AGM Statement

RNS Number : 8547M

easyJet PLC

05 February 2009

 



5 February 2009

EASYJET PLC 2009 AGM CHAIRMAN'S STATEMENT

Speaking at the Company's Annual General Meeting in Luton today, Sir Colin Chandler, Chairman of easyJet plc, said:

'The European economy is in a challenging recession of an uncertain length and depth. Many commentators are suggesting that this could be the worst economic conditions of a generation. The harsh effects of this are already being felt by many companies and industries.

Against this tough economic background easyJet has started 2009 better than we expected. Our forward bookings are currently in line with the prior year and in our recent first quarter management statement we said that for the first quarter, our constant currency total revenue per seat increased by 14% and that forward bookings remain in line with expectations. In addition jet fuel prices have fallen from the high of $1400 per tonne in summer 2008 to around $460 per tonne at spot prices. We shall receive the benefit of this reduction over time as our hedging positions are renewed at lower market prices. These benefits will be offset to some extent by the weakness of sterling against the US $. 

As we mentioned in our recent Interim Management Statement easyJet has put the following fuel and currency hedging positions in place:

For the year to 30 September 2009:

• 73% fuel requirement hedged at $1,094 per tonne

• 72% of anticipated 2009 US$ requirement hedged with 68% forwards at $1.95 and 4% with collars between $1.75 and $1.88

• 71% of anticipated 2009 euro surplus hedged at 1.24/£

For the year to 30 September 2010: 

• 27% fuel requirement hedged at $926 per tonne

• 25% of anticipated 2010 US$ requirement hedged at $1.81

• 38% of anticipated 2010 euro surplus hedged at €1.23/£

The robustness of our revenue performance to date is attributable to a number of factors; a flight to value with European consumers choosing our great value pricing and the attractiveness of our network serving primary airports, the reduction in competitor capacity on our routes, our new mainland European bases are performing well, the consequent 20% growth in our non UK originating passengers has spread our economic exposure  and  we have seen a substantial increase in our ancillary revenues per seat. There is clear evidence of business travellers switching to easyJet in search of better value and we are benefiting as leisure passengers switch from long haul destinations to holiday within the easyJet network. Our average fares also benefited from a 9% increase in sector length and the thinning out of our Winter schedule as more of our flights operated at peak times and we reduced capacity on some of our routes year on year. The higher average fares will offset to some degree the higher fuel price easyJet has paid this winter as well as the increase in unit costs which arises from lower utilisation of aircraft .

As we stated in our Interim Management Statement released on 22 January our outlook for 2009 is as follows: 

 'The economic outlook across Europe remains uncertain and we continue to monitor any potential impact on UK to Eurozone bookings following the sharp decline in the value of Sterling. Despite these concerns, forward bookings over the second and third quarters remain in line with last year. 

easyJet's capacity, measured by available seats, for the first half is expected to be ahead of last year by low single digit percent. Revenue growth in the first quarter was ahead of expectations and we anticipate total revenue per flown seat for the second quarter to be slightly ahead of the prior year on a constant currency basis. This is despite the fact that Easter has moved into easyJet's third quarter of 2009 from easyJet's second quarter in 2008.

For the first half, costs per seat ex fuel remain in line with previous guidance, up mid to high single digits on a constant currency basis. As previously stated pre-tax margins in the first half will be impacted by higher fuel costs and will decline compared to the first half of last year. At current fuel prices, dollar rates and hedged cover we anticipate first half fuel costs to be around £3.60 per seat higher than last year. Second half unit fuel costs are expected to be broadly in line with last year

Additionally there is no change to full year guidance on unit operating costs and thus full year unit operating costs ex fuel are expected to increase by a low single digit percentage at constant currency. Naturally, the recent fall in interest rates will cause a reduction in net interest income.

Supply to the European short haul market by all airlines in general is expected to continue to contract over the summer by 4% to 5%, however easyJet's capacity is expected to grow in the second half by low single digit percent with continued focus on growth from market opportunities at Gatwick and in mainland Europe. 

easyJet revenues for the first half will be ahead of previous guidance, although the unit revenue outlook for the summer remains uncertain due to the difficult macro-economic environment and any potential impact from the strengthening of the euro against sterling. Consequently, easyJet reiterates guidance that for the full year at current fuel and exchange rates easyJet expects to be profitable'

In light of the current economic environment the Board will continue to adopt a cautious approach to growth and will focus on maintaining a strong balance sheet. The Board will continue to monitor capital expenditure plans and conserve the Company's cash. As part of this essential process, efforts continue to dispose of the aircraft held for sale at the year end but obviously there are no assurances that this will happen before the end of the current financial year given the current macro climate. More importantly, fleet planning decisions will be made by the Board prudently, on the basis of the trading outlook, as updated on a monthly basis and general macro-economic conditions. These decisions will be made in respect of the current fleet plan, which was published in the Report and Accounts and in the recent Interim Management Statement. Naturally this fleet plan for 2010 of 185 aircraft and 2011 of 197 aircraft may change if the macro environment worsens in the next 3 to 6 months and given the lead-time for building aircraft.

Undoubtedly, there will be challenges in the coming year as the consumer environment weakens but easyJet is well-positioned relative to the competition and benefits from an experienced and capable senior management team. We continue to strengthen the Board and I am delighted to welcome Keith Hammill to the Board as Non Executive Director. Keith brings a wealth of experience and I am sure that he will be a worthy successor to Dawn Airey who has retired from the Board due to her commitments at Channel 5.  

We have begun the search for my replacement as I approach my 70th birthday. We shall report further over the coming year. It has been very satisfying over the past 6 years as Chairman to see easyJet develop into a truly pan-European airline operating the premier European air transport network. 

At easyJet we truly believe that people make the difference. The commitment and enthusiasm of our crew is a key part of why easyJet ranks ahead of competitors in the perceptions of our customers across Europe and my fellow directors and I continue to be very grateful for all the efforts of all our people.'

For further details please contact:

easyJet plc

Rachel Kentleton, Investor Relations             [phone]

Toby Nicol, Corporate Communications        [phone]

 

END

 

 

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