REG - easyJet PLC - Q1 Trading Update

easyJetAnnouncement

24/01/2024 07:15

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RNS Number : 6762A  easyJet PLC  24 January 2024

24 January 2024

 

 

easyJet plc

('easyJet')

 

easyJet Trading Update for the quarter ended 31 December 2023

 

easyJet's performance has improved year on year, with booking trends giving a
positive outlook for the remainder of the financial year. Underlying trends in
Q1 were strong, although headline results were impacted by the conflict in the
Middle East.

·    Q1 headline loss before tax £126 million (Q1'23 £133 million loss)

o  Passenger growth +14% YoY

o  RPS +3% YoY

§ Load factor -1ppt YoY

§ Ticket yield +2% YoY

§ Ancillary yield +6% YoY

o  CPS ex fuel reduced 3% YoY

o  easyJet holidays delivered £30 million profit (Q1'23 £13 million profit)

§ Customer growth +48%

·    Winter FY24 improvement:

o  Expect H1 loss to reduce YoY, despite a c.£40 million direct impact(1)
from the Middle East conflict

§ Expect Q2 RPS to be up by mid-single digits

§ H1 CPS ex fuel to be broadly flat YoY

·    Remain on track to deliver disciplined capacity growth of c.9% in
FY24

o  H1'24 c. 42m seats, +11% YoY

o  H2'24 c. 59m seats(2), +8% YoY

·    Positive outlook for summer:

o  Strong turn of year bookings with seats sold and yield ahead YoY

o  H2 RPS remain well ahead YoY

§ Yields and loads both ahead in Q3 & Q4

o  Expect H2 CPS ex fuel to be up low single digits YoY

o  easyJet holidays continues to expect >35% customer growth YoY in FY24

 

Summary

easyJet's financial performance in the first quarter showed year-on-year
improvement at a headline level, with underlying progress stronger still. The
onset of conflict in the Middle East on 7 October had short term impacts from
a pause in flights to Israel and Jordan (which currently remains in place) and
a temporary slowdown in flight bookings for the wider industry. Demand and
bookings have recovered strongly from late November. easyJet holidays had
another strong quarter, with customer numbers increasing by 48% compared to
the same period last year, and a profit of £30 million, a 131% increase
year-on-year.

 

easyJet's seasonal winter loss for the first half of FY24 is also expected to
improve year-on-year despite a direct impact(1) of c.£40 million (and further
indirect impacts) from the conflict in the Middle East. This improvement comes
as a result of disciplined capacity growth where demand is strongest,
alongside productivity benefits. easyJet expects cost per seat excluding fuel
to remain broadly flat in the first half of 2024, with fuel costs c.7% higher.

 

Although still early, bookings for summer 2024 are building well, with the
turn of the year bookings period showing an increase in both volume and
pricing compared to the same period last year. Demand for easyJet's primary
airport network remains strong, with RPS for the second half of FY24 currently
well ahead year-on-year. This positive momentum is also evident in the
holidays business, where we continue to expect customer growth to exceed 35%
year-on-year.

 

Johan Lundgren, CEO of easyJet, commenting on the results said:

 

"We delivered an improved performance in the quarter which is testament to the
strength of demand for our brand and network. The popularity of easyJet
holidays also continues to grow, with 48% more customers in the period.

 

"We see positive booking momentum for summer 2024 with travel remaining a
priority for consumers. Flight and holidays bookings took off strongly during
the traditional busy turn of year sales period, as customers opted to secure
their summer holidays to firm favourites like Spain and Portugal alongside
destinations further afield like Greece and Turkey.

 

"easyJet remains focused on delivering for our customers in the coming months,
while also expecting to deliver continuing performance gains"

 

Capacity

During Q1 easyJet flew 23.0 million seats. In the same period last year
easyJet flew 20.2 million seats. Load factor was 86% (Q1 FY23: 87%).

 

Passenger(4) numbers in the quarter increased to 19.8 million (Q1 FY23: 17.5
million).

 

                            October 2023  November 2023  December 2023  Q1       Q1

                                                                        FY24     FY23
 Number of flights          51,604        34,518         42,150         128,272  112,892
 Peak operating aircraft    317           266            277            317      313

 Passengers (4) (thousand)  8,066         5,324          6,452          19,842   17,481

 Seats flown (thousand)     9,210         6,199          7,585          22,994   20,159

 Load factor (5)            88%           86%            85%            86%      87%

 

Fleet

On 19 December 2023, shareholders approved the purchase of 157 Airbus A320neo
family aircraft, scheduled for delivery between FY29 and FY34. On 31 December
2023, easyJet finalised an agreement to purchase engines from CFM, securing
the company's long-term strategy of fleet modernisation and disciplined
growth. easyJet expects the delivery of 16 aircraft in the current financial
year as planned.

 

Revenue, Cost and Liquidity

Revenue continued to benefit from strong demand for easyJet's leading network
through October where RPS was +12% year on year. However, the onset of the
conflict in the Middle East on 7 October had short term impacts from a pause
in flights to Israel and Jordan (which currently remains in place) and a
temporary slowdown in flight bookings for the wider industry. Demand and
bookings have recovered strongly from late November.

 

The airline's increased productivity and utilisation led to a 3% year-on-year
reduction in non-fuel unit costs. Rising fuel prices resulted in a 15%
(£2.92) per seat increase in fuel costs compared to the same period last
year.

 

Financing costs benefitted from a decrease in gross debt and a rise in the
interest rate on floating-rate cash. However,  foreign exchange movements
over the quarter resulted in a non-operational, non-cash FX loss of £4
million from balance sheet revaluations.

 

In Q1 of FY24, easyJet repaid a €500 million Eurobond which matured in
October 2023.

 

                                                              Q1'24    Q1'23    Variance
 Passenger revenue (£'m)                                      1,133    975      16%
 Airline ancillary revenue (£'m)                              486      406      20%
 Holidays revenue(3) (£'m)                                    181      93       95%
 Group revenue (£'m)                                          1,800    1,474    22%
 Fuel costs (£'m)                                             (516)    (393)    (31)%
 Airline headline EBITDAR costs (£'m)                         (1,057)  (959)    (10)%
 Holidays EBITDAR costs(3) (£'m)                              (153)    (80)     (91)%
 Group headline EBITDAR costs (£'m)                           (1,726)  (1,432)  (21)%
 Group headline EBITDAR (£'m)                                 74       42       76%
 Group depreciation & amortisation (£'m)                      (191)    (164)    (16)%
 Group LBIT (£'m)                                             (117)    (122)    4%
 Financing costs excluding balance sheet revaluations (£'m)   (5)      (24)     79%
 Balance sheet FX revaluations (£'m)                          (4)      13       (131)%
 Group headline LBT (£'m)                                     (126)    (133)    5%

 Airline passenger revenue per seat (£)                       49.26    48.35    2%
 Airline ancillary revenue per seat (£)                       21.13    20.12    5%
 Total airline revenue per seat (£)                           70.39    68.47    3%

 Airline headline cost per seat ex fuel (£)                   (54.80)  (56.21)  3%
 Airline fuel cost per seat (£)                               (22.42)  (19.50)  (15)%
 Airline headline total cost per seat (£)                     (77.22)  (75.71)  (2)%

 Cash and money market deposits (£'bn)                        1.9      3.0      (37)%
 Net debt (£'bn)                                              0.5      1.1      55%

 Average Sector Length (km)                                   1,182    1,212    (2)%

Fuel & FX Hedging (as at 31 December 2023)

 Jet Fuel                         H1'24  H2'24  H1'25    USD                                 H1'24  H2'24  H1'25
 Hedged position                  80%    55%    29%      Hedged position                     78%    58%    32%
 Average hedged rate ($/MT)       866    821    821      Average hedged rate (USD/GBP)       1.22   1.24   1.25
 Current spot ($/MT) at 23.01.24  c.895                  Current spot (USD/GBP) at 23.01.24  c.1.27

 

 

 

For further details please contact easyJet plc:

Institutional investors and analysts:

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

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

 

Media:

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

Olivia Peters
Teneo
+44 (0) 20 7353 4200

Harry Cameron
         Teneo
+44 (0) 20 7353

 

1) Direct impact of £40 million relates to the lost contribution in H1'24
from pausing flying to Israel and Jordan alongside the demand softness seen in
Egypt following the onset of the conflict in the Middle East on 7 October.

2) Represents on sale capacity for H2 of FY'24.

3) easyJet holidays numbers include elimination of intercompany airline
transactions

4) 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.

5) 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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