easyJet plc

Well, welcome everybody to EasyJet's half-year presentation of the results to the 31st of March, 2026. I'm joined today by our chair, Sir Stephen Hester, and the management board here on the front row. We've already released a full presentation to the website this morning. I don't know whether you've had a chance to have a look at it, but if you haven't, I will give a brief summary now before we go through to Q&A. So starting with our performance for the first half, the underlying H1 results were consistent with expectations and were in line with what we put out in the April trading statement. There was a very limited impact from the Middle East in terms of trading, but obviously there was a fuel impact with volatile fuel pricing in the month of March, which caused the 25 million additional costs. We clearly recognise that these winter losses are not where we planned them to be when we set out the 2023 targets. And it remains a focus for us to structurally improve our seasonal losses and bring them down over the course of the coming years. But what's important to recognise is that we've made some important investments. So over the last three consecutive winters, we've added 24% in terms of seat capacity, which is 33% in terms of ASK flown. And that has given us a productivity benefit when it comes to crew. But importantly, it's also given us better aircraft utilization. And our aircraft utilization is now 20% higher than it was in 2023. And what that means is it's back and restored in terms of where it was pre-COVID. The good news there is that we can now moderate our growth as we look forward to the following winter and future winters because we've restored that kind of capacity and we've restored the utilization and that should allow our root investments to mature. We also saw quite rough demand during the first half. So we saw 6% extra passengers come and fly with us on the airline. That was from 4% extra seats. So the load factor improved two percentage points to 90. And EasyJet holidays continued to take share and grew by 22% when it came to passengers. The performance in the half for the airline was impacted by a number of things. The first was market oversupply on some thick beach routes. This happened in part because most airlines pulled out of their routes into Tel Aviv and therefore redeployed them on longer leisure beach flows. And that led to some market overcapacity. It was particularly the case in the London-Spain market. We also had our first winter of operations following our investments in Italy, in Rome for Mancino and in Milan-Donate. We're expecting that to come at a cost because you don't pay for slots in Europe. You fly remedy routes and we have experience of doing this in the past and over time those routes mature and we fully expect those two airports in Milan and Rome to be great catchment airports and to perform very well for us. And we also saw cost inflation weighted towards the first half. We had annualized inflation from resilience measures we put in, which did work really well through the summer 25, but we carried some of that cost into the winter. We had some above inflation airport fee increases like Schiphol, where we saw the airport fees go up 35%. We've got an ongoing investment in digitalization and there's a natural cost impact of 2% extra load factor when it comes to departing passengers. But we expect that to normalize as we did when we entered the winter season and looking forward to the summer, we're expecting our cask X fuel to develop a low single digit amount. As I said, easyJet holidays continue to grow with 22% extra passengers generating 39% extra profitability in the first half generating 61 million PVT. One of the most satisfying things was to see the on-time performance, which has already been substantially lifted compared with the 23, 24 years. We got a further one point improvement on on-time performance and customer satisfaction coming one from that on-time performance, but also from better service features improved by a further two percentage points for the airline to 84% and 1% point for EasyJet holidays to 85%. So good, good resilience operations. So if we look at the impact from the Middle East, the first thing to talk about is demand. I've obviously been watching the announcements that have been coming out and it is the same picture for all that the booking window has shortened. We're seeing strong demand. We saw it strong in the month of April. We're seeing it strong as we run through May. But as you go further out, the consumer uncertainty is meaning that people are waiting before they make that booking. And you can see that if you look at the development of booking since the April trading statement, for instance, when we did that just back in April, our Q3 was two percentage points in terms of deficit on load factor. That's now one. However, Q4 is still behind where it was last year. So that will need a certain degree of price stimulation. But at the moment, we're holding prices above the level of last year. And conversion is good. So it shows that it's really the searches that are down for that further out period. And when people come, they are buying. For jet fuel, we're well hedged. We've got 72% covered at $726 a metric ton. That hedge actually goes forward. We've got over half of next winter covered. And again, in the 700s, we've got almost 30% of the summer after that covered, again in the 700s. A lot of the hedging has been locked in pre-crisis and we're actively managing the hedging as we move forward. But that protects not only EasyJet, but more importantly protects our customers from that real volatility. But we should note that every $100 of fuel on the unhedged portion is the equivalent to $35 million sterling. We have one of the best investment grade balance sheets in European aviation and that allows us to come in and manage this conflict and the impact on fuel prices from a position of strength, meaning we can take measured and disciplined response to the action. We have 4.7 billion in liquidity, which sits over a billion above our liquidity policy. We have a net cash position with 434 million of net cash. And more importantly, from the aircraft ownership side, 86% of the more valuable NEOs we have in ownership. And when it comes to managing the near-term uncertainty, we're being quite active in our hedging. We suspended the hedging in the near two because it's extremely volatile. I think it's dropped five percent this morning but it's been bouncing between 1600 and 1200 and therefore we're coming in when we see the opportunity but further out we're continuing to layer on hedges because the curve as you all know is in backwardation and therefore if you're heading 12 to 18 months out the prices aren't materially different to where they were before so we continue to build the hedge position which is why we're 30% hedged for the summer in advance. In March, we looked at how demand was being impacted following the outbreak of the conflicts, and we reallocated about 400,000 seats from countries adjacent to the Gulf region, being Turkey, being Cyprus, being Egypt, and moved them into the Western Med or city flows or domestic flows. And we also trimmed some of the capacity in April and May on some of the thicker routes because of the elevated fuel prices. But when that was all swept through, that led to a 0.3% reduction of capacity in the summer. We now plan no further changes to the schedule. As you know, airlines make more than their annual profit in the 12 weeks from July, August and September and therefore almost everything we fly is contribution positive. I'd say everything we fly is contribution positive and therefore we're not making any further changes to the schedule. Customers can book with confidence. We're not intending to do any fuel surcharges and that's the message we'll be given. On supply itself, we have seen no issues at any of the 165 airports we fly in and out of across the UK, Europe, North Africa. And we stay in constant contact with airports, governments, fuel suppliers. And what they tell us is that fuel supply is being diversified. So, yes, there was a lot coming through the Straits of Hormuz and coming out of the Gulf region, but now more production is coming out of the Americas, more production is coming out of places like West Africa, like Nigeria, Norway are ramping up their production. And refineries are increasing productivity when it comes to jet fuel refining, which is probably not surprising given how... expensive it is so it's a good a good thing for them to be doing and that is rebalancing the supply of jet fuel and that's why confidence is lifting that this summer will be uninterrupted when it comes to a flying program okay so looking forward we remain very focused on the delivery of our strategy and our margin improvement to generate over a billion pounds in pbt We're going to take a very disciplined or continue to take a very disciplined approach on allocation of capital. When it comes to putting new aircraft, growth aircraft into bases, we're introducing a hurdle rate of 2.5 million per aircraft. And that means that these bases will already be operating at or above that level, which is the level to be in the middle of the £7 to £10 per seat range, to put it into context. As I said, now we've restored utilization levels to where they were pre COVID. We are able to moderate the growth in the future winters, which allows the roots to mature. And following all the delays we've seen from the OEMs, The good news is the upgrading now moves to the near term. So we're saying next year for the year 27, the year after that for the year 28, we expect to see a quarter of a billion of P&L efficiencies come through our P&L. And that's really important because that has been one of the things moving to the right. So you'll see from the fleet slide, we still expect to receive the 17 aircraft this year. We still expect to receive 30 next year and 43 afterwards. the year after Airbus are firming up on those deliveries yes they're slipping a bit but not structurally they're slipping one or two months and we're working through that to manage that in our schedule and working with Airbus on what that means but the confidence has grown and that's why we're now going to accelerate the retirement of our A319s and get them all out of the fleets by 2029 because we're taking this more disciplined approach on capital allocation. When it comes to easy jet holidays, we're still progressing well on our new target of 450 million. We're growing in the UK and taking market share in the UK, and that will continue. In Europe, we're looking to turbocharge the growth in Europe. It's growing very well, but from a low base. And in Germany, we're signing up 500 travel agents in the Berlin catchment area, connecting to their – the digital way they distribute products and that's important in Germany because still about 70% of the German travel market is booked offline. So that's an important distribution channel and that will be open to us from later this year. And we're also introducing a new flight plus hotel proposition which will embed in the airline book flow. You know, at the moment, if you come into the app, you have to choose up front whether you're doing a flight search or you're going to do a holiday search. That would include Citibrokes. Now you can enter the airline flow. Well, not yet, but that will be the case. You'll be able to enter the airline flow, secure the flight, secure the answer as you need with it, and then look at the accommodation offering, and it'll be served in a place that I think is more like the way the customer wishes to search. And we're bolstering the inventory we have behind that. So we're increasing our hotel inventory from 8,000 to 13,000, which means we'll have a richer offer for the consumer. And we're also going to introduce a new loyalty program from the start of next year. There's been a lot of speculation, so we thought we'd put it on the slide, but that's all you're getting. There'll be a seminar at the start of next year. It will complement the EasyJet Plus program, and we expect it fully to drive engagement, drive repeat bookings, and be accretive from a margin perspective. The aim is to leverage the group more efficiently, to continue to build on the strength of the brand, which is improving the more we improve our operations and further improve the seamless customer experience. We're also looking to move to being a more leaner digital organization and have investments running through our P&L around automation, around data and around AI, which will help improve our cost position, but also help streamline our operations. So in summary, we are navigating this near term volatility coming from the macroeconomic uncertainty from a position of strength when it comes to the balance sheet, when it comes to the hedges that we have in place for fuel. Our longer term focus remains on executing against our strategy. And what we're doing is we're underpinning that by a real disciplined approach to capital allocation, only putting those aircraft in the bases where they perform the best. And our aim is to drive a tangible improvement in our margin performance as we move away from the current position into a more normalised environment. So our medium term ambition remains unchanged. It remains to deliver a billion pounds in PVT and more. And we're very focused on that. So I'll now move to Q&A. So if you have any questions for me, for Jan, or the management team, then Adrian will organize the questions.

Good morning. It's James Hollins from BNP Paribas. Thank you for that. Three, please. First one for Jan on costs. I think it's alluded to in your snazzy video earlier in the slides. There's a kind of a doubling down on cost focused. You know, is there an official sort of cost program underway, you know, making the most of a crisis? And ideally, if you sort of quantify what you expect from that. Second one for Gary, just for holidays, my feedback to you from this morning is there wasn't much discussion in the MD&A around the holiday side. So maybe you can hear from Gary on holidays bookings and I guess specifically whether that differs much to the chat around what you're seeing in the airline side. And then finally I come back to you Kenton on jet fuel. Clearly you and others seem remarkably confident in no shortages, certainly through the summer. Maybe if we look beyond that, maybe what scenario would drive some trimming of capacity beyond the summer? a nearer term, do you think the message is now getting through from all that media scaremongering around shortages, do you think the message is now getting through to consumers that they should be fine this summer? Thank you.

All right, I think that's the first time I'm getting the first question. James, thank you very much. Normally it's always for Kenton. Well, in terms of cost focus, I think first of all, it will never be a cost-only focus. It will be a margin focus. So there are a lot of domains where we can still improve. The first one, and Kent already alluded to it, is capital allocation. So we will be much more respective in terms of where we are putting capacity with our hurdle of 2.5 million per aircraft, which means that we will grow only there or redeploying capacity where we're not making 2.5 million profitability. That also means, because very often where we're not making profit is because the cost position is not the most optimal. So moving from higher cost basis towards lower cost basis will improve our overall cost position. The second one is definitely the biggest opportunity in terms of upgaging. And as Kenton said, the application has been a little bit delayed versus what we have initially set out in our medium term targets, but now it's moving from the medium term to the near term. We still have 79 A319 aircraft in our fleet, and as already repeatedly said, A319 burns 10% more fuel than a 320, and has a unit cost position which is 24% more expensive. So just moving from a 390 to a 220 will provide an important profit we've now for the first time also quantified that so we're expecting 110 million cost improvements for that in 2027 140 in 2028 additional so that means that by 2028 it will be 250 million improvement now we've used this crisis to accelerate also that up gauging strategy so decision taken now to get And all the 319s out of the fleet by 2029, which means that next year 19 aircraft, which is six more than initially planned, then moving up to 35 and then 25, so they will all be gone. So that's an important one. We will continue to focus also on asset productivity, although as Kenton said, especially in the winter, aircraft utilization already went up by 20% and back to pre-pandemic level. I think there are still further opportunities, opportunities in terms of further network optimization, although we will not be increasing staging as much as we've done over the past winter, we will continue to increase, just only this summer we're increasing staging by 3%, so we're still optimizing where we can. We're also investing in our scheduling process with implementation of SkyMax, which will make that we will have a more efficient schedule, which will drive productivity. We're also investing quite a lot in our crew planning process, whether it's in teams, whether it's in process, whether it's in systems, which will make that we will be able to plan much more accurately and much more into the detail, which will kind of reduce the buffers we currently are having in our systems, so also that is helping. And also focusing on turn improvement. I think last time we said that we in 2025 we already reduced our turn by four minutes we're targeting a next improvement of two minutes this year and we're performing on that and that's happening to a better coordination between our ground crew people our cabin crew people our cockpit people but also digitizing at the turn so we're getting rid of all the paperwork which improves the turn but even doing investments like smart stands in Gatwick and so this will be AI powered cameras which are monitoring the turn, which are providing more accurate information on how the turn is going on, so that helps you to move faster. So all those elements are helping asset productivity, which is great. Focusing on aircraft ownership, last time we told you about the aircraft buybacks, so we have not any plans this year to do it as soon as we see opportunities. being able to switch the more expensive leasing towards cheaper, finest aircraft, definitely one. One specific one is on linearity fuel in China, so we are having, of course, a 20 million loss in summer and a 30 million loss this year. Part of that loss is induced by the fact that we have a less optimal wet lease set up, so we will be getting rid of that wet lease set up as of next winter, that should support. We are also investing at the moment in additional spare aircraft, spare engines and also LLPs. All of that held to support disruption costs and disruption costs already. We used disruption costs of 50 million last year and that remains the focus. But also, we kind of also decided to have a more moderate growth than initially foreseen, so already next winter we were growing less. Next summer we're also planning to grow less, where last year we increased our peak line of flying by 10 aircraft approximately. Next year we're planning to only increase by 5 aircraft. That does mean that the investment costs we're doing in the winter will be lower, so that will also support. And finally, we are reinforcing our investment into digitalization and all the tech investments with an objective to reduce costs, to improve customer service and improve operational resilience. And there is a whole bunch of projects which are currently ongoing, both in operational domain and commercial domain and in the general company environment. But I can count on you speaking on all the projects as well.