easyJet delivers a strong first half performance and one of its best winters ever; announces five changes to its Airline Management Board

Strong first half performance

• The strength of easyJet’s network and customer proposition helped to deliver strong performance in the first six months of the financial year. This was supported by:
  • A positive trading environment and higher load factors across easyJet routes
  • Capacity reductions by other airlines in easyJet markets
  • The partial movement of Easter into the first half from the second half in 2017
• Passenger numbers for the six months to 31 March 2018 increased by 3.0 million to 36.8 million, including 0.7 million from easyJet’s new Berlin Tegel operations launched in January
• Capacity increased by 7.8% as easyJet grew its existing network by 4.6% and added an additional 1.2 million seats at Tegel. Load factor grew by 0.9 percentage points to 91.1% (91.9% excluding Tegel)
• Total revenue increased by 19.5% to £2,183 million (H1 2017: £1,827 million). Total revenue per seat increased by 10.9% to £54.10 (H1 2017: £48.80), with an increase of 8.3% at constant currency(1). Ex-Tegel flying revenue per seat increased by 12% to £54.64 and by 9.5% at constant currency, at the upper end of previous guidance
• easyJet’s business model and strategy are underpinned by sector leading balance sheet strength, with a net cash position at 31 March 2018 of £665m (31 March 2017: £353m)
• Headline cost per seat excluding fuel increased by 2.2% to £43.11 (H1 2017: £42.18), and increased by 1.6% at constant currency (1.3% excluding Tegel), due to increased loads, inflationary costs and the impact of severe weather, offset by £66 million of cost savings
• Headline profit before tax excluding Tegel was £8 million, a £220 million improvement on H1 2017 (H1 2017 loss £212m). Total headline loss before tax was £18 million, an improvement of £194 million. Total loss before tax of £68 million for the six months ended 31 March 2018 (H1 2017 loss £236m) principally reflecting non-headline costs associated with the one-off integration of Tegel operations and the sale and leaseback of ten A319 aircraft

Investing in the future

• Following an update of its strategy, easyJet plans to invest in enhancing its propositions in holidays, business passengers, customer loyalty and data. This leverages easyJet’s existing strong business model, network, brand, cost base and data leadership
• This, combined with easyJet’s rigorous approach to underlying cost control and plans to address increasing disruption cost, is expected to drive significant profit per seat improvement
• As a result of its disciplined capital allocation and focus on maximising shareholder returns easyJet is also targeting to deliver increasing return on capital employed with a close focus on cash

Outlook

• easyJet continues to implement its strategy of profitable growth to secure leading positions at primary airports and drive returns over the long term
• Forward bookings are ahead of last year: at 80% for the third quarter and 57% for the second half
• easyJet’s ex-Tegel capacity growth in the second half is forecast at circa 5% and revenue per seat at constant currency growth in the second half is expected to be slightly positive, reflecting more disciplined market capacity growth offsetting the negative impact of the partial movement of Easter into the first half
• Full year headline cost per seat excluding fuel at constant currency (assuming normal levels of disruption in H2) is expected to increase by c.2%. This includes the impact of severe disruption incurred in the first half and expected employee incentive payments due to our strong profit and operational improvement
• At Tegel we now expect to deliver a combined headline and non-headline impact that is within the £160 million previously guided. Headline loss before tax is expected to increase to between £75 million and £95 million, due to a higher fuel price, additional regulated security and noise tax charges and lower gauge wet lease aircraft than planned, as well as the potential risk of lower revenue from our finalised schedule. One-off non-headline costs are now expected to be significantly better than previously guided at around £60 million due primarily to savings in aircraft lease costs and better execution of crew and fleet transition
• easyJet currently expects headline profit before tax for the financial year to 30 September 2018, including the impact of the Headline loss from Tegel, to be in the range of £530 million to £580 million
• Capital expenditure for the financial year to 30 September 2018, including the investment in Tegel, is expected to remain in line with previous guidance at £1.2bn

Commenting on the results, Johan Lundgren, easyJet Chief Executive said:

”easyJet has delivered an excellent performance reporting a profit of £8 million, one of our best results ever in the winter trading period (excluding the one-off impact of the start-up of our Tegel operation).  Total revenue was above £2bn for the first time, up almost 20 per cent year on year. This was driven by a record number of passengers at 37 million and our highest ever ancillary sales due to giving passengers more options and lower prices on hold luggage along with our improved inflight bistro.

“Our performance was helped by the reductions in capacity from other airlines but was also driven by the strength of the easyJet brand which is now the most considered airline brand in the UK(2), moving ahead of BA for the first time. We also reached the milestone of carrying 13 million business travellers a year – partly supported by the increase in city to city routes as we successfully started operations in Berlin Tegel.

“Turning to our strategy, I have today announced an increase in investment in easyJet Holidays to gain a greater share of that market, showcased a series of initiatives to increase the number of passengers travelling on business and revealed plans to introduce a new loyalty programme which will support and reinforce all of these initiatives and will further increase passenger loyalty to easyJet.  I also outlined new investments to harness the power of our data to improve our customer proposition, reduce costs and increase revenue.  All of these initiatives will provide higher profit per seat and higher returns for our shareholders. 

“I am also pleased to announce a number of new appointments to the Airline Management Board with a mix of internal promotions and new hires to easyJet. This will give the airline the right balance of skills, experience and diversity to deliver our strategy and take easyJet from strength to strength.”

Johan Lundgren, easyJet’s CEO, today announced five changes to the airline’s management board.  Four of these are new AMB roles and the new structure and new team is designed to enable easyJet to better deliver its strategy and drive the new initiatives announced today to accelerate its use of data, expand its easyJet Holidays business, carry more business passengers and introduce a new reward and recognition loyalty programme.

Johan commented on the new directors:

“I am pleased to announce a number of new appointments to the Airline Management Board with a mix of internal promotions and new hires to easyJet.  This will give the airline the right balance of skills, experience and diversity to deliver our strategy and take easyJet from strength to strength.”

The first new role is that of CEO, easyJet Holidays which will be run by Garry Wilson.  Garry has twenty years’ experience in the holiday sector and is currently TUI Group’s MD for Group Product and Purchasing.  Garry leads procurement and commercial activity for all hotel partners and other suppliers.  Garry has deep experience of the holiday market across easyJet’s network.

Garry will set up and lead a dedicated unit within the easyJet group and will be responsible for accelerating the development of easyJet Holidays.  easyJet entered the holidays market a few years ago but hasn’t taken advantage of the opportunities it has in this area.  easyJet has Europe’s largest leisure network from primary airports to leisure destinations, a well-loved, trusted brand, a cost advantage over the leading competitors and a customer base with high spending power.  easyJet Holidays can use this platform and easyJet’s scale to capture a significant share of the market.

Speaking about his new appointment, Garry said:

“I’m very excited to become part of easyJet and look forward to working with such a highly regarded team and well respected brand.

Over the years I have watched the growth and expansion of easyJet and having the opportunity to be part of the next chapter in their success is a great honour”

The second newly established role is that of Chief Data Officer which will be held by Luca Zuccoli.  Luca will lead and coordinate the management of data across the airline.  easyJet is already digitally advanced in both its contact with customers and across its operations.  Luca will be responsible for the airline’s data strategy and will help give greater focus and weight to the airline’s use of this data to create insights which will improve the customer proposition, drive revenue and reduce cost.

Luca currently works for Experian plc and is their Head of Analytics and Data Lab for their Asia-Pacific region based in Singapore.  Italian by birth and educated in the US, Luca will bring world leading technical data expertise as well as the experience of successfully applying data management to drive value in a commercial context.  Following a Masters in Statistics from Carnegie Mellon University Luca has worked in house and as a consultant in financial services as well as logistics and maintenance.

Luca commented:

“I have always seen easyJet as the customer oriented airline, a great brand with an even greater promise. After meeting Johan and the team, I was struck by their passion, their vision for the future and I knew that this is the group I had to be part of.  I can’t wait to contribute to a great company, a great customer experience and a great team.”

The next appointment is that of Flic Howard-Allen to the position of Group Communications Officer to replace easyJet’s outgoing Communications Director.  Flic currently heads up external affairs at Associated British Foods, the global FTSE 30 company which owns Primark, Twinings and many other major brands.  Flic was previously Director of Communications and CR at Marks & Spencer where she led the creation of their sustainability campaign, Plan A and prior to that, she was a Director at Hill + Knowlton for a number of years where she ran consumer, corporate, crisis and internal communications teams.

Flic will be responsible for all easyJet’s media communications and public affairs across all its markets, as well as leading the airline’s internal communications and CSR activities.

Commenting on her appointment, Flic said:

“I have always admired easyJet and I am delighted to be joining the team at this very exciting time in the company’s development.”

The Chief Marketing Officer role was created as an AMB role in the airline’s management restructure announced in January.   Lis Blair, currently easyJet’s CRM and Insight Director, has been promoted into this role.  Lis has been with easyJet for six years and has experience spanning all marketing disciplines at several leading brands including Audi, Barclaycard and Barclays.

Lis will lead easyJet’s brand, marketing and digital strategy as well as the airline’s customer experience strategy together with its customer research, loyalty and CRM activities.  With a pan European remit and growing customer base, Lis will lead easyJet’s strategic positioning in the leisure and business traveller markets and be responsible for continuing to drive the strength of the easyJet brand and the loyalty of easyJet’s passengers.

Lis explained:

“After six years at easyJet I am hugely excited to have the opportunity to join Johan and his team as we embark on the next chapter of our growth. I’m looking forward to leading a talented team of marketers as we build upon the powerful brand and marketing activity from recent years.”

The final, newly created role in the structure is that of Group Markets Director.  This role will provide a clear voice for Europe at the AMB – representing over 60% of easyJet’s passengers who originate in Europe and some 4,000 of easyJet’s people who are based in European countries, as well as our UK market.  Thomas Haagensen has been appointed to this new role.  Thomas lives in Switzerland, has been with easyJet for ten years and is currently easyJet’s Country Director for Germany, Austria and Switzerland.  He is also Managing Director of easyJet Europe, the Austrian based airline which is responsible for all easyJet’s EU operations.

Thomas will lead easyJet’s Country Directors and Managers who are the face of easyJet and manage its reputation across mature, new and emerging markets. Thomas and his team will also drive easyJet’s performance in country by working with the centre on the delivery of product, proposition, channel, brand, communications and operations relevant to their country.

Thomas said:

“I’m delighted to bring my 10 years of experience at easyJet to this new role. 

As easyJet continues to expand its footprint in Europe I am pleased to be able to represent the diverse nature of our customers and people in markets within the Airline Management Board.”