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easyJet reports a fiscal year profit before tax of £455 million ($575.8 million) (£633 million year on year improvement), grows its fleet

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Results for the twelve months ending on September 30, 2023

Record H2’23 financial performance with a positive outlook for FY24

·    Record H2 profit before tax despite challenging external operating environment

–      FY23 headline profit before tax of £455 million (£633 million year on year improvement)

–      easyJet holidays profits grew 221%, delivering £122 million profit before tax

·    Positive outlook for FY24

–      October RPS +12% (Q1 RPS expected to be ahead YoY despite being impacted by Middle East conflict)

–      Q2 to Q4 RPS all ahead YoY 

–      H1 CPS ex fuel to be broadly flat YoY

–      easyJet holidays expected to grow >35% in FY24 with ASP up high single digits

·    Remain on track to deliver disciplined growth of c.9% in FY24

–      H1’24 c. 42m seats, +11% YoY

–      H2’24 c. 59m seats, +8% YoY 

·    Financial strength

–      £41 million net cash with £4.7 billion liquidity 

–      BBB/Baa3 credit ratings, both with positive outlook

·    Dividends reinstated

–      4.5p per share payable in early 2024

–      Expect pay out to increase to 20% of headline PAT on FY24’s result

–      Potential to increase level of future returns to be assessed over the coming years

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

“Our record summer performance demonstrates the success of our strategy and that demand for easyJet remains strong as customers choose us for our network and value.   

 “We see a positive outlook for this year with airline and holidays bookings both ahead year on year and recent consumer research highlights that around three quarters of Britons plan to spend more on their holidays versus last year with travel continuing to be the top priority for household discretionary spending.

“We are confident about the future and the opportunity ahead, focusing on capital discipline and driving our low cost model to achieve our ambitious medium term targets.”

Overview

easyJet achieved a record performance during summer 2023, despite high fuel costs and the challenges arising from the external operational environment, thanks to initiatives implemented over the past year and a half. Supported by strong consumer demand and easyJet’s leading brand position, the Company’s success is driven by the low-risk expansion at primary airports, significant increases in ancillary revenue, market beating growth for easyJet holidays and a constant focus on cost. This led to a pre-tax headline profit of £455 million for the 2023 financial year, an improvement of £633m year on year.  

Medium-term targets

easyJet has ambitious and credible medium-term targets, that provide the building blocks to achieve a Group PBT per seat of between £7 to £10. The levers to achieving this are: reducing winter losses, growing easyJet holidays to deliver over £250 million of PBT and the cost savings that our current Airbus order book will deliver from fleet efficiency and upgauging. In addition to the delivery of our strategy, these targets are integral to achieving easyJet’s ambition to deliver more than £1 billion PBT.

Shareholder Returns

Considering easyJet’s strong financial results in FY23 and robust liquidity position, the board is proposing an ordinary dividend of 4.5 pence per share, amounting to £34 million, at the upcoming Annual General Meeting. This represents 10% of the after-tax headline profit. The expectation is that this will rise to 20% of headline profits after tax in FY24, payable in early 2025. The Board is committed to maintaining regular returns to shareholders, with the level of future return to be assessed over the coming years, taking into account market conditions, capex requirements and progress towards the Group’s new medium-term targets.

Proposed aircraft purchase and conversion

easyJet has an existing order book with Airbus to FY29 for a further 158 A320neo family aircraft still to be delivered. Alongside this, as announced on 12 October 2023, easyJet has entered into conditional arrangements with Airbus to secure the delivery of a further 157 aircraft (56 A320neo & 101 A321neo) between FY29 – FY34 as well as 100 purchase rights (the “Proposed Purchase”). This provides easyJet with the ability to complete its fleet replacement programme of A319 aircraft and replace approximately half of the A320ceo aircraft as well as providing the foundation for disciplined growth. The Company is in exclusive negotiations with CFM for the supply of engines for the Proposed Purchase.

easyJet has also agreed to exercise conversion rights within its current order book to convert 35 A320neo deliveries into A321neo aircraft (the “Conversion”). This alongside the Proposed Purchase will deliver lower fuel burn, CO2 emissions and operating costs per seat.

A circular is expected to be published on 29 November 2023 giving further details of the Proposed Purchase and seeking shareholder approval at a General Meeting on 19 December 2023.

FY23 Financial Summary

–      Headline profit before tax of £455 million (2022: £178 million loss) 

o  Total revenue increased by 42% to £8,171 million (2022: £5,769 million) predominantly due to pricing strength, increased flown capacity, improved load factors and the continued growth of easyJet holidays.

o  Group headline costs increased by 30% to £7,716 million (2022: £5,947 million), primarily due to the increase in flown capacity, significantly increased fuel costs and industry wide inflationary pressures, combined with resilience measures as part of the summer 2023 ramp up preparations and 15 wet lease aircraft which were within the fleet for the month of October. The continued growth of easyJet holidays, with 77% customer growth has seen costs increase, although at a slower rate than revenue resulting in improved margins.

–      Reported profit before tax of £432 million (2022: £208 million loss)

o  Non-headline loss of £23 million (2022: £30 million loss). Non-headline items consist primarily of returning final slots at Berlin Brandenburg airport following the rightsizing of the operation from 18 to 11 aircraft and an adjustment to right of use asset depreciation to correct a historic non-cash foreign currency translation error.

Fleet

easyJet’s total fleet as at 30 September 2023 comprised 336 aircraft (30 September 2022: 320 aircraft, excluding three A319 aircraft held on a zero rent basis). The increase was driven by:

·    Delivery of ten new A320neo aircraft, including accelerating two FY25 scheduled orders into FY23.

·    Acquisition of eight mid-life A320 leased aircraft.

·    Re-entry into the fleet of one former easyJet A319 aircraft, and the return to service of three aircraft held on a zero-rental agreement in 2022.

Six older leased aircraft exited the fleet at the end of their lease-term (three A319 aircraft, and three A320 aircraft), as easyJet continues its journey of retiring older, less efficient, aircraft whilst benefitting from the A320neo family aircraft with their superior fuel efficiency and greater number of seats.

easyJet already has 69 A320neo family aircraft within its fleet and an existing order book with Airbus to FY29 for a further 158 A320neo family aircraft still to be delivered. Alongside this, easyJet has now entered into conditional arrangements with Airbus to secure the delivery of a further 157 aircraft (56 A320neo & 101 A321neo) between FY29 – FY34 as well as 100 purchase rights (the “Proposed Purchase”). This provides easyJet with the ability to complete its fleet replacement programme of A319 aircraft and replace approximately half of the A320ceo aircraft, alongside providing the foundation for disciplined growth.

The average age of the fleet increased to 9.9 years (30 September 2022: 9.3 years). The average gauge of the fleet is currently 179 seats per aircraft (30 September 2022: 179 seats).

Fleet as at 30 September 2023

 OwnedLeasedTotal% of fleetChanges since Sep-22FirmOrders
       
A31929669528%1
A3201036917251%5
A320neo4775416%1090a
A321neo411155%68a
 183153336  158
Percentage of total fleet54%46%    

a)        easyJet retains the option to alter the aircraft type of future deliveries, subject to providing sufficient notification to the OEM. The presented number assumes the conversion of 35 A320neo deliveries into A321neo deliveries as set out in the proposed aircraft purchase and conversion section of this release. It does not reflect the proposed aircraft order from FY29 to FY34.

Our flexible fleet plan allows us to expand or contract the size of the fleet depending on the demand outlook.

Number of aircraft FY24FY25FY26
Current contractual maximum 346373395
Base fleet plan   346358370
Current contractual minimum 337338313
New aircraft deliveries 161927
Gross capital expenditure (£’m)c.1,300c.1,500c.1,900

Capex is comprised of new fleet delivery payments, maintenance related expenditure, lease payments and other capital expenditure such as IT development.

easyJet (UK) aircraft photo gallery:


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