easyJet Regulatory News (EZJ)

27 January 2022

easyJet plc

Trading statement for the quarter ended 31 December 2021

· Q1 loss almost halved year on year alongside significantly reduced operating cash burn

· Omicron impacting bookings in the short term

· Increased bookings seen post UK Government decision to remove all travel testing requirements

· Q4'22 on sale capacity unchanged, remaining at near 2019 levels

· Ancillary transformation continuing to deliver higher returns

Summary

easyJet's first quarter financial performance was in line with management expectations despite the changing environment which saw increased travel restrictions at the end of the quarter in response to the Omicron variant. October and November saw improved performance as load factors continued to strengthen, with both months above 80%. Omicron paused this momentum which resulted in load factors declining during December. easyJet expects that Omicron will continue to have an impact over short term performance in Q2.

Following the UK Government's announcement on 5 January to remove pre departure testing, easyJet has seen a sustained step change improvement in booking volumes. On 24 January, easyJet welcomed the news that the UK will see restriction free travel from 11 February which has provided a further boost to bookings which we expect will continue to have a positive impact on sales going forward. Since 5 January, other countries, including France, have subsequently followed suit by relaxing restrictions, which is a welcome step closer towards restriction free travel across the whole of Europe.

Q4 on sale capacity is at near 2019 levels, with easyJet's leisure flows expected to see strong demand this summer, in line with previous expectations. While customers continue to book closer to departure and visibility remains limited, booked ticket yield to date remains encouraging for Easter (which falls within Q3) as well as into the Q4 summer period. easyJet holidays also continues to strengthen its position as a significant player in the holidays market, with over 50% of the programme sold and stronger margins compared to 2019.

Commenting, Johan Lundgren, easyJet Chief Executive said:

"easyJet produced a significant year on year improvement in the first quarter, despite the short-term impact of Omicron in December, halving losses and cash burn compared with Q1 21 alongside driving higher returns from ancillaries.

"During the pandemic, easyJet has transformed many areas of the business including optimising its network and flexibility and finding sustainable cost savings. This is helping partially offset inflationary pressure, while also step-changing ancillary revenue, which is delivering for us now.

"Booking volumes jumped in the UK following the welcome reduction of travel restrictions announced on 5 January, which have been sustained and then given a further boost from the UK Government's decision earlier this week to remove all testing requirements. We believe testing for travel across our network should soon become a thing of the past. 

"We see a strong summer ahead, with pent up demand that will see easyJet returning to near 2019 levels of capacity with UK beach and leisure routes performing particularly well.

"We remain confident that easyJet will continue to win customers and are excited about our plans for the summer as we identify further opportunities at our key bases which, alongside our step-changed ancillary offering, will deliver strong, sustainable shareholder returns."

Capacity

During Q1 easyJet flew 64% of FY'19 capacity which was broadly in line with the guidance provided and a significant increase on the same period last year where easyJet flew 18% of FY'19 capacity.

Load factor was 77%, rather than over 80% as guided, due to the impact that Omicron had on customers' confidence and ability to travel during December. easyJet saw significant levels of late flight transfers out of December due to travel restrictions and concerns over Omicron. These customers have used our customer friendly policies to re-book easyJet flights which will have a positive impact on load factors, revenue and customer retention in future periods.

Passenger1 numbers in the quarter increased to 11.9 million (Q1 FY'21: 2.9 million).

Financials

Total group revenue for the quarter ending 31 December 2021 increased to £805 million (Q1 FY'21: £165 million). Passenger revenue increased to £547 million (Q1 FY'21: £118 million) and ancillary revenue increased to £258 million (Q1 FY'21: £47 million) primarily as a result of the increase in capacity flown. Ancillary revenue per seat of £14.84 (Q1'21: £10.20) continues to benefit from our cabin bags and new leisure fare bundle delivering incremental income. Underlying ancillary revenue per booked passenger remains strong despite winter seasonality and the impact of reduced ski travel in December due to Omicron.

Group headline costs for the quarter ending 31 December 2021 were £1,018 million (Q1 FY'21: £588 million), primarily driven by the higher level of capacity flown compared to the same period last year. Due to the impact of Omicron, an increased number of standby crew is being held to proactively protect the operation and minimise any impact on our customers from higher crew absence levels. easyJet was the most punctual large European airline in 2021, with the best OTP4, which has continued into Q1 FY'22. Following a successful recruitment process and preparation for our summer ramp up, easyJet will welcome new crew into the business during Q2 to undertake their training. 

Headline loss before tax for the quarter ending 31 December 2021 was £213 million, a £210 million improvement compared to the £423 million loss in Q1 FY'21. Included in the Headline loss was a £15 million gain from balance sheet FX revaluations.

Cash burn during the first quarter (seasonally the weakest quarter for working capital) was £450 million (Q1 FY'21: £969 million). This improved performance is despite the removal of furlough across most of Europe and includes delivery payments, as easyJet took delivery of four new aircraft during the period.

During the first quarter easyJet repaid £300 million of commercial paper, clearing the final balance under the CCFF scheme. easyJet has no other debt maturities until the 2023 financial year. As at 31 December 2021 our net debt position was c.£1.2 billion (30 September 2021: £0.9 billion) including cash and cash equivalents and money market deposits of c.£2.9 billion.

Sustainability

In December, easyJet received a B rating from CDP for 2021, an improvement on the previous year. During COP26, easyJet signed up to Race to Zero, the UN-backed campaign to drive net zero CO2 emissions by mid-century, and we are working on our science-based carbon reduction target and Net Zero transition roadmap to 2050. Meanwhile, we continue to be the only major airline in Europe to offset all carbon emissions associated with our flights and easyJet holidays, and are committed to taking action now, and lead the way to decarbonise aviation.

easyJet continues to pioneer innovation to shape a sustainable future for travel, demonstrated by the recently announced partnerships with Cranfield Aerospace Solutions (CAeS), to support the development of its hydrogen propulsion system for commercial aircraft, as well as our collaboration with Rolls-Royce focusing on alternative energy and power solutions, including low carbon and zero-emission technologies, and their application for aircraft.

Outlook

easyJet currently has c.67% of Q2'19 capacity on sale. In January, capacity will be c.50% of 2019 levels, which will ramp up as we move through the quarter. Q4 FY'22 capacity on sale remains at near Q4'19 capacity levels.

easyJet is currently c.60% hedged for fuel in the financial year ending on 30 September 2022 at c.US$504 per metric tonne with the spot price as at 26 January 2022 being US$840.

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

Edward Simpkins Finsbury +44 (0) 7947 740 551 / (0) 207 251 3801

Dorothy Burwell Finsbury +44 (0) 7733 294 930 / (0) 207 251 3801

A copy of this Trading Statement is available at http://corporate.easyjet.com/investors

Notes

1. Represents the number of earned seats flown. Earned seats include seats that 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.

2. Capacity based on actual number of seats flown.

3. 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.

4. Based on OAG Reported data