EasyJet 2010 Annual Report Download - page 9

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As Carolyn outlines in her Chief Executive’s review, she has over the past
few months concluded a review of the business. Whilst it is clear from
the operational issues experienced this summer that the business had
lost focus onsome of the basics, the nancial results demonstrate that
easyJet continues to make progress against its goal of delivering market
share growth and improving returns thus underlining that easyJet’s
business model and strategy are sound. Carolyn and Chris will provide
the Company with a leadership and focus that will ensure improved
execution of the strategy going forward and a renewed focus on
customers and the engagement of our people.
easyJet is strongly positioned to take advantage of the continuing
protable growth opportunities in European short-haul aviation. This
growth, combined with the margin improvement through a tight focus
on costs and accessing new revenue opportunities, means that easyJet
ispoised to continue the strong operating cash generation of the past
few years. Consequently, the Board now feel that the time is right to
setin place a formula to trigger adividend payment in years when
theCompany is protable whilst at the same time ensuring that the
Company remains prudently nanced with a strong, liquid balance sheet.
This will ensure that shareholders are able to benet directly from the
Company’s success as easyJet continues to take market share.
Brand licence
On 11 October 2010, your Board announced that easyJet, Sir Stelios
Haji-Ioannou and easyGroup had agreed, subject to independent
shareholder approval, to a variation of the licence agreement providing
for the Company’s use of the easyJet brand and to remove the rights
granted to Sir Stelios to appoint himself Chairman and to easyGroup to
appoint Board Directors. The Board believes that the revised agreement
better aligns the interests of easyJet shareholders and the licensor and
that it is benecial to end the uncertainty caused by this long running
dispute and enables the Company to move forward.
Industry regulation
The aviation industry plays a central role in global wealth creation and in
the UK alone it contributes £11 billion to GDP. However, this does have
an environmental impact. Aviation contributes 2% of global man-made
greenhouse gas emissions and 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 benets of travel will be put at risk. It is therefore
critical that the right policy framework is put in place to deliver
sustainable aviation, allowing continued growth while putting emissions
on a downward trend. This means creating a framework that drives
airlines to use existing aircraft more efciently but which also ensures
airframe and engine manufacturers bring forward the next generation
ofaircraft as soon as possible. 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 that are designed to encourage airlines
tominimise their impact upon the environment.
The regulatory framework that easyJet operates in is crucial, as alongside
ensuring that we can operate in a safe environment, it has a signicant
effect on both our cost base and the opportunities available for future
growth. We are working across Europe to persuade governments and
the European Commission to deliver regulation that provides stability,
issensible and allows us to compete fairly.
Conclusion
This is my rst year as Chairman of easyJet and I am delighted to have
taken over the Chairmanship of a company which has achieved so much
since it started 15 years ago. I look forward to working with the whole
team at easyJet to continue to unlock the Company’s potential.
Sir Michael Rake
Non Executive Chairman
Pre-tax profit
Increase of £99 million in pre-tax profits despite
some significant challenges in the year.
£15 4m
Overview Business review Governance Accounts Other information
07
easyJet plc
Annual report and accounts 2010