REG - easyJet PLC - Q1 Trading Update

easyJetAnnouncement

25/01/2023 07:00

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RNS Number : 7488N  easyJet PLC  25 January 2023

25 January 2023

 

 

easyJet plc

('easyJet')

 

easyJet Trading Update for the quarter ended 31 December 2022

 

Strong bookings see easyJet improve its first quarter performance by £80
million year on year, driven by its transformed network and much improved
revenue capability with momentum continuing into Q2

·    Q1 headline loss before tax £133 million (Q1 22 £213 million loss)

o  Passenger growth +47% YoY

o  RPS +36% YoY

§ Load factor +10 ppts YoY

§ Ticket yield +21% YoY

§ Ancillaries continue to grow with yield increasing 20% YoY (+85% vs Q1
FY19)

o  easyJet holidays delivers £13 million profit (Q1 22 £1 million loss)

·    Strong booking momentum:

o  Q2 RPS expected to continue year on year trend from Q1

o  Airline and easyJet holidays deliver record revenue booking days in
January

o  Bookings strength continues across Q2 and into summer 2023

§ easyJet holidays upgrades expectations from >30% to c.50% customer
growth YoY

§ Strong UK demand: 11 new routes just released to popular holiday
destinations

·    Expect H1 loss before tax to be significantly better vs H1 22

·    H2 ticket yields continuing the trend from H1, although load factors
behind FY19 levels as later booking pattern continues

·    Whilst we remain mindful of the uncertain macroeconomic outlook
across the globe, based on current high levels of demand and strong bookings,
easyJet anticipates beating the current market profit expectations(1) for FY23

 

Summary

easyJet's first quarter financial performance was ahead of expectations as
yields strengthened, with revenue per seat increasing 36% year on year.
Airline ancillary revenue continued to perform well, at £20.12 per seat, also
increasing 36% year on year. easyJet holidays remains the UKs fastest growing
major holiday company, with a 161% increase year on year in customers as
demand for travel in the UK remains strong.

 

Moving into the second quarter of this financial year, easyJet expects RPS
growth year on year to continue the trend experienced in Q1. This is driven by
yield and load factor growth alongside the continued delivery of ancillary
products. easyJet holidays will continue to see customer growth through the
quarter, alongside investment into marketing and advertising as part of the
turn of year sale campaign.

 

easyJet's leading low-cost proposition at primary airports provides a key
differentiator for customers making it easy to travel, whilst offering great
value. Demand for our network is strong demonstrated through record turn of
year bookings. Easter, which sits in Q3, is currently trading very well with
sold ticket yields +24% vs FY19, noting the later booking window. With strong
UK demand, easyJet holidays is now over 60% sold for this summer, based on the
previously guided 30% growth year on year. With the holidays business not
constrained and considering current levels of demand, we now expect to see
growth of circa 50% on FY22.

 

Johan Lundgren, CEO of easyJet, said:

"We have seen strong and sustained demand for travel over the first quarter,
carrying almost 50% more customers compared with last year. Many returned to
make bookings during the traditional turn of year sale where we filled five
aircraft every minute in the peak hours, which culminated in three
record-breaking weekends for sales revenue this month.

 

"This strong booking performance, aided by the airline's step changed revenue
capability, has driven an £80m year on year boost in the first quarter with
continued momentum as customers prioritise spending on holidays for the year
ahead. easyJet holidays, the fastest growing holidays company in the UK, is
upgrading its ambitious growth plans for the year given the strong demand.
 

 

"In summary, we expect to see our winter loss reduce significantly over the
first half compared to last year. This will set us firmly on the path to
delivering a full year profit, where we anticipate beating the current market
expectation enabling us to create value for customers, investors and the
economies we serve."

 

Capacity

During Q1 easyJet flew 20.2 million seats, in line with guidance, a
significant increase on the same period last year when easyJet flew 15.5
million seats. Load factor was 87% (Q1 FY22: 77%), due to increased customer
demand coupled with restriction-free travel.

 

Passenger(3) numbers in the quarter increased to 17.5 million (Q1 FY22: 11.9
million).

 

                            October 2022  November 2022  December 2022  Q1       Q1

                                                                        FY23     FY22
 Number of flights          49,071        28,907         34,914         112,892  85,618
 Peak operating aircraft    313           254            261            313      251

 Passengers (3) (thousand)  7,505         4,543          5,433          17,481   11,891

 Seats flown (thousand)     8,732         5,178          6,250          20,159   15,471

 Load factor (4)            86%           88%            87%            87%      77%

 

Sustainability

During the quarter, easyJet's CO2 emissions per RPK reduced 11% year on year.
Alongside this, our partnership with Rolls-Royce set a new aviation milestone
with the world's first run of a modern aeroplane engine fuelled by green
hydrogen. To further underpin the commitment to achieving our net zero
roadmap, easyJet announced a partnership with Airbus, Bristol Airport and EDF
Hynamics, with the objective of turning Bristol Airport into a hydrogen hub.

 

Revenue, Cost and Liquidity

Revenue continued to benefit from strong demand for easyJet's leading network,
the continued outperformance of ancillary products and easyJet holidays.
Significant fuel price increases year on year and the strengthened USD have
resulted in fuel cost per seat being 76% (£8.44) more than the same period
last year. One-off costs were incurred during the quarter as 15 wet leased
aircraft utilised in summer 22 left the fleet at the end of October.

 

Financing costs benefitted from the strengthening of sterling versus the USD
over the quarter which has driven a non-operating, non-cash FX gain of £13
million (Q1 FY22: £15 million gain) from balance sheet revaluations.

 

                                                              Q1'23    Q1'22    Variance
 Passenger revenue (£'m)                                      975      547      78%
 Airline ancillary revenue (£'m)                              406      230      77%
 Holidays revenue(2) (£'m)                                    93       28       232%
 Group revenue (£'m)                                          1,474    805      83%
 Fuel costs (£'m)                                             (393)    (171)    (130)%
 Airline headline EBITDAR costs (£'m)                         (959)    (647)    (48)%
 Holidays EBITDAR costs(2) (£'m)                              (80)     (29)     (176)%
 Group headline EBITDAR costs (£'m)                           (1,432)  (847)    (69)%
 Group headline EBITDAR (£'m)                                 42       (42)     200%
 Group depreciation & amortisation (£'m)                      (164)    (153)    (7)%
 Group LBIT (£'m)                                             (122)    (195)    37%
 Financing costs excluding balance sheet revaluations (£'m)   (24)     (33)     27%
 Balance sheet revaluations (£'m)                             13       15       (13)%
 Group headline LBT (£'m)                                     (133)    (213)    38%

 Airline passenger revenue per seat (£)                       48.35    35.37    37%
 Airline ancillary revenue per seat (£)                       20.12    14.84    36%
 Total airline revenue per seat (£)                           68.47    50.21    36%

 Airline headline cost per seat ex fuel (£)                   (56.21)  (52.90)  (6)%
 Airline fuel cost per seat (£)                               (19.50)  (11.06)  (76)%
 Airline headline total cost per seat (£)                     (75.71)  (63.96)  (18)%

 Cash and money market deposits (£'bn)                        3.0      2.9      3%
 Net debt (£'bn)                                              1.1      1.2      8%

 

Capacity outlook

o  H1 c.38m seats, c.25% increase YoY

o  H2 c.56m seats, c.9% increase YoY

o  Q4 capacity around pre-pandemic levels

 

Fuel & FX Hedging

 Jet Fuel                         H1'23  H2'23    USD                                 H1'23  H2'23
 Hedged position                  78%    59%      Hedged position                     75%    62%
 Average hedged rate ($/MT)       $819   $900     Average hedged rate (USD/GBP)       1.29   1.24
 Current spot ($/MT) at 24.01.23  c. $1,110       Current spot (USD/GBP) at 24.01.23  c. 1.23

 

 

For further details please contact easyJet plc:

Institutional investors and analysts:

Michael Barker                  Investor
Relations                           +44 (0) 7985 890
939

Adrian Talbot                     Investor
Relations                           +44 (0) 7971 592
373

 

Media:

Anna Knowles                   Corporate
Communications        +44 (0) 7985 873 313

Edward Simpkins              FGS Global
 
+44 (0) 7947 740 551 / (0) 207 251 3801

Dorothy Burwell               FGS Global
 
+44 (0) 7733 294 930 / (0) 207 251 3801

A copy of this Trading Statement is available at
http://corporate.easyjet.com/investors
(http://corporate.easyjet.com/investors)

 

1) Current market profit expectations for FY23 is a £126 million profit
before tax for FY23.

2) easyJet holidays numbers include elimination of intercompany airline
transactions

3) Represents the number of earned seats flown. Earned seats include seats
which are flown whether or not the passenger turns up, as easyJet is a no
refund airline and once a flight has departed, a no-show customer is generally
not entitled to change flights or seek a refund. Earned seats also include
seats provided for promotional purposes and to staff for business travel.

4) Represents the number of passengers as a proportion of the number of seats
available for passengers. No weighting of the load factor is carried out to
recognise the effect of varying flight (or "sector") lengths.

 

This announcement may contain statements which constitute 'forward-looking
statements'. Although easyJet believes that the expectations reflected in
these forward-looking statements are reasonable, it can give no assurance that
these expectations will prove to have been correct. Because these statements
involve risks and uncertainties, actual results may differ materially from
those expressed or implied by these forward-looking statements.

 

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