Easyjet Plc S/Adr

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.

Let's let Gary go on how you're seeing holidays.

Yeah. Yes, on the holidays, I think we said earlier in the year we were expecting about a 15% growth year on year. I think given the crisis, that will be below that. But we're confident it will be only a couple of percent below that. I mean, we'll be probably 10%, 11%, 12% growth at least. We're seeing very, very strong demand coming in in the lates. particularly four weeks out, and we do think that's been driven by customers just having the confidence that there'll be enough fuel for four weeks, but, you know, thinking further out. So I think once, you know, they gain more confidence that the summer is going to be kind of safe from a fuel perspective, then we're very hopeful that that can lift up. And when we look at that four-week demand, it's very, very, very strong year on year. They're pulling a lot forward. And I think that's helped by – The hoteliers have reacted very quickly with pricing, so they pulled the prices down in Turkey, in Egypt, in Tunisia, Morocco, Cyprus. pretty much when the crisis started and we went from a negative position in Egypt to a very strong positive position year on year within a matter of a couple of weeks just as those prices come down and we're seeing that sticking. So that's looking good. I think if we look at versus the competition and how we think will play out, I think we're in a bit of a sweet spot in some ways and if you look at the big legacy tour operators who've got fixed capacity, fixed commitments in the hotels, they'll be really focusing on trying to fill those. Where that gives us an opportunity is that the other third party hotels who maybe aren't getting that focus from them are pulling their prices down and we're able to pass that on to the customer. So we'll probably see a difference in mix in terms of where the customers go. this year versus last year, just based on that. But certainly when the hotel is reacting from a price point of view, and we're then passing that on to the customers, then we're seeing really good demand in the late. So if that could just in the next few weeks, start to go out kind of from the four weeks to the six weeks or eight weeks, I think that would give us quite a lot of reassurance. But we're confident that our position at the end of this year will be a positive one and not too far from the guidance that we gave.

And the last question is around fuel supply and what it might mean going further out into the winter. I think the rising confidence for this summer is the success that the fuel suppliers have had on diversifying their sources of both oil and refining capacity, which has really stepped up in the absence of it coming from the Gulf region. And, you know, governments have played a part in that to look to contingency planning to see how they could even bolster it further. So that is increasing the confidence, and you've heard from most of the sector that that confidence is rising for the summer. When you go beyond winter and what it means for pricing, capacity and supply. On the supply side, let's see, the world is rebalancing. We saw the UK government green lighting potentially, unclear really on the sanctions, but potentially Russian oil being refined outside of Russia to support. So assuming the fuel supply remains uninterrupted beyond the summer because because the straights of the news don't open. What we're seeing in pricing is the curve in backwardation. So people are expecting that fuel will come down. It's above where it was, because now you're hitting the summer, you're inside that 12 month window. It's above where it would have been pre-crisis. But as I said, we've got 53% hedged at an amazing rate of $714 a metric ton. So that puts us in a good starting position. Regarding capacity, as I said, we would anyway be looking to moderate our capacity next winter. We've added 24% in seats over the last three years. We don't need to grow at that level anymore. So we will be moderating the capacity. We've seen the utilization benefits come back in. as jan says we will obviously look for more but that will come through network refinement through use of technology like skymax we're also looking at the best way to optimize the network now cities and vfr flows are coming back and we'll be thinking about the capacity we put on some of those thicker london spanish flows and looking to to manage that as the roots mature so For us, at any rate, I would expect a more moderated winter, but we've given ourselves a good strong position from a hedge. I think the others will, I think it will be more moderated next winter, naturally.

We'll have one or two from Pamela. Can I start with bookings? You've obviously talked about some softness in bookings, but closing being strong. Where's the crossover point in terms of weeks before departure? And why do you think Q4 bookings are sort of further behind than they were in the April update? And I think you talked about taking aircraft deliveries into ownership this year. What are your thoughts in what you would do to finance deliveries beyond this year, please?

Okay, well, starting with bookings, the... The strength in month is a rolling strength. So now we'd be starting through the front half of June, strengthening, and may remain strong. But it is really anything six, eight weeks out, you see that the customer's not booking. Our conversion is strong. So when they come to the website, they're converting. So it's not necessarily a price thing, which is why the price is slightly above actually where they were last year in terms of yields. However, it's a role in caution. Now, whether that's been generated by unhelpful comments from energy ministers in Europe saying there won't be any fuel by the middle of May, it's past that now, so it should have run out. So there have been a lot of unhelpful comments, I think. You know even as a sector we should reflect on the way we communicate because we've never had more than four weeks visibility and communications back in March and April were saying it's the middle of March we've got the usual visibility which means we're fine to the end of April, created headlines of it all runs out in May. as opposed to what was actually said, which was we're fine to the end of April. So that hasn't helped, and I think that is in the mindset. But people are booking with strength in the late. Is it enough to make up for the lost forward bookings? Let's see. I don't know if there's any colour on what you're seeing destination-wise or shape within that.

What's interesting is, where we initially saw a move away from the Eastern Med into the Western Med destinations. Actually, that's balanced out now because hoteliers in the Eastern Med are offering really great deals, whereas the Western Med has oversupply in terms of airline seats, so actually hotel prices aren't so great. But we were already seeing, and we saw it last summer, we saw quite a lot of softness from UK, Spain, and we talked about that, I think, at our four-year results. In terms of what's happening in the lates and to give a bit more colour onto that, I mean, if we were to look specifically at May trading, As of the 23rd of February, we were 2% ahead in May in terms of overall, in terms of load factor. That dropped to 0.7% behind when we were at the beginning of April, and then by the 11th of May, that was only 0.2% behind. So, as Kenson says, we might not necessarily make it all back, but you're definitely seeing that strength in the late. If we were to look ahead to August, we're currently 7% behind where we were in terms of bookings for August. And I think that is all around confidence. People are just waiting to understand. And it's all about the fuel narrative. So it's really important that we're re-emphasizing that. And then in terms of route mix, it's all down to capacity in the market, really, and what's driving where people are going. We have had questions about whether we're seeing any improvement from people not flying long haul. I think not yet. We're not really seeing that coming through. But certainly in terms of destinations and routes that are popular, it's a lot of the long leisure as well as city breaks that are coming through particularly strongly. And in terms of our network mix, that actually plays in our favour. And we're seeing more of a strength in Europe than we are from the UK. So in terms of our network mix for H2, 17% of our network from Europe is onto leisure and 29% is non-leisure. So that's your cities and domestics. For UK, our leisure is 25% and non-leisure is 29%. So we actually have quite a broad mix of routes. We're not overexposed, but we are exposed to UK, Spain and UK leisure. But that is, as Kenson said, that's coming in in the late, but it's very tight. So it comes in the last four to six weeks. And really, no one's booking yet for the summer holidays. I think we'll wait to see what happens after May half term, because normally that's an inflection point when people then come back after the half term and start thinking about summer holidays. But I think the book with confidence message is the point we keep reinforcing to give people that confidence that we plan to operate the summer schedule we currently have on sale. We don't have any intentions to cut any capacity.

and jan on aircraft yep on the aircraft financing and so one um the number of aircraft we're expecting now to get delivery out uh in the next years uh are 17 uh this year uh 13 next year and 43 and the year thereafter so we're speaking about total capex of 1.7 billion and moving to 2.3 and then 3.3 but that's assuming that we're taking 100 of this ownership those aircraft into ownership I think the positive thing about EasyJet is that we have a strong balance sheet and that does allow us different options in terms of financing. The most important one will be to finance through own cash. We have 3.3 billion of cash currently on our balance sheet. So that means that the first option will be to finance through own cash. The second thing is the debt capital market. I mean, we have two bonds currently. There is none of them which is maturing before 2028. Obviously, we can have access to the bond market. Thirdly, we have last year and also this year's restarted with our Jolko financing. Our Japanese is operating this with a call option. And that is something new and it's probably it's a cheap way of financing, which we probably will continue to look for in the coming years. Of course, the market is limited, but at least what we can do, we will continue to do. Currently, we have eight aircraft which have been financed through the all costs. And then obviously we have any asset backed finance option which is still available to us. Currently 86% of our NEO fleet is owned. Total fleet is 59% of fleet which is owned. So I think we have sufficient options to be able to finance ourselves. And next to the 3.3 billion cash we also still have an RCF to our availability of 1.7 billion dollars.

Morning, Jamie Rebotham from Deutsche Bank. Two from me, potentially for Sophie. In terms of the thicker routes that you chose to trim in April and May, looking at some of the scheduling data, it looked like it was Geneva to some of the Spanish destinations that was one of the most affected corridors. Does that resonate? And if so, any particular reason for trimming there? And then secondly, you say you won't cut anything more now for peak summer. Doesn't look like Ryanair or Wizz are cutting either. It's growth full steam ahead. Are you seeing any competitor capacity actions from maybe some of the smaller players that might mean a bit of an opportunity for EasyJet in terms of market share?

Great. So in terms of Geneva, I mean, Geneva is part of the mix that we did adjust for April and May. But that was, I would say, what you saw in Spain was probably what you saw from most of the airports in terms of the trimming that we made. Actually, what we have been doing from Geneva is adjusting slightly some of the shorter sectors and growing more the longer leisure sectors. So we did take some capacity out of Amsterdam, out of Geneva, into Paris as well. And we've redeployed that into Tangier and some of the new routes that we've launched. So we're about 1.5 percentage points down in seat capacity, but we're at 1.7% in ASKs. So there is kind of route optimisation. Now you'll see that in pockets across the network. We've done it also in Amsterdam, predominantly in Amsterdam because the airport costs are so high. Actually, you can't cover the cost on a lot of the short sectors. We've had to reprofile a bit in Amsterdam. So Geneva has seen something similar in terms of what we've done on reprofiling around the edges there. And then in terms of competitor capacity, I mean, the biggest lawyers came out with the Lufthansa announcement of the 20,000 seats, but that was their CityLink operation, as you know. And actually, that doesn't really overlap with our network. That's a lot of the kind of short German sectors. So there's not a massive amount coming out. We're not seeing, as you say, Wizz and Rhino aren't really touching their capacity. We're seeing a little bit of moderation in Volatair, but only a very small amount within France predominantly. But it's just kind of trimming around the edges, and we're not seeing anything from Jet Tour Leisure either at the moment. And I do think, I think peak summer, as Kenton said, like most airlines make money in peak summer. So I think most will be reluctant to take significant amounts out. I think winter will be more interesting because it's much more marginal. I think one of the interesting points to add is the DFT announced sloth alleviation potentially to go through and be approved. Now, the sloth alleviation that they've announced is that you can give back 5% of your slots before the 9th of July and have full historical slot rights on those for the summer. And then beyond the 9th of July, you can then release another 5% of slots and retain your historical rights. At the moment, EasyJet doesn't have any plans to take advantage of that. As I say, summer is where we make the money. Interestingly, that is also going to apply for the winter. And that is where we'll be looking and running some scenarios over the coming weeks in terms of what makes sense and with different scenarios of rate of fuel prices, essentially. But winter is very much BAU because we always, in sort of early July time, look at our winter schedule based on forward bookings and based on costs. And we always make moderations for our winter capacity. The slot alleviation is a new thing. But certainly we, and I understand other carriers, won't be taking advantage of it. Some may, but certainly we don't plan to.

Hi, it's Andrew from Barclays. Can I ask one, sorry, back to Sophia, I think. How on earth, maybe not, how do we do the revenue managing in this environment when it's a game of chicken, I think, with the consumer, isn't it?

Because you don't want to see the loads for peak summer drop too low. Down seven sounds scary already for August.

Yeah, how are you thinking about managing the RevMan? Second question for Gary. I think James alluded to it in his early question, but you haven't given us very much detail or KPIs on selling prices and volumes for the summer. What can you tell us about that? Or if you don't want to play with those things, because perhaps they're not the best. What can you tell us about your ability to defend margin in the current environment, which is perhaps more important? And then if I dare a third question, what can you tell us about the MRO developments? Because I think your planned acquisition in Slovenia has got a legal block.

I know you've done Malta, but where are you going with the MRO development there? Thank you.

Great. I'll start then on the revenue management side. I think one of the great things is we're fortunate to have our own in-house system so actually we can and we've got a great core data science team that are dedicated in the revenue management team. So they're able to make sure that the system is optimizing for the current scenario. Now, if you left the system alone, what it would want to do is it would see low bookings coming in and therefore it would want to lower the fares because that's the way the system naturally works. What we're doing is we're putting in an overlay that's not letting the system overreact to a drop in booking. So we are adjusting what we call the rate of sale. So essentially where you see lower bookings coming in, we're not letting the system drop below certain minimum levels. But if booking suddenly starts to pick up, then it reacts more rapidly to that increase. Now, the way we're looking at something like August is because we know the traffic isn't coming in, we don't want the system to artificially pull down the fares, and so we're holding the system where it is. But what we are seeing is good conversion when people are looking for August. So searches for August, we were looking at it the other day, searches for August are down 15%. So people aren't searching at the moment. But when they come in, the bookings are converting 13% up year on year. So that goes to illustrate that. The demand isn't there at the moment because people aren't searching, people are cautious, but actually when they're coming in, they are booking, and therefore there's no reason to believe that we need to drop the fares anymore. It's more about how we give people confidence to get people into the book flow in the first place. So that's how we're adjusting the system, and that's how we're approaching revenue management for our Q4, is making sure that we are not letting the system overreact and we hold the fares where they are.

And the maintenance capacity. So we, as you know, we bought our own heavy maintenance facility in Malta. We've been operating just over four days since we've got it. We're actually a very attractive employee, employer in the area, and therefore we've been attracting engineers, and we're now able to open a fifth and a sixth bay. So we will be increasing the capacity in our own maintenance facility there. Regards to future plans, I'll let Jan talk to future plans, but Slovenia was an interesting one.

Yeah, well, I think that the opportunity in Adria or in Slovenia is, of course, an interesting one. But as you're saying, we're currently awaiting to be able to close that deal, given that there is at the moment a litigation which is ongoing, but we can't really say anything additional to it. But so hopefully that will be resolved because that will increase the number of base that we will be able to insource moving from a 25% currently insource heavy basements to around 50%.

There's such a lot of mix in what's being sold at the moment for H2, given the initial shift away in demand from Turkey, Egypt, Cyprus, and even Greece into Spain. And with that, when you look at that mix, then that does have a shift and a change in the margin. as a kind of cost plus business, you know, we will effectively take those reductions that the hoteliers are giving us, we'll put the markup on and we'll sell through. I mean, what I can tell you is that the, the average selling price has come down for H2. When we look at it versus some of the traditional players, clearly where they've got the fixed costs within their accommodation and on the flights, they are really pulling the prices down to places like Spain. We're choosing not to go there. So we will maintain a base at which we will just not go to the kind of prices that they're going to But we are confident by the end of the year that we will grow by kind of low double digits. We won't go backwards in profitability. We will grow in profitability and we will certainly take market share. So we're very, very happy at those kind of big KPI levels that we are ticking green boxes in that and doing very well. And that's what the models there are. in order to be able to react to, you know, it can move with the demand, it can move as a cost-plus business where the customer wants to go and where the pricing is.

Yes. Great, thanks. It's Jared Castle from UBS. Three as well. On slide 12, we show you the base case loop there. I'm just trying to get an idea, does that incorporate the parent backup or are you assuming that RMP

Geopolitical backdrop improves. And, you know, what would it mean, you know, if it doesn't incorporate that, what would it mean for the base case plan? I mean, could we see deferrals or groundings, etc., to, you know, over the next two, three years, I guess? Secondly, you know, any change in views on how you view the Middle East? You know, let's say again this is behind us or are the Middle East exposed markets going forward, I guess, over the medium term if, you know, the current situation has changed your medium term plans? And then just lastly on loyalty, you know, can you give a bit of color what's changed your mind about having a loyalty program, you know, maybe looking a little bit more like a full service airline and, you know, would you do anything else? Maybe an airport lounge or take it the answer is no, but just how you've evolved in terms of loyalty thinking. Thanks.

Jan, do you want to start with the fleet question?

Yeah, I hope I understood the question well. So the base fleet plan gives you a view of what the aircraft or what a fleet will be at the end of the year. And so having those 270 aircraft, for example, 2026, is the number of aircraft we're having at the end of the year. However, what we call it, I think it's the first time we call it out, the peak lines of flying, is really the number of aircraft that we have available at the peak moment, which is, of course, what is driving your results. The difference between the base fleet and the peak lines of flying is linked to the timing of deliveries of the aircraft. We normally always hope to have those aircraft before the summer, but because of some of the delays we have experienced with Airbus, they are also coming after the peak summer into the winters as the main explanation. Now, within that base fleet plan, but even in the peak lines of flying, we do have some flexibility, flexibility in terms of one, timing of deliveries of the aircraft, firstly, but secondly, also into the decision as to whether or not to prolong some of the leases that we have. So we have both upward and downward flexibility if we would need some.

And on the other two questions, I don't think of what's happening in the Middle East as a change for long-term structure in the aviation industry. I don't see this as we will never get oil out of that region, clearly. you know, this will be resolved at some point. It's just as important for Iran to be having oil passing through the Straits of Hormuz as any other country. So longer term, life will go back to there being sufficient oil supply coming from everywhere and that will drive prices down over the longer term. Will it come back to where it was? I don't know. Is that the question?

I'm really talking more about the net worth, I think.

We didn't really go to the Middle East. No, I mean, what we're seeing is the Egyptian in particular and anywhere around North Africa are incredibly responsive when they see demand pattern shift. And there are some fantastic offers, which means having dropped in the first few weeks of the conflict by 50%, 60%, 70%. they are now you know performing up year on year with amazing offers, very attractive five-star properties in Egypt being the equivalent of three-star properties in Spain and when people really get out their maps and realize the Suez Canal isn't part of the Strait of Hormuz they become more relaxed and it is certainly doing really well in terms of searches, in terms of conversion, in terms of people traveling there. No, will be the short answer. No, I don't see anything in our network that would change. The only thing we have done is when it comes to flying back to Tel Aviv, we prolonged the decision not to re-enter that market to give us clarity on planning next winter. So we won't be going back to Israel next winter, just for clarity. On the loyalty program, change of mind, I never thought it was a bad idea. We just didn't have one. I don't think that counts as a change of mind. We have 100 million customers. We're a very attractive airline from this place. There's a white space in the market. We know that... with British Airways becoming more of an elite program, points are harder to get. They're kind of really not rewarding the frequent flyers to and from Scotland anymore. There are just opportunities in this space and we'll reveal more about the type of program that will be, but we're seeing a growing membership anyway for EasyJet Plus customers.

Yes, good morning. Rory Cullinane, RBC. So first question on staff unit costs up 11%. Can you break that down at all and how should we expect that to evolve? And then secondly, you know, fuel may not be passed through to fares this summer in short haul. How do you see that playing out? Does it just come back and depend on capacity or how do you think about that? Thank you.

Do you want to start with the costs? I'll take the CAF. First of all, overall CAF increased by 5%, to be honest, not in line with our expectations, if you exclude the additional fuel costs into the Middle East crisis of 25 million, and also the legal provisions that we've taken for some of the historic legal cases of 32 million. If we look at the cask ex-fuel, that increased by 8%, obviously higher than what we've experienced in the previous quarter, than the previous years. It's not what we're expecting for the rest of the year. So for summer, we're expecting to come back to normality, which means in the cask ex-fuel, which will increase with a low single digit. Now, if you look at the Catholic fuel increase of 8%, what's the reason for that? So, partially there's a big link to the one-offs, as I explained. So, in the first half of 2026, we had those extra legal provisions of 32 million, but also we didn't have the benefit that we had last year from the aircraft buybacks, which had a positive effect, so that's not returning. Secondly, we have been investing in additional resilience in summer, which has benefited our summer performance, with disruptions costs going down by 50 million. But that additional resilience, which is coming through additional crew, is of course a cost that is continuing during the winter. And the third element is linked to the load factor growth. So as Kenton mentioned earlier, load factor grew by two percentage points. So that means that everything which is passenger-related costs is increasing. And fourthly, we also had an unfavorable foreign exchange movement with the euro evolving unfavorably versus the pound. And then finally, we have, of course, the above inflation cost increase, especially in airports like Amsterdam, where costs increased by 34%, but also the general increase in terms of wages and salary. And all of that was not compensated sufficiently by the productivity increases that we've seen in terms of aircraft utilization, but also crew productivity and all the operational initiatives that we have seen. But so I think it will be a one-time element this first half. For the second half, we're expecting caskets fuel to go down again in a sense that it will only increase but in low digits, low single-digit amount.

And back to the first question and the ability to pass on the incremental fuel costs. Fares in this summer are going to be dynamically priced the way low-cost carriers always do. So it'll depend on the route, it'll depend on the demand, it'll depend on the timing of the route. At the moment, fares are slightly above where they were last year for peak season, but that will be dynamic. And if competitors are looking for fares to be flat or down, then there'll be some elements of that driving the market. It'll depend route by route. what the situation is. When you look further out, we're in a more inelastic period for people booking in winter. That's why we have increased the minimum fare price to start reflecting our outlook for fuel costs. And at the moment, obviously that price is sticking. People are buying our load factors marginally up for where it was this time last year for winter. So it really is the the concern of the rolling four weeks that has created the uncertainty and people are just leaving that decision later. But we don't yet know what the fair environment will be for the lakes in July or September.

Yes, Konwar Gaynor here from Bloomberg Intelligence. So just to pick up on an earlier point, I mean, what does this sort of 2H move away from the longer leisure flows towards more cities and domestic? What does it mean for your utilisation and to what extent does that actually play into your extra cost guidance? And then the second one on the demand side, you know, while I can appreciate that the geophysical concerns and concerns around jet fuel and everything are contributing to the shortest looking window what is your general sense on the underlying demand health of the consumer given that things like higher energy bills will no doubt hit people in the pocket i'll start with the last question on on demand health and then um

at the end to talk about the cask impact of some of those shorter leisure routes. Although this isn't a wholesale move. So it's on the edges we're looking at here in terms of that. In terms of the demand health, I think, you know, You've got the world before the Middle East crisis and the world after. I mean, before the customer was there, we were growing. We saw a 6% increase in passengers for the airline. We saw a 22% increase in passengers for holidays. We know we've put a lot of investment in that capacity, and I'd expect those to mature over time. So people were definitely growing. traveling, they were buying, demand was robust. As we look forward, it remains very strong in the month of departure. So people are traveling and they're traveling in their masses and searches really ramp up. I think what's hard to gauge is what's fully behind the uncertainty with so many factors. Is it the price of petrol at the pump? Is it the rumours that fuel's not going to be there, which hopefully will start abating as more of the conversation comes out that fuel supply looks good for the summer? Is it the impact of supermarket costs? Really hard to put your finger on it. All we know is when it comes to the in-month window, people are booking and they're booking strong. Hopefully as these fuel concerns and supply start alleviating, at least for this summer, we'll see people coming back earlier. But there has been a watch and wait approach. But we haven't yet got into high season. We've still got the majority of our seats to sell for Q4, so let's wait and see.

On the task impact... Sophie, you can always... Do you want to answer or I can try first? Go ahead.

I'd like to hear your answer. I'll start anyway, and you can always add on the cast bit. I think what's interesting is although we are adding cities and domestics, we're also adding long leisure, so a lot more into non-EU. So the net balance is actually our ASKs are still growing. So our seat capacity for the second half is up 2%, but our ASKs are going to be up 3%. Sorry, the ASKs are actually up 5%, but the sector links is up 3%. So what you'll see in that mix is a kind of rebalancing of what you'd have as your kind of core leisure. Beach, you've got some more long leisure coming in. So we've got Egypt, we've got a lot more into North Africa. And then you're balancing that with more cities and domestics. So net-net, you're still going to see capacity growth greater than your seat growth in the market. So it's a bit of a mix effect, taking a bit of remixing that leisure. And that's also on the back of Egypt holidays and some of the success we've had there with some of that long leisure as well.

Adding to that, first of all, growing a little bit more on cities and domestic is not necessarily a wrong thing, because if we look at a current RASC development, we do see that cities and domestics are more resilient than currently the more leisure destinations, first of all. And secondly, I think the growth in cities and domestic is probably more focused on UK and more specifically on London and in winter. Because if you would look today at the repetition in terms of seat capacity, cities versus leisure or non-European, and especially out of the UK, the amount of seats on cities has gone down in proportion. So we see that there is an opportunity to rebuild the city proposition, especially on winter out of London. And that does mean that it will also drive your aircraft utilization because currently productivity in winter out of London is probably not the highest. So that should have also positive cost benefit.

The first question I wanted to ask about the kind of market over supply on beach routes, which you mentioned during winter and I think maybe a little bit into summer, especially UK beach. Are you starting to see that kind of change any way whether it's summer or looking early out to winter and is that just completely relying on Tel Aviv or Israel reopening I guess you could argue structurally some capacity will might never go back to that kind of adjacent region and then just going back on the Q4 kind of holding on to the higher yields at the moment and revenue management is the aim at the moment to be flat on low factor year-over-year when we get there or would you take lower loads about higher prices. So, you know, would you be happy with the current mix once we get into properly into Q4? And then this final one, you do have this new 250 million cost benefits number from the phasing out of the A319s over 27 and 28. Just to confirm, that's basically a pull forward of upgaging. It's not completely incremental to the 1 billion PBT number, medium term. And I guess for us kind of simple analysts, Should we just add 250 million to our numbers for 27 and 28? Or not?

I'll start with the last question. It's a pretty interesting one, isn't it? I mean, the 250 million is saying if in 28 we flew the program that we flew in 26, so with those 28 aircraft, that would be the cost benefit. it burns less fuel when you have a neo flying on an a319 route um and therefore if you had the same capacity and you remixed it with those aircraft then the fuel savings the the pilot savings the cabin crew savings would would land through at quarter of a billion so that that's the cost uh benefit now if you do it on 28 capacity you also get the scaling benefits of having more seats on the planes and that's when the fixed costs come through as well, which is why there's a delta between cash and fixed costs.

But just to make it very clear, they are part of our medium term targets, so you can't handle off additionally.

I mean, always part of the medium term targets was the profit improvement in holidays, which is coming through, the upgaging, which is unfortunately since 2023, moved to the right and been hard to get your fingers on. What we're saying now is it's coming in the next two years, a large chunk of that will come. So that's what's coming. The upgrade is coming near term. It was always part of the medium term targets. We always said it's about three pound per seat. How much we then trade off with revenue dilution from filling the extra seats, we'll learn more. It hasn't, we haven't seen much from the, you know, going from 183.197 to 80, but this is all 80 going effectively in the next three years. But that will be on the thickest routes. It will be in slot constrained airports. You don't need to put a new route in play. So it's not proving out new routes. Whereas the 24% increase in CACs that we've done over the last three winters, our gauge has barely moved. So that is new routes, aircraft flying new places, that needs maturing, this doesn't need maturing to the same way. Oversupply on UK beach, Sophie, do you want to pick that up?

Yeah, I mean, there is more capacity on UK beach, even this summer. 8% up in Italy, Portugal and Spain. So all of those see more capacity. I mean, interestingly, is where that's coming from. From our own perspective, our growth has only been on the Newcastle base opening for this summer. So that's where a lot of that beach growth has come from. from us, if you look at somewhere like Gatwick, 53.7% of our capacity in H2 in Gatwick is on cities and domestics. And to my earlier point, that is where we are growing more. So we're adding H2 capacity on cities and domestics at Gatwick this summer by 3.1% versus last year, compared with removing 0.3% on beach routes. So we are, as you said earlier, that's part of the The network optimisation. So for us, it's routes like adding a new key, which we see as a great opportunity for the summer, those sorts of things that just make sense. And then building back more into places like Dusseldorf, Madrid, Porto, Berlin and so on from Gatwick. So, yes, we're still seeing pressure, I think, on UK leisure more broadly. The benefit we've got is the fact we have easier holidays. That gives us an advantage over many other airlines. And the fact we've got flexibility with the Egypt holidays model, that means we're not fixed a certain destination. So if the Egyptian hoteliers put on great deals, we'll just sell more holidays to Egypt. And if the Spanish hoteliers keep their prices up, we'll just see less conversion there, but we'll still see them growing. on flight seat only. So that's kind of what we're seeing. I don't think Tel Aviv would make a significant difference kind of longer term in terms of capacity from the UK versus the leisure markets. And then on your point around Q4 yields, low factor and where that balance is and where we get that right. I mean, ultimately, we aim for the balance to get the best net profit. So whether that means that we don't take the full load factor. In terms of load factor objectives, we want to continue to achieve the load factors we have done historically, and we want to be realistic, but we're not going to go for that load factor at any cost. Now, obviously, load factor for us, we benefit then from ancillary sales. and ancillary sales continue to be strong for us, and therefore we take the balance of both ancillary plus ticket when we're making a decision on overall final load factor. So we will still aim to get the load factor, but we're not going to do it at any cost in terms of ticket yields. And there'll be certain routes where you're right, where actually if we don't see the demand coming in, it makes sense just to take the yields you can on the people that are coming in, and you'll keep the yields high. But generally, for Key4, most will be demand-led in terms of bookings and pricing.

Well, thank you very much for all the questions.

Thank you for coming today, and we'll be around for a few minutes. If anyone wants any kind of one-on-one questions afterwards, please come forward as myself. Yeah, and the team will be here.