort the
RPS and CPS metrics as these are not directly correlated to the seats flown by
the airline. Our easyJet holidays business forms a separate operating segment
to the airline, and easyJet holidays' key metrics are included under key
statistics.
In the period, the total number of passengers carried increased by 41% to 33.1
million (H1 2022: 23.4 million), which was driven by a 25% increase in seats
flown to 37.9 million seats (H1 2022: 30.3 million seats) and a 10.2 ppt
increase in load factor to 87.5% (H1 2022: 77.3%). This reflects the increased
capacity available as the period was without travel restrictions, and saw the
return of customer demand. The capacity for the period was 82% of the
comparable pre-pandemic period, H1 2019, and the load factor of 87.5% was 2.7
ppt lower.
Total revenue increased by 80% to £2,689 million (H1 2022: £1,498 million)
and by 77% at constant currency. The period experienced a record first half
airline RPS achievement of £66.46 (H1 2022: £47.61), an increase of 40% on
the comparative period and 38% at constant currency. The increase in RPS is a
consequence of increased loads, and strong ticket yields, with ancillary
initiatives continuing to deliver a revenue benefit. Airline ancillary RPS
increased by 34% and 32% at constant currency. Airline ancillary revenue is
now 47% higher than it was in H1 2019 despite passenger numbers being 21%
lower. Additionally, easyJet holidays continues to grow and contributed £173
million revenue (H1 2022: £54 million) over and above airline sales.
Total headline costs excluding fuel, foreign exchange gains, and ownership
costs increased by 48% to £1,985 million (H1 2022: £1,344 million) mainly as
a result of the volume of flying and general cost pressures. Costs were also
impacted by the disruption arising from weather events and the French ATC
industrial action, alongside measures such as tankering fuel into areas
impacted by industrial action to maintain operations and reduce the impact on
customers. This was partly offset by a release from the carried forward
provision held for disruption costs as the rate of customer compensation
claims for the Q3 FY22 period of significant disruption have not matched our
estimations (which were based on previous periods of disruption). Our cost
saving programme continues to deliver, with notable ongoing initiatives
including fitting fuel-saving descent optimisation software on our aircraft
and insourcing line maintenance where there is a cost benefit to do so. In
addition, the continuing development of our self-service disruption management
tool (through the easyJet app) brings the twin benefit when disruption does
occur, of a better customer experience and enhanced cost management.
Airline headline cost per seat (CPS) excluding fuel, foreign exchange gains,
and ownership costs increased by 13% to £48.15 (H1 2022: £42.45) and 10% at
constant currency. This is against a backdrop of increased sector length and
load factors, and an investment in crew resilience ahead of summer 2023.
Increased flying and the associated benefit of fixed operating costs being
spread across more capacity has contributed to the management of CPS, combined
with easyJet's continued focus on cost, as noted above.
Within the period the translation of revenue and costs, including fuel, from
foreign currency has had a net adverse impact of £96 million on the Group
income statement when compared to translated values had the exchange rates
from H1 2022 been used. This has been partly offset by a gain of £27 million
(H1 2022: £2 million credit) from the translation of foreign currency
denominated monetary assets and liabilities held on the statement of financial
position. Ownership costs were impacted by a £7 million charge as a result of
the movement in the period of the US dollar interest rates used to set the
discount rate of the maintenance reserves provision, compared to a £19
million benefit in the comparative period.
Airline fuel CPS increased by 71% to £20.43 (H1 2022: £11.94) and by 55% at
constant currency. This is a result of both the significant increase in the
post hedge fuel price and an increased average sector length compared to the
comparative period, arising from the destination mix in the period shifting
towards leisure routes.
Loss per share
H1 2023 H1 2022
Pence per share Pence per share Change in pence per share
Basic headline loss per share (40.5) (56.0) 15.5
Basic total loss per share (40.9) (57.2) 16.3
Basic headline loss per share decreased by 15.5 pence and basic total loss per
share decreased by 16.3 pence as a consequence of the lower loss generated
compared to the comparative period.
Return on capital employed (ROCE)
Reported £m H1 2023 H1 2022
Headline loss before interest, foreign exchange gain and tax (392) (486)
UK corporation tax rate 19% 19%
Normalised headline operating loss after tax (NOPAT) (318) (394)
Average shareholders' equity 2,227 2,540
Average net debt 413 753
Average adjusted capital employed 2,640 3,293
Headline Return on capital employed (12.0%) (12.0%)
Total Return on capital employed (12.2%) (12.3%)
ROCE is calculated by taking headline loss before interest, foreign exchange
gain and tax, applying tax at the prevailing UK corporation tax rate at the
end of the reporting period, and dividing by average capital employed. Capital
employed is shareholders' equity plus net debt.
Headline ROCE for the period was comparable to H1 2022. The reduction in
operating loss before interest, foreign exchange gain and tax in the period
was broadly in tandem with the proportional reduction in average capital
employed, with shareholders' equity reduced as a consequence of the additional
losses over the previous twelve months together with the hedging reserve
deficit offsetting the benefit in reduced net debt. Total ROCE for the period
was an improvement of 0.1 ppt on the comparative period.
Summary net debt reconciliation
The table presents cash flows on a net cash basis. This presentation is
different to the GAAP presentation of the statement of cash flows in the
financial statements as it includes non-cash movements on debt facilities.
H1 2023 H1 2022 Change
£ million £ million £ million
Operating loss (396) (499) 103
Net tax (paid)/received (6) 1 (7)
Net working capital movement excl unearned revenue (343) (157) (186)
Unearned revenue movement 1,338 934 404
Depreciation and amortization 322 277 45
Net capital expenditure (477) (247) (230)
Net proceeds from sale and leaseback of aircraft 61 87 (26)
Increase in lease liability 82 34 48
Net funding activities - 97 (97)
Purchase of own shares for employee share schemes (15) (4) (11)
Other (including the effect of exchange rate movements) (52) (209) 157
Net decrease in net debt 514 314 200
Net debt at the beginning of the period (670) (910) 240
Net debt at the end of the period (156) (596) 440
Net debt as at 31 March 2023 was £156 million (31 March 2022: £596 million)
and comprised cash and cash equivalents and money market deposits of £3,486
million (31 March 2022: £3,505 million), borrowings of £2,682 million (31
March 2022: £3,046 million) and lease liabilities of £960 million (31 March
2022: £1,055 million).
Net working capital movement of £343 million since the year end (H1 2022:
£157 million) predominantly reflects the build up of Emission Trading System
(ETS) credits as CY2023 free credits have been received and purchases for FY23
and FY24 flying have been made, whilst the CY2022 credits are held pending
surrender in H2 2023.
The unearned revenue inflow of £1,338 million (H1 2022: £934 million) has
increased as customer behaviour normalises and booking curves begin to reflect
pre-pandemic advance booking practices. Additionally, the comparative period
included Covid-19 travel restrictions and a level of consumer nervousness
following the emergence of Omicron.
The increase in depreciation and amortisation to £322 million (H1 2022: £277
million) reflects higher maintenance costs for leased aircraft with the rise
in flying volumes and some rate changes over the reporting period driving a
higher charge.
Net capital expenditure in the year of £477 million (H1 2022: £247 million)
is across new five new aircraft (H1 2022: five), pre-delivery payments,
maintenance additions and significant advance payments for long life parts.
The sale and leaseback of 6 aircraft in H1 2023 resulted in a net cash inflow
of £61 million compared to the ten sale and leasebacks in H1 2022 which
generated proceeds of £87 million. Lease additions, extensions and rate
updates increased the lease liability by £82 million.
In the prior year the net funding activities of £97 million related to final
funding income from the rights issue in FY21.
Exchange rates
The proportion of revenue and headline costs denominated in currencies other
than sterling is outlined below alongside the exchange rates in the period:
Revenue Headline Costs((1))
H1 2023 H1 2022 H1 2023 H1 2022((1))
Sterling 51% 45% 39% 37%
Euro 38% 45% 33% 33%
US dollar 1%* 0% 22% 24%
Other (principally Swiss franc) 10% 10% 6% 6%
Average headline exchange rates** H1 2023 H1 2022
Euro - revenue €1.15 €1.17
Euro - costs €1.14 €1.19
US dollar $1.26 $1.37
Swiss franc CHF 1.16 CHF 1.24
Closing exchange rates H1 2023 H1 2022
Euro €1.14 €1.19
US dollar $1.23 $1.31
Swiss franc CHF 1.13 CHF 1.21
(1) H1 2022 figures have been restated to exclude the impact of non-headline
costs. In addition, US dollar and euro values in H1 22 reporting were
transposed and have been corrected.
*our customers have the option of paying for flights in US dollars
**exchange rates quoted are post-hedging applied to revenue and headline costs
The Group's foreign currency risk management policy aims to reduce the impact
of fluctuations in exchange rates on future cash flows.
This half year has seen a weakening of sterling against both the euro and US
dollar when compared to the exchange rates at H1 2022, resulting in a net
adverse foreign currency impact of £96 million on the Group income statement
had the exchange rates from H1 2022 been used. Conversely the translation of
foreign currency denominated monetary assets and liabilities held on the
statement of financial position has resulted in a gain of £27 million (H1
2022: £2 million credit).
Headline exchange rate impact
Euro Swiss franc US dollar Other Total
Favourable/(adverse) £ million £ million £ million £ million £ million
Total revenue 17 19 2 1 39
Fuel (1) - (70) - (71)
Headline costs excluding fuel (36) (16) (11) (1) (64)
Headline total before tax(1) (20) 3 (79) - (96)
(1) Excludes the impact of balance sheet revaluations
easyJet recognises a significant element of revenue across its network in
euros, and therefore a weaker sterling vs euro at average rates has improved
revenue in the period. Additionally the weakening against the Swiss franc has
been beneficial. However, the revenue foreign exchange benefit has been offset
by the converse impact on costs. easyJet's cost base includes US dollar
denominated costs, particularly fuel and aircraft lease payments, and
therefore post-hedge US dollar strengthening against the comparative period
has increased the sterling value of those headline costs.
FINANCIAL PERFORMANCE
Revenue
£m Group H1 2023 H1 2022
Passenger revenue 1,749 985
Ancillary revenue 767 459
Holidays incremental revenue (1) (2) 173 54
Total revenue 2,689 1,498
(1) 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 1C(iii) in the condensed
consolidated interim financial information
Total revenue increased by 80% to £2,689 million (H1 2022: £1,498 million)
and 77% at constant currency. This 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 41% to 33.1 million (H1 2022: 23.4 million), arising from
a combination of a 25% increase in seats flown to 37.9 million seats (H1 2022:
30.3 million seats) and a 10.2 ppt increase in load factor to 87.5% (H1 2022:
77.3%). This reflects the increased capacity with the removal of all travel
restrictions that were in place in the prior year and the resumption of
customer demand as the air travel industry returns to a level of normality.
Similar to FY22, within revenue there was a £17 million credit (H1 2022:
£nil million) arising from the release of aged contract liabilities within
other payables, split £14 million against passenger revenue and £3 million
against ancillary revenue.
Total airline RPS of £66.46 was 38% ahead of H1 2022 at constant currency and
total yield of £75.98 was 22% favourable when compared against H1 2022 at
constant currency, with passenger yields 24% favourable and ancillary yields
16% favourable at constant currency.
Airline ancillary revenue of £767 million was 67% ahead of H1 2022, and 64%
at constant currency, as a result of both passenger numbers and favourable
yields. Pricing initiatives, fare bundling and standalone cabin bags
introduced since H1 2022 have contributed to the growth of the ancillary
offer. Note that airline ancillary revenue is now 47% higher than in H1 2019
despite passenger numbers being 21% lower.
easyJet holidays incremental revenue increased by 220% to £173 million (H1
2022: £54 million) with strong yields and growth in customer numbers to 0.6
million (including affiliates) in the period (H1 2022: 0.2 million) as the
holidays offer resonated with customers and grew in strength throughout the
period.
Headline costs excluding fuel
H1 2023 H1 2022
Group Airline Group Airline
£ million £ per seat £ million £ per seat
Operating costs and income
Airports and ground handling 735 19.41 474 15.65
Crew 424 11.19 318 10.48
Navigation 165 4.36 110 3.63
Maintenance 174 4.59 157 5.16
Holidays direct operating costs 132 n/a 40 n/a
Selling and marketing 103 2.34 68 2.03
Other costs 253 6.29 183 5.61
Other income (1) (0.03) (6) (0.11)
1,985 48.15 1,344 42.45
Ownership costs
Aircraft dry leasing 1 0.02 1 0.04
Depreciation 309 8.17 265 8.74
Amortisation 13 0.29 12 0.33
Net finance charges 46 1.22 61 2.01
369 9.70 339 11.12
Foreign exchange gain (27) (0.70) (2) (0.09)
342 9.00 337 11.03
Headline costs excluding fuel 2,327 57.15 1,681 53.48
Headline CPS excluding fuel for the airline increased by 7% to £57.15 (H1
2022: £53.48), and by 5% at constant currency.
Included within the Group headline costs excluding fuel of £2,327 million is
£163 million (H1 2022: £59 million) related to the holidays business, the
cost increase primarily being activity related due to the growth of the
business.
Operating costs and income
Airports and ground handling operating costs increased by 55% to £735 million
(H1 2022: £474 million), an increase of 24% to £19.41 (H1 2022: £15.65) on
a cost per seat (CPS) basis, 19% at constant currency. The period has seen an
overall increase in airport rates, reflecting that easyJet largely flies from
slot constrained and regulated airports. In addition, operating costs
associated with improved load factors, and higher passenger and security
charges contributed to price inflation driving a cost increase on a per seat
basis.
Crew costs increased by 33% to £424 million (H1 2022: £318 million), an
increase of 7% to £11.19 (H1 2022: £10.48) on a CPS basis, 4% at constant
currency. This CPS increase has resulted from increased costs as easyJet looks
to secure crew levels for Summer 2023 flying in addition to post-pandemic pay
deals, partly offset by allocating the fixed element of crew costs over
greater capacity.
Navigation costs increased by 50% to £165 million (H1 2022: £110 million), a
rise of 20% to £4.36 (H1 2022: £3.63) on a CPS basis, 16% 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
comparative period.
Maintenance costs increased by 11% to £174 million (H1 2022: £157 million),
but decreased by 11% to £4.59 (H1 2022: £5.16) on a CPS basis. This CPS
decrease is primarily the result of the fixed element of our maintenance costs
being apportioned over increased capacity.
Selling and marketing costs increased by 51% to £103 million (H1 2022: £68
million), an increase of 16% to £2.34 (H1 2022: £2.03) on a CPS basis, 12%
at constant currency. The increase is predominantly in selling costs which
result from increased credit card bookings and the associated fees on forward
bookings.
Other costs increased by 38% to £253 million (H1 2022: £183 million), an
increase of 12% to £6.29 (H1 2022: £5.61) on a CPS basis, 10% at constant
currency. Other costs include the impact of the disruption experienced in the
period, with net £37 million disruption compensation and welfare costs
incurred (H1 2022: £6 million) after a £24 million release (H1 2022: £3
million pre-pandemic claim release) of provision held for disruption costs
where customer compensation claims for the Q3 FY22 period of significant
disruption have not matched our initial estimations of claim rates (based on
previous periods of disruption). Additionally, in Q1 we incurred significant
wet lease costs before the aircraft were removed from the fleet at the end of
the summer flying season, and there has been increased employee benefits and
an investment in cyber security and merchandising technology in the year.
Ownership costs
Depreciation costs increased by 17% to £309 million (H1 2022: £265 million),
but decreased by 7% to £8.17 (H1 2022: £8.73) on a CPS basis, 6% at constant
currency. The increase in depreciation costs compared to H1 2022 is largely
due to the increased maintenance provision for leased aircraft, reflecting
higher flying volumes and the change in the discount rate arising from
movements in the US dollar interest rates. Depreciation on owned aircraft has
remained relatively stable. The cost on a CPS basis has benefitted from the
increased maintenance cost being allocated across a significantly increased
seat capacity.
Net finance charges decreased by 25% to £46 million (H1 2022: £61 million),
and by 39% on a CPS basis to £1.22 (H1 2022: £2.01) reflecting the benefit
from improved interest rates on cash deposits in the period and a reduced
level of debt.
Foreign exchange gains were £27 million (H1 2022: £2 million) being the
benefit of the retranslation of foreign currency denominated monetary assets
and liabilities arising from the currency movements in the reporting period,
with sterling being stronger against the US dollar offsetting the impact of a
marginally weaker sterling against the euro as at 31 March 2023 compared to 30
September 2022.
Fuel
H1 2023 H1 2022
Group Airline Group Airline
£ million £ per seat £ million £ per seat
Fuel (773) (20.43) (362) (11.94)
Fuel costs for the period were £773 million, compared to £362 million
in H1 2021, a 71% increase on a CPS basis to £20.43 (H1 2022: £11.94), 55%
on a constant currency basis. The increase in flying volumes, resulting in a
33% increase in block hours in the period, has contributed, but the
significant driver has been the increase in fuel prices over the period.
The Group uses jet fuel derivatives to hedge against significant increases in
jet fuel prices to mitigate cash and income statement volatility in the short
term. In order to manage the risk exposure, jet fuel derivative contracts are
used in line with the Board approved policy to hedge up to 18 months of
estimated exposures in advance.
During the period the average market price payable for jet fuel increased by
33% from $762 per tonne in H1 2022 to $1,012 per tonne in H1 2023. Whilst
hedging undertaken by the Group provided some mitigation, the overall post
hedge fuel price for H1 2023 of $860 per tonne was 44% higher than the post
hedge fuel price of $599 per tonne achieved in H1 2022. Approximately 80% of
jet fuel was hedged in H1 2023.
Group loss after tax
H1 2023 H1 2022
£ million (Reported) ─ Group
Group headline loss before tax (411) (545)
Headline tax credit 107 123
Group headline loss after tax (304) (422)
Non-headline items before tax (4) (12)
Non-headline tax credit 1 3
Group total loss after tax (307) (431)
Non-headline items
A non-headline charge of £4 million (H1 2022: £12 million) was recognised in
the period. This consisted of a £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 (H1 2022: £nil) and net restructuring charges of
£1 million (H1 2022: £8 million release) resulting from the net impact of
additional costs arising from previously announced restructuring programmes in
Germany. The sale and leaseback of 6 aircraft in the period generated a £nil
gain (H1 2022: £21 million loss from 10 aircraft).
Corporate Tax
Corporate tax has been recognised at an effective rate of 26.1% (H1 2022:
22.7%), resulting in an overall tax credit of £108 million (H1 2022: £126
million credit). This splits into a tax credit of £107 million on the
headline losses and a tax credit of £1 million on the non-headline items.
KEY STATISTICS
OPERATING MEASURES
H1 2023 H1 2022 Increase/ (decrease)
Seats flown (millions) 37.9 30.3 25%
Passengers (millions) 33.1 23.4 41%
Load factor 87.5% 77.3% 10.2 ppts
Available seat kilometres (ASK) (millions) 45,108 34,287 32%
Revenue passenger kilometres (RPK) (millions) 39,956 26,811 49%
Average sector length (kilometres) 1,192 1,131 5%
Sectors ('000) 212 168 26%
Block hours ('000) 438 329 33%
easyJet holidays passengers (thousands) (1) 445 137 225%
Number of aircraft owned/leased at end of period 328 322 2%
Average number of aircraft owned/leased during period 325 322 1%
Average number of aircraft operated per day during period 249 204 22%
Number of routes operated at end of period 988 930 6%
Number of airports served at end of period 154 150 3%
FINANCIAL MEASURES H1 2023 H1 2022 Favourable/ (adverse)
Total return on capital employed (12.2%) (12.3%) 0.1ppts
Headline return on capital employed (12.0%) (12.0%) 0.0ppts
Airline total loss before tax per seat (£) (11.22) (18.20) 38.4%
Airline headline loss before tax per seat (£) (11.12) (17.80) 37.6%
Airline total loss before tax per ASK (pence) (0.94) (1.61) 41.6%
Airline headline loss before tax per ASK (pence) (0.93) (1.57) 40.8%
easyJet holidays total profit / (loss) before tax (millions) 10 (5) 300.0%
Revenue
Airline revenue per seat (£) 66.46 47.61 39.6%
Airline revenue per seat at constant currency (£) 65.44 47.61 37.5%
Airline revenue per ASK (pence) 5.58 4.21 32.5%
Airline revenue per ASK at constant currency (pence) 5.49 4.21 30.4%
Airline revenue per passenger (£) 75.98 61.59 23.4%
Airline revenue per passenger at constant currency (£) 74.82 61.59 21.5%
Costs
Per seat measures
Airline headline cost per seat (£) (77.58) (65.42) (18.6%)
Airline total cost per seat (£) (77.68) (65.81) (18.1%)
Airline headline cost per seat excluding fuel (£) (57.15) (53.48) (6.9%)
Airline headline cost per seat exc fuel at constant currency (£) (56.27) (53.57) (5.0%)
Airline total cost per seat excluding fuel (£) (57.25) (53.87) (6.3%)
Airline total cost per seat excluding fuel at constant currency (£) (56.50) (53.96) (4.7%)
Per ASK measures
Airline headline cost per ASK (pence) (6.51) (5.78) (12.6%)
Airline total cost per ASK (£) (6.52) (5.82) (12.0%)
Airline headline cost per ASK excluding fuel (pence) (4.80) (4.73) (1.5%)
Airline headline cost per ASK exc fuel at constant currency (pence) (4.72) (4.74) 0.4%
Airline total cost per ASK excluding fuel (pence) (4.80) (4.76) (0.8%)
Airline total cost per ASK exc fuel at constant currency (pence) (4.74) (4.77) 0.1%
(1) Total holiday customers including affiliates is 0.6 million (HY22: 0.2
million).
PRINCIPAL RISKS AND UNCERTAINTIES
The Board is ultimately responsible for determining the nature and extent of
the principal risks it is willing to take to achieve its strategic objectives,
its risk appetite, and maintaining the Group's systems of internal control and
risk management. The Audit Committee, on behalf of the Board, is accountable
for reviewing and assessing the risk management processes. The Risk and
Assurance team, which reports jointly to the Chair of the Audit Committee and
CFO, ensures that robust processes are in place for identifying and assessing
the Group's emerging and principal risks.
Over the course of H1 2023, the Risk and Assurance team has spent time with
each area of the business, to ensure that risks continue to be identified and
assessed in line with the Risk Framework. This has been conducted via
functional and business unit risk reviews. We continue to develop our
corporate risk framework to ensure that risks, including emerging risks, are
identified, assessed, managed and articulated.
The Board has reconsidered the principal risks and uncertainties affecting the
Group at the half year. The principal risks and uncertainties set out in the
2022 Annual Report and Accounts have not materially changed, and therefore
easyJet's risk themes remain unchanged and are as follows:
· Asset Efficiency & Effectiveness
· Environment & Sustainability
· Legislative / Regulatory Landscape
· Macro-economic & Geopolitical
· People
· Safety, Security, and Operations
· Technology & Cyber
CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION
Condensed consolidated income statement (unaudited)
Six months ended 31 March
2023 2022
Headline Non-headline (note 3) Total Headline Non-headline (note 3) Total
Notes £ million £ million £ million £ million £ million £ million
Passenger revenue 1,749 - 1,749 985 - 985
Ancillary revenue*
Airline ancillary revenue 767 - 767 459 - 459
Holidays incremental revenue 173 - 173 54 - 54
Total ancillary revenue 940 - 940 513 - 513
Total revenue 2,689 - 2,689 1,498 - 1,498
Fuel (773) - (773) (362) - (362)
Airports and ground handling * (735) - (735) (474) - (474)
Crew (424) - (424) (318) - (318)
Navigation (165) - (165) (110) - (110)
Maintenance (174) - (174) (157) - (157)
Holidays direct operating costs (excluding flights) * (132) - (132) (40) - (40)
Selling and marketing (103) - (103) (68) - (68)
Other costs (253) (4) (257) (183) (12) (195)
Other income 1 - 1 6 (1) 5
EBITDAR (69) (4) (73) (208) (13) (221)
Aircraft dry leasing (1) - (1) (1) - (1)
Depreciation 8 (309) - (309) (265) - (265)
Amortisation of intangible assets (13) - (13) (12) - (12)
Operating loss (392) (4) (396) (486) (13) (499)
Interest receivable and other financing income** 53 - 53 4 2 6
Interest payable and other financing charges (99) - (99) (65) (1) (66)
Foreign exchange gain** 27 - 27 2 - 2
Net finance (charge)/income (19) - (19) (59) 1 (58)
Loss before tax (411) (4) (415) (545) (12) (557)
Tax credit 4 107 1 108 123 3 126
Loss for the period (304) (3) (307) (422) (9) (431)
Loss per share, pence
Basic 5 (40.9) (57.2)
* Revenue and expenditure of easyJet holidays recognised in the prior period
has been re-presented, see note 1C(iii) for details.
** Interest receivable and other financing income, and foreign exchange gain
recognised in the prior period has been re-presented, see note 1C(iii) for
details.
Condensed consolidated statement of comprehensive income (unaudited)
Six months ended Six months ended
31 March 2023 31 March 2022
Notes £ million £ million
Loss for the period (307) (431)
Other comprehensive (loss)/income
Items that may be reclassified to the income statement
Cash flow hedges
Fair value (losses)/gains in the period 7 (224) 396
Gains transferred to income statement 7 (153) (118)
Hedge discontinuation gain transferred to income statement 7 - (5)
Related deferred tax credit/(charge) 4, 7 86 (53)
Cost of hedging (1) 3
Items that will not be reclassified to the income statement
Remeasurement (loss)/gain on post-employment benefit (5) 23
obligations
Related deferred tax credit/(charge) 4 1 (6)
(296) 240
Total comprehensive loss for the period (603) (191)
Condensed consolidated statement of financial position (unaudited)
31 March 30 September 2022
2023
Notes £ million £ million
Non-current assets
Goodwill 365 365
Other intangible assets 246 217
Property, plant and equipment 8 4,744 4,629
Derivative financial instruments 27 127
Equity investments 31 31
Restricted cash 2 3
Other non-current assets 105 91
Deferred tax assets 259 62
5,779 5,525
Current assets
Trade and other receivables 373 367
Intangible assets 843 495
Derivative financial instruments 60 423
Restricted cash - 4
Money market deposits 81 126
Cash and cash equivalents 3,405 3,514
4,762 4,929
Current liabilities
Trade and other payables (1,624) (1,685)
Unearned revenue (2,375) (1,042)
Borrowings 9 (440) (437)
Lease liabilities (193) (247)
Derivative financial instruments (188) (86)
Current tax payable (3) (5)
Provisions for liabilities and charges 10 (197) (176)
(5,020) (3,678)
Net current (liabilities)/assets (258) 1,251
Non-current liabilities
Borrowings 9 (2,242) (2,760)
Unearned revenue (6) (1)
Lease liabilities (767) (866)
Derivative financial instruments (25) (22)
Non-current deferred income (3) (4)
Post-employment benefit obligations - (1)
Provisions for liabilities and charges 10 (557) (589)
(3,600) (4,243)
Net assets 1,921 2,533
Shareholders' equity
Share capital 207 207
Share premium 2,166 2,166
Hedging reserve 7 (121) 170
Cost of hedging reserve 4 5
Translation reserve (5) (6)
Accumulated losses (330) (9)
Total equity 1,921 2,533
Condensed consolidated statement of changes in equity (unaudited)
Share Share premium Hedging reserve Cost of hedging reserve Translation reserve Accumulated Total
capital losses
£ million £ million £ million £ million £ million £ million £ million
At 1 October 2022 207 2,166 170 5 (6) (9) 2,533
Loss for the period - - - - - (307) (307)
Other comprehensive loss - - (291) (1) - (4) (296)
Total comprehensive loss - - (291) (1) - (311) (603)
Share incentive schemes
Value of employee services - - - - - 5 5
Purchase of own shares - - - - - (15) (15)
Currency translation differences - - - - 1 - 1
At 31 March 2023 207 2,166 (121) 4 (5) (330) 1,921
Share Share premium Hedging reserve Cost of hedging reserve Translation reserve Retained Total
capital earnings/
(Accumulated
losses)
£ million £ million £ million £ million £ million £ million £ million
At 1 October 2021 207 2,166 156 (1) - 111 2,639
Loss for the period - - - - - (431) (431)
Other comprehensive income - - 220 3 - 17 240
Total comprehensive income/(loss) - - 220 3 - (414) (191)
Transfers to Property Plant and Equipment - - (12) - - - (12)
Share incentive schemes
Value of employee services - - - - - 10 10
Purchase of own shares - - - - - (4) (4)
Currency translation differences - - - - (2) - (2)
At 31 March 2022 207 2,166 364 2 (2) (297) 2,440
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 period end.
Condensed consolidated statement of cash flows (unaudited)
Six months ended Six months ended
31 March 2023 31 March 2022*
Notes £ million £ million
Cash flows from operating activities
Cash generated from operations* 12 933 516
Interest and other financing charges paid* (88) (74)
Interest and other financing income received 50 -
Settlement of derivatives 80 -
Net tax (paid)/received (6) 1
Net cash generated from operating activities 969 443
Cash flows from investing activities
Purchase of property, plant and equipment (438) (236)
Purchase of non-current other intangible assets (39) (11)
Net decrease/(increase) in money market deposits 45 (258)
Proceeds from sale and leaseback of aircraft 61 87
Net cash used in investing activities (371) (418)
Cash flows from financing activities
Proceeds from issue of ordinary share capital - 91
Share issue transaction costs - (37)
Purchase of own shares for employee share schemes (15) (4)
Repayment of bank loans and other borrowings (432) (300)
Repayment of capital element of leases (108) (92)
Decrease in restricted cash 5 9
Net cash used in financing activities (550) (333)
Effect of exchange rate changes (157) 19
Net decrease in cash and cash equivalents (109) (289)
Cash and cash equivalents at beginning of period 3,514 3,536
Cash and cash equivalents at end of period 3,405 3,247
*Consistent with the financial statements for the year ended 30 September 2022
the condensed consolidated statement of cash flows has been re-presented to
separately disclose the cash settlement of derivatives relating to cash flows
for ineffective and discontinued hedging derivatives and fair value
derivatives through profit and loss. In addition the condensed consolidated
statement of cash flows for the six months ended 31 March 2022 includes a
restatement of the disclosure of derivative cash inflows that principally
related to operational hedges and were incorrectly included within interest
and other financing charges paid. The overall impact of these changes can be
seen in note 1C(iii). In the current period the amount recognised in
settlement of derivatives includes cash flows arising from the maturity of
cross currency interest rate swaps.
Notes to the condensed consolidated interim financial information (unaudited)
1. General information
easyJet plc (the Company) is a Company registered in England (Company no.
03959649) and domiciled in the United Kingdom (UK). The condensed consolidated
interim financial information of the Company as at and for the six months
ended 31 March 2023 comprises the Company and its interest in its subsidiaries
(together referred to as the Group). Its principal business is that of a
low-cost airline carrier and package holiday Group operating primarily in
Europe. The consolidated financial statements of the Group as at and for the
year ended 30 September 2022 are available upon request to the Company
Secretary from the Company's registered office at Hangar 89, London Luton
Airport, Luton, Bedfordshire, LU2 9PF or are available on the corporate
website at http://corporate.easyJet.com.
1A. Basis of preparation
The condensed consolidated interim financial information has been prepared in
accordance with IAS 34 'Interim Financial Reporting' under UK-adopted
international accounting standards and the Disclosure and Transparency Rules
of the United Kingdom's Financial Conduct Authority. It should be read in
conjunction with the Annual Report and Accounts for the year ended 30
September 2022, which were prepared in accordance with international
accounting standards in conformity with the requirements of the Companies Act
2006.
The interim financial information does not constitute statutory accounts
within the meaning of sections 434 and 435 of the Companies Act 2006.
Statutory accounts for the year ended 30 September 2022 were approved by the
Board of Directors on 29 November 2022 and have been delivered to the
Registrar of Companies. The report of the auditors was unqualified.
The Group's financial risk management objectives and policies are materially
consistent with those disclosed in the consolidated financial statements as at
and for the year ended 30 September 2022.
1B. Going concern
In adopting the going concern basis for preparing these interim 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 December
2024.
As at 31 March 2023 easyJet has a net debt position of £0.2 billion including
cash and cash equivalents and money market deposits of £3.5 billion, the
Group has unrestricted access to £4.5 billion of liquidity and has retained
ownership of 55% of the total fleet with 40% being 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 permits, the phasing out of
the free ETS permits from 2024, and the expected price and quantity required
of Sustainable Aviation Fuel usage and fleet renewals.
The business is exposed to fluctuations in fuel prices and foreign exchange
rates. easyJet is currently c.75% hedged for fuel in H2 of FY23 at c.US$885
per metric tonne, c.52% hedged for H1 FY24 at c.US$868 and c.22% hedged for H2
FY24 at c.US$806.
In modelling the impact of severe but plausible downside risks, the Directors
have considered demand suppression leading to a reduction in ticket yield of
5% and reduced capacity of 5% as well as sensitivities on fuel price (increase
of $100 per metric tonne), operational costs (additional inflation assumed on
all costs), reoccurrence of additional disruption costs (at FY22 levels), a
10% growth reduction for the Holidays segment and delays in the delivery of
strategic revenue initiatives and cost savings. These impacts have been
modelled across the whole going concern period. In addition, this downside
model also includes a grounding of 25% of the fleet for one month in the peak
trading month of August to cover the range of severe but plausible risks that
could result in significant operational disruption. This downside scenario
resulted in a significant reduction in liquidity but still maintained
sufficient headroom on external liquidity requirements.
After reviewing the current liquidity position, committed funding facilities,
the base case and severe but plausible downside financial forecasts
incorporating the uncertainties described above, the Directors have a
reasonable expectation that the Group has sufficient resources to continue in
operation for the foreseeable future. For these reasons the Directors continue
to adopt the going concern basis of accounting in preparing the Group's
financial statements.
1C. Accounting policies
The accounting policies adopted are consistent with those described in the
Annual report and accounts for the year ended 30 September 2022.
1C (i) New and revised standards and interpretations
The following standards applicable for periods commencing on or after 1
January 2022 came into effect during the period, and did not have a material
impact:
· Amendments to IFRS 3 - Business Combinations
· Amendments to IAS16 - Property, plant and equipment
· Amendments to IAS37 - Provisions, contingent liabilities and
contingent assets
· 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.
1C (ii) Estimates and judgements
The preparation of the condensed consolidated interim 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 condensed
consolidated interim 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.
In preparing these condensed consolidated interim financial statements, the
key judgements and estimates are the same as those applied in the most
recently published consolidated financial statements.
1C(iii) Change in presentation
Net foreign exchange gains and losses:
Net foreign exchange gains and losses arising from the revaluation of monetary
assets and liabilities have historically been included within either 'Interest
receivable and other financing income' or 'Interest payable and other
financing charges' on the face of the income statement. During the year ended
September 2022, it was concluded that it would be clearer for users of the
financial statements if net foreign exchange gains and losses were a separate
financial statement line item. The prior period therefore has been presented
on a consistent basis, which has resulted in the re-presentation of the
consolidated income statement as below.
Six months ended 31 March 2022
(Previously reported) (Re-presented)
Headline Non-headline (note 3) Total Headline Non-headline (note 3) Total
£ million £ million £ million £ million £ million £ million
Interest receivable and other financing income 6 2 8 4 2 6
Interest payable and other financing charges (65) (1) (66) (65) (1) (66)
Foreign exchange gain - - - 2 - 2
Net finance (charge) / income (59) 1 (58) (59) 1 (58)
Cash settlement of derivatives:
Historically cash settlement of derivatives relating to cash flows for
ineffective and discontinued hedging derivatives, cashflows relating to
effective cashflow hedged derivatives which recycle within net finance
(charge)/income and fair value derivatives through profit and loss have been
presented on the face of the consolidated statement of cash flows within
interest and other financing charges paid. As first presented in the financial
statements for the year ended 30 September 2022, in order to give greater
clarity to the users of the financial statements, these derivatives are now
presented as a separate line within the condensed consolidated statement of
cash flows. There is no impact from this presentational change for the six
months ended 31 March 2022 as the total impact of the related items was £nil.
In addition it was identified that in the condensed consolidated statement of
cash flows for the six months ended 31 March 2022, there were £74m of
derivative cash inflows that principally related to effective operational
cashflow hedges which recycle within operating profit that were presented
within interest and other financing charges paid which should have been
presented in increase/(decrease) in derivative financial instruments included
within cash generated from operations. The impact on the condensed
consolidated statement of cash flows and reconciliation of operating loss to
cash generated from operations note (note 12) can be seen in the extracts
below:
Six months ended 31 March 2022
(Previously reported) (Restated)
£ million £ million
Cash flows from operating activities
Cash generated from operations 590 516
Interest and other financing charges paid (148) (74)
Net tax received 1 1
Net cash generated from operating activities 443 443
Operating loss (499) (499)
Total adjustments for non-cash items 312 312
Decrease/(increase) in derivative financial instruments 55 (19)
Other working capital movements 722 722
Cash flows from operating activities 590 516
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 holiday transfers.
The prior period has been presented on a consistent basis, which has resulted
in the re-presentation of the condensed consolidated income statement as
below.
Six months ended 31 March 2022
(Previously reported) (Re-presented)
Headline Non-headline (note 3) Total Headline Non-headline (note 3) Total
£ million £ million £ million £ million £ million £ million
Revenue
Passenger revenue 985 - 985 985 - 985
Airline ancillary - - - 459 - 459
Holidays incremental revenue - - - 54 - 54
Ancillary revenue 513 - 513 513 - 513
Total Revenue 1,498 - 1,498 1,498 - 1,498
Expenditure
Airports and ground handling - - - (474) - (474)
Airports, ground handling, holidays accommodation, and other operating costs (514) - (514) - - -
Holidays direct operating costs (excluding flights) - - - (40) - (40)
Total (514) - (514) (514) - (514)
2. Seasonality
The airline and package holiday industries are highly seasonal. The airline
industry experiences significantly higher demand and yields during the summer.
Accordingly, revenue and profitability are usually higher in the second half
of the financial year. Historically, the Airline operating segment has
reported a loss for the first half of the financial year. This seasonal
profile has been exacerbated by the pandemic, but as the airline industry
emerges from the pandemic, historic patterns of seasonality have returned. The
Holidays operating segment also experiences higher demand during the summer
and consequentially profitability in the second half of the financial year.
3. Non-headline items
Non-headline items are those where, in management's opinion, their separate
reporting provides an additional understanding to users of the financial
statements of easyJet's underlying trading performance, and which are
significant by virtue of their size and/or nature. In considering the
categorisation of an item as non-headline, management's judgement includes,
but is not limited to, a consideration of:
· Whether the item is outside of the principal activities of the
easyJet Group (being to provide point-to-point airline services and package
holidays);
· The specific circumstances which have led to the item arising,
including, if extinguishing an item from the statement of financial position,
whether that item was first generated via headline or non-headline activity.
The rebuttable presumption being that when subsequently extinguishing an item
from the statement of financial position, any impact on the income statement
should be reflected in the same way as that which was used in the initial
creation of the item;
· The likelihood and potential regularity of recurrence; and,
· Whether the item is unusual by virtue of its size.
Non-headline items may include impairments, amounts relating to corporate
acquisitions and disposals, expenditure on major restructuring programmes and
the gain or loss resulting from the initial recognition of sale and leaseback
transactions.
An analysis of the amounts presented as 'non-headline' is given below:
Six months ended Six months ended
31 March 2023 31 March 2022
£ million £ million
Sale and leaseback loss - 21
Restructuring charge/(credit) 4 (8)
Recognised in operating loss 4 13
Hedge discontinuation credit - (1)
Total non-headline charge before tax 4 12
Tax credit on non-headline items (1) (3)
Total non-headline charge after tax 3 9
Sale and leaseback
During the period, easyJet completed the sale and leaseback of six A319
aircraft (H1 2022: 10). The income statement impact of the six sale and
leasebacks was a £nil profit on disposal (H1 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 period 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. Additionally, net
restructuring charges of £1 million (H1 2022: £8 million credit)
representing additional costs arising from previously announced restructuring
programmes in Germany, have been incurred in the period. Together, these
amounts have been presented as a net £4 million restructuring charge (H1
2022: £8 million credit).
Hedge discontinuations
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 six months ended March 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. Due to the reduced level of
commercial flying over the pandemic, easyJet had been in an over-hedged
position from both a jet fuel and FX perspective. Where forecast exposures
were no longer expected to occur, these previously hedged amounts no longer
qualified for hedge accounting. In the six months ended March 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.
Tax on non-headline items
After the necessary tax adjustments, which principally relate to the sale and
leaseback transactions in both the current and comparative periods, the tax
adjusted non-headline items amount to a loss of £6 million (H1 2022: £14
million loss) which results in a tax credit of £1 million (2022: £3 million
credit) for the period.
4. Tax credit
Tax on loss on ordinary activities:
Six months ended Six months ended
31 March 2023 31 March 2022
£ million £ million
Current tax 4 3
Deferred tax (112) (129)
(108) (126)
Effective tax rate 26.1% 22.7%
Effective tax rate excluding rate change impact 26.1% 16.8%
The forecast effective tax rate (using currently enacted rates) is higher than
the standard rate of corporation tax in the United Kingdom (22%) principally
due to timing differences being recognised at the substantively enacted tax
rate for deferred tax (25%). This is on the basis that the Finance Act 2021
confirmed the increase of the UK Corporation Tax rate from 19% to 25%
effective from 1 April 2023. As such, timing differences that unwind after
this date are recognised at 25%. The standard rate of corporation tax reflects
a rate of 19% for the 6 months ended March 2023 and a rate of 25% for the 6
months ended September 2023.
Had all timing differences been recognised at the current year rate, the
resulting effective tax rate (23.7%) would be higher than the standard rate of
corporation tax principally due to permanent tax differences and differences
in tax rates in jurisdictions where easyJet has a taxable presence outside the
UK. The permanent tax differences are as a result of the sale and leaseback
transactions (disclosed within note 3) as well as other disallowable expenses.
The forecasted effective tax rates have been determined on the basis that
deferred tax assets on tax losses are fully recoverable. Additionally, the
Full Expense Relief announced by the Chancellor of the Exchequer and included
in the draft Finance Bill 2023 has not been taken into account as this has yet
to be substantively enacted.
Tax on items recognised directly in other comprehensive income
Six months ended Six months ended
31 March 2023 31 March 2022
£ million £ million
Credit/(charge) to other comprehensive income
Deferred tax credit/(charge) on defined benefit scheme 1 (6)
Deferred tax credit/(charge) on fair value movements of cash flow hedges 86 (53)
Total credit/(charge) to other comprehensive income 87 (59)
There was no tax on items recognised directly in shareholders' equity in the
period (H1 2022: £nil).
5. Loss per share
Six months ended Six months ended
31 March 2023 31 March 2022
£million £million
Headline loss for the period (304) (422)
Total loss for the period (307) (431)
Six months ended Six months ended
31 March 2023 31 March 2022
million million
Weighted average number of ordinary shares used to calculate basic loss per 751 754
share
Six months ended Six months ended
31 March 2023 31 March 2022
pence pence
Basic loss per share
Total (40.9) (57.2)
Adjustment for non-headline 0.4 1.2
Headline (40.5) (56.0)
Diluted earnings per share figures are not presented for either period as the
impact of potential ordinary shares is anti-dilutive.
6. Segmental Reporting
Six months ending 31 March 2023
Airline Holidays Intra-group transactions Group
£ million £ million £ million £ million
Passenger revenue 1,749 - - 1,749
Ancillary revenue 767 239 (66) 940
Total revenue 2,516 239 (66) 2,689
Operating costs excl fuel (1,824) (32) 3 (1,853)
Fuel (773) - - (773)
Holidays direct operating costs - (195) 63 (132)
Ownership costs (367) (2) - (369)
Foreign exchange gain 27 - - 27
Headline (loss)/profit before tax (421) 10 - (411)
Non-headline items (4) - - (4)
Total (loss)/profit before tax (425) 10 - (415)
Six months ending 31 March 2022
(re-presented)
Airline Holidays Intra-group transactions Group
£ million £ million £ million £ million
Passenger revenue 985 - - 985
Ancillary revenue 459 73 (19) 513
Total revenue 1,444 73 (19) 1,498
Operating costs excl fuel (1,287) (17) - (1,304)
Fuel (362) - - (362)
Holidays direct operating costs - (59) 19 (40)
Ownership costs (337) (2) - (339)
Foreign exchange gain 2 - - 2
Headline loss before tax (540) (5) - (545)
Non-headline items (12) - - (12)
Total loss before tax (552) (5) - (557)
The presentation of this note has been expanded to include further details on
revenue, the impact of foreign exchange revaluations on the statement of
financial position, and direct operating costs of the Holidays operating
segment. The prior period has been presented on a consistent basis, which has
resulted in the re-presentation of the segmental information above.
This revised presentation reflects the increased granularity of the internal
reporting to the Chief Operating Decision Maker (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. Individual cost
lines are not reported separately as these are not key metrics reported to the
CODM. Assets and liabilities are not allocated to individual segments and are
not separately reported to, or reviewed by, the CODM, and therefore have not
been disclosed.
7. Hedging Reserve
Within the consolidated statement of comprehensive income, there is a decrease
of £291 million (H1 2022: increase of £220 million) associated with the fair
value movement of cashflow hedges and the related deferred tax credit/charge.
Gains of £153 million, primarily associated with jet fuel swaps settled in
the period, were transferred to the income statement (H1 2022: gains of £123
million). In addition, fair value losses of £224 million were recognised in
the hedging reserve in the period (H1 2022: gains of £396 million), mainly
due to the movement in the market rate of jet fuel verses the average hedged
rates. The fair value gain in the prior period was primarily due to the
increase in the market rate of jet fuel in the initial aftermath of the start
of the conflict in Ukraine. The net decrease in the current period of £377
million in the reserves for the cashflow hedges (H1 2022: net increase of
£273 million) is partially offset by the related deferred tax increase of
£86 million (H1 2022: decrease of £53 million).
8. Property, plant and equipment
Owned assets Right of use assets Total
Aircraft and spares Land and buildings Other Aircraft Other Total
£ million £ million £ million £ million £ million £ million
Cost
At 1 October 2022 4,988 44 68 2,416 45 7,561
Additions 262 - 72 130 - 464
Aircraft sold and leased back (128) - - 25 - (103)
Disposals (16) - (5) - - (21)
At 31 March 2023 5,106 44 135 2,571 45 7,901
Depreciation
At 1 October 2022 1,390 - 28 1,479 35 2,932
Charge for the period 131 - 6 172 - 309
Aircraft sold and leased back (66) - - - - (66)
Disposals (13) - (5) - - (18)
At 31 March 2023 1,442 - 29 1,651 35 3,157
Net book value
At 31 March 2023 3,664 44 106 920 10 4,744
At 1 October 2022 3,598 44 40 937 10 4,629
Owned assets Right of use assets Total
Aircraft and spares Land and buildings Other Aircraft Other Total
£ million £ million £ million £ million £ million £ million
Cost
At 1 October 2021 4,802 44 55 2,335 45 7,281
Additions 414 - 28 120 - 562
Transfers - - (14) - - (14)
Aircraft sold and leased back (216) - - 25 - (191)
Disposals (12) - (1) (64) - (77)
At 30 September 2022 4,988 44 68 2,416 45 7,561
Depreciation
At 1 October 2021 1,243 - 19 1,255 29 2,546
Charge for the period 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 £321 million (30.09.22: £297
million) relating to advance payments for future aircraft deliveries. This
amount is not depreciated.
The net book value of aircraft spares is £85 million (30.09.22: £81 million)
Transfers are from work in progress on other owned assets to computer software
intangible assets.
The 'Other' categories are principally comprised of leasehold improvements,
computer hardware, leasehold property, fixtures, fittings and equipment, and
work in progress in respect of various projects. The work in progress as at 31
March 2023 was £74 million (30.09.22: £20 million). Included within work in
progress are amounts relating to two A320 NEOs received from Airbus in March,
which were initially due to be sold to another airline. As the aircraft are
not built to easyJet operational standards and work is required to bring them
to the required specification, management will hold these assets as work in
progress and shall not commence depreciation until they enter operation in
early Summer 2023.
As at 31 March 2023 easyJet was contractually committed to the acquisition of
163 (30.09.22: 168) Airbus A320 family aircraft, with a total list price* of
US$22.3 billion (30.09.22: US$21.9 billion) before escalations and discounts
for delivery. It is expected that three aircraft will be delivered during the
remainder of FY 23, and 18 in FY 24, with the remaining aircraft delivered
between 2025 and 2029. In addition, easyJet was contractually committed to the
acquisition of four LEAP engines (30.09.22: four).
easyJet is committed to 11 additional lease commitments and one extension with
a combined value of £123 million, of which the extension and four of the
lease commitments were entered into after the statement of financial position
date.
*Airbus no longer publishes list prices. The estimated list price is based on
the last available list price published in January 2018 and escalated by
Airbus' standard escalation from January 2018 to January 2023 of 11.2% (or
2.7% CAGR)
9. Borrowings
Current Non-current Total
£ million £ million £ million
At 31 March 2023
Eurobonds 440 1,483 1,923
Term Loan (UK Export Finance backed facility) - 759 759
440 2,242 2,682
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.
During the period a Eurobond with a carrying value of £437 million was
repaid.
Refer to note 11 for further details on borrowings.
10. Provisions for liabilities and charges
Maintenance provisions Provisions for customer claims Restructuring Other Provisions Total provisions
£ million £ million £ million £ million £ million
At 1 October 2022 636 80 15 34 765
Exchange adjustments (52) - - - (52)
Release of provisions - (27) (3) (5) (35)
Additional provisions recognised 113 61 4 8 186
Updated discount rates net of unwind of discount 2 - - - 2
Utilised (44) (60) (5) (3) (112)
At 31 March 2023 655 54 11 34 754
Maintenance provisions comprise of maintenance costs arising from legal and
constructive obligations relating to the condition of the aircraft when
returned to the lessor. Provisions for customer claims comprise amounts
payable to customers who make claims in respect of flight delays and
cancellations, performance, quality issues, and personal injury and illness
experienced whilst on holiday, and refunds of air passenger duty or similar
charges. Restructuring and other provisions include amounts in respect of
potential liabilities for employee related matters and litigation which arose
in the normal course of business.
31 March 2023 30 September 2022
£ million £ million
Current 197 176
Non-current 557 589
754 765
The split of the current/non-current maintenance provision is based on the
expected maintenance event timings. If actual aircraft usage varies from
expectation the timing of the utilisation of the maintenance provision could
result in a material change in the classification between current and
non-current. Maintenance provisions are expected to be utilised within nine
years.
Within other provisions are provisions for litigation matters. The split of
these provisions between current/non-current is based on the dates of expected
court judgements. Provisions for customer claims and restructuring provisions
could be fully utilised within one year from 31 March 2023 and therefore are
classified as current.
11. Financial instruments
Carrying value and fair value of financial assets and liabilities
The fair values of financial assets and liabilities, together with the
carrying value at each reporting date, are as follows:
Amortised cost Held at fair value
At 31 March 2023 Financial assets Financial liabilities Fair value hedges Cash flow hedges Other financial instruments Other ((1)) Carrying Fair
value value
£ million £ million £ million £ million £ million £ million £ million £ million
Other non-current assets 105 - - - - - 105 105
Trade and other receivables 252 - - - - 121 373 373
Trade and other payables ((2)) - (790) - - - (834) (1,624) (1,624)
Derivative financial instruments - - - (147) 21 - (126) (126)
Restricted cash 2 - - - - - 2 2
Money market deposits 81 - - - - - 81 81
Cash and cash equivalents 2,398 - - - 1,007 - 3,405 3,405
Eurobonds ((3),(4),(5),(6).(7)) - (1,923) - - - - (1,923) (1,774)
Other borrowings ((8)) - (759) - - - - (759) (759)
Lease liabilities ((9)) - (960) - - - - (960) N/A
Equity investments ((10)) - - - - 31 - 31 31
Amortised cost Held at fair value
At 30 September 2022 Financial assets Financial liabilities Fair value hedges Cash flow hedges Other financial instruments Other ((1)) Carrying Fair
value value
£ million £ million £ million £ million £ million £ million £ million £
mi
ll
io
n
Other non-current assets 91 - - - - - 91 91
Trade and other receivables 230 - - - - 137 367 367
Trade and other payables ((2)) - (1,077) - - - (608) (1,685) (1,685)
Derivative financial instruments - - 58 264 120 - 442 442
Restricted cash 7 - - - - - 7 7
Money market deposits 126 - - - - - 126 126
Cash and cash equivalents 2,528 - - - 986 - 3,514 3,514
Eurobonds ((3),(4),(5),(6),(7)) - (2,356) - - - - (2,356) (2,081)
Other borrowings ((8)) - (841) - - - - (841) (841)
Lease liabilities ((9)) - (1,113) - - - - (1,113) N/A
Equity investments ((10)) - - - - 31 - 31 31
(1). Amounts disclosed in the 'Other' column are items that do not meet the
definition of a financial instrument. They are disclosed to facilitate
reconciliation of the carrying values of financial instruments to line items
presented in the statement of financial position.
(2) During the year ended 30 September 2022, £322m of obligations under the
EU Emissions Trading Scheme (ETS) were presented as a financial liability
within Trade and other payables. During the period ended 31 March 2023
management concluded these obligations are a non-financial liability and have
presented obligations of £608m within the 'Other' column. The prior period
has been presented on a consistent basis, resulting in reclassification of
£322m from the Financial liabilities column to Other within Trade and other
payables.
(3). easyJet plc established a £3,000 million Euro Medium Term Note (EMTN)
Programme on 7 January 2016. Subsequently easyJet plc has issued three bonds
under this programme and easyJet FinCo B.V. has issued one bond. One bond has
been repaid within the reporting period. The remaining three bonds under this
scheme are guaranteed by easyJet Airline Company Limited, easyJet plc and
easyJet FinCo B.V. On 11 February 2022 the EMTN programme increased in size to
£4,000 million.
(4). In February 2016, easyJet plc issued a €500 million bond under the
£3,000 million Euro Medium Term Note Programme guaranteed by easyJet Airline
Company Limited. The Eurobond had a seven year-term and paid an annual fixed
coupon of 1.750%. At the same time the Group entered into three cross-currency
interest rate swaps to convert the entire €500 million fixed rate Eurobond
to a sterling floating rate exposure. In February 2023 this bond reached
maturity and was settled, with a corresponding gain realised on settlement of
the cross-currency swap.
(5). In October 2016 easyJet plc issued a €500 million bond under the
£3,000 million Euro Medium Term Note Programme guaranteed by easyJet Airline
Company Limited. The Eurobond is for a seven year term and pays an annual
fixed coupon of 1.125%. Shortly after the issuance of the €500 million bond
the Group entered into three cross-currency interest rate swaps to convert the
entire €500 million fixed rate Eurobond to a Sterling fixed rate exposure.
The cross-currency interest rate swaps were executed on 8 November 2016 with
settlement and notional exchange occurring on 14 November 2016. All three
swaps pay fixed interest semi-annually, receive fixed interest annually, and
have maturities matching the Eurobond. The Group designated all three
cross-currency interest rate swaps as a cash flow hedge of the currency risk
on the €500 million Eurobond. The cross-currency interest rate swaps are
measured at fair value with the effective portion taken through the statement
of comprehensive income. The element of the fair value generated by the change
in the spot rate is recycled to the income statement from the statement of
comprehensive income to offset the revaluation of the Eurobond. The carrying
value of the fixed rate Eurobond net of the cross-currency interest rate swap
at 31 March 2023 was £445 million. This value does not include capitalised
set-up costs incurred in the issuing of the bond.
(6). In June 2019 easyJet plc issued a €500 million bond under the £3,000
million Euro Medium Term Note Programme guaranteed by easyJet Airline Company
Limited. The Eurobond is for a six year-term and pays an annual fixed coupon
of 0.875%. At the same time the Group entered into three cross-currency
interest rate swaps to convert the entire €500 million fixed rate Eurobond
to a sterling fixed rate exposure. All three swaps pay fixed interest
semi-annually, receive fixed interest annually, and have maturities matching
the Eurobond. The Group designated all three cross-currency interest rate
swaps as a cash flow hedge of the currency risk on the €500 million
Eurobond. The cross-currency interest rate swaps are measured at fair value
with the effective portion taken through the statement of comprehensive
income. The element of the fair value generated by the change in the spot rate
is recycled to the income statement from the statement of comprehensive income
to offset the revaluation of the Eurobond. The carrying value of the fixed
rate Eurobond net of the cross-currency interest rate swap at 31 March 2023
was £445 million. This value does not include capitalised set-up costs
incurred in the issuing of the bond.
(7) In March 2021 easyJet FinCo B.V. issued a €1,200 million bond under the
£3,000 million Euro Medium Term Note Programme guaranteed by easyJet Airline
Company Limited and easyJet plc. The Eurobond is for a seven-year term and
pays an annual fixed coupon of 1.875%. easyJet subsequently entered into four
cross-currency interest rate swaps to convert €600m of the fixed rate
Eurobond to a Sterling fixed rate exposure. All four swaps pay fixed interest
semi-annually, receive fixed interest annually, and have maturities matching
the Eurobond. The Group designated all four cross-currency interest rate swaps
as a cash flow hedge of the currency risk for half of the €1,200 million
Eurobond. The cross-currency interest rate swaps are measured at fair value
with the effective portion taken through the statement of comprehensive
income. The element of the fair value generated by the change in the spot rate
is recycled to the income statement from the statement of comprehensive income
to offset the revaluation of the Eurobond. The carrying value of the fixed
rate Eurobond net of the cross-currency interest rate swaps at 31 March 2023
was £1,049m. This value does not include capitalised set-up costs incurred in
the issuing of the bond.
(8) In January 2021 easyJet entered into a new five-year term loan facility of
$1.87 billion underwritten by a syndicate of banks and supported by a partial
guarantee from UK Export Finance under their Export Development Guarantee
scheme. easyJet drew down $1.05 billion from the UKEF backed facility in
January 2022. In April 2022 $0.1bn was repaid, reducing the total facility to
$1.77bn and leaving a closing drawn balance of $0.95bn at 31 March 2023. The
carrying value of the drawn balance as at 31 March 2023 was £769 million.
This value does not include capitalised set-up costs.
(9) Lease liabilities are valued in accordance with IFRS 16 and a fair value
determination is not applicable.
(10). The equity investment of £31 million (30.09.22 £31 million) represents
a 13.2% shareholding in a non‐listed entity, The Airline Group Limited.
Valuation movements are designated as being fair valued through other
comprehensive income due to the nature of the investment being held for
strategic purposes.
Fair value calculation
methodology
Where available the fair values of financial instruments have been determined
by reference to observable market prices where the instruments are traded.
Where market prices are not available, the fair value has been estimated by
discounting expected future cash flows at prevailing interest rates and by
applying period end exchange rates (excluding The Airline Group Limited equity
investment).
The fair values of the three Eurobonds are classified as level 1 of the IFRS
13 'Fair Value Measurement' fair value hierarchy (valuations taken as the
closing market trade price for each respective Eurobond as on 31 March 2023).
Apart from the equity investment, the remaining financial instruments for
which fair value is disclosed in the table above, and derivative financial
instruments, are classified as level
2.
The fair values of derivatives are calculated using observable market forward
curves (e.g. forward foreign exchange rates, forward interest rates or forward
jet fuel prices) and discounted to present value using risk free rates. The
impacts of counterparty credit, cross currency basis and market volatility are
also included where appropriate as part of the fair
valuation.
The equity investment is classified as level 3 due to the use of forecast cash
flows not based on observable market data, which are discounted to present
value. The fair value is assessed at each reporting date based on the
discounted cash flows. If the level 3 forecast cash flows were 10% higher or
lower the fair value would not increase / decrease by a significant amount.
The fair value measurement hierarchy levels have been defined as follows;
•Level 1, fair value of financial instruments based on quoted prices
(unadjusted) in active markets for identical assets or liabilities.
•Level 2, fair value of financial instruments in an active market (for
example, over the counter derivatives) which are determined using valuation
techniques which maximise the use of observable market data and rely as little
as possible on entity specific estimates.
•Level 3, fair value of financial instruments that are not based on
observable market data (i.e. unobservable inputs).
12. Reconciliation of operating loss to cash generated from operations
Six months ended Six months ended
31 March 2023 31 March 2022*
£ million £ million
Operating loss (396) (499)
Adjustments for non-cash items:
Depreciation 309 265
Amortisation of intangible assets 13 12
Loss on disposal of property, plant and equipment and intangibles 6 4
Loss on sale and leaseback - 21
Share-based payments 5 10
Changes in working capital and other items of an operating nature:
Increase in trade and other receivables (28) (133)
Increase in current intangible assets (204) (86)
Decrease in trade and other payables (64) (9)
Increase in unearned revenue 1,339 934
Post employment defined benefit contributions (10) 5
Decrease in provisions (40) (75)
(Increase)/decrease in other non-current assets (15) 86
Decrease/(increase) in derivative financial instruments* 18 (19)
Cash generated from operations* 933 516
*The comparative period has been restated as described in note 1C(iii).
13. Government Grants and assistance
During the half year ended 31 March 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 in the half year ended 31 March 2023 amounted to £2 million (H1
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.
On 8 January 2021 easyJet Airline Company Limited signed a five-year term loan
facility of $1.87bn (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. easyJet
drew down $1.05bn from the UKEF backed facility in January 2022. In April 2022
$0.10bn was repaid, reducing the total facility to $1.77bn and leaving a
closing drawn balance of $0.95bn as at 31 March 2023. The carrying value of
the drawn balance as at 31 March 2023 was £769 million. This value does not
include capitalised set-up costs.
14. Contingent liabilities and commitments
Contingent liabilities
easyJet is involved in a number of disputes and litigation cases which arose
in the normal course of business. The potential outcome of these disputes and
litigations can cover a range of scenarios, and in complex cases reliable
estimates of any potential obligation may not be possible.
On 19 May 2020, easyJet announced that it had been the target of a
cyber-attack from a highly sophisticated source. The email addresses and
travel details of approximately 9 million customers were accessed and for a
very small subset of customers (2,208), credit card details were accessed.
The cyber-attack continues to be under investigation by the Information
Commissioner's Office (ICO). As the cyber-attack took place before the United
Kingdom left the European Union, the Group expects the ICO to be investigating
on behalf of all EU data protection authorities as lead supervisory authority
under the GDPR. Any penalty or enforcement action will need to be reviewed and
approved by the other EU data protection authorities under the GDPR's
cooperation process. In addition, in May 2020, a class action claim was filed
in the UK High Court by a law firm representing a class of affected customers
and claims have also been commenced or threatened in certain other courts and
jurisdictions.
The merit, likely outcome and potential impact on the Group of the continued
investigation by the ICO, group action and other claims are still subject to a
number of significant uncertainties and therefore the Group is unable to
assess the likely outcome or quantum of the claims as at the date of these
condensed consolidated interim financial statements.
In December 2022 easyJet was notified by the Italian Competition Authority of
an investigation into price fixing on Italian domestic flights between ITA
Airways, easyJet, Ryanair and Wizz Air. easyJet has refuted the claims and is
fully cooperating with the Authority in its investigation. The Group does not
expect any financial impact to arise as a result of the investigation.
Additionally, there is a possibility of a claim being made by a third party
supplier, for what would be a material recovery. Management have assessed the
likelihood of a case being brought, easyJet's response and likelihood of a
successful defence and at this stage do not consider it appropriate to provide
for such a possibility.
Contingent commitments
At 31 March 2023 easyJet had outstanding letters of credit and performance
bonds totalling £41 million (30.09.22: £43 million), of which £11 million
(30.09.22: £10 million) expire within one year. The fair value of these
instruments at each period end was negligible. No amount is recognised on the
statement of financial position in respect of any of these financial
instruments as it is not probable that there will be an outflow of resources
and the fair value has been assessed to be £nil.
As at 31 March 2023 easyJet was contractually committed to the acquisition of
163 (30.09.22: 168) Airbus A320 family aircraft, with a total list price* of
US$22.3 billion (30.09.22: US$21.9 billion) before escalations and discounts
for delivery. It is expected that three aircraft will be delivered during the
remainder of FY23, and 18 in FY24, with the remaining aircraft delivered
between 2025 and 2029. In addition, easyJet was contractually committed to the
acquisition of four LEAP engines (30.09.22: four).
easyJet is committed to 11 additional lease commitments and one extension with
a combined value of £123 million, of which the extension and four of the
lease commitments were entered into after the statement of financial position
date.
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 and are therefore not certain,
hence no liability has been recognised for these payments.
*Airbus no longer publishes list prices. The estimated list price is based on
the last available list price published in January 2018 and escalated by
Airbus' standard escalation from January 2018 to January 2023 of 11.2% (or
2.7% CAGR)
15. Related party transactions
The Company licenses the easyJet brand from easyGroup Ltd ('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 31 March 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 have 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 02 February 2018 in which easyGroup agreed that certain
affiliates of easyJet have the right to use the brand.
The amounts included in the income statement, within other costs, for these
items were as follows:
Six months ended Six months ended
31 March 2023 31 March 2022
£ million £ million
Royalty 6.7 3.6
Brand protection (legal fees paid through easyGroup to third parties) 0.1 -
6.8 3.6
At 31 March 2023, £0.4 million (30.09.22: £11.1 million) was payable to
easyGroup.
At 31 March 2023, £0.2 million (30.09.22: £nil) is receivable from
easyGroup.
16. Events after the statement of financial position date
There are no events to disclose.
Glossary - Alternative performance measures (APMs)
Non-headline items 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/nature (See note 3).
Headline loss before tax A measure of underlying performance which is not impacted by non-headline
items.
Period ended 31 March 2023 Period ended 31 March 2022
£ million £ million
Statutory loss before tax (415) (557)
Total non-headline loss before tax (see note 3) 4 12
Headline loss before tax (411) (545)
EBITDAR Earnings before interest, taxes, depreciation, amortisation, and aircraft
rental
Headline EBITDAR Earnings before non-headline items, interest, taxes, depreciation,
amortisation, and aircraft rental.
Period ended 31 March 2023 Period ended 31 March 2022
£ million £ million
Statutory operating loss (396) (499)
Add back;
Aircraft dry leasing 1 1
Depreciation 309 265
Amortisation of intangible assets 13 12
EBITDAR (73) (221)
Non-headline charge within operating profit (see note 3) 4 13
Headline EBITDAR (69) (208)
Net debt Total cash less borrowings and lease liabilities; cash includes money market
deposits but excludes restricted cash.
As at 31 March 2023 As at 30 September 2022 As at 31 March 2022
£ million £ million £ million
Borrowings 2,682 3,197 3,046
Lease liabilities 960 1,113 1,055
Cash and money market deposits (excluding restricted cash) (3,486) (3,640) (3,505)
Net debt 156 670 596
Return on capital employed (ROCE) Operating profit, less tax at the prevailing UK corporation tax rate at the
end of the period, divided by average capital employed (shareholder equity
plus net debt).
Headline return on capital employed (ROCE) Operating profit less non-headline items, less tax at the prevailing UK
corporation tax rate at the end of the period, divided by average capital
employed (shareholder equity plus net debt).
Period ended 31 March 2023 Period ended 31 March 2022
£ million £ million
Opening shareholders' equity 2,533 2,639
Closing shareholders' equity 1,921 2,440
Average shareholders' equity 2,227 2,540
Opening net debt 670 910
Closing net debt 156 596
Average net debt 413 753
Average capital employed 2,640 3,293
Reported operating loss (396) (499)
Tax rate 19% 19%
Adjusted operating profit after tax (321) (404)
Return on capital employed (12.2%) (12.3%)
Reported operating loss (396) (499)
Non-headline charge within operating profit (see note 3) 4 13
Headline reported operating loss (392) (486)
Tax rate 19% 19%
Adjusted headline operating loss after tax (318) (394)
Headline returned on capital employed (12.0%) (12.0%)
Basic headline (loss)/earnings per share - pence Total headline loss for the period divided by the weighted average number of
shares in issue during the period after adjusting for shares held in employee
benefit trusts.
Diluted headline (loss)/earnings per share - pence Total headline loss for the period divided by the weighted average number of
ordinary shares in issue adjusted to assume conversion of all dilutive
potential shares.
Period ended 31 March 2023 Period ended 31 March 2022
£ million £ million
Total loss after tax for the period (307) (431)
Total non-headline charge before tax (see note 3) 4 12
Tax impact of non-headline items (1) (3)
Headline loss after tax (304) (422)
million million
Weighted average number of ordinary shares used to calculate basic loss per 751 754
share
Weighted average number of ordinary shares used to calculate diluted loss per 751 754
share
Headline loss per share Pence Pence
Basic (40.5) (56.0)
Diluted (40.5) (56.0)
Constant currency measures These performance measures are calculated by translating the period ended 31
March 2023 income statement at the financial period average exchange rate for
period ended 31 March 2022, excluding any income statement impact in either
financial period from foreign currency exchange gains and losses arising from
the revaluation of the statement of financial position. The purpose of this
APM is to provide a like for like comparison of underlying operating
performance by excluding the impact of exchange rate movements.
Glossary - Other
Aircraft dry / Dry leasing arrangements relate solely to the provision of an aircraft. Wet
leasing arrangements relate to the provision of aircraft, crew, maintenance
wet leasing and insurance.
Aircraft owned/leased at end of period Number of aircraft owned or on lease arrangements of over one month's duration
at the end of the period. This excludes operating leased aircraft which have
been acquired for future operations. These are held at zero rent and are
excluded from the fleet numbers.
Available seat kilometres (ASK) Seats flown multiplied by the number of kilometres flown.
Average adjusted The average of opening and closing capital employed.
capital employed
Block hours Hours of service for aircraft, measured from the time that the aircraft leaves
the terminal at the departure airport to the time that it arrives at the
terminal at the destination airport.
Capital employed Shareholders' equity plus debt.
Airline cost per ASK (CASK) Airline revenue less profit before tax, divided by available seat kilometres.
Airline cost per seat Airline revenue less profit before tax, divided by seats flown.
Airline cost per seat, excluding fuel Airline revenue, less profit before tax, adding back fuel costs, divided by
seats flown.
Airline CSAT (Customer Satisfaction Score) A weighted average of responses of surveys sent to customers who experienced
either an on-time, delayed, severely delayed or cancelled flight.
Gearing Net debt divided by the sum of shareholders' equity and adjusted net
cash/debt.
Booked load factor Number of passengers as a percentage of number of seats flown. The load factor
is not weighted for the effect of varying sector lengths.
Normalised operating profit after tax Reported operating profit, less tax at the prevailing UK corporation tax rate
at the end of the period.
Operating costs excl fuel Includes costs relating to airports and ground handling, crew, navigation,
maintenance, selling and marketing and other costs/income.
Ownership costs Includes depreciation, amortisation, net finance charges and the impact of
foreign exchange gain/losses from the revaluation of the statement of
financial position.
Other costs Administrative and operational costs not reported elsewhere, including
disruption costs, IT costs, costs of 3(rd) party providers, some employee
costs, wet lease costs and insurance. Additionally, some non-headline costs,
such as loss on sale and leaseback transactions, and restructuring costs, are
included in other costs.
Other income Includes insurance receipts, supplier compensation payments, rental income and
gain on sale and leaseback transactions.
Passengers Number of earned seats flown. Earned seats comprises seats sold to passengers
(including no-shows), seats provided for promotional purposes and seats
provided to staff for business travel.
Profit before tax per seat Profit before tax divided by seats flown.
Total revenue The sum of passenger revenue and ancillary revenue, including package holiday
revenue.
Revenue passenger Number of airline passengers multiplied by the number of kilometres those
passengers were flown.
kilometres (RPK)
Revenue per ASK Airline revenue (passenger and ancillary) divided by available seat
kilometres.
Revenue per seat Airline revenue (passenger and ancillary) divided by seats flown.
Seats flown Seats available for passengers.
Sector A one-way revenue flight
Statement of Directors' responsibilities
The Directors are responsible for preparing the interim report in accordance
with applicable law and regulations. The Directors confirm that the condensed
consolidated interim financial information has been prepared in accordance
with UK adopted International Accounting Standard 34, 'Interim Financial
Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
The interim management report includes a fair review of the information
required by the Disclosure Guidance and Transparency Rules paragraphs 4.2.7 R
and 4.2.8 R, namely:
· an indication of important events that have occurred during the
six months ended 31 March 2023 and their impact on the condensed set of
financial information, and a description of the principal risks and
uncertainties for the remaining six months of the financial year; and
· material related-party transactions during the six months ended
31 March 2023 and any material changes in the related-party transactions
described in the Annual report and accounts for the year ended 30 September
2022.
The Directors of easyJet plc are listed in the Annual report and accounts for
the year ended 30 September 2022. A list of current Directors is maintained on
the easyJet plc website: http://corporate.easyJet.com
(http://corporate.easyJet.com) .
The Directors are responsible for the maintenance and integrity of, amongst
other things, the financial and corporate governance information as provided
on the easyJet website (http://corporate.easyJet.com). Legislation in the
United Kingdom governing the preparation and dissemination of financial
information may differ from legislation in other jurisdictions.
The interim report was approved by the Board of Directors and authorised for
issue on 18 May 2023 and signed on its behalf by:
Johan Lundgren Kenton Jarvis
Chief Executive Chief Financial Officer
Independent review report to easyJet plc
Report on the condensed consolidated interim financial information
Our conclusion
We have reviewed easyJet plc's condensed consolidated interim financial
information (the "interim financial statements") in the interim report of
easyJet plc for the 6 month period ended 31 March 2023 (the "period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim financial statements comprise:
· the Condensed consolidated statement of financial position as at
31 March 2023;
· the Condensed consolidated income statement and Condensed
consolidated statement of comprehensive income for the period then ended;
· the Condensed consolidated statement of cash flows for the period
then ended;
· the Condensed consolidated statement of changes in equity for the
period then ended; and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the interim report of easyJet plc
have been prepared in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the interim report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial information and the review
Our responsibilities and those of the directors
The interim report, including the interim financial statements, is the
responsibility of, and has been approved by the directors. The directors are
responsible for preparing the interim report in accordance with the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority. In preparing the interim report, including the interim
financial statements, the directors are responsible for assessing the group's
ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the group or to cease
operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the interim report based on our review. Our conclusion,
including our Conclusions relating to going concern, is based on procedures
that are less extensive than audit procedures, as described in the Basis for
conclusion paragraph of this report. This report, including the conclusion,
has been prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We do not, in
giving this conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
Watford
18 May 2023
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