AGM Statement

RNS Number : 3347H

easyJet PLC

18 February 2010

 



18 February 2010

easyJet Annual General Meeting  2010 Chairman's Statement

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

"This is my first AGM as Chairman of easyJet and I am delighted to be taking over the Chairmanship of a company which has achieved so much since it started fourteen years ago.

easyJet has continued to be  one of the best performing European airlines even during the recession. It was one of the few airlines globally to make a profit last year with an underlying pre tax profit of £43.7 million. easyJet also delivered the best revenue performance of any European airline, driven by strong consumer demand because we offer the lowest fares to the most convenient airports.  

In a tough environment, easyJet's continued superior performance is a testament to the quality of our business model: Europe's premier air transport network, strong customer proposition and service delivery linked to a highly efficient operating model that is predicated on simplicity and low cost.

At easyJet our people really do make the difference to the customer experience. We have outstanding people, including our front line cabin crew and pilots who are highly trained and professional. They all make a crucial contribution to our success by creating an easyJet personality which is an important competitive advantage. I would like to thank them all for helping to deliver such a resilient performance in very difficult economic circumstances.

Importantly, in the past year we have strengthened the fundamentals of the business. With improvements in network quality, enhancements to easyJet.com and a clear programme to take £190million of cost per annum out of the business which we expect to deliver after inflation a net £1 cost reduction per seat by end of September 2012. All of this will give easyJet a great platform for profitable growth in the medium term and to achieve our 15% return on equity target. The Board has also agreed a fleet plan of around 7.5% growth per annum in seats flown over the next five years. This fleet plan will enable easyJet to grow its share of the European short-haul market from around today's 7% to 10%. Whilst we have not recommended payment of a dividend for the year ended 30 September 2009 the Board will keep the issue of returns to shareholders under review as we achieve our financial targets.

Contrary to the suggestions contained in the  inappropriate, inaccurate and personal attacks launched by  Ryanair on Stelios our founder, we believe that ensuring our customers arrive at their destinations on time is one of the  key factors in the  delivery of a winning customer proposition. This is why we continually measure on-time performance, and we  are pleased that in the  year  the number of flights arriving  'on time' improved from 75.4% to  79.5%.  These statistics were clearly presented on our website as part of our annual report on 20 January 2010.

Much of our future potential has its foundations in the work done by Andy Harrison and his team. Andy leaves later in the year to take up new challenges and we are making good progress with the recruitment of a chief executive to be his successor. I am pleased that Chris Kennedy will be joining the easyJet Board in June as Group Finance Director; he brings a strong combination of financial, business and leadership capabilities and I am sure that Chris will make an important contribution to easyJet.

I would like to thank Sir David Michels who took on the role of interim Chairman in July 2009; I'm delighted that given his wealth of experience he remains with the Company as its Deputy Chairman. I am looking forward to working with David and the rest of the Board and the easyJet senior management team to continue to develop the business.

The legal action with easyGroup over the interpretation of the brand licence agreement continues. As we have previously disclosed, following High Court directions in summer 2009, some elements of the easyGroup claim have been recast within notices alleging breach of contract. These include notices alleging non-compliance with some administrative obligations by easyJet, such as auditing sublicensees and monitoring compliance with the 75:25 Rule. Naturally, easyJet remains in correspondence with easyGroup on these points. However, the principal subject matters at issue remain the interpretation of "the 75:25 Rule" and the classification of certain revenue streams affecting that interpretation.

Obviously, the Litigation Committee of the Board is committed to ensuring the optimal outcome for the Company. Whilst we will be receptive to opportunities for an acceptable commercial settlement, we are preparing for a court hearing (scheduled for June 2010) which we hope will provide clarity on the issues in dispute. To this end we remain reassured by robust advice from our professional advisers that the Company's interpretation of the brand licence is well-founded.

The aviation industry plays a central role in global wealth creation and in the UK alone it contributes £11billion to GDP. Aviation contributes just three percent of global manmade greenhouse gas emissions but we know it is important that our industry addresses its wider responsibilities, in particular to ensure that we play our part in tackling climate change. However if this is done through purely constraining demand the economic and social benefits of travel will be put at risk. It is therefore critical that the right policy framework is put in place to deliver sustainable aviation with efficiency gains and lower emissions. This means pressuring airlines to use existing aircraft technology more efficiently and pressurising airframe and engine manufacturers to bring forward the next generation of technology with more urgency. We also need to ensure that air travel taxes are not blunt, ineffective taxes on passengers such as APD in the UK, but emissions based taxes which are designed encourage airlines to operate more efficiently.

We have now taken the first steps towards aviation entering into the European Emissions Trading System or ETS. This will put a price on aviation CO2 emissions to encourage greater airline efficiency. However we cannot simply rely on the carbon price mechanism to deliver the necessary efficiency gains. Additional measures are needed to force the pace of technical development. Specifically governments should set minimum standards for aircraft emissions in the same way as they do in other industries. Aircraft which did not meet these standards should not be permitted to fly; different standards and different emission milestones would be required for each class of aircraft. This approach provides a global solution for a global industry.

Finally as we commented in our Interim Management Statement released on 21 January:

"easyJet's pre tax result in 2010 at current fuel prices and exchange rates¹ is expected to benefit by around £60million in the first half of the year and £100million for the full year from the positive contribution of lower dollar fuel prices as higher price fuel hedges roll off and a stronger euro, partially offset by the negative impact of a strengthening US dollar.

Yield performance and any future levels of weather related disruption are the key variables in determining easyJet's first half performance and consequently the first half pre tax result is expected to be a loss in the range of £80million to £95million delivering a significant improvement compared to the first half of the prior financial year.

Economic conditions remain challenging and we continue to expect a tough trading environment. However, the underlying performance of the business in the first quarter has been encouraging and easyJet remains on track to deliver substantial profit improvement during 2010."

End

For further details please contact easyJet plc:

Institutional investors and analysts:

Rachel Kentleton, Investor Relations                                           [phone]

Media:

Oliver Aust                                                                               [phone]

Ben Foster / Tim Spratt (Financial Dynamics)                              [phone]

1.   Jet cif NWE August 2010 $733 per metric tonne, US $ to £ sterling 1.63, euro to £ sterling 1.13. (21 January 2010)

 

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