29 November, 2022

easyJet releases results for the twelve months ending 30 September 2022

easyJet plc

Results for the twelve months ending 30 September 2022

 

easyJet achieves record bounce back delivering best ever as the carrier focuses on network allocation, improved revenue capability and financial strength.


Commenting on the results, Johan Lundgren, easyJet Chief Executive said: "easyJet has achieved a record bounce back this summer with a performance which underlines that our transformation is delivering. The summer saw easyJet achieve its highest ever earnings for a single quarter with headline EBITDAR of £674 million, ancillaries up by 59% on FY19 and easyJet holidays well on its way to its £100m target.

"easyJet does well in tough times. Legacy carriers will struggle in this high-cost environment. Consumers will protect their holidays but look for value and across its primary airport network, easyJet will be the beneficiary as customers vote with their wallets.

"Over the next year, we are targeting customer growth and are well placed to drive returns and margins while maintaining a rigorous focus on cost. With one of the strongest balance sheets in European aviation, we are ready to take opportunities as they present themselves.

"We have a clear strategy to drive returns for our shareholders and have significant confidence in our plan today and that it will deliver going forward."


-      Achieved record headline EBITDAR in Q4 of £674 million (Q4 2021: £82 million profit)

-      FY22 headline loss before tax of £178 million (Reported loss before tax of £208 million)

-      Operational performance in Q4 better than Q4 2019, with fewer on the day cancellations  

-      Financial strength - £0.7bn net debt with £3.6bn in cash and money market deposits

-      Business transformation delivering:

 holding more slots than ever where returns are highest

 delivering on destination base strategy - 21 aircraft now based in destination

 enhanced ancillaries delivered 59% yield uplift vs FY19

 easyJet holidays delivers £38 million profit before tax 

-      Q123 RPS growth expected to be >20% YoY

 

Overview

easyJet, alongside the whole industry, has faced multiple headwinds throughout the 2022 financial year from Omicron, the impact of Russia's invasion of Ukraine, and operational challenges as demand returned at scale following the widespread removal of travel restrictions across Europe. Despite this, easyJet has delivered a significantly improved performance with headline EBIT profit of £3 million (2021: £1,036 million loss) which includes incremental disruption costs of £78 million compared to FY19. The headline loss before tax in the year was £178 million (2021: £1,136 million) which includes a £64 million loss from balance sheet revaluations. 

The business transformation is delivering with easyJet achieving a record headline EBITDAR of £674 million in Q4 2022 with load factors returning to 92% and seat capacity to 26 million. Ancillary products and easyJet holidays are fully embedded and delivering incremental returns to the business.

easyJet is continuing to allocate aircraft to the markets where demand is strongest enabled by slot growth at primary airports. Over the past 12 months we have seen growth at Gatwick, PortoLisbon and the Greek islands. Each of these airports has delivered returns above the network average in FY22.

For winter, which is typically a loss-making period, easyJet is investing in building additional resilience. This investment allows for summer 23 preparations to start earlier in response to the tight labour market, where we have already begun our seasonal recruitment campaign. Alongside this, we now have a dedicated team in place to process employment reference checks as efficiently as possible. easyJet, like all airlines, is seeing cost pressures including fuel, strengthened US dollar and wage inflation.

Peak holiday weeks this winter, such as October half term and Christmas week in the UK, are back to normal levels of volume. Through these key periods, ticket yields are showing strength on the prior year, with the Christmas period's ticket yield currently up c. 18%. Visibility over bookings in the second half remains low, however Easter booked ticket yields are strong and booked load factors for Easter are ahead of the prior year.

easyJet goes into the 2023 financial year with one of the strongest balance sheets in European aviation. This financial strength, combined with our leading low-cost proposition at primary airports provides a key differentiator for customers, making it easy for customers to switch towards value. easyJet's historic performance in a challenging economic environment where the consumer was squeezed has been strong, as evidenced in 2008/09 during the global financial crisis when easyJet delivered increased margins1 as well as capacity growth.

Financial Summary

-      Headline loss before tax of £178 million (2021: £1,136 million loss) 

 Total revenue increased by 296% to £5,769 million (2021: £1,458 million) predominantly due to the increase in capacity flown and ancillary products continuing to deliver incremental revenue.

 Group headline costs increased by 129% to £5,947 million (2021: £2,594 million), primarily due to the increase in flown capacity. 

-      Reported loss before tax of £208 million (2021: £1,036 million loss).

 Non-headline loss of £30 million (2021: £100 million gain). Non-headline items consist primarily of losses from the sale and leaseback of aircraft and the return of slots in the year at Berlin Brandenburg airport following the right-sizing of our operations from 18 to 11 aircraft.

  

2022

2021

     Change

favourable/(adverse)

Capacity2 (millions of seats)

81.5

28.2


189%

Passengers3 (millions)

69.7

20.4


242%

Load factor4 (%)

85.5

72.5


13ppts

Average sector length (km)

1,193

1,184


1%

Total revenue (£ million)

5,769

1,458


296%

Headline EBITDAR (£ million)

569

(551)


203%

Headline EBIT (£ million)

3

(1,036)


100%

Headline loss before tax (£ million)

(178)

(1,136)


84%

Reported loss before tax (£ million)

(208)

(1,036)


80%

Airline revenue per seat (£)

66.23

50.54


31%

Airline revenue per seat at constant currency5 (£)

67.33

50.54


33%

Airline EBITDAR cost ex fuel per seat (£)

44.09

56.62


22%

Airline EBITDAR cost ex fuel per seat at constant currency5 (£)

44.38

56.62


22%

Airline headline loss before tax per seat (£)

(2.65)

(39.87)


93%

Holidays contribution (£m)

38

(12)


417%

Headline EBITDAR Margin (%)

9.9

(37.8)


48ppts

Headline ROCE (%)

0.1

(25.5)


26ppts


 




Outlook

-      Based on current trading, easyJet expects the following over the 2023 financial year:

-      Q1 RPS growth expected to be up >20% YoY

-      Q1 load factor growth c.+10 ppts YoY

-      Earlier summer 23 ramp up for resilience

-      H1 fuel price up >50% YoY

-      Market wide inflationary pressure

-      H2 early bookings look positive with Easter ticket yields showing strength YoY

-      Capacity

 H1 c.38m seats, c.25% increase YoY

 H2 c.56m seats, c.9% increase YoY

 Q4 capacity around pre-pandemic levels

-      easyJet holidays targeting >30% customer growth YoY

 

Fuel & FX Hedging:

Jet Fuel

H1'23

H2'23

H1'24


USD

H1'23

H2'23

H1'24

Hedged position

74%

51%

25%


Hedged position

77%

54%

27%

Average hedged rate ($/MT)

814

903

922


Average hedged rate (USD/GBP)

1.29

1.24

1.19

Current spot ($/MT) at 28.11.22

c.1,000


Current spot (USD/GBP) at 28.11.22

c.1.21

 

Carbon obligation 100% covered for CY22 at €17/MT and 77% covered for CY23 at €31/MT

USD Lease payments hedged for the next three years at 1.33

Capex hedged for the next 12 months in EUR & USD

 


Revenue

Total revenue increased by 296% to £5,769 million (2021: £1,458 million) in line with capacity increasing to 81.5 million seats (2021: 28.2 million), due to the relaxation of pandemic-related travel restrictions relative to the prior year, strong growth in the easyJet holidays business and the step change in our ancillary offering.

Passenger revenue increased by 282% to £3,816 million (2021: £1,000 million) as we flew increased levels of capacity compared to the same period last year. Passenger RPS increased by 32% to £46.80 (2021: £35.48) as demand returned, with travel restrictions easing through the year and easyJet's primary airport network driving yield growth.

Group ancillary revenue increased by 326% to £1,953 million (2021: £458 million) as capacity increased and as easyJet holidays continues its rapid growth. Airline ancillary revenue per seat also increased by 29% to £19.43 (2021: £15.06) as we continue to see incremental benefits from ancillary products which have been launched since H1 of FY21.

Costs

Group headline costs excluding fuel and FX gains increased by 106% to £4,604 million (2021: £2,233 million), driven by an increase in capacity flown as well as incremental disruption costs of £78 million compared to FY19 and one-off resilience actions taken in order to ensure a stable operation during the fourth quarter.

easyJet recorded a £64 million loss from foreign exchange on balance sheet revaluations (2021: £10 million gain), related to the impact of a weaker sterling on our net foreign currency-denominated liabilities. 

Airline headline cost per seat at constant currency decreased by 25% to £68.11 (2021: £90.73). Headline Airline cost per seat excluding fuel at constant currency decreased by 32% to £52.66 (2021: £77.57).

Non-headline Items

Non-headline items are those where, in management's opinion, separate reporting provides a better understanding to users of the financial statements of easyJet's underlying trading performance, and which are significant by virtue of their size and/or nature. These costs are separately disclosed and further detail can be found in the notes to the financial statements. A Group non-headline loss before tax of £30 million (FY 2021: £100 million gain) was recognised in the financial year. The significant items consisted of a £21 million loss as a result of the sale and leaseback of 10 aircraft and a £10 million loss from returning slots in the year at Berlin Brandenburg airport following the rightsizing of the operations from 18 to 11 aircraft.

Balance Sheet

During FY22 easyJet repaid £300 million of commercial paper, clearing the final balance under the CCFF scheme. $100 million was also voluntarily repaid on the UKEF in April ahead of its maturity in FY26. As at 30 September 2022 our net debt position was £0.7 billion (30 September 2021: £0.9 billion) including cash and cash equivalents and money market deposits of £3.6 billion (30 September 2021: £3.5 billion).

Fleet

easyJet's total fleet as at 30 September 2022 comprised 320 aircraft (excluding three A319 aircraft held on a zero rent basis) (30 September 2021: 308 aircraft excluding 12 aircraft held on a zero rent basis). The increase was driven principally by nine aircraft ending their zero-rental period and re-entering the operational fleet, delivery of eight new A320neo family aircraft, and seven lease additions while 12 aircraft left the fleet, as easyJet continues its journey of retiring older aircraft and benefitting from the A320neo family of aircraft with their superior fuel efficiency and greater number of seats.

We have an agreed order book consisting of 168 firm orders, 135 for A320neo aircraft and 33 A321neo aircraft.  This includes the aircraft purchase approved earlier this year, securing 56 aircraft deliveries with the conversion of 18 A320neo's into A321's for delivery between FY26 and FY29.  In order to meet our long-term fleet requirements, we will continue to keep all options under review going forward.

The average gauge of the fleet is now 179 seats per aircraft, compared to 178 seats at 30 September 2021. The average age of the fleet increased to 9.3 years (30 September 2021: 8.6 years).

Fleet as at 30 September 2022 (excluding aircraft on a zero-rent basis)

 

Owned

Leased

Total

% of fleet

Changes since Sep-21

Future deliveries

Purchase options

Purchase rights

 

 

 

 

 

 

 

 

 

A319

35

59

94

29%

(3)

-

-

-

A320

105

62

167

52%

7

-

-

-

A320 neo

37

7

44

14%

7

135a

-

3

A321 neo

4

11

15

5%

1

33a

-

-

 

181

139

320b

 

 

168

-

3

Percentage of total fleet

 

57%

43%

 

 

 

 

 

 

a) easyJet retains the option to alter the aircraft type of future deliveries, subject to providing sufficient notification to the OEM.

b) At 30 September 2022, easyJet was storing three operating leased aircraft which have been acquired for future operations. These are held at zero rent and are excluded from the fleet numbers.

 

 

Our flexible fleet plan allows us to expand or contract the size of the fleet depending on the demand outlook.

Number of aircraft

 

FY22

FY23

FY24

FY25

Current contractual maximum

 

-

336

336

346

Actual aircraft

 

320

-

-

-

Current contractual minimum

 

-

333

318

308

New aircraft deliveries

 

-

7

21

23

 

Capital Expenditure

Over the next three years easyJet's gross capital expenditure is expected to be as follows:

 

FY23

FY24

FY25

Gross capital expenditure (£ million)

c.900

c.1,500

c.1,600

 

Capex is comprised of new fleet delivery payments, maintenance related expenditure as well as lease payments and other capital expenditure such as IT development. Our capex projections assume 7 deliveries in FY23, 21 deliveries in FY24 and 23 deliveries in FY25. 

Strategy Update

easyJet has refined its strategy to drive our purpose of making low-cost travel easy.  Our strategy has four strategic priorities that will build on our structural advantages in the European aviation market, helping easyJet move closer towards its destination of being Europe's most loved airline, winning for customers, shareholders and our people. Our strategic priorities are set out below:

·    Building Europe's best network

·    Transforming our revenue capability

·    Delivering ease and reliability

·    Driving our low-cost model

 

Building Europe's best network

easyJet has a strong network of leading number one and number two positions in primary airports, which has proven to be amongst the highest yielding in the market, as demonstrated this summer. This enables us to be efficient with our network choices, with an emphasis on maximising returns.

easyJet continues to optimise its network to ensure capacity is deployed in the markets where we see the strongest demand and returns. This was done throughout FY22 where 2.1 million seats were re allocated around the network, and in Q4 delivered a 10% uplift on contribution per block hour compared to Q4 19.

We will seek to strengthen our position in key markets as the competitive landscape evolves. This has been demonstrated at Lisbon where we won a further 9 daily slot pairs, making us the second largest airline at the airport from this Winter. This adds to slot additions at Gatwick, Porto and the Greek Islands, which all returned greater than the network average return in FY22.

Our focused network strategy can be summarised as follows:

1.    Lead in our Core Markets

easyJet prioritises slot-constrained airports as these are where customers want to fly to and from and as a result have superior demand and yield characteristics. In our core markets, we are able to achieve cost leadership and preserve scale.  We provide a balanced network portfolio across domestic, city and leisure destinations. Our scale enables us to provide a market leading network and schedule.

2.    Investment in Destination Leaders

We will build on our existing leading positions in Western Europe's top leisure destinations to provide network breadth and flexibility. This will also unlock cost benefits, enabling us to manage seasonality and support the growth of easyJet holidays. It also ensures that easyJet remains top of mind for customers and is seen as the 'local airline' for governments and hoteliers. 

3.    Build our network in Focus Cities

easyJet is building a network of key cities, broadening our presence across Europe. This is a low-risk way of serving large origin markets. We will base assets in Focus Cities where it makes sense from a cost perspective. 

Transforming our revenue capability

easyJet recognises that the continued evolution of our product portfolio represents a significant opportunity to build on spend per customer, delivering enhanced sustainable returns.

Airline Ancillaries:

Cabin bags and our leisure fare, amongst other ancillary products, have continued to deliver incremental revenue through the period. During the year we also launched inflight retail, our new retail brand & proposition, with September being its first full month of operation. This has resulted in direct sourcing and contracting for our on-board retail offering and is tailoring the product offering to our customers.

Further opportunities have been identified internally as easyJet continues to maximise unit revenues. In FY23 we will implement closed loop Wi-Fi on all of our aircraft. This will facilitate enhanced marketing revenue generation through our partners, as well as enabling order to seat - which is planned to be launched later in the 2023 financial year. easyJet also plans to launch pre-order capability, and our duty-free proposition during the coming year.

We are partnering with Datalex, a leading provider of omnichannel airline retail solutions, to enable us to realise the benefits of total basket optimisation from FY24.

easyJet holidays:

easyJet holidays continues its rapid growth, becoming a major player within the sector and delivering customer growth of 83% vs FY19 and profit before tax of £38 million in FY22. The business is targeting customer growth of >30% for the coming year and remains on track to deliver the medium-term target of £100 million plus profit before tax.

As the holidays business grows in scale, we plan to make targeted investments to strengthen the business. We will continually optimise our yields on packages sold, whilst developing the cities proposition - allowing easyJet holidays to reduce the cyclical disparity of a traditional tour operator. We will also unlock the technology supporting the business to allow for new source markets at the appropriate juncture. We expect these investments to be fully embedded within the business by FY24.

Delivering ease and reliability

easyJet aims to deliver a seamless and digitally enabled customer journey at every stage and is continuously working to enhance the customer experience. During the year, easyJet launched its twilight bag drop allowing customers to drop hold baggage off the evening before their flight, removing a part of the journey on the day of travel.

During the second half of the year, easyJet took action to alleviate the pressure on our operations and improve the operational performance of the airline, resulting in on the day cancellations in the fourth quarter being below that of the same period in FY19. Over the fourth quarter easyJet took the position as the number 1 most preferred airline brand in the UK, with number 2 positions in key markets such as France, Switzerland and Italy.

There has been a significant focus on improving the control and decision making we have across our operations, namely through the addition of terminal and fleet manager roles at London Gatwick, enabling quick and agile decisions to be made in the airport, where staff are closer to and more informed of the operations.

We continue to see the return of business travel and easyJet's business travel on domestic routes reached 95% of FY19 capacity in Q4. This was due to the quicker return to business travel by SME's, which account for 75% of easyJet's business travel, compared to larger corporates. easyJet's high frequency, primary airport focussed, network remains well positioned to service business travel as we see demand continue to increase.

Driving our low-cost model

easyJet has a cost advantage over its major competitors on the primary network that it operates. The current inflationary environment will impact all airlines and therefore is not expected to affect easyJet's ability to retain our historical cost advantage. Alongside cost actions, a focus on margins through network optimisation, effective pricing management and ancillaries driving yields higher all help to offset inflation.

easyJet has delivered a number of cost actions:

·    Seasonality focus:

 A proportion of pilots have voluntarily moved to seasonal contracts, reducing the fixed cost overheads in this area of the business.

 The growth of our seasonal bases has resulted in 21 aircraft operating for 8 months of the year, removing the cost of operating through winter.

·    Insourcing of line maintenance: line maintenance has been insourced at LGW, BER, GLA, EDI, and BRS; enabling easyJet to have greater control over the maintenance, reducing the cost incurred and improving on the quality of maintenance fulfilled.

·    Collective labour agreements: 80% of pilot and 60% of crew agreements have all been renewed during the 2022 financial year.

·    Major hedging position built: easyJet's hedging positions for fuel, FX, and ETS, are significant and at very favourable rates to the current spot rates.

Cost remains a core focus of the business with a number of areas of focus for the coming year:

·    Achieving fuel savings: unlocking descent profile optimisation across the majority of our fleet through the use of upgraded technology.

·    Completion of labour agreements: several pilot and cabin crew labour agreements are in negotiation across the network.

·    Increasing automation of self-service management: thereby increasing digitalisation of customer flows and reducing the need for contact centre support.

·    Up-gauging of the fleet: efficiency benefits will be unlocked as A319s leave the fleet, being replaced by A320 family aircraft. Around 40% of the 94 A319s currently in the fleet will be replaced over the next three years.

Sustainability

In the fourth quarter, easyJet announced its roadmap to achieving net-zero by 2050. The roadmap is aligned to the Science Based Targets initiative (SBTi), with easyJet being the first low-cost airline to announce its interim target, of a 35% carbon emission intensity reduction by 20357, 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.

Since this announcement we have made a step forward with our partner Rolls-Royce who have achieved a world first - successfully running a modern aircraft engine on hydrogen. This is a major step towards proving that hydrogen can be a zero carbon aviation fuel of the future - a key element of our net zero roadmap.

Our sustainability strategy is underpinned by strong sustainability governance and monitoring at Board level to make sure the strategy is delivered, with remuneration also being linked to sustainability and the delivery of the key steps towards delivering our roadmap.

easyJet has received IATA IEnvA Stage 2 certification, making us the first low-cost carrier worldwide with a fully IATA IEnvA certified Environmental Management System (EMS). This follows our successful completion of the IATA IEnvA Stage 1 implementation, assessment, and certification earlier this year, as well as enhancing our ratings achieved across indices including CDP, MSCI & Sustainalytics.

Our People

David Morgan has been appointed as Chief Operating Officer on a permanent basis. David has been an integral part of the easyJet leadership team since he joined as Chief Pilot in 2016 from Wizz Air where he held the same role. David remains an active pilot.

easyJet continues to have a strong reputation as an employer of choice. Our people are a key source of differentiation, and this helps to deliver excellent customer experience and loyalty.

Our Glassdoor rating of employee satisfaction is 4.06 (out of 5.0), which is the highest within the travel and tourism sector, illustrating our market-leading position.  

We have constructively worked in partnership with our employee representative bodies across Europe in order to support the operation. We recognise that the wider economic environment of rising inflation and the increased cost of living has and continues to be challenging for our people and we continue to work with our trade union partners in order to support our people whilst maintaining control of our cost base.

In FY22 some of the key deliverables include:

·    Readiness and operational resilience: We recruited around 1,650 cabin crew to deliver the flying programme against a difficult labour market across the network, particularly in the UK. Meanwhile, in the face of challenges related to processing employment referencing across the industry we reacted quickly by setting up an in-house team to supplement our partners. This new model will allow easyJet to manage all referencing checks end-to-end.

·    Employee experience: Working with our employee representative groups across Europe we continued to support new ways of working - including flexibility of employment contracts and the continuation of our hybrid working model for our office-based colleagues.

·    Learning and development: We have introduced a new People Management development programme to help develop our manager and leader capabilities throughout all First Line Leaders, while continuing to develop our approach to early careers including the re-launch of our engineering apprenticeships. In addition, we have also utilised our Apprenticeship levy to support a range of head office roles.

·    Health and Wellbeing: We have implemented a new UK occupational health provision and mobile enabled support for all employees while also delivering comprehensive mental health awareness training for all employees and managers.

·    Diversity and inclusion: Implementation of a new Equal Opportunities and Inclusion Policy.

Board

There have been a number of changes to our Board during the year. Ryanne van der Eijk, Harald Eisen├Ącher and Dr Detlef Trefzger joined the Board as Independent Non-Executive Directors on 1 September 2022, and Nick Leeder stood down on 30 September 2022. 

Andreas Bierwirth has decided not to seek re-election at the Company's next Annual General Meeting in line with corporate governance best practice, having served for nearly nine years. Julie Southern has also decided not to seek re-election at the next AGM having been appointed Chair designate at RWS Holdings plc.

Dividends

Given a reported loss, the Board will not be recommending payment of a dividend in respect of the year to 30 September 2022.  The Board is mindful of the importance of capital returns to shareholders and will reassess the potential for, and structure of future shareholder cash returns when the market conditions and financial performance of the Group allows.

Footnotes

(1) Based on earnings before interest at constant currency.

(2) Capacity based on actual number of seats flown. 

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

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

(5) Constant currency is calculated by comparing 2022 financial year performance translated at the 2021 financial year effective exchange rate to the 2021 financial year reported performance, excluding foreign exchange gains and losses on balance sheet revaluations. 

(6) As at 30 September 2022

(7) easyJet plc commits to reduce well-to-wake GHG emissions related to jet fuel from owned and leased operations by 35% per revenue tonne kilometre (RTK) by FY2035 from a FY2019 base year. The target boundary includes biogenic emissions and removals from bioenergy feedstocks. Non-CO2e effects which may also contribute to aviation induced warming are not included in this target.

Our Financial Results

Headline loss before tax of £178 million for the year ended 30 September 2022 was a significant reduction on the loss of £1,136 million for the year ended 30 September 2021. This improvement was driven by increased capacity and yields as customer confidence to travel returned once Covid-19 related restrictions were lifted across Europe, along with enhanced contribution from our ancillary product offering and easyJet holidays. easyJet flew 69.7 million passengers in the year ended 30 September 2022 (2021: 20.4 million), up 242% on the prior year, reflecting that return of confidence. Load factor for the year was 85.5% (2021: 72.5%). Capacity for the year was 78% of the level of the pre-pandemic year, FY19, and the load factor of 85.5% was 6 ppt lower.

 

Trading in the first half of the financial year was impacted by the emergence of the Omicron variant of Covid-19.  Trading had been relatively strong in October and early November but then travel restrictions were re-imposed at different times across Europe from mid-November and remained in place until starting to be relaxed in February-April 2022, the timing and precise degree of relaxation varying from country to country.  The total number of passengers carried in H1 increased by 471% to 23.4 million (H1 2021: 4.1 million) with a 13.6 percentage point increase in load factor to 77.3% (H1 2021: 63.7%). Capacity for H1 was 66% of FY19 and the load factor of 77.3% was 12.8 ppt lower.

 

The other major event which occurred during H1 was the Russian invasion of Ukraine in February 2022.  Whilst this did not impact easyJet's network directly as we do not fly to or over Ukraine, it has had an indirect effect through the increase in oil prices and therefore jet fuel prices which has occurred since then. 

 

Trading in our third quarter started to pick-up as the Omicron-related travel restrictions fell away across Europe and consumer confidence to travel returned.  In Q3 easyJet flew 22 million passengers, more than seven times higher than the same period in the previous financial year, representing 87% of FY19 capacity. Load factors continued to build over the quarter, reaching highs of 92% in June. The unprecedented ramp up across the aviation industry, coupled with a tight labour market, resulted in widespread operational challenges culminating in higher levels of cancellations in Q3 than normal and consequently higher disruption expenses were incurred.  The industry's challenges were reflected in the flight caps announced at two significant airports, London Gatwick and Amsterdam.  Alongside these capacity caps, easyJet took swift action to reduce our capacity and build resilience into Q4.  As a result, disruption in Q4 was much reduced and in line with historical levels.

 

After the operational issues experienced across the industry in Q3, the fourth quarter was characterised by more stable operations with load factors of 92% being achieved. Headline EBITDAR in Q4 was the strongest quarterly headline EBITDAR in the history of the Group, helping take the full year headline EBIT result to breakeven.  Headline EBITDAR achieved for the year of £569 million was £1,120 million better than the result in the prior year when easyJet recorded an EBITDAR loss of £551 million. Similarly, total loss after tax for the year ended 30 September 2022 of £169 million was an improvement from the loss of £858 million in the year ended 30 September 2021.

 

Amounts presented at constant currency throughout this section are an alternative performance measure and are not determined in accordance with International Financial Reporting Standards but provide relevant and comparative reporting for readers of these financial statements.

 

Financial overview

 

£ million (Reported) - Group


2022


2021

Group revenue

 

5,769

 

1,458

Headline costs excluding fuel, balance sheet FX and ownership costs


(3,921)


(1,638)

Fuel


(1,279)


(371)

Headline EBITDAR


569

 

(551)

Depreciation, amortisation & dry leasing costs


(566)

 

(485)

Headline EBIT


3

 

(1,036)

Net finance charges


(117)

 

(110)

Balance sheet foreign exchange (loss)/gain


(64)


10

Group headline loss before tax

 

(178)

 

(1,136)

Being:

 

 

 


Airline headline loss before tax

 

(216)

 

(1,124)

Holidays headline profit/(loss) before tax

 

38

 

(12)

Headline tax credit

 

31


236

Group headline loss after tax

 

(147)

 

(900)

Non-headline items


(30)


100

Non-headline tax credit/(charge)


8


(58)

Group total loss after tax

 

(169)

 

(858)

 

 

 



£ per seat - Airline only (1)


2022


2021

Airline revenue

 

66.23

 

50.54

Headline costs excluding fuel, balance sheet FX and ownership costs


(44.09)


(56.62)

Fuel


(15.68)


(13.16)

Headline EBITDAR

 

6.46

 

(19.24)

Depreciation, amortisation & dry leasing costs

 

(6.89)

 

(17.12)

Headline EBIT

 

(0.43)

 

(36.36)

Net finance charges

 

(1.45)

 

(3.83)

Balance sheet foreign exchange (loss)/gain


(0.77)


0.32

Airline headline loss before tax

 

(2.65)

 

(39.87)

Headline tax credit

 

0.38


8.39

Airline headline loss after tax

 

(2.27)

 

(31.48)

Non-headline items


(0.36)


3.53

Non-headline tax credit/(charge)


0.10


(2.07)

Airline total loss after tax

 

(2.53)

 

(30.02)






(1) All per seat metrics are for the Airline business only, as the inclusion of hotel-related revenue and costs from the holidays business will distort the RPS and CPS metrics as these are not directly correlated to the seats flown by the Airline. Our easyJet holidays business forms a separate operating segment to the Airline, and easyJet holidays' key metrics are included under key statistics.

The total number of passengers carried increased by 242% to 69.7 million (2021: 20.4 million), which was driven by a 189% increase in seats flown to 81.5 million seats (2021: 28.2 million seats) and a 13.0 percentage point increase in load factor to 85.5% (2021: 72.5%). This reflects the increased capacity following the reduction in travel restrictions across Europe over the year, and the associated strengthening in customer demand as the recovery from Covid-19 continues. Note that capacity for the year was 78% of the level of the pre-pandemic year, FY19, and the load factor of 85.5% was 6 ppt lower.

 

Total revenue increased by 296% to £5,769 million (2021: £1,458 million) and by 302% at constant currency. Airline revenue per seat increased by 31% to £66.23 (2021: £50.54) and increased by 33% at constant currency. The increase in Airline revenue per seat is a consequence of increased loads, reflecting the growth in demand through the year as travel restrictions eased across Europe, and strong performance from both bag and seat initiatives which contributed to an Airline ancillary revenue per seat increase at constant currency of 31%. Note that airline ancillary revenue is now 15% higher than it was in FY19 despite passenger numbers being 27% lower.

 

Total headline costs excluding fuel, balance sheet exchange movements and ownership costs increased by 139% to £3,921 million (2021: £1,638 million) mainly as a result of the volume of flying and general cost pressures. Costs were also impacted by the disruption seen throughout the year; wet lease costs of £23 million (2021: £nil) were incurred to support operational resilience and £205 million EU261 compensation and welfare costs were also incurred (2021: £7m credit arising from the release of a Covid specific welfare provision). In addition, wet leases were required to provide coverage for new slots at Gatwick and Porto at a cost of £30 million (2021: £nil million). This year also saw a significant reduction in furlough schemes as government support wound down across Europe with £8 million support received in 2022 compared to £134 million support in the prior year. The cost impact was partly mitigated by continued operational cost focus including maintaining a proportion of captains on seasonal contracts and a release of airport charge accruals of £18 million (2021: £4 million) as the return of activity has reduced some of the uncertainty and risks which were previously accrued for. On an Airline cost per seat basis total headline costs excluding fuel, balance sheet foreign exchange movements and ownership costs decreased by 22% to £44.09 (2021: £56.62) and 22% at constant currency. This was mainly a result of increased flying, as fixed operating costs were being spread across more flying capacity, combined with easyJet's continued focus on cost, as noted above, which has also contributed to the favourable movement.

 

Over the year the translation of revenue and costs, including fuel, from foreign currency has had a net adverse impact of £88 million (2021: £22 million credit) on the Group income statement, with a further income statement charge of £64 million (2021: £9 million credit) from the translation of foreign currency denominated monetary assets and liabilities on the statement of financial position. Conversely, ownership costs benefited from the movement in US dollar interest rates with a credit of £71 million (2021: £20 million credit) from the discounted maintenance reserves provision which uses long-term US dollar interest rates to set the discount rate.

 

Additionally, within ownership costs is the first full year impact of the change in estimation for the useful economic lives (UEL) of the owned CEO fleet from 23 to 18 years and the amended approach to residual value estimation. This increased the depreciation charge in the year by £50 million (2021: £13 million, 3 months' impact).

 

Airline fuel cost per seat increased by 19% to £15.68 (2021: £13.16) and by 17% at constant currency. This is a result of both the significant increase in the post hedge fuel price due to the war in Ukraine and an increased average sector length compared to the prior year, arising from the destination mix shifting towards beach in the current financial year. The impact of higher fuel prices was partly offset by the carry forward of the allocated free ETS (Emission Trading Systems) certificates from the prior year which were not utilised due to the reduced flying volumes in prior year, and in-year allocation of free credits.

 

easyJet holidays performed strongly, with this summer being its first season of trading relatively unaffected by Covid-19 under its revised operating model.  Overall, it contributed incremental revenue of £368 million (2021: £34 million) to the Group from 1.1 million customers (including affiliates), delivering £38 million of headline profit before tax (2021: £12 million loss).

 

A non-headline charge of £30 million (2021: £100 million gain) was recognised in the year, consisting of a £21 million loss on the sale and leaseback of 10 aircraft (2021: £65 million gain from 35 aircraft and two engines), a £10 million loss on disposal of landing rights surrendered as a consequence of the reduction in our operations at Berlin and a £1 million net fair value adjustment credit for hedge discontinuation (2021: £26 million charge). Restructuring charges were net £nil million (2021: £61 million credit) as the £10 million provision arising from the announcement of the downsizing of our operations at the Berlin base has been offset by releases following the finalisation of restructuring programmes initiated in the prior year. Full details can be found in note 5 to the financial statements.

 

Corporate tax has been recognised at an effective rate of 18.7% (2021: 17.2%), resulting in an overall tax credit of £39 million (2021: £178 million credit). This splits into a tax credit of £31 million on the headline losses and a tax credit of £8 million on the non-headline items. Whilst the non-headline loss is £30 million, after the necessary tax adjustments the tax adjusted non-headline items amount to a loss of £22 million, which results in the non-headline tax credit of £8 million for the year.


Consolidated income statement

 

 

 

 

Year ended 30 September

 

 

 

 

 

2022

 

2021


 

 

 

 

Headline

Non-headline (note 2)

Total

 

Headline

Non-headline (note 2)

Total


 

 

Notes


£ million

£ million

£ million

 

£ million

£ million

£ million


Passenger revenue




3,816

-

3,816

 

1,000

-

1,000


Ancillary revenue




1,953

-

1,953

 

458

-

458


Total revenue

 

5


5,769

-

5,769

 

1,458

-

1,458


 






 

 





Fuel




(1,279)

-

(1,279)

 

(371)

-

(371)


Airports, ground handling, holidays accommodation, and other operating costs



(1,716)

-

(1,716)

 

(446)

-

(446)


Crew




(767)

-

(767)

 

(495)

-

(495)


Navigation




(339)

-

(339)

 

(102)

-

(102)


Maintenance




(301)

-

(301)

 

(222)

-

(222)


Selling and marketing




(173)

-

(173)

 

(60)

-

(60)


Other costs




(635)

(30)

(665)

 

(319)

47

(272)


Other income




10

-

10

 

6

79

85


EBITDAR

 



569

(30)

539

 

(551)

126

(425)








 

 





Aircraft dry leasing




(2)

-

(2)

 

(5)

-

(5)


Depreciation


7


(539)

-

(539)

 

(456)

-

(456)


Amortisation of intangible assets



(25)

-

(25)

 

(24)

-

(24)


Operating profit/(loss)

 



3

(30)

(27)

-

(1,036)

126

(910)








 

 





Interest receivable and other financing income *



26

-

26

 

40

33

73


Interest payable and other financing charges



(143)

-

(143)

 

(150)

(59)

(209)


Foreign exchange (loss)/gain *



(64)

-

(64)

 

10

-

10


Net finance charges




(181)

-

(181)

 

(100)

(26)

(126)








 

 





Loss before tax

 



(178)

(30)

(208)

 

(1,136)

100

(1,036)








 

 





Tax credit/(charge)


3


31

8

39

 

236

(58)

178






 

 

 

 





Loss for the year


(147)

(22)

(169)

 

(900)

42

(858)




 

 









Loss per share, pence

 











Basic


4




(22.4)

 



(159.0)


Diluted


4




(22.4)

 



(159.0)


* Interest receivable and other financing income, and foreign exchange (loss)/gain recognised in the prior year has been re-presented.


 

Consolidated statement of comprehensive income

 

 

 

 

Year ended

 

Year ended

 

 

 

 

30 September 2022

 

30 September 2021

 

 






Notes


£ million

 

£ million

Loss for the year

 

 

 

(169)

 

(858)

Other comprehensive income/(loss)

 

 

 

 

 

 


 

 

 

 

 

 

Items that may be reclassified to the income statement:

 

 

 

 

 

 

Cash flow hedges




 

 

 

Fair value gains in the year




774

 

477

Gains transferred to income statement




(730)

 

(17)

Hedge discontinuation (gains)/losses transferred to income statement




(5)

 

25

Related tax charge


3


(11)

 

(93)

Cost of hedging




8

 

(3)

Related tax (charge)/credit


3


(2)

 

1






 


Items that will not be reclassified to the income statement:





 


Remeasurement gain of post-employment benefit obligations

 


 

41

 

5

   Related deferred tax credit

 

3

 

(10)

 

(4)

Fair value gains/(loss) on equity investment

 


 

1

 

(3)





66

 

388

Total comprehensive loss for the year

 

 

 

(103)

 

(470)

 

 

 

 

 

 


 

Consolidated statement of financial position



 

 

As at 30 September 2022

 

As at 30 September 2021

 

 

 

 


 

 

 

 






Notes


£ million

 

£ million

Non-current assets

 

 

 

 

 


Goodwill




365

 

365

Other intangible assets




217

 

217

Property, plant and equipment


7


4,629

 

4,735

Derivative financial instruments




127

 

86

Equity investment




31

 

30

Restricted cash




3

 

1

Other non-current assets




91

 

135

Deferred tax assets


3


62

 

39

 

 

 

 

5,525

 

5,608

Current assets

 

 

 

 

 


Trade and other receivables




367

 

291

Intangible assets




495

 

140

Derivative financial instruments




423

 

185

Restricted cash




4

 

13

Money market deposits




126

 

-

Cash and cash equivalents




3,514

 

3,536





4,929

 

4,165

 

 

 

 

 

 


Current liabilities

 

 

 

 

 


Trade and other payables




(1,685)

 

(1,128)

Unearned revenue




(1,042)

 

(844)

Borrowings


8


(437)

 

(300)

Lease liabilities




(247)

 

(189)

Derivative financial instruments




(86)

 

(31)

Current tax payable


3


(5)

 

(2)

Provisions for liabilities and charges


9


(176)

 

(183)





(3,678)

 

(2,677)

 

 

 

 

 

 


Net current assets

 

 

 

1,251

 

1,488

 

 

 

 

 

 


Non-current liabilities

 

 

 

 

 


Borrowings


8


(2,760)

 

(3,067)

Unearned revenue




(1)

 

(2)

Lease liabilities




(866)

 

(890)

Derivative financial instruments




(22)

 

(37)

Non-current deferred income




(4)

 

(4)

Post-employment benefit obligation




(1)

 

(37)

Provisions for liabilities and charges


9


(589)

 

(420)





(4,243)

 

(4,457)

 

 

 

 

 

 


Net assets

 

 

 

2,533

 

2,639





 

 


Shareholders' equity

 

 

 

 

 


Share capital




207

 

207

Share premium




2,166

 

2,166

Hedging reserve




170

 

156

Cost of hedging reserve




5

 

(1)

Translation reserve




(6)

 

-

(Accumulated losses)/Retained earnings




(9)


111

Total equity

 

 

 

2,533

 

2,639





 



 

Consolidated statement of changes in equity



Share

capital

 

Share premium

 

Hedging reserve

 

Cost of hedging reserve

 

Translation reserve

 

Retained earnings/ (accumulated losses)

 

Total



 

 

 

 

 

 



£ million

 

£ million

 

£ million

 

£ million

 

£ million

 

£ million

 

£ million

At 1 October 2021


207

 

2,166

 

156

 

(1)

 

-

 

111

 

2,639

Loss for the period


-

 

-

 

-

 

-

 

-

 

(169)

 

(169)

Other comprehensive income

-

 

-

 

28

 

6

 

-

 

32

 

66

Total comprehensive (loss)/income

 

-

 

-

 

28

 

6

 

-

 

(137)

 

(103)

Transfers to property, plant & equipment

 

-

 

-

 

(14)

 

-

 

-

 

-

 

(14)

Share incentive schemes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee share schemes - value of employee services


-

 

-

 

-

 

-

 

-

 

26

 

26

Purchase of own shares


-

 

-

 

-

 

-

 

-

 

(9)

 

(9)

Currency translation differences


-

 

-

 

-

 

-

 

(6)

 

-

 

(6)

At 30 September 2022


207

 

2,166

 

170

 

5

 

(6)

 

(9)

 

2,533

 



























Retained earnings





Share

capital


Share premium


Hedging reserve


Cost of hedging reserve


Translation reserve



Total











£ million


£ million


£ million


£ million


£ million


£ million


£ million

At 1 October 2020


125


1,051


(236)


1


(2)


960


1,899

Loss for the period


-


-


-


-


-


(858)


(858)

Other comprehensive (loss)/profit

-


-


392


(2)


-


(2)


388

Total comprehensive (loss)/income

 

-


-


392


(2)


-


(860)


(470)

Net proceeds from rights issue

 

82

 

1,115

 

-

 

-

 

-

 

-

 

1,197

Share incentive schemes

 


 


 


 


 


 


 


Employee share schemes - value     of employee services


-


-


-


-


-


15


15

Related tax (note 3)


-


-


-


-


-


2


2

Purchase of own shares


-


-


-


-


-


(6)


(6)

Currency translation differences


-


-


-


-


2


-


2

At 30 September 2021






-



2,639

 















On 9 September 2021 the Company invited its shareholders to subscribe to a rights issue of 301,260,394 ordinary shares at an issue price of 410 pence per share on the basis of 31 shares for every 47 fully paid ordinary shares held, with such shares issued on 28 September 2021.

The rights issue resulted in £1,235 million of gross proceeds. Shares totalling 280.2 million were taken up by existing shareholders (93%) with the remaining rump of 21.0 million shares being underwritten. As at 30 September 2021, there were £91 million of proceeds outstanding, which were subsequently received in October 2021. Costs of £38 million were incurred on the rights issue.

At 30 September 2022 amounts in the cost of hedging reserve comprised of a £7 million gain related to cross-currency basis (2021: £nil) and a £2 million loss related to the time value of options (2021: £1 million loss).

Consolidated statement of cash flows

 


Year ended

 

Year ended


 


30 September 2022

 

30 September 2021



Notes

£ million

 

£ million


Cash flows from operating activities


 

 



Cash generated from/(used in) operations

10

892

 

(755)


Interest and other financing charges paid *


(130)

 

(127)


Interest and other financing income received


11

 

1


Settlement of derivatives *


7

 

(155)


Net tax (paid)/received


(4)

 

1


Net cash generated from/(used in) operating activities


776

 

(1,035)




 

 



Cash flows from investing activities


 

 



Purchase of property, plant and equipment

7

(501)

 

(140)


Purchase of non-current other intangible assets


(29)

 

(9)


Net (increase)/decrease in money market deposits

11

(126)

 

32


Net proceeds from sale and leaseback of aircraft


87

 

836


Net cash (used in)/generated from investing activities


(569)


719




 

 



Cash flows from financing activities


 

 



Proceeds from issue of ordinary share capital


91

 

1,144


Share issue transaction costs


(38)

 

-


Purchase of own shares for employee share schemes


(9)

 

(6)


Proceeds from debt financing

11

-

 

1,804


Repayment of bank loans and other borrowings

11

(377)

 

(1,045)


Repayment of capital element of leases

11

(206)

 

(261)


Decrease in restricted cash


7

 

5


Net cash (used in)/generated from financing activities


(532)

 

1,641




 

 



Effect of exchange rate changes


303

 

(73)




 

 



Net (decrease)/increase in cash and cash equivalents


(22)

 

1,252


 


 

 



Cash and cash equivalents at beginning of year


3,536

 

2,284




 

 



Cash and cash equivalents at end of year


3,514

 

3,536


 


 

 



* Historically cash settlement of derivatives relating to cash flows for ineffective and discontinued hedging derivatives and fair value derivatives through profit and loss have been presented on the face of the consolidated statement of cash flows within interest and other financing charges paid. In order to give greater clarity to the users of the financial statements, these derivatives have been presented as a separate line within the consolidated statement of cash flows for the current and prior year.


 


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