TIDMEZJ
RNS Number : 1820D
easyJet PLC
27 January 2015
EASYJET TRADING STATEMENT FOR THE QUARTER ENDED
31 DECEMBER 2014
A. HIGHLIGHTS:
Drive demand, conversion and yields across Europe
-- Seats flown grew by 2.9% to 16.6 million. Passengers carried
increased by 4.1% to 14.9 million, and the load factor increased by
1.0 percentage point to 89.7%.
-- Total revenue grew by GBP34 million to GBP931 million and
revenue per seat grew by 0.8% on a reported basis to GBP56.16 per
seat or by 3.7% at constant currency. The growth in revenue per
seat was driven by disciplined allocation of capital across the
network, revenue management and digital initiatives and growth in
business passenger revenue.
Maintain cost advantage
-- Full year cost per seat is expected to be in line with the
guidance given at the full year results and be up by 2% on a
constant currency basis. As expected in the quarter cost per seat
excluding fuel decreased by 0.2% on a reported basis and increased
by 3.7% on a constant currency basis.
-- The increase at constant currency was primarily driven by
anticipated increases in charges at regulated airports, mainly in
Germany and Italy, crew costs associated with building a resilient
operation ahead of base openings, the phasing of marketing
expenditure on the business traveller punctuality campaign and an
increase in maintenance costs associated with the planned ageing of
the fleet.
-- Cost per seat including fuel decreased by 2.0% on a reported
basis and increased by 1.6% on a constant currency basis.
Build strong number one and two network positions
-- Continued to increase frequencies on routes, such as Geneva
to London Gatwick, and connect existing network points, such as
Amsterdam to Hamburg.
Disciplined use of capital
-- Strong balance sheet with cash and money market deposits of
GBP913 million as at 31 December 2014.
Outlook
With first half bookings in line with last year, easyJet expects
to report a first half loss before tax of between GBP10 million and
GBP30 million assuming normal levels of disruption compared to the
GBP53 million loss reported in the first half of last year.
Commenting on the results, Carolyn McCall, easyJet Chief
Executive said:
"easyJet has made a good start to the year by continuing to
deliver its strategy of making travel easy and affordable for
passengers. We enjoyed a strong October across the network -
particularly on UK leisure flights to beach destinations and on
French domestic routes where we continued to build passenger
numbers after a busy September."
"We further strengthened our network in the quarter adding
around 500,000 seats, the majority of which are from airports where
easyJet has a number one or number two position. This combined with
our new TV ads aimed at business travellers enabled easyJet to sell
record numbers of seats to business travellers in the first
quarter."
"easyJet is well positioned to continue to deliver returns and
growth to shareholders."
For further details please contact easyJet plc:
Institutional investors and analysts:
Will MacLaren +44 (0) 7961 763 879
Michael Barker +44 (0) 7985 890 939
Media:
Paul Moore +44 (0) 7860 794 444
Edward Simpkins Finsbury +44 (0) 7947 740 551
A copy of this Interim Management Statement is available at
http://corporate.easyjet.com/investors
KEY FINANCIALS
Three months ended 31 Dec 2014 31 Dec 2013 Change %
Passengers (m) (1) 14.9 14.3 4.1%
------------ ------------ ---------
Seats (m) 16.6 16.1 2.9%
------------ ------------ ---------
Load factor (%) (2) 89.7% 88.7% 1.0pp
------------ ------------ ---------
Total revenue reported (GBPm) 931 897 3.8%
------------ ------------ ---------
Seat revenue reported (GBPm) 916 883 3.8%
------------ ------------ ---------
Non-seat revenue reported (GBPm) 15 14 4.2%
------------ ------------ ---------
Total revenue per seat reported
(GBP) 56.16 55.71 0.8%
------------ ------------ ---------
Total revenue per seat constant
currency (GBP) 57.76 55.71 3.7%
------------ ------------ ---------
Seat revenue per seat reported
(GBP) 55.27 54.83 0.8%
------------ ------------ ---------
Non-seat revenue per seat reported
(GBP) 0.89 0.88 1.2%
------------ ------------ ---------
Total revenue per passenger
reported(GBP) 62.64 62.82 -0.3%
------------ ------------ ---------
Average number of owned / leased
aircraft 226 217 3.9%
------------ ------------ ---------
Average operating aircraft 211 204 3.3%
------------ ------------ ---------
Average utilisation owned aircraft
(hours per day) 9.3 9.5 -1.5%
------------ ------------ ---------
Average utilisation operating
aircraft
(hours per day) 10.0 10.1 -0.9%
------------ ------------ ---------
ASKs (bn) 18.0 17.5 2.9%
------------ ------------ ---------
RPKs (bn) 16.4 15.7 4.4%
------------ ------------ ---------
Average sector length (km) 1,089 1,089 0.0%
------------ ------------ ---------
B. STRATEGIC PROGRESS
In order to execute against its strategy to drive sustainable
growth and returns, easyJet is focused on four key objectives:
1. Drive demand, conversion and yields across Europe
2. Maintain cost advantage
3. Build strong number one and two network positions
4. Disciplined use of capital
1. Drive demand, conversion and yields across Europe
First quarter revenue and network performance
Passenger numbers grew by 4.1% in the quarter to 14.9 million(1)
. Capacity (seats flown) increased by 2.9% as load factor improved
by 1.0 percentage point to 89.7%. Total revenue per seat grew by
0.8% to GBP56.16 on a reported basis and by 3.7% on a constant
currency basis. The growth in revenue per seat was driven by
the:
-- Disciplined allocation of capital across the network;
-- Business passenger initiative including our first business
television advertisement which helped drive our strongest ever
business passenger performance in October;
-- Continued investment in digital and revenue management initiatives;
-- Performance of allocated seating;
-- Yield management of bags; and
-- Strong October trading, particularly UK beach and domestic France routes.
At London Gatwick, easyJet grew capacity by around 10% in the
first quarter including the first winter flying of the slots
acquired from Flybe. As expected, this has resulted in short term
yield pressure at the airport. There is a significant opportunity
over the next two years to drive improvement in revenue performance
as easyJet optimises the use of the slots and as the additional
capacity matures.
2. Maintain cost advantage
First quarter cost performance
Cost per seat, on a constant currency basis and excluding fuel,
is expected to increase by around 2.5% for the first half of the
year and by around 2% for the full year in line with the guidance
given at the full year results. This does not include an additional
navigation charge from Eurocontrol of up to GBP12 million (3) which
easyJet is disputing.
As expected, in the quarter cost per seat excluding fuel
decreased by 0.2% on a reported basis and increased by 3.7% on a
constant currency basis. The main drivers included anticipated
increases in charges at regulated airports mainly in Germany and
Italy, the phasing of marketing expenditure on the business
traveller punctuality campaign and maintenance costs associated
with the planned ageing of the fleet. In addition, crew costs
increased in the quarter as a result of the early recruitment of
crew to build a resilient operation ahead of three new crew base
openings.
Cost per seat including fuel decreased by 2.0% on a reported
basis and increased by 1.6% on a constant currency basis.
In the three months to 31 December 2014 easyJet lean delivered
around GBP8 million of savings in the period which includes the
benefit from longer term airport deals and ground handling
efficiencies. easyJet expects easyJet lean to deliver GBP30 million
to GBP40 million of sustainable savings per annum over the next
five years.
Operational performance
A strong operational performance is critical to easyJet
maintaining its cost performance. Ensuring aircraft depart on time
minimises the costs of disruption and is also a key driver of
customer satisfaction and loyalty.
Total cancellations for the quarter were 468 compared to 360 in
the same period last year. The majority of the cancellations took
place in December mainly due to general strikes in Italy and
Belgium, crew strikes in France and Italy as well as the impact of
the runway closure at Gatwick airport due to the Virgin Atlantic
emergency landing.
On-time performance was broadly in line with the same period
last year despite the impact of adverse weather across northern
Europe and the impact of the Gatwick runway closure.
OTP % arrivals within October November December Q1
15 minutes
----------------------- -------- --------- --------- ----
2013 86% 93% 84% 87%
2014 85% 91% 82% 86%
----------------------- -------- --------- --------- ----
Fleet
As at 31 December 2014 the fleet comprised of 226 aircraft; with
75 A320s and 151 A319s.
Aircraft utilisation fell in the quarter with the average
utilisation for operated aircraft decreasing by 0.9% to 10.0 hours
per day due to schedule optimisation over the winter period.
3. Build strong number one and two network positions
In the three months to 31 December 2014 easyJet secured an
additional slot pair at Paris Orly and also gained approval to
launch the route between Paris Charles de Gaulle and Tel Aviv. In
addition, easyJet continued to increase frequencies on routes, such
as Geneva to London Gatwick, and connect existing network points,
such as Amsterdam to Hamburg.
4. Disciplined use of capital
As at 31 December 2014 easyJet had cash and money market
deposits (excluding restricted cash) of GBP913 million and net cash
of GBP353 million.
In the quarter easyJet announced that it intends to pay an
ordinary dividend of 45.4 pence per share, or GBP180 million, to
shareholders. The dividend is subject to shareholder approval at
the Annual General Meeting on 12 February 2015 and will be payable
on 20 March 2015 to shareholders on the register at the close of
business on 27 February 2015.
LOOKING FORWARD
Hedging
To reduce short term earnings volatility easyJet has put the
following fuel and currency hedging positions in place:
Six months to 31 March 2015
84% of the anticipated US$ requirement hedged using forwards at
$1.59
91% of the anticipated Jet requirement hedged using forwards at
$957 / metric tonne
93% of the anticipated Euro surplus hedged using forwards at
EUR1.19
82% of the anticipated Swiss Franc surplus hedged using forwards
at CHF1.47
12 months to 30 September 2015
83% of the anticipated US$ requirement hedged using forwards at
$1.58
84% of the anticipated Jet requirement hedged using forwards at
$936 / metric tonne
84% of the anticipated Euro surplus hedged using forwards at
EUR1.18
73% of the anticipated Swiss Franc surplus hedged using forwards
at CHF1.47
Full Year to 30 September 2016
68% of the anticipated US$ requirement hedged using forwards at
$1.64
63% of the anticipated Jet requirement hedged using forwards at
$908 / metric tonne
59% of the anticipated Euro surplus hedged using forwards at
EUR1.21
53% of the anticipated Swiss Franc surplus hedged using forwards
at CHF1.47
Outlook
easyJet still expects to grow capacity, measured in seats flown,
by around 3.5% in the first half of the year and by around 5% for
the full year. With first half bookings in line with last year,
easyJet now expects first half revenue per seat at constant
currency to increase by around 2% compared to the previous guidance
of flat to very slightly up on the prior year.
easyJet still expects cost per seat (at constant currency and
excluding fuel) to increase by around 2.5% for the first half of
the year and by around 2% for the full year. This does not include
an additional navigation charge from Eurocontrol of up to GBP12
million (3) which easyJet is disputing. The cost per seat increase
reflects the prior year's unusually benign winter weather and will
primarily be driven by charges at regulated airports, particularly
in Germany and Italy, increased navigation charges, and increased
maintenance costs associated with the planned ageing of the fleet.
In addition, the cost per seat increase reflects increased crew
costs as a result of building a resilient operation and recruiting
crew early ahead of three crew base openings.
It is estimated that at current exchange rates(4) and with jet
fuel remaining within a $550 metric tonne to $750 metric tonne
trading range, easyJet's unit fuel bill(5) for the first six months
of the 2015 financial year is likely to decrease by between GBP30
million and GBP35 million compared to the six months to 31 March
2014. On a full year basis it is estimated that at current exchange
rates and with jet fuel remaining within a $550 metric tonne to
$750 metric tonne trading range, easyJet's unit fuel bill for the
12 months ending 30 September 2015 is likely to decrease by between
GBP90 million and GBP130 million compared to the 12 months to 30
September 2014. easyJet expects that lower fuel costs will be
beneficial for its customers as fares adjust.
In addition, exchange rate movements are likely to have around a
GBP10 million favourable impact compared to the six months to 31
March 2014 and are likely to have around a GBP20 million adverse
impact for the year to 30 September 2015.
easyJet expects its first half loss before tax to be in the
range of GBP10 million to GBP30 million assuming normal levels of
disruption. With around 15% of second half seats sold year to date,
in line with this time last year, it is still too early to give
guidance on second half revenue per seat or expected profits.
easyJet is successfully executing its strategy of offering its
customers low fares to great destinations with friendly service so
that it will continue to win in a more competitive market. This
means easyJet is well placed to continue to deliver sustainable
returns and growth for shareholders.
END
Notes:
1. Represents the number of earned seats flown. Earned seats
include seats that are flown whether or not the passenger turns up
because 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.
2. 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.
3. Relates to the impact to the 2015 Financial Year.
4. US $ to GBP sterling 1.5086,euro to GBP sterling 1.3214 as at noon on 22.1.15.
5. Unit fuel calculated as the difference between latest
estimate of FY'15 fuel costs less FY'14 fuel cost per seat
multiplied by FY'15 seat capacity.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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