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easyJet PLC  -  EZJ   

Q3 Interim Management Statement

Released 07:00 20-Jul-2017

RNS Number : 5665L
easyJet PLC
20 July 2017


30 JUNE 2017


easyJet delivers a strong trading and operational performance in its third quarter and announces the award of its European Air Operator Certificate in Austria.




·      Passengers carried increased by 10.8% to 22.3 million, driven by an increase in capacity of 9.5% to 24.0 million seats and load factor increasing by 1.1 percentage points to 93.1%.


·      Total revenue per seat increased by 2.2% at constant currency, ahead of guidance and increased by 5.9% on a reported basis to £57.78 per seat. Total revenue in the quarter increased by 16.0% to £1,387 million, with a significant benefit from the move of Easter to April, higher load factors, as well as an improving underlying trend in the trading environment. Ongoing enhancements to our customer proposition and other revenue initiatives helped to stimulate bookings and build revenue momentum throughout the period.


·      easyJet delivered strong cost control as headline cost per seat including fuel improved by 5.5% at constant currency, due to low fuel prices and a strong underlying cost focus. As anticipated easyJet's headline cost per seat excluding fuel at constant currency was up 1.6% in the quarter reflecting planned investment in the resilience of the operation and the additional load.


·      Operational performance for the quarter has improved as the investment in resilience has delivered improved on time performance figures across the network. A new ground handling agreement has been signed with DHL at Gatwick, commencing November 2017.


·      Continued strong balance sheet with net cash of £426 million as at 30 June and reaffirmed "BBB+" investment grade rating by Standard & Poor's.


·      easyJet has received approval for its Air Operator Certificate and airline operating licence from the authorities in Austria, securing its future operations in Europe.


·      Headline profit before tax guidance for FY2017 expected in the range of £380 million to £420 million.



Commenting; Carolyn McCall, easyJet Chief Executive said:


"easyJet has delivered a strong performance in the quarter right across the business.

"Our purposeful and disciplined growth continues to strengthen our market positions and we are seeing an underlying improving revenue trend.  Our continuing product and digital innovation is generating revenue growth. Our underlying cost control is strong, while our investment in resilience is delivering results in our operational performance. 

"Our European AOC has now been awarded and the first flight by an easyJet Europe aircraft takes place today.  That means our flying rights in Europe will be secure after the UK leaves the EU.

"Although we expect capacity to continue to put pressure on yields, our progress this year has enabled us to upgrade this year's PBT forecast and demonstrates that after a difficult 18 months of external challenges easyJet once again has positive momentum."





For further details please contact easyJet plc:


Institutional investors and analysts:

Stuart Morgan                                                                            +44 (0) 7989 665 484

Michael Barker                                                                           +44 (0) 7985 890 939



Paul Moore                                                                                +44 (0) 7860 794 444

Edward Simpkins   (Finsbury)                                                      +44 (0) 7947 740 551









Three months ended

30 Jun 2017

30 Jun 2016




Passengers (million) 1




Seats flown (million)




Load factor (%) 2




Total revenue (£ million)




Seat revenue (£ million)




Non seat revenue (£ million)




Total revenue per seat reported (£)  




Total revenue per seat constant currency (£)




Total revenue per passenger reported (£)




Total headline cost per seat reported (£)




Total headline cost per seat at constant currency (£)




Headline cost per seat excluding fuel at constant currency (£)




Average number of owned/leased aircraft




Average operating aircraft




Average utilisation owned aircraft (hours per day)




Average utilisation operating aircraft (hours per day)




ASKs (billion)




RPKs (billion)




Average sector length (km)








Seats flown increased by 9.5% in the third quarter to 24.0 million. Passengers increased by 10.8% to 22.3 million and load factor has increased by 1.1 percentage points to 93.1%.


In the third quarter capacity growth3 continued to build on easyJet's strategy of purposeful growth to secure strong number one and number two positions and drive returns in the long term. Notably easyJet grew significantly in the quarter at Luton, Manchester and Bristol airports in the UK and at Geneva, Toulouse, Venice and Amsterdam in mainland Europe.


Revenue per seat at constant currency increased by 2.2%, during the quarter to £55.77. This performance was driven by:


·      the movement of Easter from March 2016 to April 2017, which saw a benefit of c. £55m for the quarter;

·      increased load factors, up 1.1ppts;

·      the underlying revenue trend continuing to improve from H1 into the second half of the year; offset by

·      a continued low fuel price environment which is sustaining inefficient capacity in the European short-haul market and which continues to drive lower fares.


easyJet has offset some of the effects of continued low fares in a competitive short-haul market by profitably increasing load factors and by stimulating bookings and increased revenues via:


·      The launch of a new website in all markets with a refreshed design and enhanced functionality that makes the site easier to use across all devices and simpler for passengers to add ancillaries; and

·      Further optimisation of pricing algorithms.


This is driving increased conversion and attachment rates, particularly in bag revenue. Overall conversion across all channels is up 0.5ppts versus the same quarter last year.




Headline cost per seat during the quarter improved by 5.5% at constant currency to £48.98 due to low fuel prices and a strong underlying cost focus mitigating offsetting inflationary pressure.


Headline cost per seat excluding fuel (at constant currency) reflected the increased load factor and investment in the fleet and resilience of the operation. During the third quarter it increased as expected by 1.6% to £38.23 and has now increased by 0.6% for the year to date to £38.41.


easyJet continued to deliver underlying cost improvements through airport and ground handling deals that leverage its scale and increasing passenger numbers; engineering and maintenance efficiencies; as well as the continued up-gauging of our fleet. For the full year easyJet is on track to deliver Lean savings of c.£80 million.


easyJet remains on track to deliver flat headline cost per seat excluding fuel at constant currency from the 2015 financial year to the 2019 financial year, assuming normal levels of disruption.   


Customer and operational performance


The third quarter has seen easyJet invest in resilience measures across the operation to deliver a more robust schedule for our customers and crew in an environment of growing airport congestion. Some of the initiatives included:


·      Aircraft spare parts inventory: investment in additional inventory of critical spare parts that typically cause operational interruption;

·      Rapid response aircraft and teams: two light aircraft and engineering teams are available with one based in Luton and now one based in Milan Malpensa;

·      Schedule resilience: firebreaks, standby aircraft availability and the deployment of three wet lease aircraft; and

·      Cabin maintenance: additional capability and resources to perform preventative maintenance on our cabins, specifically the crew areas.



OTP % arrivals within 15 minutes



















Excluding the UK, which is heavily influenced by the amount of capacity flying through London airspace from Gatwick and Luton, the network's On Time Performance year to date is over 81%.


During the quarter easyJet appointed DHL to take over its ground handling operations at London Gatwick Airport.  DHL will handle over nine million departing easyJet passengers per year starting from 1st November 2017 and easyJet is looking forward to developing a new partnership with DHL building on their global expertise in logistics, people management and service.


Balance sheet and financing


easyJet continues to maintain a strong balance sheet and its sector leading credit rating, with S&P recently re-confirming their investment grade rating of BBB+. Cash and money market deposits were £1,397 million (excluding restricted cash) at 30 June 2017 compared to £1,120 million at 30 June 2016. Net cash was £426 million compared to net cash of £368 million at 30 June 2016.


Fleet and flexibility


In the quarter, easyJet took delivery of 10 A320 aircraft.  As at 30 June 2017 the fleet comprised 275 aircraft; with 132 A320s, including one NEO variant, and 143 A319s.


easyJet took delivery of its first A320 NEO aircraft in June 2017 which delivers 50% less noise and a 15% unit cost and fuel savings against the older A319s4. The second A320 NEO delivery was delivered in July.


easyJet continues to have significant flexibility to adjust its capacity plans, through its strong relationship with Airbus over fleet delivery schedules, aircraft utilisation and lease options on its A319 fleet.


easyJet Europe


Following a rigorous and comprehensive year-long process, easyJet is today announcing that it has been awarded an Air Operator Certificate (AOC) by Austro Control and an airline operating licence by Austria's Federal Ministry for Transport, Innovation and Technology.


These allow easyJet to establish a new airline, easyJet Europe, headquartered in Vienna and will enable easyJet to continue to operate flights both across Europe and domestically within European countries after the UK has left the EU (regardless of the outcome of talks on a future UK-EU aviation agreement).


The new structure means that easyJet will become a pan European airline group with three airlines based in the UK, Switzerland and Austria.  All of these will be owned by easyJet plc which itself will be EU owned and controlled, listed on the London Stock Exchange and based in the UK.


The people and aircraft that will fly for easyJet Europe are already employed and based in EU27 countries.  The establishment of easyJet Europe will create a number of new jobs in Austria, but no jobs will move from the UK to Austria.  All of easyJet's UK employees will continue to be based in Luton and our 11 UK bases and employed as they are today.







easyJet operates under a clear set of treasury policies agreed by the Board.  The aim of easyJet's hedging policy is to reduce short-term earnings volatility. Therefore, easyJet hedges forward, on a rolling basis, between 65% and 85% of the next 12 months' anticipated fuel and currency requirements and between 45% and 65% of the following 12 months anticipated requirements.  Details of current hedging arrangements are set out below:



Percentage of anticipated requirement hedged



US Dollar requirement



Swiss Franc surplus

Three months to 30 September 2017





Average rate





Full year ending 30 September 2017





Average rate





Full year ending 30 September 2018





Average rate






It is estimated that at current exchange rates5 and with jet fuel remaining within a $450 metric tonne to $520 metric tonne trading range, easyJet's unit fuel bill for the second half of the financial year is likely to decrease by between £150 million and £165 million compared to the six months to 30 September 2016.  On a full year basis it is estimated that at current exchange rates and with jet fuel within a $450 metric tonne to $520 metric tonne trading range, easyJet's unit fuel bill for the 12 months ending 30 September 2017 is likely to decrease by between £230 million and £245 million compared to the 12 months to 30 September 2016.

In addition, exchange rate movements are likely to have around a £20 million adverse impact to headline profit before tax compared to the six months to 30 September 2016 and are likely to have around a £100 million adverse impact to headline profit before tax compared to the 12 months to 30 September 2016.




Approximately 67% of expected bookings for the fourth quarter have now been secured. Based on this, revenue per seat at constant currency for the 6 months ending 30 September 2017 is expected to decline by around 2%. This reflects in particular continuing high market growth, including by easyJet, in key summer holiday markets such as Spain and Portugal.


easyJet's capacity is expected to grow in the second half by 8.5%.


There is no change to cost guidance with cost per seat excluding fuel at constant currency expected to increase by c.1% for the full year.


easyJet currently expects to deliver a headline profit before tax for FY 2017 of between £380 million and £420 million.


With the ongoing low cost of fuel allowing capacity to stay in the market, easyJet currently expects continued pressure on yields into the next financial year.


All guidance is subject to normal levels of disruption.







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.   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.   Capacity based on actual number of seats flown.


4.   Based on fuel price quoted in original plan from an A319CEO to an A320NEO with 186 seats.


5.   US $ to £ sterling 1.3008, Euro to £ sterling 1.1397 as at 1st July 2017.


A copy of this Trading Statement is available at

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Q3 Interim Management Statement - RNS