EasyJet 2010 Annual Report Download - page 10

Our people make a difference
I have been truly impressed by easyJet’s people. Our front line cabin crew
and pilots are highly trained and committed. Their warmth and focus on
passenger care helps create a connection with our customers which
makes us a more popular and successful airline and they need to be
recognised for this. Our engineering, management and administration
teams are equally important to the success of the business and I’d like to
thank the whole team at easyJet for their commitment and hard work
over what has been a very tough year in the airline industry.
Taking a fresh look at the business
Over the past couple of months the senior management team has
conducted an end to end review of the business. We have examined all
of the assumptions that underline our business plan. We have looked
carefully at the broader market in which we operate and the trends that
will challenge us and provide us with opportunities.
Our conclusion is that the business model and strategy is delivering for
customers and shareholders. We have a unique network which will
enable us to expand in Europe as our routes and low fares
are attractive to customers.
Market place review
We see clear opportunities for easyJet to continue to take market share
as charter trafc continues to decline, as weaker short-haul carriers
retrench or fail and as new infrastructure capacity comes on stream.
Lowcost carrier penetration across Europe is expected to increase as
several major markets including France, Switzerland, Italy, Netherlands
and Portugal see the penetration of low cost carrier trafc increase to
around 50% in line with that now seen in the UK and Spain.
Passenger growth in the European short-haul market is expected to
continue at between 3% and 4% per annum, with the majority of the
growth in point to point business and leisure travel.
Around 200 carriers currently compete in the European short-haul
aviation market and the top ve players, including easyJet, account for
around 60% of seats own with the rest of the market being highly
fragmented. The average growth of the market over the past 20 years
orso has been 4.5% per annum. In the past year, overall capacity in the
European short-haul market grew by 4.2%.
easyJet is the only pan European short-haul carrier with a signicant
position in major airports and operates the leading network in European
short-haul aviation measured by presence on the top 100 routes.
Ournetwork not only ensures that easyJet is well positioned to capture
leisure trafc but also will enable easyJet to continue to build its share
ofthe £18 billion per annum European short-haul air travel market.
Whilst we anticipate that the European short-haul market will continue
to grow, the industry is clearly cyclical and protable opportunities for
expansion will not be linear. Therefore exibility in eet planning will be
key in order to seize strategic opportunities when they emerge whilst
not putting excess capacity into uneconomic markets. Consequently,
easyJet has built exibility into its eet planning arrangements that
meansthat its growth rate in terms of seats own can be exible and
dependant on the opportunities available and economic conditions.
Introduction
This is my rst Chief Executive’s review at easyJet and I am proud to be
leading a company that has achieved so much in the past 15 years.
easyJet was born out of the liberalisation of European aviation by
'OpenSkies'. It has been a true industry innovator pioneering the use
ofthe web and low cost air travel centred around a transparent pricing
model. Post 9/11, easyJet took bold strategic moves that have been the
foundation of the Company’s present day success including the initial
entry into primary airports such as London Gatwick. Over the past ve
years, easyJet has grown from a UK centric airline to develop a signicant
presence in mainland Europe built around valuable positions at slot
constrained airports.
The strength of easyJet’s business model, which is centred around
offering low fares to convenient airports, is reected in the performance
of the past year. easyJet has delivered a robust nancial result against
adifcult backdrop. Reported pre-tax prot grew by £99.3 million to
£154.0 million driven by a strong revenue performance as total revenue
grew by 11.5% to £2,973.1 million. Return on equity grew by 3.1
percentage points to 8.6%. easyJet also generated signicant positive
cashows in the period with cash and money market deposits at
30 September 2010 totalling £1,171.9 million (30 September 2009:
£1,074.9 million).
Since I joined the Company in July, my priorities have been to spend
asmuch time as possible out in the network with our people to
understand their perspective on the business; the mitigation of the
operational issues experienced in July; resolution of the Brand Licence
dispute; and importantly, taking a fresh look at the business to assess
theopportunities available to it, in conjunction with a review of easyJet’s
capital structure to ensure easyJet has the nancial resources necessary
to support its future plans.
Business review
Chief Executive’s statement
The leading positions that easyJet
has built at primary airports gives
easyJet the platform for future
expansion in Europe.
Carolyn McCall OBE
Chief Executive
08 easyJet plc
Annual report and accounts 2010