easyJet plc (LON: EZJ) have provided results for the year ending 30th September 2019.
Summary
· Against the background of a difficult year, in the year ending 30 September 2019, easyJet has:
o delivered full year results in line with expectations, with headline profit before tax towards the top end of guidance,
o achieved solid revenue per seat during the second half of the year, as our self-help initiatives deliver valuable returns
o demonstrated good operational performance thanks to our ongoing operational resilience programme and continued strong cost control, in spite of a difficult Q4 disruption environment (weather and LGW issues)
· Passenger numbers for the year ending 30 September 2019 increased by 8.6% to 96.1 million (2018 10.2%)
· Capacity1 increased by 10.3% due to growth across all regions. Load factor decreased by 1.4 percentage points to 91.5%
· Total revenue increased by 8.3% to £6,385 million (2018: £5,898 million) enabled by our increase in capacity. Total revenue per seat decreased by 1.8% to £60.81 (2018: £61.94), driven by some weakness in consumer confidence, notably offset by the self-help initiatives delivered in the second half of the financial year and the positive impact from strikes at British Airways and Ryanair. The self-help initiatives included a focus on optimising late yield, whilst maintaining our commitment to offer great value. Revenue per seat at constant currency2 for the year ending 30 September 2019 decreased by 2.7%, but increased by 0.8% during the second half, reflecting these self-help initiatives
· Headline cost per seat excluding fuel at constant currency2 was down 0.8% to £43.11, mainly due to the successful delivery of the operational resilience programme which drove disruption costs down for the year. Headline cost per seat increased by 1.5% to £56.74 (2018: £55.87) as a result of higher unit fuel3 costs and adverse foreign exchange movements
· Cost and efficiency programme savings of £139 million (2018: £107 million) were delivered over the year
· Non-headline items of £3 million positive (2018: £133 million cost). Total cost per seat, including the impact of non-headline items was £56.71 (2018: £57.26)
· Headline profit before tax was down 26% to £427 million (2018: £578 million), towards the top of the £420-430 million guidance range. Total headline profit before tax per seat decreased by 32.9% to £4.07 per seat (2018: £6.07 per seat)
· Reported profit before tax decreased to £430 million (2018 £445 million)
· Headline ROCE for the year decreased to 11.4% (2018: 14.6%). On a like-for-like accounting basis, headline ROCE decreased to 9.9%4.
· Proposed dividend of 43.9 pence (2018: 58.6p) subject to approval by shareholders
· Balance sheet strength amongst the best in the sector, with a net debt position of £326 million
Looking forward
· From today onwards easyJet will make all flights net zero carbon. By offsetting the carbon emissions from the fuel used on the flights across our whole network we will become the world’s first major net zero carbon airline. Carbon offsetting is an interim measure and we will continue the push to reinvent aviation for the long-term, including development of sustainable fuel and electric flying
· easyJet holidays will launch in the UK before Christmas and will offer beach and city holidays, travelling across easyJet’s network. Flexibility will play a key part in the new offering allowing customers to holiday the way they want by choosing from a huge range of flight options paired with Europe’s most loved hotels, all at great value
Outlook
· Forward bookings for the first half of the 2020 financial year are reassuring. Bookings are slightly ahead of last year (recognising that the second quarter is a weak comparative)
· easyJet’s expected capacity growth for the year ending 30 September 2020 will be at the lower end of historic guidance of between 3% and 8% per year
· Headline airline revenue per seat at constant currency2 in the first half of the 2020 financial year is expected to be up low to mid single digits
· Headline airline cost per seat excluding fuel at constant currency2 for the full year to 30 September 2020 is expected to be up by low single digits, assuming normal levels of disruption
· easyJet Holidays is expected to be at least breakeven for the financial year to 30 September 2020
· Offsetting carbon emissions from the fuel used for all flights on behalf of customers is expected to cost c.£25 million in the financial year to 30 September 2020, and is reflected within our guidance of total fuel costs
· Capital expenditure for the financial year to 30 September 2020 is expected to be around £1,350 million
· easyJet has been operating since March 2019 in a state of full preparedness for all possible Brexit outcomes. We are structured as a pan-European airline group with three Air Operator Certificates based in Austria, Switzerland and the UK. Around 50% of our equity capital is held by qualifying European nationals. We continue to closely monitor customer demand in relation to Brexit.
Commenting on the results, Johan Lundgren, easyJet Chief Executive said:
“easyJet finished the 2019 financial year with a strong performance across the business and a record summer. More customers than ever are coming to easyJet as their airline of choice, with a record 96.1 million customers flying with us this year. Our self-help initiatives meant we have been able reduce costs and drive a better yield performance which has improved revenue per seat in the second half of the year.
“We have also invested in tackling disruption for our customers through our Operational Resilience programme, which has reduced cancellations by 46% and lowered delays of 3 hours or more by 24% year on year. All of these efforts have led to easyJet being the number one airline in the UK in terms of customer satisfaction, ahead of BA and Jet2; and the first choice airline brand and considered best value for money across Europe.
“I am really thrilled that with the launch, before Christmas, of our brand new easyJet Holidays business we are bringing flexibility and excellent value to the holiday market. We are now able to offer our customers more than 100 amazing beach and city holiday destinations, pairing Europe’s best short-haul flight network with more than 5,000 of Europe’s best hotels. We believe there is a gap in the market for a modern, relevant and flexible business for today’s consumer.
“And finally I am proud that we have announced that from today we will be the world’s first major airline to operate net-zero carbon flights across our whole network. We are doing this by offsetting the carbon emissions from the fuel used for all of our flights. We recognise that offsetting is only an interim measure, but we want to take action on our carbon emissions now. easyJet has a long tradition of efficient flying – the aircraft we fly and the way we fly them means that easyJet is already more efficient than many airlines. However, our priority is to continue to work on reducing our carbon footprint in the short term, coupled with long-term work to support the development of new technology, including electric planes, to reinvent aviation for the long-term.”
