Making low-cost
travel easy
Annual Report and Accounts 2022
What’s inside
2022 Highlights
Strategic report
Investment Case
Chairman’s Letter
Our Purpose
Strategy Overview
Business Model
Our Promise
Roadmap to Net Zero
CEO Review
Market Review
Our Strategy
Key Performance Indicators
People and Culture
Our Engagement with Stakeholders
Sustainability
Task Force on Climate-related
Financial Disclosures
SASB Index
Non-Financial Information
Statement
Financial Review
Risk Management
Going Concern and Viability
Statement
Governance
Chairman’s Statement on
Corporate Governance
Board of Directors
Airline Management Board
Governance Framework
Corporate Governance Report
Directors’ Remuneration Report
Directors’ Report
Statement of Directors’
Responsibilities
Financials
Independent auditors’ report to the
members of easyJet Plc
Consolidated Accounts
Notes to the Consolidated
Accounts
Company Accounts
Notes to the Company Accounts
Five-Year Summary
Glossary – Alternative Performance
Measures
Glossary
Shareholder information
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Financial highlights
Loss before tax
£(208)m
2021: £(1,036)m
Headline loss before tax
£(178)m
2021: £(1,136)m
Revenue
Net debt
£5.8bn
2021: £1.5bn
£670m
2021: £910m
Headline EBIT
£3m
2021: (£1,036)m
Headline EBITDAR margin
9.9%
2021: (37.8)%
Non-financial highlights
Load factor
85.5%
2021: 72.5%
OTP (On-time
Performance)
72%
2021: 87%
Seats flown
81.5m
2021: 28.2m
CO2 emissions per
passenger kilometre
70.4g
2021: 81.1g
Navigating this report
Signposts to extra content that can enhance your understanding of
the information provided in this report can be found throughout.
Look for the following icons:
Links to resources on the easyJet corporate website
https://corporate.easyjet.com
References to pages within the report
INV E S TME NT CASE
COMPETING THROUGH
business transformation
Making low-cost travel easy
Delivering
Greater
profitability
• Profitable reallocation
of aircraft
Increased share in constrained
airports with additional slots
at Gatwick, Porto and Lisbon.
More capacity for the
Greek islands.
• Step-changing ancillaries
Airline ancillary revenue
increased 274% in the year,
with a greater focus on the
new cabin bag policy and seat
pricing capability plus a
change to the in-flight
retail proposition.
• easyJet holidays
With 1.1 million customers,
the UK’s fastest-growing
holiday company. Delivered
incremental revenue of
£368 million to the Group and
£38 million of operating profit.
cost
focuS
Strong
Financial
Position
• Cost seasonality addressed
A proportion of captains are
on seasonal contracts.
Seasonal bases: 21 aircraft
operating for eight months of
the year.
• Insourced line maintenance
Line maintenance insourced
at London Gatwick, Berlin,
Glasgow, Edinburgh and
Bristol – lower cost
and better quality.
• Fuel and FX hedging
Strong and consistent
hedging policy on both
FX and fuel.
• £0.7 billion net debt
• £3.5 billion cash
• Cash generation from
Our net debt has remained
at a low level throughout
the current financial year.
We have one of the lowest
net debt positions of any
major European airline.
Our cash balance has stayed
stable at £3.5 billion even after
repayment of £0.4 billion of
debt. This underpins our
excellent liquidity position and
the strength of our balance
sheet as we enter FY23.
operations
We generated £0.9 billion
of cash from our operations
over FY22.
This enabled us to repay
£0.4 billion of debt during
the year.
Brand
Excellence
• Driving customer confidence
easyJet remained number
one most preferred brand
in the UK this summer.
• Customer preference
• Employer of choice
76% of our seats are booked
by returning customers.
High brand preference in our
European core markets, being
the number two brand in
France, Switzerland and Italy.
Highest rating employer in the
travel and tourism industry
on Glassdoor. We have received
>18,000 applications for our
summer 2023 recruitment drive
for 2,200 roles.
Sustainable
future for
Travel
focus on
Shareholder
Returns
• Publication of net zero
• Driving operational
• Sustainable Aviation
Fuel (SAF)
We will use SAF in line with
our net zero roadmap, until
our fleet has transitioned to
zero carbon emission aircraft.
roadmap to 2050 with an
interim science-based target
of 35% carbon emissions
intensity reduction by 2035,
an integral part of
our net zero roadmap.
efficiencies through our fleet
renewal programme with a
further 168 new Airbus NEO
aircraft joining the fleet this
decade, as well as numerous
other initiatives, including
Descent Profile Optimisation,
single engine taxiing and
engine washing.
We will continue to be relentlessly efficient, focusing on
competing where it provides the highest returns and only
investing where it matters most to our customers. This will
also deliver the best sustainable returns for our shareholders.
easyJet.com
1
C H AIRMAN’S LETT ER
Building Europe’s
most loved airline
Stephen Hester
Chairman
Demand has been
strong for easyJet’s
primary airport network
following the removal of
travel restrictions. This
summer saw load
factors return to above
90% for the first time
since the pandemic
resulted in the fleet
being grounded in
April 2020.
When I joined the Board last year, I was convinced
that easyJet could be a structural winner in the
evolving European airline industry, serving
customers well and delivering attractive shareholder
value. Having met with employees across the
business and our investors, and worked closely with
management and my Board colleagues over the
past year, I remain of that view.”
The year was one of substantial
accomplishment for easyJet in unusually
demanding circumstances. The first half
was burdened by continued Covid-19
impact on the whole sector, followed by
inflationary headwinds from Russia’s
invasion of Ukraine. In common with many
other global industries, the wider air
transport ecosystem also suffered
significant operational ‘growing pain’ from
an unprecedented ramp-up of travel
volumes once travel restrictions had lifted.
Caps at two of our main hubs, London
Gatwick and Amsterdam Schiphol, coupled
with actions easyJet implemented, led to
the fourth quarter returning to more
normal operational stability. Summer
demand was strong for easyJet’s primary
airport network and saw load factors return
to above 90% for the first time since the
pandemic began. This period of restriction-
free travel saw easyJet deliver a record
headline EBITDAR performance, as ancillary
revenue and easyJet holidays
supplemented rising ticket revenues and
demonstrated the ability to generate
enhanced returns for our business.
In addition to intense operational focus
during the year, easyJet prioritised
emerging financially and strategically
stronger from the challenges of Covid-19.
The strengthening of our balance sheet
from the rights issue a year ago proved its
worth – both avoiding defensive pressures
as Covid-19 extended its impact in winter,
whilst supporting valuable slot expansion
during the year in Gatwick and Lisbon,
successful route mix enhancement and
then the decision to continue fleet renewal
with the exercise of Airbus options over the
summer.
Results
The year was truly one of two halves – a
first half with defensive focus on minimising
cash burn in the face of pandemic travel
restrictions, followed by a second half
dedicated to supporting a dramatic volume
ramp-up and a gratifying return to
profitability. This showcased the work done
during the pandemic to enhance route
network and revenue sources and to
protect cost-efficiency.
Revenue for the full year increased 296% to
£5,769 million (2021: £1,458 million).
easyJet was able to achieve a £1.1 billion
improvement in EBITDAR from the prior
year despite headwinds. And while the
Group reported a headline loss before
tax of £178 million, this was an
improvement of £958 million versus the
prior year. Pre-tax profit for the fourth
quarter was £477 million.
Dividends
Given a reported loss, the Board will not be
recommending payment of a dividend in
respect of the year to 30 September 2022.
The Board is mindful of the importance of
capital returns to shareholders and will
reassess the potential for, and structure of,
future shareholder cash returns when the
financial performance of the Group allows.
Balance sheet
Financial strength is an important attribute
in this industry, especially in challenging
times. As at 30 September 2022, easyJet
had unrestricted access to £4.7 billion of
liquidity, an increase of £0.3 billion during
the year, despite repaying £377 million of
debt and the purchase of eight aircraft.
easyJet finished the year with a net debt
balance of £0.7 billion.
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easyJet plc Annual Report and Accounts 2022
This strength, reflected in the investment
grade credit ratings we hold, positions
easyJet to be able to move away from
the pandemic with a continued focus
on shareholder return but also the base
to deal with those challenges and
opportunities that the current macro-
economic environment may present.
Our Board
There have been a number of changes
to our Board during the year. Nick Leeder
stepped down from the Board on 30
September 2022, following his relocation
to Singapore. Andreas Bierwirth and Julie
Southern, having served nine and four
years respectively, will not seek reelection
at the Company’s next AGM. I am very
grateful to all three for their significant
contributions to the Board.
Following a thorough search led by the
Nominations Committee for three new
Non-Executive Directors, Ryanne van der Eijk,
Harald Eisenächer and Dr Detlef Trefzger
were appointed to the Board with effect
from 1 September 2022. We are delighted to
welcome them and anticipate their mix of
experience will add positively to our work.
Further details of these changes
are included in the Governance
report on page 91.
Our people
I am grateful to our employees,
management and my Board colleagues
for their continued dedication and
commitment to delivering easyJet’s
purpose to all stakeholders. It is not an
exaggeration to note that the last few
years have brought unprecedented stress
and difficulty to managing an airline. Our
management team, led ably by Johan
Lundgren, has coped well and deserves
particular thanks and appreciation.
Stakeholders
There has been a constant dialogue with our
stakeholder groups throughout the year, and
on behalf of the Board, I would like to take
this opportunity to thank them for their
partnership. At the front of our minds remain
our customers and shareholders. Both have
suffered in different ways from the
challenges of Covid-19.
We take very seriously the task of serving
customers well. We were not satisfied with
how well we did in Q3 in this regard, as we
and the wider industry struggled to cope with
the fast ramping-up of travel volumes.
During the year, easyJet has set out plans for the next
phase of our journey towards our ultimate ambition of
zero carbon emission flying.”
Happily we made changes that have righted
the situation. I apologise to those customers
affected by flight cancellations in particular.
We will remain intensely focused on providing
good customer experience in all those areas
under our control.
Shareholders across the whole industry
have suffered during the pandemic. It is
gratifying to see results bouncing back but
there remains much more to do to produce
the higher performance levels that easyJet
is capable of as economic recovery
progresses. We are determined to show
that easyJet can be a leading airline for
shareholders, as for customers.
Sustainability
The airline industry as a whole has
a particular responsibility to respond
effectively to the climate-based challenges
facing the world. It was therefore both
gratifying and important that easyJet could
continue to play a positive role as a leader
in mapping out the transition towards our
ultimate ambition of zero carbon emission
flying. This was set out through our net
zero roadmap launch. Alongside this we
have partnered with Rolls-Royce, pioneering
hydrogen combustion engine technology,
and Airbus, to support the development of
carbon removal technology.
Read more on our approach to
sustainability on pages 30 to 42.
The future
easyJet’s unique network, continued focus
on capital allocation and the enhanced
contribution that ancillaries and easyJet
holidays will provide, should put this
business in a position to deliver attractive
shareholder value. I am pleased that proof
points supporting this are now increasingly
evident, with the holidays business
generating £38 million of profit before tax
and the optimised network proving its
worth in the fourth quarter.
I am convinced that easyJet can be a winner
in the evolving European airline industry and
am committed to working with the Board,
management and wider employees to deliver
on this for all our stakeholders.
Stephen Hester
Chairman
easyJet.com
3
STRATEGIC REPORT
OU R PURPOSE
Making low-cost
travel easy
We are passionate about connecting people by making travel
easy, enjoyable and affordable for customers, whether for leisure
or business. This purpose defines who we are and guides our
actions and decision making.
a PURPOSE-led business
low-cost
We are a low-cost, European, point-to-point airline.
We use our cost advantage, operational efficiency
and leading positions in primary airports to deliver
low fares from these airports – making great value
travel accessible for everyone.
travel
easy
We believe that travel is all about bringing people
and places together – connecting people to what
they value, whether it is for leisure or business.
Low-cost travel should be a positive and hassle-free
experience. We aim to provide simple, convenient
travel at a competitive price.
MADE Possible by our people
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easyJet plc Annual Report and Accounts 2022
Always with safety at our heartAlways challenging costMaking a positive differenceAlways warm and welcomingLiving the Orange Spirit S TRATE G IC RE PO RT
strategic PRIORITIES
Building Europe’s best network
DEstination
Transforming revenue
Delivering ease and reliability
Driving our low-cost model
Europe’s most
loved airline –
winning for
customers,
shareholders
and our people
Our destination
Our ambition is to be Europe’s most loved
airline, winning for our customers, shareholders
and people.
These are our key stakeholders who we want
to be most loved by and to win for.
We win for our customers by providing a simple,
convenient product at a competitive price. We
aspire to be customers’ most loved airline by
meeting and exceeding their expectations.
We win for our shareholders by being the best
airline to invest in, creating long-term value
through sustainable profitable growth and by
conducting ourselves in an ethical and
responsible way.
We win for our people by being a responsible
employer and a great place to work. Attracting
great talent will help us to win for our customers
and shareholders and enable our people to
participate in our success.
easyJet.com
5
STR ATEGY OVERVIEW
DELIVERING
OUR STRATEGY
We have taken the opportunity to focus our strategy to align with
our purpose of making low-cost travel easy. Our 2022 strategy
framework refines our previous priorities to deliver easyJet’s
destination as Europe’s most loved airline, winning for
customers, shareholders and our people.
Our strategy has four strategic priorities. These define the
areas of focus which will allow us to achieve our ambition.
They build on our structural advantages in the European
aviation market and will enable us to be at the forefront of
the recovery as travel returns after the effects of the
pandemic. We believe that by focusing on these priorities we
will deliver strong shareholder returns. All of this is only made
possible by our people – read more about Our Promise on
page 10.
Building Europe’s best network
easyJet is one of Europe’s largest airlines, with an unrivalled
network of leading positions in some of the most attractive
markets in Europe. Within those markets, we have
established a strong presence in primary airports – which
provide ease and a choice to customers and ultimately
deliver relatively high yields. Our network is built with an
emphasis on maximising returns and as a result, over the
course of the pandemic easyJet has reallocated capacity
from weaker markets into stronger markets to strengthen
underlying profitability.
Our ambition is to build the best network in Europe. To do
this, we will continue to lead in our core markets, building
scale in Europe’s largest and most attractive travel markets.
This will offer customers choice in terms of destination and
schedule and will ensure highly efficient operations. In many
cases, easyJet’s core markets are slot-constrained and we
will continue to grow in these markets by building the slot
portfolio as opportunities arise and through up-gauging as
the average seats per aircraft increases in coming years.
In addition, we will continue to build out our destination
bases in top leisure locations. These bases provide easyJet
with the opportunity to better manage seasonality and
support the growth of easyJet holidays. They also provide
flexibility, allowing easyJet to easily move capacity between
source markets depending upon market conditions, and
allowing us to serve new source markets through focus
cities which leverage the breadth of the network.
Transforming revenue
easyJet has delivered exceptional revenue performance,
especially in the ancillary revenue area. Continuing to
develop and build in this area is a key priority in delivering
the strategy, ensuring that we are able to maximise the
revenue potential of the market. To deliver on this priority
easyJet will continue to invest in its strong revenue
management capability, ensuring that its market-leading
position is maintained by developing new industry-leading
capabilities which creatively leverage new sources of data
and optimise ticket and ancillary revenue together.
We also intend to transform our ability to develop ancillary
revenue products and merchandise these to our customers
based on their specific needs. Additionally, we will continue
to invest in diversifying our sources of revenue with an
ongoing focus on easyJet holidays.
Delivering ease and reliability
Ease and reliability is at the centre of easyJet’s purpose of
making low-cost travel easy. Giving customers an enjoyable,
hassle-free experience and reliable service that makes them
want to fly with us again will always be one of the
cornerstones of our strategy.
To deliver ease and reliability, we will continue to build on
our areas of strength, in particular the digital booking and
on-the-day experience and exceptional onboard service.
This will be supported by investments in other key areas of
the customer journey, in particular the airport experience,
and continuing to improve On-Time Performance and
reduce cancellation rates.
Sustainability continues to be a priority for easyJet and
its customers. The net zero roadmap recently launched
demonstrates our commitment to leading in an area which
is likely to be a key purchase driver in the future.
Driving our low-cost model
Disciplined execution of the low-cost model underpins all of
the elements of the easyJet strategy:
• a highly efficient point-to-point network to deliver
simplicity in operations and scale within airports;
• providing disaggregated products and relevant bundles of
products, allowing customers to pay for what they value;
• ensuring we have a fleet with exceptional fuel efficiency
and low maintenance costs.
And most importantly, it means always challenging cost,
ensuring that where easyJet spends it delivers tangible value
to our customers. It means ensuring a focus on productivity
and investing in processes and tools which deliver truly
sustainable long-term cost efficiency.
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easyJet plc Annual Report and Accounts 2022
S TRATE G IC RE PO RT
Our DESTINATION: Europe’s most loved airline –
winning for customers, shareholders and our people
building europe’s best network
• Lead and build scale in our core markets.
• Maintain and build leadership positions in slot-constrained airports.
• Accelerate investment in destination bases.
• Disciplined expansion into new geographies and focus cities.
TRansforming revenue
• Maximise the revenue potential of our market.
• Transform our ancillary revenue capability.
• Diversify our sources of revenue, continuing to focus on easyJet holidays.
Delivering ease and reliability
• Provide an easy and reliable customer experience.
• Protect and build on easyJet’s strong brand.
• Establish sustainability leadership.
• Grow and deepen relationships with our customers.
Driving our low-cost model
• Drive our business with sustainable efficiency.
• Invest in our fleet.
• Optimise our capital efficiency.
• Deliver strong productivity.
Read more on pages 20 and 21.
easyJet.com
7
STRATEGIC REPORT BUSINESS MODEL
Creating value
through low-cost
operations
We deliver our purpose by leveraging the low-cost airline
business model with network and service differentiation.
Making low-cost travel easy
Cost
efficiency
Network
AND Schedule
Capital
efficiency
Scale and
Growth
Customer
Product price
and distribution
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easyJet plc Annual Report and Accounts 2022
Standard low-cost model
easyJet differentiation
• Point-to-point routes.
• Frequency of schedule.
Network And
Schedule
• Leadership positions in primary and slot-
constrained airports in many of Europe’s largest
catchments with high customer demand.
• These have proven to be among the highest
yielding in the market and enable us to tap into
both business and leisure demand.
• Our network is unrivalled and difficult to
replicate.
Scale and
Growth
• Scale drives high brand
awareness and facilitates
volume pricing deals
(e.g. airports, fleet).
• Spreads fixed overheads
over larger volume of
seats.
• We have strengthened and will continue to
strengthen our positions as the competitive
landscape evolves, bidding for additional slots
where it makes economic sense.
• We have an opportunity for further growth by
investing in new, larger aircraft with greater
seat numbers (known as up-gauging).
Product price
and distribution
• Low fares predicated on
basic airport and cabin
product.
• Unbundled fares with
additional charges for
bags, seats and catering.
• Industry-leading revenue management
capability, including dynamic pricing of
ancillaries.
• Continued evolution of the Group’s product
portfolio to build on spend per customer and
deliver enhanced sustainable returns.
• Limited indirect distribution to capture
additional value.
• Standardised products to
• Leading customer app which improves the
meet the needs of
individuals.
• Single fleet type with
standard specification.
• High density, single-class
cabin.
• Short turnarounds and
high aircraft utilisation.
• Young fleet.
• High productivity and
strong cost culture.
Customer
Capital
efficiency
Cost efficiency
overall experience from booking to check-in
to reaching the aircraft, often without the need
for human interaction.
• Warm welcome and personal service to get
customers to their destination on time.
• Disruption management self-service tool
(SSDM) to make it easier for customers to
make changes when disruption does occur.
• Opportunity to increase the average gauge of
our aircraft through our fleet renewal
programme, bringing in larger aircraft.
• This presents us with a considerable opportunity
for organic growth by increasing our overall
seat capacity.
• c.40% of the A319s will be replaced over the
next three years.
• Long-term strategic partnerships with key
airports and ground-handling operators.
• Focus on seasonal bases which increases cost
flexibility, with 21 aircraft now operating for
eight months of the year from these bases.
easyJet.com
9
STRATEGIC REPORT OUR PROMI SE
Fostering an
inclusive culture
Creating an inclusive culture – where people can be their best
and feel that they truly belong – is the key to our success.
We aim to create an environment where everyone is respected,
can be themselves and thrive.
OUR promise: a framework
to inform our day-to-day behaviours
always with Safety
at our heart
always
CHALLENGING COST
Safety is our number one
priority – it runs through
everything we do and is
everyone’s responsibility.
We always speak up, learn and
take action where it’s needed.
We are always challenging costs
and strive to be highly efficient
in how we work. We continually
innovate, aim for simplicity and
invest where it matters most.
We always aim to deliver the
best value for our customers.
Making a positive
difference
We are passionate about
making a meaningful difference
for our planet, communities and
people. Sustainability is
important to us and we’re
creating a positive impact today
and taking action to pioneer a
sustainable future for travel.
Always warm
and welcoming
Living the
orange spirit
We are the warm and
welcoming low-cost airline.
We strive to create a hassle-free
travel experience. We build trust
with our customers by being fair
and transparent, and we
consistently deliver the friendly
service we are famous for.
We are bold and proud
easyJetters. We can be
ourselves and challenge the
status quo so that we fly high.
We bring passion and energy,
working together to do the
right thing for our customers
and each other.
Read more about our people on pages 24 and 25.
10 easyJet plc Annual Report and Accounts 2022
Fostering an
inclusive culture
S TRATE G IC RE PO RT
Case study: Living our promise
Pride month
Throughout 2022 we have continued to create an
inclusive environment and culture by highlighting some
of the year-round activity in the LGBTQIA+ community,
as well as introducing some additional educational
events and fun celebrations.
We have been supporting the annual LGBTQIA+ Pride
month for several years, and did so again in 2022.
Much of the activity was driven and led by our
internal diversity, inclusion and wellbeing group,
the Trailblazers.
We invited two fantastic LGBTQIA+ charities, AKT
and Micro Rainbow, to talk about the work they do
to support the community, the impact they have on
people’s everyday lives and what colleagues
across easyJet can do to support them.
To continue our work with the local community within
Luton, we created a year-long partnership with the
newly formed ‘Pride in Luton’, which was formed to
support the diverse LGBTQIA+ community across the
town. Our partnership supported the creation of their
first Pride event, which was attended by over 2,000
people. We also supported The Big Gay Family Picnic,
which brought together the LGBTQIA+ community, their
families and allies.
Many of our colleagues across the European network
got involved in local activity, as well as sharing their own
stories and experiences of being part of the LGBTQIA+
community or of being an LGBTQIA+ ally. We are
especially proud to have been involved in both
the Amsterdam and Manchester Pride celebrations
this year.
We extended our activity to our customer-facing
operations, with crew able to wear our specially
commissioned LGBTQIA+ Pride tie and neck scarf.
We even added our exclusively designed logo to
our headrest covers and the external livery of
selected aircraft.
Our support for the LGBTQIA+ community doesn’t just
happen during the month of June – we support our
colleagues and customers all year round, regardless
of their sexual orientation and gender identity.
easyJet.com
11
STRATEGIC REPORT RO ADMAP TO NET ZERO
Pioneering
sustainable travel
easyJet's roadmap to net zero provides the framework with which we plan to
achieve net zero carbon emissions by 2050. We aim to reduce our carbon
emissions per passenger by 78% by 2050 and we are working to achieve zero
emissions over the longer term.
Our roadmap to net zero by 2050
2019
2022
Baseline set
Our validated science-based
target, a 35% carbon
emissions intensity
improvement by 2035, is
benchmarked against a 2019
baseline. Since 2000, over a
20-year period, we have
already reduced our carbon
emissions per passenger, per
kilometre by one third.
Read more on
our approach to
Sustainability on
pages 30 to 42.
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1000
800
600
400
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0
35%
Carbon emissions
intensity improvement
target by 2035*
Publishing our roadmap
We signed up to the UN-backed Race
to Zero campaign and in September
we published our roadmap to achieving net
zero carbon emissions by 2050. We were
the first low-cost airline worldwide to
announce validation of our science-based
target of a 35% carbon emissions intensity
improvement by 2035.
Our roadmap to net zero carbon emissions
by 2050 focuses on zero carbon emission
aircraft. This technology, once available, will
enable us to reduce carbon emissions per
passenger, per kilometre by 78% by 2050
(vs 2019) with residual emissions addressed
by carbon removal technology.
* easyJet plc commits to reduce well-to-wake GHG emissions related to jet fuel from owned and leased operations by 35% per Revenue Tonne
Kilometre (RTK) by FY35 from a FY19 base year. The target boundary includes biogenic emissions and removals from bioenergy feedstocks.
Non-CO2e effects which may also contribute to aviation-induced warming are not included in this target. easyJet plc commits to report publicly on
its collaboration with stakeholders to improve understanding of opportunities to mitigate the non-CO2e impacts of aviation annually over its target
timeframe.
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easyJet plc Annual Report and Accounts 2022
S TRATE G IC RE PO RT
Contributions to Carbon INtensity reduction
35% intensity reduction
by 2035
78% intensity reduction
by 2050
Fleet renewal with NEO aircraft
Operational efficiencies
Airspace modernisation
Sustainable Aviation Fuels (SAF)
Zero carbon emission aircraft
More detail on our net zero roadmap can be found on our website at
https://corporate.easyjet.com/corporate-responsibility/net-zero-pathway
2035
Achieving our target
We aim to achieve our 2035 target with a combination of:
Fleet renewal: we are replacing our A319/320ceo aircraft
with A320/321neo aircraft which are at least 15% more fuel
efficient and have a 50% smaller noise footprint versus
A320ceo. The larger gauge of these aircraft will significantly
reduce carbon emissions per seat in the short term due to
higher absolute fuel efficiency and lower emissions per seat.
Operational improvements and efficiencies: we operate our
aircraft as efficiently as possible, adjusting standard operating
procedures to reduce fuel usage: single-engine taxiing
on arrival and departure, using advanced weather information
to improve navigation performance and engine washing
to remove debris. New software and AI will identify further
operational efficiencies.
Airspace modernisation: this has huge potential to deliver
quick benefits as more direct flight paths lead to shorter
flying times. We are working with stakeholders and public
authorities to advocate for the modernisation of airspace,
with projects such as the Single European Sky aiming to
deliver 10% carbon emissions savings from European aviation.
Sustainable Aviation Fuel (SAF): we will use SAF in line
with our net zero roadmap, until our fleet has transitioned
to zero carbon emission aircraft. We have signed a long-term
agreement with our main fuel supplier to provide us with
SAF in accordance with mandates for the next five years.
We were the first airline to operate flights out of Gatwick
Airport that were powered by a 30% SAF blend. We are
also fully implementing the French SAF mandate.
50% smaller noise footprint from
A320neo family aircraft
2050
Net zero by 2050
The entry of zero carbon emission aircraft into our
fleet will allow us to truly decarbonise.
Hydrogen not only has no operational carbon
emissions, it also has the potential to significantly
reduce non-CO2 emissions from flying.
The development of zero carbon emission technology
has accelerated exponentially over the last couple
of years. We have built strong partnerships with key
players in the sector, including Airbus, Rolls-Royce,
GKN Aerospace, Cranfield Aerospace Solutions
and Wright Electric. easyJet provides the airline
and customer perspective and demonstrates
to aircraft manufacturers that there is significant
airline demand for zero carbon emission aircraft.
Rolls-Royce is progressing the development of
hydrogen combustion engine technology capable
of powering easyJet size narrowbody aircraft.
Carbon removals will be critical to achieving net zero
by 2050 as fleet transition will not be complete by
then, based on typical fleet replacement cycles.
One example is Direct Air Carbon Capture and
Storage, where CO2 is extracted from ambient air
and sequestered underground.
easyJet roadmap
easyJet.com
13
1000
800
600
400
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STRATEGIC REPORT C EO REVIEW
Making low-cost travel easy
We have a clear strategy to drive returns for
our shareholders and have significant
confidence in our plan today and that it will
deliver going forward.
Overview
easyJet, alongside the whole industry, has
faced multiple headwinds throughout the
2022 financial year from Omicron, the
impact of Russia’s invasion of Ukraine, and
operational challenges as demand returned
at scale following the widespread removal
of travel restrictions across Europe. Despite
this, easyJet has delivered a significantly
improved performance with headline EBIT
profit of £3 million (2021: £1,036 million
loss) which includes incremental disruption
costs of £78 million compared to FY19.
The headline loss before tax in the year
was £178 million (2021: £1,136 million loss)
which includes a £64 million loss from
balance sheet revaluations.
The business transformation is delivering
with easyJet achieving a record headline
EBITDAR of £674 million in Q4 2022
with load factors returning to 92% and
seat capacity to 26 million. Ancillary
products and easyJet holidays are fully
embedded and delivering incremental
returns to the business.
easyJet is continuing to allocate aircraft to
the markets where demand is strongest
enabled by slot growth at primary airports.
Over the past 12 months we have seen
growth at Gatwick, Porto, Lisbon and the
Greek islands. Each of these airports has
delivered returns above the network
average in FY22.
For winter, which is typically a loss-making
period, easyJet is investing in building
additional resilience. This investment allows
for summer 2023 preparations to start
earlier in response to the tight labour
market, where we have already begun our
seasonal recruitment campaign. Alongside
this we now have a dedicated team in
place to process employment reference
checks as efficiently as possible. easyJet,
like all airlines, is seeing cost pressures
including fuel, strengthened US dollar and
wage inflation.
Peak holiday weeks this winter, such as
October half term and Christmas week in
the UK, are back to normal levels of
volume. Through these key periods, ticket
yields are showing strength on the prior
year, with the Christmas period’s ticket
yield currently up c.18%. Visibility over
bookings in the second half remains low,
however Easter-booked ticket yields are
strong and booked load factors for Easter
are ahead of the prior year.
easyJet goes into the 2023 financial year
with one of the strongest balance sheets
in European aviation. This financial strength,
combined with our leading low-cost
proposition at primary airports, provides a
key differentiator for customers, making it
easy for customers to switch towards
value. easyJet’s historic performance in a
challenging economic environment where
the consumer was squeezed has been
strong, as evidenced in 2008/09 during
the global financial crisis when easyJet
delivered increased margins1 as well as
capacity growth.
Over the next year, we are targeting customer
growth and are well placed to drive returns and
margins while maintaining a rigorous focus on cost.
With one of the strongest balance sheets in
European aviation, we are ready to take
opportunities as they present themselves.”
Johan Lundgren
Chief Executive Officer
69.7m
passengers
(2021: 20.4 million)
85.5%
load factor
(2021: 72.5%)
13,951
employees
(2021: 13,689)
1. Based on earnings before
interest at constant currency
14
easyJet plc Annual Report and Accounts 2022
Revenue
Total revenue increased by 296% to
£5,769 million (2021: £1,458 million) in line
with capacity increasing to 81.5 million seats
(2021: 28.2 million), due to the relaxation of
pandemic-related travel restrictions relative
to the prior year, strong growth in the
easyJet holidays business and the step
change in our ancillary offering.
Passenger revenue increased by 282% to
£3,816 million (2021: £1,000 million) as we
flew increased levels of capacity compared
to the same period last year.
Passenger RPS increased by 32% to £46.80
(2021: £35.48) as demand returned, with
travel restrictions easing through the year
and easyJet’s primary airport network
driving yield growth.
Group ancillary revenue increased by 326%
to £1,953 million (2021: £458 million) as
capacity increased and as easyJet holidays
continues its rapid growth. Airline ancillary
revenue per seat also increased by 29% to
£19.43 (2021: £15.06) as we continue to
see incremental benefits from ancillary
products which have been launched
since H1 of FY21.
Costs
Group headline costs excluding fuel and
FX gains increased by 106% to £4,604
million (2021: £2,233 million), driven by an
increase in capacity flown as well as
incremental disruption costs of £78 million
compared to FY19 and one-off resilience
actions taken in order to ensure a stable
operation during the fourth quarter.
easyJet recorded a £64 million loss from
foreign exchange on balance sheet
revaluations (2021: £10 million gain), related
to the impact of a weaker sterling on our
net foreign currency-denominated liabilities.
Airline headline cost per seat at constant
currency decreased by 25% to £68.11
(2021: £90.73). Headline Airline cost per
seat excluding fuel at constant currency
decreased by 32% to £52.66 (2021: £77.57).
Non-headline items
Non-headline items are those where, in
management’s opinion, separate reporting
provides a better understanding to users
of the financial statements of easyJet’s
underlying trading performance, and which
are significant by virtue of their size and/or
nature. These costs are separately disclosed
and further detail can be found in the notes
to the financial statements. A Group
non-headline loss before tax of £30 million
(2021: £100 million gain) was recognised in
the financial year. The significant items
consisted of a £21 million loss as a result of
the sale and leaseback of 10 aircraft and a
£10 million loss from returning slots in the
year at Berlin Brandenburg Airport following
the rightsizing of the operations from 18 to
11 aircraft.
Balance sheet
During FY22 easyJet repaid £300 million
of commercial paper, clearing the final
balance under the CCFF scheme. $100
million was also voluntarily repaid on the
UKEF in April ahead of its maturity in FY26.
As at 30 September 2022 our net debt
position was £0.7 billion (30 September
2021: £0.9 billion) including cash and cash
equivalents and money market deposits
of £3.6 billion (30 September 2021:
£3.5 billion).
Fleet
easyJet’s total fleet as at 30 September
2022 comprised 320 aircraft (excluding
three A319 aircraft held on a zero-rent basis)
(30 September 2021: 308 aircraft excluding
12 aircraft held on a zero-rent basis). The
increase was driven principally by nine
aircraft ending their zero-rental period and
reentering the operational fleet, delivery of
eight new A320neo family aircraft, and
seven lease additions while 12 aircraft left
the fleet, as easyJet continues its journey of
retiring older aircraft and benefiting from the
A320neo family of aircraft with their
superior fuel efficiency and greater number
of seats.
We have an agreed order book consisting
of 168 firm orders, 135 for A320neo aircraft
and 33 A321neo aircraft. This includes the
aircraft purchase approved earlier this year,
securing 56 aircraft deliveries with the
conversion of 18 A320neos into A321s for
delivery between FY26 and FY29. In order
to meet our long-term fleet requirements,
we will continue to keep all options under
review going forward.
Fleet as at 30 September 2022 (excluding aircraft on a zero-rent basis)
A319
A320
A320neo
A321neo
Percentage of total fleet
Owned
Leased
35
105
37
4
181
57%
59
62
7
11
139
43%
Total
94
167
44
15
3202
Changes since
Purchase
% of fleet
Sep-21 Future deliveries
options Purchase rights
29%
52%
14%
5%
(3)
7
7
1
–
–
1351
331
168
–
–
–
–
–
–
–
3
–
3
1. easyJet retains the option to alter the aircraft type of future deliveries, subject to providing sufficient notification to the OEM.
2. At 30 September 2022, easyJet was storing three operating leased aircraft which have been acquired for future operations. These are held at zero rent
and are excluded from the fleet numbers.
Our flexible fleet plan allows us to expand or contract the size of the fleet depending on the demand outlook.
Number of aircraft
Current contractual maximum
Actual aircraft
Current contractual minimum
New aircraft deliveries
FY22
–
320
–
–
FY23
336
–
333
7
FY24
336
–
318
21
FY25
346
–
308
23
easyJet.com
15
STRATEGIC REPORT C EO REVIEW CONTINUED
The average gauge of the fleet is now
179 seats per aircraft, compared to 178
seats at 30 September 2021. The average
age of the fleet increased to 9.3 years
(30 September 2021: 8.6 years).
Capital expenditure
Over the next three years easyJet’s gross
capital expenditure is expected to be as
follows:
FY23
FY24
FY25
Gross capital
expenditure
(£ million)
c.900 c.1,500 c.1,600
Capex is comprised of new fleet delivery
payments, maintenance-related
expenditure as well as lease payments and
other capital expenditure such as IT
development. Our capex projections
assume seven deliveries in FY23, 21
deliveries in FY24 and 23 deliveries in FY25.
Sustainability
In the fourth quarter, easyJet announced
its roadmap to achieving net zero by 2050.
The roadmap is aligned to the Science
Based Targets initiative (SBTi), with easyJet
being the first low-cost airline to announce
a SBTi-validated interim target of 35%
carbon intensity reduction by 2035.
The long-term roadmap sees easyJet
transition from carbon offsetting, which has
been a valuable interim measure but is not
recognised under the SBTi framework,
towards investments that drive in-sector
emission reductions to deliver our net zero
roadmap.
We plan to achieve our ambitious roadmap
through the combination of six drivers: fleet
renewal, operational efficiencies, airspace
modernisation, sustainable aviation fuel,
zero carbon emission aircraft and carbon
removal technology.
For further information on our
roadmap, see pages 12 and 13 .
1. Glassdoor score as at 30 September 2022
Since this announcement we have made a
step forward with our partner
Rolls-Royce, who have achieved a world
first – successfully running a modern
aircraft engine on hydrogen. This is a major
step towards proving that hydrogen can be
a zero carbon aviation fuel of the future – a
key element of our net zero roadmap.
Our Sustainability Strategy is underpinned
by strong sustainability governance and
monitoring at Board level to make sure the
strategy is delivered, with remuneration
also being linked to sustainability and the
delivery of the key steps towards delivering
our roadmap.
easyJet has received IATA IEnvA Stage 2
certification, making us the first low-cost
carrier worldwide with a fully IATA IEnvA
certified Environmental Management
System (EMS). This follows our successful
completion of the IATA IEnvA Stage 1
implementation, assessment, and
certification earlier this year, as well as
enhancing our ratings achieved across
indices including CDP, MSCI and
Sustainalytics. Read more on page 31.
Our people
David Morgan has been appointed as Chief
Operating Officer on a permanent basis.
David has been an integral part of the
easyJet leadership team since he joined as
Chief Pilot in 2016 from Wizz Air where he
held the same role. David remains an
active pilot.
easyJet continues to have a strong
reputation as an employer of choice.
Our people are a key source of
differentiation and this helps to deliver
excellent customer experience and loyalty.
Our Glassdoor rating of employee
satisfaction is 4.01 (out of 5.0), which is
the highest within the travel and tourism
sector, illustrating our market-leading
position.
16
easyJet plc Annual Report and Accounts 2022
Our people are a
key source of
differentiation
compared to our
competition, and
help deliver excellent
customer experience
and loyalty.”
We have constructively worked in partnership
with our employee representative bodies
across Europe in order to support the
operation. We recognise that the wider
economic environment of rising inflation
and the increased cost of living has and
continues to be challenging for our people
and we continue to work with our trade
union partners in order to support our
people whilst maintaining control of our
cost base.
Read more on how we work with our
people on pages 24 and 25.
In FY22 some of the key deliverables
include:
• Readiness and operational resilience:
We recruited around 1,650 cabin crew to
deliver the flying programme against a
difficult labour market across the
network, particularly in the UK.
Meanwhile, in the face of challenges
related to processing employment
referencing across the industry we
reacted quickly by setting up an in-house
team to supplement our partners. This
new model will allow easyJet to manage
all referencing checks end-to-end.
• Employee experience: Working with our
employee representative groups across
Europe we continued to support new
ways of working – including flexibility of
employment contracts and the
continuation of our hybrid working model
for our office-based colleagues.
• Learning and development: We have
introduced a new People Management
development programme to help
develop our manager and leader
capabilities throughout all first line
leaders, while continuing to develop our
approach to early careers including the
relaunch of our engineering
apprenticeships. In addition, we have also
utilised our apprenticeship levy to
support a range of head office roles.
• Health and wellbeing: We have
• Earlier summer 2023 ramp-up for
implemented a new UK occupational
health provision and mobile enabled
support for all employees while also
delivering comprehensive mental health
awareness training for all employees and
managers.
• Diversity and inclusion: Implementation
of a new Equal Opportunities and
Inclusion Policy.
Outlook
Based on current trading, easyJet expects
the following over the 2023 financial year:
resilience.
• H1 fuel price up >50% year on year.
• Market-wide inflationary pressure.
• H2 early bookings look positive with
Easter ticket yields showing strength
year on year.
• Capacity
• H1 c.38 million seats, c.25% increase
year on year.
• H2 c.56 million seats, c.9% increase
year on year.
• Q4 capacity around pre-pandemic
• Q1 RPS growth expected to be up
levels.
>20% year on year.
• Q1 Load factor growth c.+10 ppts year on
year.
• easyJet holidays targeting >30%
customer growth year on year.
Fuel and FX hedging:
Jet fuel
Hedged position
Average hedged rate ($/MT)
Current spot ($/MT) at 28.11.22
H1 ’23
74%
814
H2’23
51%
903
H1 ’24
US dollar
25%
922
c.$1,000
Hedged position
Average hedged rate (US$/GB£)
Current spot (US$/GB£) at 28.11.22
H1 ’23
77%
1.29
H2’23
54%
1.24
H1’24
27%
1.19
c.1.21
Carbon obligation 100% covered for CY22 at €17/MT and 77% covered for CY23 at €31/MT.
US dollar lease payments hedged for the next three years at $1.33.
Capex hedged for the next 12 months in euros and US dollars.
easyJet.com
17
STRATEGIC REPORT MA R KET REVI EW
MARKET DYNAMICS
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Demand
The airline industry overall is a
cyclical one, with demand for
flights driven primarily by
economic growth. Demand is also
seasonal, particularly in leisure
travel. However, the business
model of low-cost carriers such as
easyJet tends to be more resilient
to recession, as there will be some
customers who seek greater value
during periods of low economic
growth, attracted by our lower
prices and our network of primary
airports.
Demand in the first half of the
year was impacted by the
changes in travel restrictions as
the Omicron variant of Covid-19
emerged in December 2021, with
subsequent relaxation of those
restrictions a few months later,
early in 2022. There was increased
customer confidence to travel
over the second half of the year,
notwithstanding the operational
challenges and associated
disruption experienced across the
sector in our Q3.
• Many European airlines have
seen customer numbers
strongly increase over the
summer season, as customers’
confidence to travel has
recovered since the pandemic-
induced travel restrictions were
lifted.
• Leisure travel has rebounded
more quickly than business travel.
• We have moved a significant %
of our fleet to destination bases,
which allows us to reallocate
capacity from one source
market to another rapidly in
response to demand
fluctuations.
• We focus on constrained
airports, where demand is more
resilient to these macro-
economic pressures.
• The combination of low fares,
primary airports and our city
network is an attractive offering
18
easyJet plc Annual Report and Accounts 2022
In Q4, customer numbers were back
up to c. 87% of the levels seen in Q4
FY19, prior to the pandemic.
Whilst forecasts are that economic
growth will be slow across the UK and
the EU in 2023, as a consequence of
geopolitical factors arising from the
war in Ukraine, rising inflation and
increased interest rates, we believe
that easyJet will be protected due to
the emphasis on value in such an
environment, combined with there still
being pent-up demand for travel and
holidays as a reaction to the travel
restrictions imposed during the
pandemic.
Fuel
Fuel is one of the biggest costs
airlines face and one of the most
volatile. Fuel represented 21.5% of
easyJet’s headline cost base in the
current financial year. The ICE Brent
crude oil spot price has fluctuated
between $69 and $128 per barrel
over our financial year, with the
Russian invasion of Ukraine in
February 2022 leading to a general
increase in the market price of oil.
The price of jet fuel is strongly
correlated with the price of crude oil.
Brent price
140
120
100
80
60
40
20
0
2017
$ per barrel
2018
2019
2020
2021
2022
• Increases in the cost of living and
• Many European airlines hedge their
fuel costs.
the associated squeeze on
household and business incomes
across European economies are
likely to increase the emphasis on
value in the short term, to the
natural advantage of low-cost
carriers such as easyJet.
for business travellers when cost
focus is paramount.
• Our strategic focus on ‘Building
Europe’s best network’ and
‘Transforming revenue’ addresses
these market dynamics, including
how we manage the associated
risks (see ‘Our Strategy’ table,
page 20).
• easyJet has continued its fuel
hedging programme throughout
the year and is 74% hedged for H1
FY23.
• Our strategic focus ‘Driving our
low-cost model’ addresses this
market dynamic (see ‘Our
Strategy’ table, page 20).
• Further details on how we manage
this risk can be found under the
Macro-economic and geopolitical
risk on page 69.
The key factors and trends which influence easyJet and all
operators within the European airline industry.
Environmental and social
Sustainability, in particular the
carbon emissions from flights and
the contribution to climate change,
is a significant issue for the aviation
industry.
According to research by Kantar
Public across six European
countries in September 2021, 78%
of European consumers consider
climate change a very serious
problem. More recently, a
nationwide study of 2,000 British
holidaymakers, conducted by
easyJet, revealed that 76% think
that companies need to urgently
set out how they will achieve net
zero this century and demonstrate
how they are operating more
sustainably. 78% say they will
choose an airline based on their
sustainability credentials when
travelling in the future and 70%
would commit to a zero carbon
emission holiday if it was available
to them.
Foreign exchange
easyJet is exposed to foreign
exchange rate movements, mainly
resulting from euro revenues and
US dollar costs, translated into our
functional currency of sterling.
Sterling weakened during the year
against both the euro and US dollar
as political turmoil and the cost of
living crises in the UK reduced
investors’ confidence in the currency.
This has an adverse impact on US
denominated costs (mainly fuel,
leases and maintenance) and a
favourable impact on euro revenues
when translated into sterling.
On-Time Performance,
airspace management and
supply chain pressures
European airspace remains a
challenging environment, with a lack
of air traffic resources and capacity
constraints impacting across the
continent. While Eurocontrol
continues to redesign the airspace
infrastructure with the aim of
creating a more efficient and
sustainable network, nevertheless
UK and EU airspace consists of a
complex network of flight paths that
have seen little development over
the last 70 years. The unprecedented
ramp-up of activity in 2022 across
the aviation industry, coupled with a
tight labour market, resulted in
widespread operational challenges in
our third quarter, resulting in a higher
than normal level of cancellations.
• Individual airlines, airports and
industry groups have set net
zero targets for 2050.
• Aerospace companies are
developing new technologies which
could in the future help to
decarbonise aviation.
• Governments across Europe are
considering the policy measures
that will be needed to meet their
own net zero targets.
• In September 2022 we published
our SBTi-aligned net zero roadmap,
outlining how we can achieve net
zero carbon emissions by 2050. Our
full Sustainability Strategy with
further detail can be found in the
Sustainability section on page 30.
• Further details on how we manage
this risk can be found under the
Environment and sustainability risk
on page 67.
• Air traffic control delays cause a
number of issues from additional
flying time and airport congestion
to inefficient flight planning.
• Antiquated flight paths cause
additional fuel burn.
• Labour shortages and other supply
chain issues throughout the
aviation ecosystem resulted in an
abnormally high level of
cancellations and delays across
the sector.
• Action taken to build resilience into Q4.
• Recruitment already underway for
cabin crew for summer 2023.
• Advocating for change and
modernisation of airspace, alongside
other airlines, by lobbying national
decision makers and maintaining a
collaborative relationship with
Eurocontrol.
• Our strategic focus ‘Delivering ease
and reliability’ addresses these market
dynamics, including how we manage
the associated risks (see ‘Our
Strategy’ table, page 20).
• Many European airlines hedge their
foreign currency requirements,
particularly for the US dollar.
• easyJet has continued its US dollar
hedging programme throughout
the year and is already 77%
hedged on US dollars for H1 FY23.
• Our strategic focus ‘Driving our
low-cost model’ addresses this
market dynamic (see ‘Our
Strategy’ table, page 20).
• Further details on how we manage
this risk can be found under the
Macro-economic and geopolitical
risk on page 69.
easyJet.com
19
STRATEGIC REPORT OUR STRATEGY
Our strategy
Our purpose:
Making low-cost travel easy
Our DESTINATION:
Europe’s most loved airline
– winning for customers,
shareholders and our people
Our focus
Risk theme1
• Build scale by expanding in our core
markets.
• Maintain and build leadership positions
• Safety, security and operations.
• Asset efficiency and effectiveness.
• Macro-economic and geopolitical.
in slot-constrained airports.
• Invest in destination bases.
• Disciplined expansion into new
geographies and focus cities.
Building
Europe’s
best network
Transforming
revenue
• Maximise the revenue potential of our
market.
• Transform our ancillary revenue
capability.
• Diversify our sources of revenue,
continuing to focus on easyJet
holidays.
• Technology and digital safety.
• Macro-economic and geopolitical.
Delivering ease
and reliability
• Provide an easy and reliable customer
experience.
• Protect and build on easyJet’s strong
brand.
• Establish sustainability leadership.
• Grow and deepen relationships with
our customers.
• Safety, security and operations.
• Asset efficiency and effectiveness.
• People.
• Environment and sustainability.
• Technology and digital safety.
• Drive our business with sustainable
efficiency.
• Asset efficiency and effectiveness.
• Environment and sustainability.
Driving our
low-cost model
• Invest in our fleet.
• Optimise our capital efficiency.
• Deliver strong productivity.
20 easyJet plc Annual Report and Accounts 2022
1. Risk themes align with the
Risk section, pages 59 to 69
Progress in FY22
FY23 initiatives
• Increased our market share at Gatwick
Airport after reallocating aircraft to this
high-yielding base, along with the
addition of new slots.
• Won additional slots at Porto, which we
began to utilise in 2022.
• Won 18 daily slots at Lisbon Airport,
achieving growth in a highly slot-
constrained airport.
• An extra five aircraft-worth of slots
were added into the Greek islands.
easyJet was the largest carrier
there this summer.
• Overall, 2.1 million seats redeployed
in summer 2022, primarily used to
strengthen core markets in France,
Italy and Greece.
• Announced plans to rightsize our
operation in Berlin.
• Start operating Lisbon slots won in
2022.
• Capacity to continue to be
deployed where demand and
returns are strong.
• Strong performance achieved in the year
from the ancillary products which have
been launched recently, including cabin
bags and our new leisure fare
(Essentials) bundle.
• Introduced new in-flight retail proposition
during the year, expected to be fully
embedded during FY23.
• Overall airline ancillary revenue
increased 274% in the year and on
a per seat basis was 29% ahead of
that achieved in FY21.
• easyJet holidays performed
strongly, contributing incremental
revenue of £368 million to the
Group and generating £38 million
profit from 1.1 million passengers.
• Further growth of easyJet holidays.
• Continued evolution of product
portfolio e.g. pre-order capability
for in-flight retail.
• Closed loop wifi to facilitate an
enhanced in-flight retail experience.
• Industry-wide operational challenges
materialised in Q3. This was reflected in
the flight caps announced at two of our
biggest airports, London Gatwick and
Amsterdam. Alongside these capacity
caps, easyJet took swift action to reduce
our capacity and build resilience into Q4.
As a result, disruption in Q4 was much
reduced and in line with historical levels.
• easyJet remained the number one
most preferred airline brand in the
UK this summer and is the number
two brand in France, Switzerland
and Italy.
• We aspire to lead the way on the
sustainability agenda, and in
September announced our
SBTi-aligned roadmap to net zero.
• Earlier recruitment of cabin crew
and pilots for the 2023 summer
season.
• In-house team to process
employment reference checks
more quickly.
• Supporting Rolls-Royce’s research
into hydrogen engine development.
• Fleet renewal continues with the
delivery of eight new A320neo family
aircraft in the year.
• The average gauge of the fleet is now
179 seats per aircraft, compared to
178 seats at 30 September 2021.
• In Q4, easyJet agreed to purchase an
additional 56 A320neo family aircraft for
delivery between FY26 and FY29, as well
as converting 18 planned deliveries of
A320neo aircraft to 18 A321neo
aircraft with a higher gauge.
• Delivery of seven NEO aircraft
scheduled.
• Fuel, FX and ETS – major positions
• Descent profile optimisation
hedged in line with our long-
established policy.
technology to be fitted to all our
aircraft.
• Continue to reinforce our position
as the lowest cost carrier on our
primary network, with a proportion
of captains now on seasonal
contracts.
• Increasing automation of self-
service management, which
increases digitalisation of customer
flows and reduces the need for
contact centre support.
easyJet.com
21
STRATEGIC REPORT KE Y PERFORMA NCE INDICATOR S
key performance indicators
easyJet has seven Key Performance Indicators which we use to
measure our overall progress.
Why it is important
Incremental improvements in
profitability ensure that we
have a platform for long-term
growth while generating value
for all stakeholders.
What we measure
Headline (loss)/profit before
tax divided by the number of
seats flown.
What we measure
Headline EBITDAR divided by
Group revenue.
Why it is important
EBITDAR is a good proxy for
cash generation. EBITDAR
margin is a metric the
business uses to make its
operating decisions and is one
measure of the underlying
performance of the business.
How we performed
Headline loss before tax per
seat was £2.65 (2021: £39.87
loss). Airline revenue per seat
increased by 33% at constant
currency, a consequence of
increased loads and higher
ticket prices as demand
returned and strong ancillary
revenue as a result of both
bag and seat initiatives. This
was compounded by cost per
seat falling 24% as our fixed
cost base was spread across
a much higher flying capacity.
How we performed
Headline EBITDAR margin %
increased from (37.8)% last
year to 9.9% this year. This
was a reflection of the
improved performance of the
Group as volumes increased
and customers’ confidence to
travel returned.
Why it is important
Delivering sustainable
shareholder value is a
fundamental part of our
mindset as we manage our
business.
What we measure
Headline (loss)/profit after tax
divided by the weighted
average number of shares in
issue during the period
(adjusted for shares held in
employee benefits trusts).
How we performed
Headline loss per share was
19.6 pence (2021: 166.9 pence
loss per share) as a result of
the improved performance
and smaller headline loss
recorded this year. Total loss
per share was 22.4 pence
(2021: 159.0 pence per share
loss).
Headline (loss)/profit
before tax per seat (£)
(39.87)
(2.65)
2022
2021
2020
(14.68)
2019
4.07
2018
6.07
Per seat metrics are for the Airline
business only.
Headline EBITDAR
margin (%)
2022
9.9
(37.8)
2021
(9.0)
2020
2019
2018
15.2
16.3
Headline (loss)/earnings
per share (p)
(19.6)
2022
2021
2020
(166.9)
(149.7)*
2019
2018
88.7
118.3
* 2020 previously restated due to
impact of the 2021 rights issue.
22
easyJet plc Annual Report and Accounts 2022
Headline (loss)/return on
capital employed (%)
(25.5)
(19.9)
2022
0.1
2021
2020
Why it is important
As a low-cost business, we
focus on efficiency to provide
outstanding customer service
at the best value, while also
driving operational efficiencies
which will maximise our return
on investment.
What we measure
Headline operating (loss)/
profit after tax, divided by
average capital employed.
2019
2018
11.4
14.6
2018 as restated, headline
2019 and onwards post IFRS 16.
Customer satisfaction (%)
2022
2021
2020
2019
2018
72
75
75
74
75
Revised calculations in 2019, and
2018 was restated as a result.
On-Time Performance (%)
2022
2021
2020
2019
2018
87
84
72
75
75
CO2 emissions per
passenger kilometre (g)
2022
2021
2020
2019
2018
70.36
81.08
70.77
70.41
71.56
2018 and 2019 previously restated
to align to current industry
methodology.
Why it is important
Customers have increasing
choice and their expectations
are rising. Ensuring we meet
their evolving needs will
position us as the brand of
choice when flying within
Europe.
What we measure
Our customer satisfaction
index is based on the results
of a customer satisfaction
survey measuring how
satisfied the customer was
with their most recent flight.
What we measure
Percentage of flights which
arrive within 15 minutes of the
scheduled arrival time.
Why it is important
Reliable operational
performance
is a key factor in our
customers’ perceptions of
their experience with us.
Managing OTP and minimising
disruption will positively
impact on the likelihood of our
customers choosing to fly
with us on a repeat basis.
Why it is important
An important part of Our
Promise is to make a
meaningful difference for our
planet and help to tackle
climate change. In the short
term our focus is being as
efficient as we can and driving
carbon efficiencies.
What we measure
How much carbon dioxide is
produced for each passenger,
for each kilometre they fly
with us.
How we performed
Headline ROCE improved to
0.1% (2021: (25.5)%) driven by
headline profit before interest
and tax returning to a
£3 million profit this year
(2021: loss £1,036 million).
Total ROCE for the year was
(0.6)% (2021: (22.4)%). The
total ROCE was adverse to
the headline ROCE due to
non-headline items generating
a £30 million charge before
tax in the income statement.
How we performed
Overall customer satisfaction
declined by 3 ppts from 75%
to 72%. Customer satisfaction
was adversely impacted by
the abnormal level of
disruption experienced in our
third quarter. The
unprecedented ramp-up
across the aviation industry
resulted in widespread
operational challenges and
higher levels of cancellations.
How we performed
Our OTP declined in the year
to 72% (2021: 87%) primarily
as a consequence of the
abnormal level of disruption
experienced in our third
quarter due to the ramp-up
across the aviation industry
and the ensuing operational
challenges which resulted.
How we performed
In 2022 our carbon emissions
per passenger kilometre were
70.36g, a substantial
reduction from 81.08g in 2021.
This is a reflection of the
increased load factor in the
current year which drove a
decrease in emissions per
passenger, combined with the
increased number of more
efficient NEO aircraft and a
continued focus on flight
efficiency measures.
easyJet.com
23
STRATEGIC REPORT PE OPLE AND CULTURE
People and culture
Our people are one of our main points of difference – and are
key to our success.
People and culture
Creating an inclusive culture – where
people can be their best, feel that they
truly belong and live the ‘Orange Spirit’
– is the key to our success. This past
year has again presented our people
with major challenges, as the industry
navigates its recovery from the
pandemic. Our focus has been to
prioritise activity that ensures our
readiness and operational resilience and
also that contributes to the employee
experience, so that we can retain our
talented people.
For more information on how
we are fostering an inclusive
culture, see pages 10 and 11.
Readiness and operational
resilience
• We recruited around 1,650 cabin crew
in a difficult labour market across the
network, particularly in the UK.
• Faced with industry-wide delays to
security-clearance processing we
reacted quickly by asking head office
colleagues to help with the referencing
activity needed to complete ID
clearance.
• In response to the much-publicised
pinch points at airports over the
summer, our head office colleagues
provided additional assistance to
customers and ground crew at
airports.
Employee experience
• Working with employee representative
groups across Europe we continued to
support new ways of working –
including flexible employment
contracts and hybrid working for our
office-based colleagues.
• The wellbeing of our people is
intrinsically linked to our number one
priority, safety. A new digital app from
our Employee Assistance Programme
provides more support to our remote
workforce.
• We invested in our online learning
technology to give all our people the
opportunity to develop new skills and
grow into new or existing roles.
Glassdoor employee overall
satisfaction rating
Employee engagement
score in 2022
4.0/5
The highest rating within the travel
and tourism sector.1
1. Glassdoor score as at
30 September 2022.
7.1 / 10
This puts us in the middle range for the
Transportation sector in the Peakon
engagement methodology.
Retaining talent
• Continuing uncertainty within aviation,
combined with a highly competitive
external market, has created an
environment in which it is harder to
retain our experienced and passionate
people. Attrition levels have been higher
than before 2020.
• With inflation rising across Europe, we
made changes to reward and recognition
packages across the network to reflect
the challenges facing our business and
employees. Changes included one-off
payments for cabin crew, the
reintroduction of our bonus plan for
head office colleagues and the launch
of an easyJet holidays credit for all
employees across the network.
• Keeping our employees connected to
the business and to each other so that
they feel supported has remained a
focus and we have introduced new
programmes for our people managers,
to help to build confidence across our
teams.
• Creation of the Velocity Talent
development programme – a cohort
of high-performing, high-potential
individuals who have been identified as
emerging leaders, including those who
are subject matter experts in their field.
24 easyJet plc Annual Report and Accounts 2022
Gender
Gender makeup of easyJet employees as at 30 September 2022
plc Board
4 (36.4%)
Senior managers2
7 (63.6%)
10 (21.7%)
36 (78.3%)
Airline Management Board1
All employees
3 (30%)
7 (70%)
6,149 (42.6%)
8,294 (57.4%)
Female
Male
1. The Airline Management Board is our ‘Executive Committee’ for the purposes of the FTSE
Women Leaders/Hampton-Alexander Review.
2. Defined in accordance with the Companies Act 2006 which includes those with responsibility
for planning, directing or controlling the activities of the Company as well as persons who were
directors of our subsidiary undertakings.
Diversity, inclusion and
wellbeing
Throughout this year we have continued
to make progress against our Diversity,
Inclusion and Wellbeing Strategy,
focusing on creating a culture of
inclusion where everyone can be
themselves and people look after their
own and each other’s wellbeing.
Firm foundations
We are committed to using quality data
to create best practice inclusion and
wellbeing policy and processes. We are
aiming to improve the quality of and
increase the amount of data we
collect through our regular diversity data
monitoring, the Care to Share campaign.
We are developing our HR information
systems to capture better data. Both of
these will help us improve the employee
experience of our people.
We continue to measure how our
employees feel about the inclusive
environment that we are striving to
create, through our regular employee
listening activities such as our
anonymous Your Voice Matters survey.
For the 12 months ending September
2022, we recorded a score 0.3 above
the benchmark for our peers within the
transportation sector for the question ‘I
feel I can be myself at work’ which is
used as an indicator of inclusion.
Both our 2021 and 2022 UK gender pay
gap submissions reflected the impact of
our pilot and predominantly female UK
cabin crew community being on
furlough as, in line with reporting
regulations, they were excluded from
the data. As a result the submissions for
these years do not represent a
complete picture. In 2022 our gender
pay gap performance was a median
gap of 59% and a mean gap of 50%.
The biggest single factor influencing our
gender pay gap is the gender
representation within our pilot
community. This remains a well-known
industry-wide challenge that we continue
to tackle, working with our partners to
inspire more young people to consider a
career in aviation, including encouraging
more women to become pilots.
Our GPG submissions are available
on our website at https://corporate.
easyjet.com/ corporate-
responsibility/gender-pay-reports
We treat every applicant in our recruitment
process fairly, including those requiring
reasonable adjustments. However, for
our two largest communities, pilots and
cabin crew, we are bound by regulatory
requirements for ability which all applicants
and employees must comply with
for operational safety reasons.
We remain committed to hiring and
developing a diverse pipeline – be
that crew, engineers, pilots or those that
support from our head office functions.
Open and honest communication
Engaging campaigns and supporting
materials, designed using feedback from
our listening channels, articulate what we
mean by inclusion and wellbeing at easyJet.
Our central hub for all conversations and
support, known as ‘You Matter’, sets a
structured approach for conversations on
diversity, inclusion and wellbeing. In
addition, we have a space on our social
network ‘Workplace’ dedicated to inclusion,
which encourages our people to share
information and personal stories.
Our internal campaigns recognise,
celebrate and educate on a variety of
topics that promote and support inclusion
and wellbeing. Over this past year
campaigns have included Black History
Month, Pride and Wellbeing Week.
Our employee-led community known as
Trailblazers are our passionate advocates
for diversity, inclusion and wellbeing. The
group helps amplify the work and
educate on all activity across easyJet.
Our Trailblazer conference this year
included educational experiences
provided by external specialist partners
such as Stonewall and WiHTL (a
collaboration community aimed at
increasing diversity and inclusion across
hospitality, travel and leisure).
Increasing confidence and
capability
We deliver a variety of learning
interventions across the business that
give our people, in particular those who
manage teams, greater confidence
across all things inclusion and wellbeing.
We have successfully implemented
agreements with new health services
partners – both Occupational Health and
Employee Assistance Provider (EAP) –
that allow us to provide an improved,
digitally-enabled experience in support
of managing health and wellbeing.
We have spent time evaluating how we
could better support mental health
awareness among our colleagues and
managers and worked with the UK
mental health charity MIND to launch
three bespoke programmes which were
made available across the network.
These included mental health awareness
e-learning for all colleagues as well as
two manager-specific modules around
understanding, supporting and
managing mental health at work.
Our inclusive behaviours e-learning and
our mandatory diversity, equality and
inclusion training continue to be available
for all colleagues across the business.
External partnerships
Developing positive inclusive mindsets is
at the forefront of delivering authentic
and meaningful diversity and inclusion
experiences. We work with our partners
to provide key insights and advice and
work with our Board and leaders to
strengthen conversations and build
confidence in inclusive leadership.
We partner with Business in the
Community (BiTC) to help us with our
commitment to the Race at Work
Charter. We have encouraged our
people, where legally reasonable, to
disclose diversity data through our ‘Care
to Share’ campaign. On the UK
Glassdoor platform our diversity and
inclusion rating has been maintained at a
score of 4.2 out of 5. Additionally, our
ranking in the Financial Times Diversity
leaders table has improved year on year
to rank #256 from the 850 included.
Read more in our Human Capital factsheet, at https://corporate.easyjet.
com/corporateresponsibility/esg-supplementaryinformation
easyJet.com
25
STRATEGIC REPORT OUR ENGAGEMENT WITH STAKEH OLDE RS
engaging with those around us
Our customers
A key part of our strategy is a focus
on the customer, both to win our
customers’ loyalty and to achieve
our purpose of making low-cost
travel easy.
Our understanding of who our current
and future customers are, how they
perceive easyJet and what products
they need, enables us to prioritise our
efforts towards driving a positive
customer experience and loyalty.
Our People
Our people are a critical part of our
business and their famous ‘Orange
Spirit’ a key part of our success.
We want to attract, retain and
develop our people by creating an
inclusive and energising environment,
inspiring everyone to learn and grow
and do their best – and helping our
Orange Spirit to thrive. Engaging
effectively with them is key to doing
this successfully.
Our suppliers
easyJet’s suppliers have an important
role in delivering our ambition, and we
strive to ensure that they have aligned
views on corporate responsibility and
compliance.
We partner with key suppliers to deliver
many of our operational and commercial
activities. Our partners are carefully
selected, and significant emphasis is
placed on managing these relationships,
with the aim of encouraging incremental
innovation and performance.
Key focus
• Safety
• Sustainability
• Product choice and value
• Ease of making and managing bookings
• Ease of travelling and minimising disruption
How we engage and
information flows
• Through the easyJet Customer
Community, who share experiences and
help test messaging, policies, products and
propositions via polls, discussions, forums,
video diaries and surveys.
• Regular customer surveys to find out
about customers’ travel experiences.
• Crew feedback sessions via
management and online forums.
• Through customer communications,
including emails, our app, call centres,
our self-service disruption management
tool and on social media.
• Customer sentiment is regularly
reported to and discussed by the
Airline Management Board (AMB)
and the Board. We measure our
performance through our customer
satisfaction KPI (see page 23).
Considerations and outcomes
• Travel restrictions and entry requirements
were constantly changing across Europe
throughout the year due to the Omicron
Key focus
• Health, safety and working conditions
• Wellbeing and mental health
• Training and career development
• Diversity and inclusion
• Reward and benefits
• Extensive engagement with various
employee representative groups and cabin
crew unions.
• Your Voice Matters employee surveys are
discussed by the AMB and Board.
• Employee Representative Directors’
meetings.
How we engage and
information flows
• Regular internal communication including
weekly voice notes from the AMB and
stand-ups at key times.
• Updates to the Board from the CEO and
Group People Director on people matters.
• Monitoring of themes and trends arising
from the Speak Up, Speak Out
mechanism.
Key focus
• Compliance with regulations
• Health and safety
• Treatment of suppliers
• Sustainability
• Payment practices
How we engage and
information flows
• Meetings between AMB members and
senior executives of major suppliers on a
regular basis to understand the strategy
and health of their businesses.
• The Board looks to engage with key
suppliers whenever appropriate.
• Discussion at Audit Committee and Board
with central procurement function on
supplier management.
26 easyJet plc Annual Report and Accounts 2022
Our customers
S TRATE G IC RE PO RT
Details of how the Directors have had regard to their section 172 duty can be
found throughout the Strategic and Governance reports.
variant. We ensured customers were
kept fully informed via the Covid-19
Travel Hub on easyJet.com, which is
kept updated with the latest information.
• We undertook a customer satisfaction
deep dive prior to the summer ramp-up
to understand any customer pain points.
This resulted in initiatives around
pre-travel communications and the
airport experience. We also revised
airport signage and launched ‘Play your
part’, with non-customer-facing
employees helping customers with extra
support such as wayfinding and bag
drop questions at airports. These actions
helped improve CSAT rates.
• Given the unprecedented ramp-up,
the aviation industry across Europe
experienced significant operational
issues in the second half which
resulted in significant delays and
cancellations for customers. We
proactively consolidated flights across
affected airports and revised the
schedule in order to build additional
resilience and reduce the number of
on-the-day cancellations. We were
able to rebook the majority of
customers on alternative flights, with
many travelling on the same day as
originally booked.
• In response to customer feedback we
launched a new in-flight retail offering,
with greater regionalisation and a
refreshed product offering. Due to
challenges in the supply chain, not all
items were available at launch,
however availability has continued to
increase and customer feedback is
very positive.
• The Board has also reflected on the
above initiatives and the impact of the
pandemic on customers when
reviewing the Group’s longer-term
strategy.
More information on our customer
strategy and our operational
performance can be found on
pages 6 to 17.
Considerations and outcomes
• The Board and management
understand the lasting impact of the
pandemic on our people, and the
unprecedented ramp-up over the
summer and related disruption
compounded this. By taking action to
build additional resilience in the
schedule, we were able to achieve
greater roster stability and help our
people focus on serving customers.
• During the year we relaunched our
employee survey Your Voice Matters.
54% of all employees completed the
surveys throughout FY22. Engagement
score was 7.1 out of 10 for all employees
and 7.9 out of 10 for our head office and
engineering employees.
• We continue to have a number of
mechanisms to support our people’s
wellbeing and mental health.
• The Board received regular updates
from our Employee Representative
Directors to ensure employee voice was
reflected in the Boardroom. This
included topics such as workload, pay
and reward and communication of the
strategy. The Board and its Committees
have considered this feedback when
taking decisions on remuneration,
organisational design and the
communicaton of the revised strategy.
• Our employees were invited to
participate in the launch of our
ambitious SBTi aligned net zero
roadmap in September, which helped
increase engagement around our
sustainability plans.
Read more about our people and
our approach to diversity and
inclusion on pages 24 and 25.
Considerations and outcomes
• We have a number of key suppliers,
including aircraft and engine suppliers,
ground-handling and logistics, critical
technology suppliers, fuel providers,
engineering and maintenance providers,
aircraft lessors and hoteliers for easyJet
holidays.
• With the ramp-up of flying we
performed a supplier readiness check to
ensure safe and responsible delivery of
our operation. While there continued to
be several challenges with ATC,
ground-handling and airports due to
staff shortages and delays in
recruitment, we worked closely with
them to identify solutions, such as with
our ground-handlers DHL at Gatwick
Airport to improve resilience and
performance. We continue to engage
with our suppliers to improve resilience
and performance.
• During the year the Board considered
the medium-term fleet plan and secured
agreement on delivery slots with our key
supplier Airbus and the related engine
orders with CFM.
Further details are set
out on page 85.
easyJet.com
27
Section 172Our stakeholders are a fundamental part of our operations and are referenced throughout this report. We have set out on the following pages details of who our key stakeholders are, how we have engaged with them and the associated outcomes. The Directors are required to act in a way they consider, in good faith, would most likely promote the success of the Company for the benefit of its members as a whole, taking into account the factors as listed in section 172 of the Companies Act 2006. OUR ENGAGEMENT WITH STAKEH OLDE RS (CO NTI NUE D)
Our shareholders and investors
Shareholders and investors are the
main providers of capital with which
to invest and grow the Group’s
business. Taking account of their
views on the Company’s operational
and financial performance and its
strategic direction is an important
part of ensuring we deliver strong
shareholder value.
Key focus
• Operational and financial performance
• Creation of long-term sustainable
shareholder value, including addressing
environmental, social and governance
matters
• Share price and dividend returns
How we engage and
information flows
• Active engagement programme with
institutional investors, including
attendance at investor conferences,
results presentations, roadshows,
individual investor meetings and
engagement with equity research
analysts.
• Engagement around voting events by
Investor Relations and Company
Secretariat teams.
• Feedback is regularly provided to the
Board on investor sentiment. The Board
also engages directly through events
such as the Annual General Meeting.
Our communities
We want to make a positive impact
and we value our relationships with
the communities where our
employees live and operations are
based, as they are important to the
effective operation of our business.
Key focus
• Local employment
• Sustainability, including carbon and other
aircraft emissions; aircraft noise; energy
usage; recycling and waste
• Charitable activity
How we engage and
information flows
• Country managers lead the community
engagement in their markets, and base
managers also engage directly with their
local airport communities.
• Partnerships with individual airports and
air traffic control teams to implement
reduction in cabin waste and noise
mitigation activities that seek to minimise
the impact on local communities.
• Employee volunteering with local
charities and organisations.
regulators and governments
Regulators and governments take
decisions which directly impact
our operations. easyJet engages
with them to understand their
strategic drivers and the impact of
any regulatory changes on the
Company and customers and to
ensure that policymakers
understand our business and the
social and economic benefits
it delivers.
Key focus
• Compliance with regulations
• Consumer protection
• Treatment of suppliers
• Sustainability
• Public health
• Taxes and charges
How we engage and
information flows
• AMB members and other senior
management engage with members of
government and regulatory bodies.
• Country managers and directors engage
with governments in all markets where
we have bases, at both a national and
regional level.
• Discussions with operations and safety
regulators such as Austro Control
(Austria), the Civil Aviation Authority (UK)
and the Federal Office of Civil Aviation
(Switzerland) and EASA, amongst others.
• Discussions with air traffic control
operators such as NATS.
• Participation in trade associations such
as A4E and Airlines UK, and tourism
bodies, such as ABTA and the GSTC.
28 easyJet plc Annual Report and Accounts 2022
Our communities
regulators and governments
S TRATE G IC RE PO RT
Considerations and outcomes
• Engagement took place in advance
of the AGM on the resolutions being
proposed, including by the Chair of
the Remuneration Committee on the
Remuneration Policy, with
amendments made to reflect the
feedback received.
• Engagement also took place following
the AGM relating to the resolutions
that received less than 80% in favour.
Further details are available on page 88.
• Major shareholders were also
• In September 2022 we launched
our SBTi aligned net zero roadmap
and engaged with investors on our
plans. Further details are set out on
pages 12 and 13.
consulted prior to the GM held in July
2022 to approve the Airbus and CFM
agreements. The transaction was
approved and further details are set
out on page 85.
Considerations and outcomes
• We extended our partnership with
Bristol Airport to support the long-
term ambition of achieving net zero
operations at the airport. Our trial of
electric ground-handling equipment
achieved a total of a 96% reduction in
carbon emissions.
• We offer support for employees to
volunteer in their local communities,
such as flexible working and time off.
• To help support children and families
affected by the war in Ukraine we
launched our onboard collection in
support of UNICEF’s Ukraine appeal.
We also continue to provide support
for UNICEF’s global vaccination effort.
Considerations and outcomes
• Management have engaged
extensively with governments across
all markets on lifting travel restrictions
and testing.
• Our Chief Commercial Officer
participated in a BEIS Select
Committee to provide insight on the
challenges the industry was facing and
explain easyJet’s response.
• Johan Lundgren met with various
governments in our network, such as
Italy and the Netherlands, to confirm
our commitment to their markets and
discuss some of the key challenges
and opportunities.
• Our approach with regulators is open
and transparent, which allows for a
constructive relationship. It also
enables us to quickly identify and
address any regulatory concerns at an
early stage.
• We continue to engage with
policymakers across Europe on how
public policy can help airlines to
address their carbon emissions and
stimulate the technological innovation
that will be needed for zero emission
aviation.
• We also participate in industry groups
that contribute to public policy
development on sustainability issues,
such as the Aerospace Technology
Institute, Airlines UK, the Jet Zero
Council (UK Government), the Science
Based Targets initiative and
Sustainable Aviation (UK).
easyJet.com
29
SUSTAINABILITY
OUR APPROACH TO Sustainability
easyJet aims to be a responsible and sustainable business. We recognise the
need to transition to a low-carbon economy and will continue to work towards
ensuring aviation plays its part. Our focus is to pioneer positive change for our
planet, communities and people, getting one step closer to net zero every day.
MESSAGE from Johan Lundgren
I’m incredibly
proud of the
progress that we,
and our partners,
have made this year
and believe that
easyJet is an industry
leader on its journey
to net zero.”
The benefits of aviation are fantastic – it
connects people, reunites friends and
families, enables people to experience
different cultures and provides economic
prosperity. But at the same time, we know
that we have a responsibility to minimise
the impact of our flights on the planet and
everyone at easyJet, including myself,
takes this responsibility seriously.
There is no doubt that decarbonising
aviation is a cross-industry effort and no
one airline can do this alone, however I’m
incredibly proud of the progress that we,
and our partners, have made this year and
believe that easyJet is an industry leader on
its journey to net zero.
Much has been achieved this year; in
November 2021, we made an important
commitment by joining Race to Zero, a
UN-backed global campaign to achieve net
zero carbon emissions by 2050. This was
closely followed by setting a carbon
emissions intensity reduction target of 35%
by 2035 and in September 2022 we were
the first low-cost airline worldwide to
announce an interim target validated by
the Science Based Targets initiative (SBTi).
Later in September we published our
SBTi-aligned roadmap to achieving net
zero carbon emissions by 2050. I firmly
believe that our roadmap is the most
ambitious to date due to the focus on new
technology, as soon as available, with the
ambition to achieve zero carbon emission
flying across our entire fleet in the
long-term. By 2050, we plan to have
reduced our carbon emissions per
passenger by 78%, with residual emissions
removed through carbon capture
technology.
Alongside the ultimate transition to zero
carbon emission technology, the roadmap
features a combination of fleet renewal,
operational efficiencies, airspace
modernisation, Sustainable Aviation
Fuel and carbon removal technology
(see pages 12 and 13).
We have taken a wide range of actions to
help us make progress on the roadmap.
On new zero emission technology, we
formed a new partnership with Rolls-Royce
to pioneer the development of hydrogen
combustion engine technology capable of
powering an easyJet sized aircraft in the
future with ground testing already
successfully underway. We formed
hydrogen technology partnerships with
GKN Aerospace and Cranfield Aerospace
Solutions and were the first airline to
support Airbus’s ZEROe programme.
A modern fleet of aircraft is instrumental in
driving down emissions and so we will be
making a list price investment of $21 billion
over the coming years to continue to
30 easyJet plc Annual Report and Accounts 2022
renew our fleet. All 168 new aircraft
deliveries, scheduled between FY23 and
FY29, will be Airbus NEO aircraft, which are
at least 15% more fuel efficient and 50%
quieter than the aircraft they replace.
During the year we also announced several
technology developments, including a
multi-million-pound fleet-wide investment
into the latest technology from Airbus to
achieve further carbon emission reduction
through Descent Profile Optimisation.
We have contracted all Sustainable
Aviation Fuel (SAF) reflected in our
roadmap for the next five years with
supplier Q8 Aviation and also signed a
letter of intent with Airbus to support the
development of ground-breaking carbon
removal technology.
As we move towards delivery of our net
zero roadmap, we are transitioning our
current investment in carbon offsetting
into supporting the technologies that will
help us decarbonise.
Looking beyond carbon, we became the
first low-cost carrier worldwide to have a
fully-certified IATA Environmental
Assessment (IEnvA) Environmental
Management System, showing we are
managing our environmental performance
in a structured and systematic way.
We continue to support the vital work of
UNICEF both through its Covid-19 Vaccines
Appeal and collecting donations to help
support children and families affected by
the war in Ukraine.
Meanwhile, easyJet holidays continues to
find ways to further optimise the benefits
of travel and tourism to destination
communities (see page 40).
So in summary, informed by our roadmap
we are investing millions where we can
make the most difference, in efficiency
measures now and in the development and
realisation of net zero technology in the
decades to come.
By continuing our leadership in this area
and implementing our roadmap step by
step, we will help ensure a sustainable
future of aviation for the benefit of the
next generation and our planet.
sustainability Strategy
Pioneering positive change for our planet, communities and people
Getting one step closer to net zero every day
PILLAR ONE
Reducing our impact today
for a better tomorrow
We work tirelessly to minimise the
environmental impact across our
operations.
• Focused on reducing the carbon
intensity of our flying.
PILLAR TWO
Pioneering future travel
easyJet’s support in the development of
zero carbon emission technologies will
shape the future of flying.
• Signed up to Race to Zero.
• Driving change to deliver our net zero
transition roadmap.
• Tackling waste and plastic reduction
within easyJet and our supply chain.
• Collaboration and partnerships
to achieve zero carbon emission aviation.
• Continuously addressing our
noise impact.
• Environmental management
system – ISO 14001 compliant.
• Advocating for effective carbon
regulation and new technology.
PILLAR THREE
Driving positive change in society
Positively impacting our people, customers
and communities to maximise the social
and economic benefits of travel and
tourism.
• Creating an inclusive workplace.
• Remaining an employer of choice.
• Making more sustainable travel
accessible to everyone through easyJet
holidays.
• Supporting charitable causes that are
important to our customers and
employees.
Underpinned by strong governance and monitoring at Board level to drive delivery of this strategy
Sustainability and ESG Governance
Further details on page 43 and page 82
plc Board
Approves changes in strategy
Airline Management Board
Regular updates and approval
Sustainability Steering Committee
Steers direction of Sustainability Strategy, including net zero roadmap and ESG disclosure
ESG Reporting Group
Climate Change Transition Risk Register
Environmental Policy Group
Dedicated
Sustainability
Team
Net Zero Technology Innovation Team
Sustainability Communications Forum
Environmental Management System Review Board
Materiality
To determine the priority sustainability
issues we need to address, we conducted
a full materiality assessment in 2019 and
plan to refresh this in 2023. The
assessment gathered the views of key
stakeholders, including employees,
investors, suppliers, regulators, customers,
trade unions and non-governmental
organisations. The results were published in
our 2019 and 2020 Annual Reports and are
available at https://corporate.easyjet.com.
The assessment confirmed that the most
material sustainability issue for easyJet is
our carbon emissions and this is the
primary focus of our sustainability efforts,
addressed through risk management and
through the many partnerships and
activities described in this section of
the Annual Report. Other critical material
issues identified included health and safety,
fair employment and the management of
waste and plastics.
External recognition
Our sustainability activities and
performance are assessed by the key
sustainability ratings agencies that are
important to our investors. We have
achieved improved ratings year on year
with leading ratings providers Sustainalytics,
FTSE4Good and Transition Pathway
Initiative. In December 2021, we received a
B rating from CDP (Carbon Disclosure
Project) and in July 2022 an AA rating from
MSCI – both an improvement on 2021.
This year we won: the most effective ESG
programme in the transport sector in
Britain’s Most Admired Company awards,
Best Sustainability and Inclusion initiatives
of the year in the Italian Mission awards and
the Sustainability award at the Professional
Clothing Industry Association Worldwide
awards for our new pilot and cabin crew
uniforms, produced from 100% recycled
plastic bottles. And Bristol Airport won the
Airports Council International Eco-
Innovation Award for the partnership
between easyJet and Bristol Airport.
easyJet.com
31
STRATEGIC REPORT SUSTAINABILITY (CONTINUED)
Pillar one
Reducing our impact today
for a better tomorrow
We publish a range of ESG factsheets
on our website, to be read alongside
our FY22 Annual Report, which give
further data and information on ESG
topics such as human capital and
labour management; safety, quality
and governance; digital safety; and
environmental management. Go to
https://corporate.easyjet.com/
corporate-responsibility/sustainability
Overview
Reducing our direct organisational carbon
footprint (Scope 1 and 2 emissions) has
been a long-term priority. In this financial
year easyJet set an interim target for a
35% reduction in emissions intensity, as
measured by CO2e/RTK (Revenue Tonne
Kilometre), and we were the first European
low-cost carrier to have this target
validated by the Science Based Targets
initiative (SBTi). We continue with our
relentless focus on fuel efficiency, and are
transitioning our fleet to more modern,
fuel-efficient aircraft. We have taken
delivery of a further eight Airbus NEO
aircraft this year, which now constitute 19%
of our fleet, and confirmed the order of a
further 56 A320neo family aircraft. We are
also constantly refining our operations and
optimising passenger loads to ensure
maximum efficiency.
Our environmental impact of course goes
beyond carbon emissions, and we continue
to address, assess and minimise issues
such as waste, the use of plastics and our
noise impact. This year easyJet was the
first European low-cost carrier to achieve
IEnvA Stage 2 certification for our
Environmental Management System (EMS).
Carbon governance and data
Mapping our carbon emissions
The measurement and reporting of our
carbon emissions are aligned to the
European Union’s Emissions Trading
Scheme (EU ETS), the Greenhouse Gas
(GHG) Protocol and the recommendations
of the Task Force on Climate-related
Financial Disclosures (see pages 43 to 46).
They also meet the UK Government’s
Streamlined Energy and Carbon Reporting
requirements, 2019.
The GHG Protocol categorises emissions in
three scopes:
• Scope 1 – direct emissions from owned
and leased assets (typically combustion
of fossil fuels).
• Scope 2 – indirect emissions from
imported energy (typically grid
electricity) used in assets where easyJet
has direct operational control.
• Scope 3 – all other indirect emissions
resulting from upstream and
downstream business activity such as
supply chain, business travel and aircraft
components.
This year we have again worked with
Carbon Trust, a global climate change and
sustainability consultancy, on our carbon
mapping and reporting work.
Our carbon emissions are calculated and
expressed as a suite of carbon dioxide
equivalent (CO2e) figures in metric tonnes.
We use the operational control approach,
in which we include emissions from
activities where we control the operation
and use published emission factors issued
by competent authorities (such as UK
government departments including
DEFRA).
The carbon mapping work in the 2022
financial year estimated that 99.98% (2021:
99.87%) of easyJet’s organisational (Scope
1 and 2) carbon emissions was as a result
of the use of jet fuel across our fleet of
aircraft.
Carbon emissions methodology
We report both grams of carbon dioxide
per Revenue Passenger Kilometre and
grams of carbon dioxide equivalent per
Revenue Passenger Kilometre. We have
also included our carbon emissions
equivalent per Revenue Tonne Kilometre
(gCO2e/RTK) as this is the intensity metric
specified by the SBTi for their aviation
sectoral decarbonisation pathway and is
used by a number of other stakeholders.
Since the 2021 financial year, we have
expanded the scope of our reporting to
include fugitive emissions from chillers and
air-conditioning equipment which is
included in Scope 1.
From the 2020 financial year, we reviewed
our carbon intensity calculation
methodology, so that it aligns more closely
with established industry methodologies.
The methodology used follows the
protocols outlined in the BS EN 16258 –
2012, ‘Methodology for calculation and
declaration of energy consumption and
GHG emissions of transport services
(freight and passengers)’ document. This is
the methodology that airlines with
Environmental Management System (EMS)
To improve our environmental performance in a structured, systematic and documented way, we joined the IATA Environmental
Assessment (IEnvA), an EMS accreditation programme specifically developed for the airline sector by airlines, IATA and leading
experts in aviation environmental sustainability. IEnvA provides airlines with guidance, aligned with internationally accepted
environmental management standard ISO 14001:2015, to effectively address significant environmental sustainability matters that
face the aviation industry today.
Airlines are able to phase the implementation of the IEnvA programme with recognition as a Stage 1 or Stage 2 Operator. In early
2022 we achieved IATA IEnvA programme Stage 1 certification, for an ISO 14001-compliant EMS.
In August 2022 we achieved Stage 2 certification, which made us the first low-cost carrier operating in Europe with an IEnvA
Stage 2 verified EMS and the first non-IATA member to participate in the IEnvA certification process.
Our environmental policy is available at https://corporate.easyjet.com/corporate-responsibility/policies
32
easyJet plc Annual Report and Accounts 2022
Greenhouse gas and energy performance
Global emissions
UK-only
emissions**
Global emissions
(excl. UK)
Global emissions
UK-only
emissions**
Global emissions
(excl. UK)
FY22
FY21
Scope 1 – tonnes of CO2e
Scope 2 – tonnes of CO2e*
Total Scope 1 & 2 – tonnes of CO2e
Scope 3 – tonnes of CO2e
Total carbon footprint – S1, 2 & 3
tonnes of CO2e
Scope 1 energy use (kWh)
Scope 2 energy use (kWh)
Total energy use (kWh)
Scope 1 & 2
Carbon offsets in tonnes of CO2e
2,601,877
0
2,601,877
3,819,557
0
3,819,557
6,421,434
0
6,421,434
1,660,512
8,081,946
25,911,221,182 10,498,872,319 15,412,348,863
0
3,246,789
3,246,789
2,114,961
788
2,115,749
585,443
2,701,192
8,531,020,231
3,699,537
803,463
760
804,223
1,311,498
28
1,311,526
3,238,837,186 5,292,183,044
122,794
3,576,743
25,914,467,971
6,497,911
10,502,119,108 15,412,348,863
8,534,719,768 3,242,413,929 5,292,305,838
2,120,772
* Zero Scope 2 CO2e as 100% renewable energy is sourced for sites where we have direct operational control (market-based).
** UK-only emissions cover emissions from flights operating under our UK Air Operating Certificate.
Carbon emissions/revenue passenger km
Intensity metric
Carbon emissions/revenue passenger km
Carbon emissions/revenue tonne km
Intensity metric
Carbon emissions/revenue tonne km
operations within the EU and beyond follow
to comply with the EU’s Emissions Trading
System requirements. The UK ETS also
follows this methodology.
In 2021 we adopted the convention of
using Great Circle Distance (GCD) plus a
fixed correction factor of 95km for each
sector, as recommended by the EU ETS
reporting methodology. It is also in line with
the ICAO Carbon Emissions Calculator
Methodology. This approach is intended to
better reflect the actual distance flown in
each flight. Completed flight data, fuel in
tanks, fuel density, booked (revenue)
passengers and GCD are recorded for each
flight. Internal checking processes are
applied to data on a regular basis for the
purpose of ensuring data is of a high,
robust quality for internal and external
reporting requirements.
We have used the UK government’s DEFRA
GHG Conversion Factors for Company
Reporting, which were last issued in June
2022.
Further detail on our methodology
can be found at https://corporate.
easyjet.com/corporate-
responsibility/sustainability
Total carbon emissions
Our total carbon dioxide equivalent
emissions from the fuel used in our flights
was 6,390,927 tonnes CO2e in FY22,
compared to 2,112,906 in FY21.
This total figure for FY22 is significantly
higher than in FY21, reflecting the market
recovery from the effects of the pandemic.
easyJet plc
gCO2/RPK
70.36
easyJet plc
gCO2/RTK
703.64
FY22
easyJet plc
gCO2e/RPK
71.07
FY22
easyJet plc
gCO2e/RTK
710.74
easyJet plc
gCO2/RPK
81.08
easyJet plc
gCO2/RTK
810.77
FY21
easyJet plc
gCO2e/RPK
81.89
FY21
easyJet plc
gCO2e/RTK
818.9
Carbon emissions per
revenue passenger kilometre
Our per passenger kilometre intensity
metrics are expressed as grams of carbon
dioxide equivalent (gCO2e) per passenger
kilometre (RPK) and as grams of carbon
dioxide (gCO2) per passenger kilometre.
These metrics record how many grams of
CO2e and CO2 are emitted on average for
each kilometre travelled by each passenger
on an easyJet aircraft. In FY22 our carbon
dioxide emissions per passenger kilometre
were 70.36gCO2/RPK, compared to
81.08g in FY21.
As in FY21, the pandemic continued to
have an effect on this intensity metric. The
first half of FY22 continued to be impacted
by travel restrictions, imposed due to the
spread of the Omicron variant, which
resulted in lower load factors than in a
typical year. As a result, the carbon
emissions from each flight were shared
between a smaller number of passengers,
thus increasing our intensity metric.
However, in the second half of FY22, we
were able to reduce this effect by
achieving load factors of over 90%
following the return to restriction-free
travel, and by prioritising the use of A320/
A321neo aircraft, which are typically 15%
more efficient per seat kilometre flown
compared to the aircraft they replace,
resulting in the lowest annual carbon
intensity in easyJet’s history.
The impact of the Covid-19 pandemic and
related travel restrictions over the past two
and a half years was also the primary
reason we were not able to meet our 2017
target of a 10% reduction in carbon dioxide
emissions per passenger kilometre from
our flights by the end of FY22, compared
to our 2016 performance. We continue to
work every day to reduce our carbon
emissions and we have now published our
roadmap to net zero carbon emissions,
including an interim science-based target
of a 35% carbon emissions intensity
reduction by 2035, which has been
validated by the Science Based Targets
initiative (SBTi).
Since 2000, we have reduced our carbon
emissions per passenger, per kilometre by
one-third.
Third-party verification
Our intensity metrics are verified by a
third-party specialist auditor, Verifavia.
Verifavia used a reasonable assurance
approach to review easyJet’s 2022 financial
year aircraft fuel burn, Revenue Passenger
Kilometre, Revenue Tonne Kilometre and
associated output CO2 and CO2e KPIs. In this
financial year Verifavia has for the first time
also verified easyJet’s Scope 2 emissions
and Scope 3, category 3 emissions
(upstream emissions due to fuel usage). In
FY22 the verified emissions equated to 96%
of easyJet’s carbon footprint.
Verifavia’s detailed assurance
statement is available at
https://corporate.easyjet.com/
corporate-responsibility/sustainability
easyJet.com
33
STRATEGIC REPORT SUSTAINABILITY (CONTINUED)
Internal carbon price
We set an internal carbon price based on
ETS costs for monitoring and evaluating
compliance obligations. By using the
internal carbon price, we can track the
obligation costs in the current year, as well
as future years. The internal carbon price is
input into easyJet’s master financial models
that drive the five-year financial plan,
10-year funding model and budget. These
financial models forecast route profitability
and therefore influence both near- and
long-term commercial decisions such as
the routes that easyJet operates and the
frequency of service. The internal carbon
price also has a material influence on the
fleet plan, which defines the number and
type of aircraft in the easyJet fleet, and on
fleet-related capex as a result. Since FY21
the internal carbon price has been split by
region with different prices applied to UK
departures and EU departures in line with
the respective ETS schemes.
Non-carbon dioxide effects
We know that aviation also contributes to
non-carbon dioxide climate effects in the
atmosphere. However, scientific uncertainty
remains over the quantification and
methods of mitigation and so we are
engaging with a range of stakeholders to
address this, and also recognise the need
for more information gathering and
monitoring.
Any action on non-CO2 needs to:
1) be full scope, as long-haul contrails are
the major driver of non-CO2 effects;
2) account for the non-cumulative effects
of non-CO2 effects; and
3) ensure a balanced approach aimed at
minimising the total climate impact of
aviation inclusive of CO2 and non-CO2.
What we are doing to reduce
carbon impact
Efficient aircraft
easyJet is one of the largest single brand
operators of A320neo family aircraft in
Europe. All 168 new aircraft to be delivered
up to the 2029 financial year will be NEO
(New Engine Option) aircraft, at a list price
of $21 billion. These will join the 59 NEO
aircraft that are already in the fleet.
The NEO aircraft (easyJet has both A320
and A321 variants in our fleet), are Airbus’s
new generation of narrow-body aircraft,
replacing the CEO-type (Current Engine
Option) variants of the same model.
Equipped with CFM International’s LEAP-1A
engines, they are at least 15% more fuel
efficient than the aircraft they replace and
provide a 50% noise footprint reduction,
and significantly less NOx. Switching to
more fuel-efficient current generation
aircraft as well as up-gauging to larger
aircraft has a significant impact on
reducing carbon emissions in the short
term due to higher absolute fuel efficiency
and lower emissions per seat.
In addition to the NEO-technology aircraft,
since 2013 our A320ceo aircraft have been
delivered with ‘Sharklet’ wingtips (also
standard on the NEO variants), reducing
drag and fuel-burn by 2-3% per hour flown.
To further increase the efficiency of our
A320 fleet, 93% of it has either been
delivered in, or retrofitted to, the increased
density Spaceflex configuration. This space-
saving layout reconfigures unused space in
the rear galley, freeing up room for six
additional seats. The seats of these aircraft
have also been converted to the slimline
lightweight Recaro design (also standard
on all our NEO deliveries), further reducing
the weight (and fuel burn) of the aircraft.
Number of aircraft by type
Aircraft type
A319
A320
A320neo
A321neo
Total
Number
Percentage
of fleet
94
167
44
15
320
29%
52%
14%
5%
Operational improvements
and efficiencies
easyJet continues to operate its aircraft as
efficiently as possible and is always looking
for further efficiency improvements to
reduce fuel burn and therefore carbon
emissions. This includes adjusting standard
operating procedures, for example
single-engine taxiing on arrival and
departure, using advanced weather
information to improve navigation
performance and engine washing to
remove debris, which improves the air
turbine performance.
The airline is also using new software and
AI to identify further operational
efficiencies.
This is complemented by flight efficiency
partnerships with key stakeholders such as
Airbus, Collins Aerospace, NATS and
Eurocontrol.
For example, this year easyJet signed an
agreement with Airbus to enable Descent
Profile Optimisation (DPO) and Continuous
Descent Approach (CDA) across our fleet.
Through this software upgrade, we will be
able to further reduce fuel burn and
emissions as our aircraft descend towards
their destinations at lower thrust settings.
Once rolled out across the fleet, easyJet
will have the largest DPO-enabled fleet in
the world.
We are also harnessing the power of AI
and big data through initiatives such as
the deployment of the SkyBreathe
fuel management tool. This solution
automatically collects and analyses data
from the easyJet fleet and combines them
with data from other sources such as
weather conditions and air traffic control
to identify the most relevant fuel saving
opportunities. This will enable the
implementation of the most efficient
operational procedures on the ground
and in the air.
This year easyJet also received the first
A320neo from Airbus equipped with the
latest Satellite Landing System (SLS) which
will enable pilots to perform ‘straight-in’
approaches into airports using satellite
positioning, even in low-visibility conditions.
All measures are taken only when safe and
practical to do so, within the constraints of
the operational environment.
The NEO family aircraft are quieter and more
fuel efficient than the previous generation
34 easyJet plc Annual Report and Accounts 2022
Airspace modernisation
This is crucial for the entire industry as it
has strong potential for significant carbon
reductions in the short and medium term
as more direct flight paths lead to shorter
flying times and therefore reduced fuel
burn and resulting emissions. Airspace
modernisation has to be addressed on
both a national and pan-European level,
and is crucial for a more environmentally
optimised and efficient air traffic
management system.
easyJet is working with stakeholders and
public authorities to advocate for the
modernisation of airspace, including
projects such as the Single European Sky,
which has a stated ambition to deliver 10%
carbon emissions savings from European
aviation, and the UK’s Airspace Change
Organising Group (ACOG). easyJet’s
interim COO has been appointed to the
ACOG steering committee and is helping to
drive the required changes.
easyJet is also laying the foundations for
the airline to be equipped for an optimised
European airspace and has recently been
announced as the first airline evaluation
partner for Iris, a ground-breaking air traffic
management programme, led by Inmarsat,
the global leader in satellite
communications, together with the
European Space Agency and Airbus,
paving the way for more efficient air traffic
management: see case study right.
Airports
Last year we announced a partnership with
Bristol Airport to trial a number of
sustainability initiatives across our
operations to reduce our carbon footprint,
which identified several areas for
improvement. During the trial we
introduced a push and hold process for
flight operations and also improved our
single engine taxi and Continuous Descent
Approach (CDA) performance. We also
improved onboard recycling performance.
Our trial managed to reduce carbon
emissions by 96% on the aircraft
turnaround, using electric ground-handling
equipment including ground power units,
baggage trolleys, belt loaders and steps.
Over a period of six months the trial
delivered a total carbon saving of 23,632 kg
which equates to the carbon savings of
nine households’ typical annual energy.
The initial learnings from the trial will be
embedded in our future operational
strategy. The trial also opened several
avenues for us to pursue, particularly
around the use of hydrogen, and we have
extended the partnership for a further
five years.
Case study: GROUND-BREAKING AIR
TRAFFIC COMMUNICATIONS SYSTEM
easyJet is the first airline partner of the revolutionary Iris programme, led by
Inmarsat and the European Space Agency (EASA), which will provide early
access to the transformative technology which enables airspace optimisation
that will ease congestion and reduce delays, fuel usage and emissions.
Powered by Inmarsat’s award-winning SwiftBroadband-Safety (SB-S)
connectivity platform, Iris enables new air traffic management functionalities
such as trajectory-based operations that pinpoint aircraft in four dimensions
(latitude, longitude, altitude and time), which will allow easyJet to avoid
holding patterns, calculate the shortest available routes and optimum altitudes,
and benefit from continuous climb and descent pathways. The additional
datalink capacity provided by SB-S will power a host of powerful onboard
digital applications, such as AI flight profile optimisers and real-time
weather applications.
With the support of leading Air Navigation Service Providers (ANSPs), easyJet
will evaluate Iris’s transformative capabilities on up to 11 Airbus A320neos.
The Iris programme is the culmination of years of work and over €50 million
investment by EASA, Inmarsat and more than 30 partners. Meanwhile we
advocate for governments to also take action to accelerate airspace efficiency,
i.e. for the EU27 to deliver the Single European Sky project and for the UK
government to deliver its UK airspace modernisation programme.
In Italy, we have set up a partnership with
SEA, the group that manages the airports
of Milan Malpensa and Linate, to implement
more sustainable management of
operations at Milan airports.
Areas that the project will cover are the use
of Sustainable Aviation Fuel (SAF), research
into infrastructure requirements for
hydrogen propulsion, improvements in
waste management and recycling, as well
as the use of zero carbon emission ground
service equipment.
Noise reduction
easyJet continues to work hard on
reducing the noise impact of our aircraft
and flights. A large part of this is driven by
the acquisition of newer, quieter Airbus
A320neo and A321neo aircraft, powered by
CFM LEAP-1A engines, that meet ICAO
Chapter 14 regulations.
Flight crew also use specialist techniques
and procedures to minimise the impact of
noise. This could be adhering to noise
abatement procedures or flying continuous
descent approaches.
easyJet investigates any concerns raised
relating to noise procedures. This helps us
understand how we can improve
procedure design and flight planning to
reduce the impact of noise on those living
near airports or under flight paths.
Carbon offsetting
easyJet was the first airline worldwide to
offset carbon emissions from the fuel used
on all our flights. We also offset our
ground-based CO2e, and easyJet holidays
offsets the carbon from the energy used
for hotel stays and for in-destination
transfers. Since the launch in November
2019, we have offset 11,767,387 tonnes of
carbon emissions (19 November 2019–30
September 2022), with our portfolio of
projects meeting the high quality
certifications of either Gold Standard or
VCS (Verified Carbon Standard). Carbon
credit certificates are available at https://
corporate.easyjet.com/corporate-
responsibility/sustainability.
Offsetting has been an extremely valuable
interim measure, and as we move towards
the delivery of our net zero roadmap we
will transition our investment from
out-of-sector carbon offsetting into
supporting and facilitating the individual
elements of our roadmap, to decarbonise
our operations.
This is also aligned with the SBTi
requirement for airlines to decarbonise
within their own operation, which does not
take into account the use of out-of-sector
carbon offsetting or other market-based
mechanisms such as the EU Emissions
Trading System or CORSIA.
easyJet will continue to offset on behalf of
its customers, for all flights booked by the
end of this year. From January 2023, we
will offer a voluntary offsetting option for
our customers.
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35
STRATEGIC REPORT
SUSTAINABILITY (CONTINUED)
Waste management
We generate a variety of waste streams in
our operations and are committed to
reducing waste across all our activities. We
apply the waste hierarchy (reduce, reuse
and recycle) to minimise the impact of
waste. A prime example of this is our new
crew uniforms made from recycled plastic
bottles. Forty-five bottles go into each outfit
– with the potential to prevent 2.7 million
plastic bottles from ending up in landfill or in
oceans over a five-year period.
In our offices we segregate recyclable
waste streams such as paper and
cardboard, aluminium cans, plastics and
food waste. In FY22 in our Luton campus,
we achieved 100% landfill diversion. In our
Engineering & Maintenance operations we
ensure hazardous waste is handled
appropriately and we are working towards
improved segregation of hazardous and
non-hazardous waste.
With respect to onboard waste, we
continue to segregate waste with
recyclables collected in a green bag, and
we continue to work with stakeholders to
improve recycling rates once waste is taken
off the aircraft.
Waste generated in easyJet
operations (excluding onboard waste)
Waste type
Weight (by tonnes)
Card
Crushed empty oil tins
Food
General commercial waste
Textiles
Waste oil and fuel
Scrap metal
Wood pallets
Hazardous waste
Mixed
Electrical and Electronic
Equipment (WEEE)
Total waste
9.3
39.1
21.1
154.0
1.0
13.5
1.4
1.4
24.7
3.7
3.6
272.8
Onboard waste projection
Metric
FY22
FY21
Waste per passenger
(kg/pax)*
Total onboard waste
(thousand tonnes)**
0.07
0.08
4.92
1.61
*Average waste generated per passenger was
calculated based on the total cabin waste
generated from aircraft operations at Luton
Airport and the number of arriving passengers.
** Total onboard cabin waste generated,
including recycling, general waste and
international catering waste, calculated using
average waste per passenger and the total
number of easyJet passengers carried.
Onboard waste
Airlines and passengers have a strong
desire to do more in terms of reusing and
recycling. We communicate regularly with
our cabin crew community, emphasising
the importance of waste segregation, and
have created a new training module that
explains segregation procedures and what
happens to recyclable waste once it is
taken off the aircraft. This module has been
rolled out to all cabin crew and over 7,000
colleagues have completed it.
As an airline, we are not directly responsible
for the disposal of onboard waste, which is
typically handled by our ground-handling
and cleaning contractors. Waste is taken to
appropriate disposal facilities at airports,
with some materials being recovered for
recycling and some being sent to landfill or
incinerated.
Following the UK’s departure from the EU,
International Catering Waste (ICW)
regulations now apply for flights between
both territories. The interpretation and
enforcement of ICW legislation often
means that all waste generated onboard is
deemed ICW, meaning that materials are
unnecessarily sent to incineration or deep
landfill, when they could be recycled.
Over the last year we continued to discuss
these issues of waste with partners at all 28
of our base airports to drive improvements
in waste segregation and increase recycling
rates, and we have also engaged with
regulators to encourage clearer guidance.
In partnership with Schiphol Airport,
PreZero and Menzies we undertook a
waste composition analysis. Every day
PreZero weighed a roll container (1300L)
with aircraft waste. All waste bags from the
container were sorted according to
streams. The different waste streams were
separated into different containers and
weighed per stream. The analysis showed
that 51% of our waste can be recycled,
leaving 49% of waste that must be
disposed of as ICW.
We continue to make changes to our
inflight food and drinks products and
service to reduce the amount of single-use
plastics used in our flights. For example, in
this financial year we removed 11.5 million
items of single-use plastic, introduced a
recycling programme for our dry stores
and made packaging changes which could
save two tonnes of plastic waste annually.
Since 2020 we have tracked the avoided
use of 48 million items of plastic across our
inflight service.
Hazardous waste
Hazardous and non-hazardous waste is
generated in our Engineering &
Maintenance operations. We are
committed to ensuring all waste is handled
in a responsible manner and reused where
possible. Cardboard is reused for
transporting engineering parts, both in the
main hub and in outstations, and cleaning
clothes are made from recycled clothing
materials.
In 2022 we have worked to align the waste
procedures and standards across all
locations and to improve segregation of
hazardous waste and non-hazardous
waste. We rolled out a new waste
management contract covering our
operations at Bristol, Edinburgh, Glasgow
and Liverpool airports and we took the
opportunity to review the adequacy of
waste storage locations and facilities and
introduced new bins and labelling. Over the
next year we will be setting reduction and
improvement targets.
Sustainable premises
This year we engaged Schneider Electric to
monitor and manage energy and water
usage across our premises, which will drive
both environmental and cost efficiencies. In
respect of the facilities where easyJet has
direct operational control, easyJet reports
no Scope 2 carbon emissions as these
facilities now operate on 100% renewable
energy.
At the easyJet HQ in Luton we have
installed new energy-saving lighting in our
airside hangar, removing existing fittings
and installing LED equivalents. These new
fittings provide a higher lighting output and
are more energy efficient, with a 53%
energy saving within the first year,
equivalent to over 100 tonnes of CO2. We
have sensors and monitoring devices fitted
in all our operational buildings to ensure
that we minimise any unnecessary power
usage and we are in the process of
migrating across from LPG to electric for
heating our building; this will ensure we
optimise all fuel usage. We are also
upgrading the ventilation system with a
more sustainable electric alternative.
To help our UK colleagues reduce their
personal carbon footprint we launched a
new flexible electric car leasing scheme and
will be adding EV charging points at our HQ
car park. We extended Cycle to Work, a
salary sacrifice scheme for purchasing
bicycles, to allow access to additional
e-bike choices.
36 easyJet plc Annual Report and Accounts 2022
Pillar two
Pioneering future travel
Overview
We aim to lead the decarbonisation of
aviation and ultimately achieve zero carbon
emission flying across Europe. We are
committed to meeting the target of net
zero by 2050, and in order to do so are
supporting the development of zero
carbon emission technologies. We have
signed up to Race to Zero, and committed
to a science-based target for reducing our
carbon emissions. We are working with
many partners across the aviation sector to
achieve zero carbon emission aviation,
while advocating for effective carbon
regulation and new technology.
Future fuels
Sustainable Aviation Fuel
We believe SAF will be part of our
decarbonisation pathway, as and when it
becomes more widely available and
affordable. However, we do not see SAF as
the ultimate decarbonisation solution for
short-haul aviation, since current pathways
are not zero carbon emissions.
At present, SAF is typically several times
the price of jet fuel, but forecasts predict
that this differential will drop as SAF scales
and is adopted.
In the long term it is best suited to
long-haul flying where there may not be
alternatives for decarbonisation.
We will use SAF in line with our net zero
roadmap, until our fleet has transitioned to
net zero carbon emission aircraft to
achieve material lifecycle carbon emissions
reductions in comparison to kerosene. Last
year, easyJet was the first airline to operate
flights out of Gatwick Airport that were
powered by a 30% SAF blend. easyJet is
also fully implementing the French SAF
mandate, introduced in January 2022.
The airline is working with fuel suppliers to
enable it to fly on increasing amounts of
SAF over the coming years.
In August 2022 easyJet signed an
agreement with Q8 Aviation to supply our
SAF requirements for the next five years
aligned with national and EU mandates.
We support efforts to ensure strict
sustainability standards for alternative fuels
for use in aviation and we have signed joint
statements to appeal to the EU to prevent
the use of unsustainable feedstocks and
food-grade agricultural land for the
production of aviation biofuels in aviation,
and any use of palm oil that may
encourage high-impact production of the
crop.
Hydrogen – the key to
sustainable air travel
easyJet’s philosophy is that the cleanest
applicable energy source must be used for
a given application.
Zero carbon emission aircraft offer huge
potential to drive easyJet, and all short-haul
aviation, towards net zero.
Once available, zero carbon emission
technology would contribute to easyJet
reducing our carbon emissions intensity by
78% by 2050, with residual emissions
addressed by carbon removal technology.
While we are considering all options for
zero carbon emission flight, based on
today’s technological advances, hydrogen
shows the most potential for a short-haul
airline like easyJet to decarbonise.
Hydrogen has no operational carbon
emissions, and in the case of green
hydrogen (produced through electrolysis of
water with renewable electricity), has no
lifecycle carbon emissions.
It also offers the potential to materially
reduce non-CO2 effects, although further
research is required to better understand
the effects and how to mitigate them.
Hydrogen has almost universal appeal as
an energy source for hard-to-abate sectors
including aviation, logistics and heavy
industry. High demand for hydrogen is
anticipated from these sectors and the UK
and EU hydrogen strategies are increasing
in ambition.
The development of zero carbon emission
technology has accelerated exponentially
over the past two years, and easyJet is
working with key players in the sector,
including Airbus, Rolls-Royce, GKN
Aerospace, Cranfield Aerospace Solutions
and Wright Electric, to accelerate this. It is
a cross-industry effort to which easyJet
provides the airline and customer
perspective and demonstrates the
significant airline demand for zero carbon
emission aircraft.
Hydrogen infrastructure
and technology
We are going further than supporting the
development of the aircraft. We are
collaborating with partners to develop
hydrogen ecosystems – the infrastructure
and technology required to enable
commercial zero carbon emission flying at
scale. We have partnerships with Bristol
Airport, SEA Milan Airports, Airbus and
Hydrogen South West (HSW). We also
engage in wider studies including those
being conducted by Cranfield University,
Target True Zero (World Economic Forum)
and the International Council for Clean
Transportation.
Carbon removal
To reach net zero by 2050 easyJet, and
the airline industry, will have to remove
residual carbon from the atmosphere
through durable carbon removals. These
have been formally recognised as being
critical to a net zero world by the
Intergovernmental Panel on Climate
Change (IPCC). Direct Air Carbon Capture
and Storage (DACCS) is a nascent
technology that offers huge potential. In
the 2022 financial year we were one of the
first airlines in the world to commit to this
technology by joining a coalition initiated by
Airbus, 1PointFive and Carbon Engineering,
which will lead to easyJet securing future
carbon removal credits from a facility
based in the Permian Basin in Texas (see
case study on page 38).
As part of the DACCS coalition, we and our
partners will also be advocating for carbon
removals to be formally recognised as
equivalent to ETS allowances in order to
encourage further uptake from the
industry.
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37
STRATEGIC REPORT SUSTAINABILITY (CONTINUED)
Our partners
Airbus
Our strategic partnership with Airbus
supports their ambition to develop a zero
emission, hydrogen-powered commercial
aircraft by 2035.
In 2019 we signed a Memorandum of
Understanding with Airbus for research on
electric, hybrid-electric and hydrogen
aircraft, to study operational and
infrastructure opportunities and challenges
with new propulsion technologies.
In September 2020, Airbus unveiled three
ZEROe hydrogen-powered concept planes:
a turbofan, a turboprop and a blended
wing body fuelled aircraft concept.
The programme is gaining momentum, and
Airbus now has a ground and flight test
programme planned using an A380 test
aircraft, and also has the BlueCondor
project, a glider that has a hydrogen
combustion engine attached, which is used
to measure emissions and performance in
flight.
easyJet’s collaboration with the programme
includes supporting the development of
the commercial and operational
requirements of zero carbon emission
aircraft as well as studies into hydrogen
supply and airport infrastructure.
Case study: Direct Air Carbon Capture and Storage
Direct Air Carbon Capture and Storage
(DACCS) is a high-potential
technology that captures carbon
dioxide directly from the atmosphere
and stores it securely underground.
When scaled, it will help counteract carbon
emissions and even address historic
carbon. It forms an essential element of our
net zero roadmap since decarbonising a
hard-to-abate sector such as aviation is a
huge challenge. We have signed a
Letter of Intent with Airbus to support
development of carbon removal
technology and a supply of carbon
removal credits from 2025 to 2028.
Rolls-Royce
At the Farnborough Airshow in July 2022
easyJet and Rolls-Royce announced a
ground-breaking partnership pioneering the
development of hydrogen combustion
engine technology capable of powering a
range of aircraft, including those in the
narrow-body market segment.
We committed to working together on a
series of engine tests on the ground and
have a shared ambition to take the
technology into the air. The objective of the
partnership is to demonstrate that
hydrogen has the potential to power a
range of aircraft from the mid-2030s
onwards.
While Rolls-Royce brings its expertise in
engine development and combustion
systems, easyJet contributes its operational
knowledge and experience and will also
directly invest in the test programme.
Alongside the test programme, we are also
supporting Rolls-Royce’s research by
providing our commercial and operational
expertise to inform their designs and
specifications for clean sheet hydrogen
engines.
GKN Aerospace
We are working with GKN Aerospace to
support the development of Hydrogen
Combustion (H2JET) and Hydrogen Fuel
Cell (H2GEAR) technology, including
exploring the options for flight
demonstration. H2GEAR is a GKN
Aerospace-led UK collaboration
programme aiming to develop a liquid
hydrogen propulsion system for sub-
regional aircraft that could be scaled up to
larger aircraft. It is supported by £27 million
of Aerospace Technology Institute funding.
H2JET is a two-year Swedish collaborative
programme led by GKN Aerospace to push
development of key subsystems for gas
turbine-based hydrogen propulsion of
medium-range civil aircraft.
Cranfield Aerospace Solutions
We are working with Cranfield Aerospace
Solutions to support the development of its
hydrogen fuel cell propulsion system for
commercial aircraft. Cranfield Aerospace
Solutions is developing the system for an
existing nine-seat Britten-Norman Islander
aircraft, which is being retrofitted and
prepared for its first flight in 2023.
This aircraft could be one of the first
hydrogen powered aircraft to fly and will be
a key step towards the development of
larger commercial aircraft, the
infrastructure to support them and the
operational and safety procedures that will
be critical to the industry.
Wright Electric
We have been supporting the development
of Wright Electric’s zero emission aircraft
since 2017. Wright Electric announced in
November 2021 that they are launching the
world’s first zero emission aircraft for the
regional jet market.
38 easyJet plc Annual Report and Accounts 2022
The ‘Wright Spirit’ aircraft is designed for
the 100-passenger market for one-hour
flights and will incorporate Wright’s
megawatt-class electric propulsion system
on a BAe 146 regional jet platform. In 2022,
Wright tested its electric jet engine
designed for the Wright Spirit at a
laboratory managed by the Federal
Aviation Administration, and in 2023-24
Wright will begin testing at high altitude.
Project ACORN – H2-powered
airside equipment
This collaboration with Bristol Airport and
ground-handling suppliers aims to
introduce hydrogen-powered ground
service equipment, which will start the
process of using hydrogen airside by
developing operational procedures and
safety standards and helping shape the
regulatory environment.
Hydrogen South West (HSW)
Regional hydrogen ecosystems are a
critical first step to pave the way for
hydrogen-powered zero carbon emission
aircraft during the next decade.
Case study: Rolls-royce engine tests
During Farnborough Airshow 2022, Rolls-Royce and easyJet announced plans to
work together on a hydrogen engine technology development programme with
the ultimate ambition to take the technology to flight test. Just a few months
later, the partnership has already reached its first milestone, with Rolls-Royce
successfully conducting a series of hydrogen combustion ground tests on an
AE2100 engine at Boscombe Down.
We are supporting the development of a
regional hydrogen economy in the South
West of England in a project called
Hydrogen South West (HSW), which aims
to develop the production, transport,
storage and use of hydrogen in the region
across a number of sectors.
SEA Milan airports
In 2022 we launched a partnership with
SEA, the operator of Milan Malpensa and
Linate Airports, on implementation of more
sustainable operations at scale including
the use of Sustainable Aviation Fuel (SAF),
research into hydrogen infrastructure
requirements, improvements in waste
management and recycling, and the use of
zero emissions ground service equipment.
PARTNERING FOR NET ZERO
This graphic provides an overview of the elements of easyJet’s path to net zero and our partnerships that drive it. At the
heart of it are our technology partnerships on engine and aircraft development. These are complemented by our
collaborations across the value chain including airports and the hydrogen ecosystem. Also included are a number of
efficiency measures and cooperations with airspace modernisation projects that will drive down emissions in the short to
medium term, and our DACCS coalition that aims to accelerate the development of carbon removal technologies.
easyJet.com
39
STRATEGIC REPORT SUSTAINABILITY (CONTINUED)
Pillar Three
Driving positive change in society
Overview
Beyond our efforts to reduce our
environmental impact we want to make a
positive contribution to the lives of our
people, our customers and the communities
where we operate. We aim to spread the
social and economic benefits of travel and
tourism by widening access to travel that is
more sustainable, becoming an employer
of choice and creating local jobs. We
engage with our customers, our people
and wider stakeholders to drive sustainable
change.
Pioneering sustainable tourism
The negative environmental impacts of
aviation are very real, but these must be
balanced against the social and economic
benefits that aviation creates – connecting
people, reuniting friends and family,
providing new social, cultural and
educational experiences and, critically,
providing economic prosperity. The
European Union’s recently published Clean
Sky report estimates that aviation
accounted for 4.5% of European GDP,
around €725 billion, and 11 million jobs in
2019. It is expected to support up to 18.5
million jobs by 2050.
We are shaping the next generation of
travel by leading the way with initiatives
that will make tourism more sustainable,
affordable and accessible. Since its launch
in 2019, easyJet holidays has committed to
leading the industry in sustainability and in
May 2021 it became the first major UK tour
operator to offset all carbon emissions
directly associated with its package
holidays, including fuel for flights, transfers
and energy from hotel stays.
easyJet holidays is developing new ways of
making travel more sustainable through its
innovative partnerships with a range of
influential organisations. Its work with
international sustainable tourism
organisation, the Travel Foundation, brings
together stakeholders from destination
communities and the industry to develop
practical solutions to minimise negative
impacts of tourism.
In November 2021 easyJet holidays and the
University of Oxford collaborated to form
The Oxford SDG Impact Lab to tackle
some of the big sustainable tourism
challenges.
Case study: The Oxford SDG impact lab
Findings and recommendations from our Sustainable Tourism Programme
Food waste
The Oxford SDG Impact Lab team conducted their field lab in
Tenerife, investigating food waste on the island, and found
that 18% of food wasted is generated by the hospitality
industry. Additionally, hotel partners have limited to no
measures in place to prevent and reduce food waste, nor the
ability to accurately quantify the food waste they generate.
Following on from these findings, easyJet holidays is
partnering with Winnow to pilot a food waste reduction
scheme in a key partner’s hotel. Winnow develops Artificial
Intelligence tools to help chefs run more profitable and
sustainable kitchens by cutting food waste in half. Winnow is
a registered B corporation working internationally in 67
countries. easyJet holidays plans to work with further hotel
partners to replicate the results based on a successful trial
from this initiative.
Long stays
As part of their preliminary research, members of The Oxford
SDG Impact Lab identified the sustainability benefits of
extended holidays, stepping away from traditional weekly or
fortnightly breaks during high season. Not only does taking one
extended trip instead of multiple per year reduce the carbon
impact from flights, but holidaying in seasonal resorts during
the shoulder seasons also helps to spread the positive impacts
of tourism over the course of the year. Shoulder season stays
support the local economy and excursion providers, decrease
reliance on air conditioning systems and reduce the
concentrated impact on natural resources. This research
supports easyJet holidays’ decision to launch its ‘winter-long
stays’, offering 28-night packages to destinations across Europe
during the shoulder season.
40 easyJet plc Annual Report and Accounts 2022
The programme saw 20 graduate students
conduct field research to improve key
areas of social and environmental
development in communities where
easyJet holidays operates, in a way that
ensures progress against the UN’s
Sustainable Development Goals (SDGs).
Following the success of the programme
and its recommendations, opposite,
easyJet holidays will continue to partner
the Lab for a second year.
easyJet holidays joined the Global
Sustainable Tourism Council (GSTC) in
2021. The GSTC was created jointly by UN
agencies and international conservation
NGOs to develop global standards for
sustainability in travel and tourism. It
supports hotel partners to achieve
GSTC-recognised certification, meaning the
accommodation complies with high social
and environmental standards. Hotels which
meet the certification have joined a new
‘eco certified’ collection on the easyJet
holidays website, which makes it easier for
customers to make more sustainable
choices for their holiday.
Engaging our stakeholders
in sustainability
Building close relationships with our
customers, our people and our external
stakeholders is important to ensuring we
meet our sustainability objectives, including
building a diverse workforce, meeting our
emissions and waste targets and
influencing the wider aviation industry to be
more sustainable.
Read more about our relationships
with our stakeholders on pages 26
to 29.
Engaging our customers
We regularly communicate with our airline
and holiday customers about sustainability,
including during the booking process and
on board. This year we focused on our
work to reduce the carbon impact of our
operations, our carbon offsetting for the
fuel used on all our flights and the
development of new technology to
decarbonise aviation. We also have a
dedicated, customer-facing website
area about our sustainability activities:
easyjet.com/sustainability
Engaging our colleagues
Our colleagues are key to our ability to
deliver a more sustainable airline. We rely
on our pilots to put into action fuel
efficiency procedures and our cabin crew
to sort onboard waste. We have regular
sustainability training for both pilots and
cabin crew. Colleagues including line-
maintenance engineers and internal
auditors have regular formal environmental
management training and it is incorporated
into induction training for new colleagues.
We communicate frequently with our
colleagues about sustainability, our
activities and the role they can play. We
Case study: CoRporate Customer
carbon Certificates
Companies are increasingly looking to fly with airlines which help them to reduce
their carbon footprint. To help companies account for their emissions, we have
launched carbon emissions reporting for corporate customers to help them track
their Scope 3 emissions from business travel. The certificates are based on real
flown data and enable our customers to set objectives for future travel.
The provision of this carbon data has facilitated deep engagement with suppliers
on sustainability issues and led to us being acknowledged as pioneers, reflected
in this enthusiastic feedback from one of our corporate customers, a major
construction company: “We have been able to use the data provided by easyJet
to enhance our Scope 3 GHG emissions reporting. It has provided us with a
better understanding of the significance of this GHG emissions source in relation
to our operations and what steps must be taken to achieve our net zero targets.”
have an active sustainability workplace
forum on our intranet with over
700 members, where colleagues can share
feedback and ideas and exchange views on
sustainable aviation issues and easyJet’s
strategy. Sustainability features on our
main intranet forum ’Inside’, with materials,
interviews and links to events where our
senior managers are speaking.
We involve colleagues wherever possible,
such as at the launch of our net zero
roadmap in September 2022, where
around 100 colleagues participated in
person in the event, which showcased
many of the innovations that will enable
sustainable aviation and which was
live-streamed across the organisation.
For further information on our
engagement with our people
see pages 24 to 27.
Engaging the next generation
We are working towards an inclusive
workplace and as part of our drive to
increase diversity we have a number of
initiatives aimed at encouraging young
people to consider a career in aviation.
With around only 6% of pilots worldwide
being women, we are tackling this
industry-wide gender imbalance head-on,
through our programme of school visits
where our pilots, including many of our
female pilots, give young people across our
European network the opportunity to find
out what being a pilot is really like, and
show that it can be a job for everyone.
This year, for the first time since the start
the pandemic, we relaunched our
Generation easyJet Pilot Training
Programme, to train and recruit 1,000
cadet pilots over the next five years. The
recruitment drive has been supported by
Europe-wide recruitment campaigns to
attract more diverse candidates and
challenge stereotypes about becoming an
airline pilot. Our ‘Pilots Wanted’ media
campaign featured real-life easyJet pilots
from all walks of life and showcased a
range of important skills that can be
applied to flying. In the summer, our
‘Mavericks Wanted’ campaign parodied
all-male blockbuster movie ‘Top Gun’ by
putting girls in the lead roles, with the aim
of tackling gendered stereotypes of jobs in
aviation and inspiring more young people
to consider a career in the industry.
We also engaged younger generations in a
competition that challenged bright young
minds to design a zero emission passenger
plane, to inspire them to become part of
the future of air travel as aircraft designers
and engineers.
Engaging with industry peers to
drive change
We continue to engage with policymakers
across the UK and Europe on how to
address carbon emissions and stimulate
the technological innovation that will be
needed for zero carbon emission aviation.
We participate in industry groups and
forums that contribute to public policy
development in sustainability. These include
the Aerospace Technology Institute, the
Airspace Change Organisation Group,
Airlines for Europe, Airlines UK, the Global
Sustainable Tourism Council, Sustainable
Aviation, the World Economic Forum’s Target
True Zero coalition, the pan-European
Alliance for Zero Emission Aviation and the
New Aviation, Propulsion, Knowledge and
Innovation Network (NAPKIN).
Jet Zero Council
Our Chief Executive Officer, Johan
Lundgren, is a member of the UK
Government’s Jet Zero Council. Members
of our Sustainability, Policy and Operations
teams also participate in discussions within
the Council and its working groups. The Jet
Zero Council brings together the UK
government and industry to accelerate the
development of a UK Sustainable Aviation
Fuel industry and to commercialise zero
emission flight.
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41
STRATEGIC REPORT SUSTAINABILITY (CONTINUED)
Our public policy positions
promote effective climate
regulation and decarbonisation
technologies for aviation
Our Sustainability Governance framework
seeks to ensure that all engagement on
policy is consistent with our Sustainability
Strategy. The Sustainability team works
closely with easyJet’s Regulatory Affairs
and Public Affairs teams who provide
policymakers with information about
easyJet’s work on sustainability and how
airlines can work with governments to
address the impact of aviation on climate
change.
In 2021 easyJet welcomed the ambition of
the EU’s Fit for 55 package and outlined
how effective aviation tax reform, based on
the ‘polluter pays’ principle, would enable a
low-carbon transition for the aviation
sector. easyJet continuously advocates for
greater coverage of the Fit for 55
proposals, by expanding climate measures
to all flights departing the European
Economic Area (EEA).
This year, we issued joint statements with
NGOs and other airlines asking the EU to
apply the Sustainable Aviation Fuel mandate
to all EEA departing flights and ensure strict
sustainability standards for biofuels in
aviation. We joined a statement with NGO
Transport & Environment to ask the EU to
apply the EU’s Emissions Trading System
(ETS) to all EEA departing flights. We
co-commissioned an independent study
demonstrating that this would increase the
efficiency of EU climate law and protect
European tourism. We publicly opposed the
exclusion of feeder flights from the EU ETS.
Our positive engagement on effective
climate policy has been acknowledged by
Influence Map’s 2021 and 2022 rating, where
we were ranked first among European airlines
in terms of climate advocacy.
Case study: Unicef
easyJet engages with third parties to
support projects such as the Single
European Sky (SES) and the UK’s airspace
modernisation programme. Airspace
modernisation is crucial for reducing
aviation’s emissions, particularly over the
short term. The SES has stated an ambition
to deliver 10% carbon emissions savings
from European aviation. However the SES,
and other modernisation projects, require
support from third-party stakeholders to
succeed. easyJet is also one of the
founding members of the Single European
Sky ATM Research (SESAR) 3 Joint
Undertaking and recently became the first
airline evaluation partner for Iris, a ground-
breaking air traffic management
programme. easyJet has also made a multi-
million-pound fleet-wide investment into
the latest aircraft software to optimise
aircraft descents.
In the UK we have been engaging with the
Department for Transport and the
Department for Business, Energy and
Industrial Strategy over the UK’s SAF
mandate and revision of the UK ETS. We
have advocated for greater coverage of
climate laws, so that all UK departing flights
are covered by the measures. Applying
measures to all departures, as opposed to
only intra-EEA flights, increases the
emissions from departing flights covered
by the laws from roughly 25%-40%,
depending on the jurisdiction, to 100%.
Full decarbonisation cannot happen
without governments’ support to
accelerate change. easyJet advocates for
public institutions to:
• Expand effective carbon pricing, through
the EU and UK ETS, to all EEA and UK
departures, while ringfencing a portion of
the ETS revenues for decarbonising
aviation.
• Support the development of zero carbon
emission technology:
• Develop a regulatory framework which
incentivises aircraft manufacturers to
produce zero carbon emission aircraft
and airlines to adopt the technology.
• Create investment and financial
incentives for funding the
development and scaling-up of zero
carbon emission technology.
• Recognise the role of green hydrogen
in aviation by incorporating the
requirements of aviation in UK and EU
hydrogen strategies.
• Invest in renewable energy to support
the creation of green hydrogen for
aviation.
• Incorporate hydrogen as a SAF-
equivalent in EU and UK SAF
mandates.
• Support the development of hydrogen
supply and infrastructure at airports.
• Ensure passenger taxes reflect emissions
to incentivise efficiency and the move
towards zero carbon emission aircraft,
and ringfence a portion of tax revenues
for decarbonising aviation.
• For the EU27 national governments to
make rapid improvements in national
airspace efficiency plus deliver on the
Single European Sky project for airspace
modernisation.
• For the UK government to deliver on its
stated ambitions for UK Airspace
Modernisation.
• Recognition and incentivisation of the
contribution of carbon removal
technology to meet net zero targets.
Carbon removal credits should be
equivalent to ETS allowances.
Our pan-European charity partnership, Change for Good,
with UNICEF, the world’s leading children’s organisation, aims
to protect children around the world from disease and keep
them safe during emergencies. Our cabin crew have been
making onboard appeals to help raise funds, through taking
donations by card payment, advertising on seatbacks and
through previous prompts on the easyJet mobile app.
In 2022, we continued to support UNICEF’s Covid-19
Vaccines Appeal, and since March we have been collecting
donations for UNICEF’s humanitarian response in Ukraine,
supporting children and families affected by the war, raising
£834,151 in the year.
easyJet and UNICEF’s partnership will celebrate its 10th
anniversary this year, during which time easyJet customers
have raised over £16 million, helping to protect millions of
children around the world.
42
easyJet plc Annual Report and Accounts 2022
Image copyright: UNICEF
Task force on climate-related
financial disclosures
We are committed to complying with the recommendations and recommended
disclosures of the Task Force on Climate-related Financial Disclosures (TCFD),
taking into account the TCFD All Sector Guidance, and we consider the
disclosures set out on the following pages to be consistent with these guidelines.
Governance
(a) The Board’s oversight of climate-
related risks and opportunities
Climate-related issues are discussed by the
Board through regular sustainability
updates as well as specific Board
discussions to approve key climate-related
decisions such as the net zero roadmap
and associated capital expenditure, as
evidenced on pages 86 and 87; for relevant
Board expertise, see page 78. The Audit
Committee has reviewed the climate
transition risks during the year as part of its
review of principal risks, as set out in its
report on page 101. Additionally, climate-
related issues are regularly discussed by
the Airline Management Board (AMB),
which is an executive committee of the
functional leaders across the Group. The
AMB is led by the Chief Executive Officer
(CEO), who is a member of the plc Board
and is ultimately responsible for climate-
related issues.
The AMB’s members (which include the
CFO and CEO, who are plc Board
members) are collectively responsible for
assessing and managing climate-related
risks and opportunities, as well as driving
the performance of the Group against
strategic KPIs, including carbon emission
targets, and managing the allocation of
central funds and capital. CEO and CFO
remuneration is aligned with sustainability
targets for FY22. This includes delivery of
the net zero roadmap, Stage 1 and Stage 2
IEnvA certification for the Environmental
Management System (EMS), developing
the Climate Change Risk Register and
improving ESG reporting and performance.
This is also set out in the Directors’
Remuneration Report on page 113.
See page 31 for an overview of the
sustainability governance structure.
(b) Management’s role in assessing
and managing climate-related risks
and opportunities
easyJet has a Sustainability Steering
Committee, which meets regularly and
comprises several AMB members including
the CFO, Chief Operating Officer (COO),
Group General Counsel & Company
Secretary, CEO easyJet holidays and Group
Markets Director (Chair) as well as the
Director of Sustainability, Director of Tax
and Fuel and the HR and People
Development Director. The Sustainability
Steering Committee is responsible for our
Sustainability Strategy, driving key
sustainability-related decisions, such as on
technology partnerships and programmes
that support our net zero pathway,
delivering against strategic KPIs and the
consideration and disclosure of climate-
related risks and opportunities. In FY22 we
expanded our dedicated Sustainability
team, which develops and coordinates
implementation of the Sustainability
Strategy, working with management and
teams across the Group.
Strategy
(a) The climate-related risks and
opportunities we have identified over
the short, medium and long term
Risks and opportunities are dynamically
reviewed and developed as part of the
corporate risk management framework
which ensures a unified and collaborative
risk management approach and best
practice across the Group. easyJet defines
the time horizons for climate risk as follows:
• Short – 0-1 year – aligned with budget
• Medium – 1-5 years – aligned with
corporate strategy and financial plan
• Long – 5-30 years – aligned with
commitment to reach net zero by 2050
The key risks identified by the business
using the risk framework, and subsequently
reviewed by the plc Board, fall into seven
broad themes – one of which is the climate
change transition risk, as outlined in the risk
section on page 67.
In FY20 easyJet appointed Risilience
(formerly known as Cambridge Centre for
Risk Studies), an enterprise risk
management specialist, to assess our
exposure to climate-related risks and
opportunities under four global average-
temperature-increase scenarios. The
Group’s current portfolio and business
activities were modelled assuming no
climate actions are undertaken. TCFD
categorisation was used to define transition
and physical risk definitions and scope, and
each risk was modelled independently. The
work commenced in early FY21 and
focused on physical and transition risks that
could occur by 2040. This long-term
20-year period was broken down into
five-year phases to identify which risks
easyJet could be exposed to in the short
and medium term, aligned with easyJet’s
budget and corporate strategy timeframes.
The assessment was made using
workshops and interviews with key internal
stakeholders regarding the potential
financial risks to our business operations
associated with physical and transition risks.
Risilience then undertook scenario
modelling of each climate risk against
easyJet’s current commercial and physical
footprint. This included the potential
financial impacts of transition risks such as
changing climate and carbon-related taxes
and regulatory changes on a country level
as well as physical risks.
easyJet has assessed the financial impact
of climate change transition risks against
the organisation’s threshold for what
constitutes a risk of ‘major concern’ i.e.
substantive financial or strategic level of
impact and ‘above risk tolerance’. This
metric is defined by the overall Group
materiality principle of 1% of total assets
equating to a threshold of £104 million
which is defined in this report.
This assessment has been reviewed and
updated in FY22 to reflect the evolving
landscape.
easyJet.com
43
STRATEGIC REPORT SUSTAINABILITY (CONTINUED)
Transition risks
easyJet has identified six transition risk areas:
• Compliance costs: Financial impact of
coordinated regulatory action to increase
the costs of emitting GHGs.
• Legal: Legislation and litigation to disrupt
companies that do not take sufficient
action on GHG reduction.
• Technology: Transition to low-carbon
emissions technology and products
drives increased total operating costs,
impairment on existing assets and
delivery risk.
• Consumer sentiment: Consumer
preferences shift to lower emissions
alternatives on a market level resulting in
demand suppression.
• Investor/market sentiment: Preferences
shift away from carbon-intensive
businesses, resulting in increasing
challenges to attract investment and/or
financing.
• Reputation: Climate activism towards
organisations and industries that are
seen as being slow to transition towards
a low-carbon economy.
We have identified specific risks within
these transition risk areas. These include:
Carbon pricing mechanisms (short to
medium-term)
Future policy measures and regulation, to
tackle the impact of aviation on climate
change such as escalating costs of carbon
emissions, introduction of non-CO2
emissions taxes and the proposed
withdrawal of Emissions Trading System
(ETS) free allowances for the aviation
sector, could translate into significant costs
for all airlines. This could potentially affect
easyJet carbon emissions that are within
the scope of three ETS schemes – UK, EU
and Switzerland – which included 80% of
our flying carbon emissions in FY22.
Sustainable Aviation Fuel (SAF) mandates
(medium to long term)
Emerging SAF mandates in the UK and EU
will require fuel suppliers to provide
kerosene with a specified blend of SAF at
airports in that country or region. Airlines
lifting fuel in these countries will therefore
be subject to the additional costs
associated with the supply of SAF. easyJet
has signed a SAF supply agreement with
Q8, one of our key fuel suppliers, creating a
contractual obligation on Q8 to supply
volumes of SAF that at least meet
minimum mandate requirements over the
next five years, in order to secure certainty
of supply.
We also have flexibility in our SAF
agreement to procure up to 10% more than
mandated volumes in order to manage the
risk that other levers’ contribution to our
carbon intensity reduction targets fall short.
Technology transition costs (long term)
Capex and operational costs associated
with the introduction of new technology
such as next-generation aircraft, alternative
fuels and carbon removals, and potential
depreciation impacts on older assets.
Physical risks
The Risilience analysis highlighted the acute
and chronic physical risks that could impact
our business. These relate to extreme
weather events as well as long-term
environmental changes. The physical risks
were evaluated on a geographical level
(with the world divided into 1ox1o grid cells
and potential physical risk assessed
according to the physical geography of
such units) and include the following:
• Operational disruption: due to extreme
weather events in the short, medium and
long term.
• Market disruption: changing demand
patterns due to climate change in the
long term.
Due to the nature of our business, easyJet
could be exposed to both on-the-ground
impacts (such as heavy rainfall and flooding
affecting airport infrastructure) and aerial
impacts (such as more severe storms,
extreme wind or hailstorms). The
geographic spread of physical risk types
varies depending on the specific location
– for instance, coastal flooding was
modelled as being more pronounced in
low-lying areas of North Western Europe
such as the Netherlands, whereas
heatwave risk was higher in inland regions
of Spain, Portugal and France. As an airline
operator we have some flexibility to adapt
network and operations to respond to
changing geographic risk.
Risks summary
Risilience quantified easyJet’s climate
change risks using a five-year Enterprise
Value at Risk (5yrEV@Risk) metric for the
period FY23-27, which shows how the risks
would impact discounted cash flows over
five years according to different scenarios,
aligned with the timeframe for easyJet’s
budget, corporate strategy and financial
planning process. The long-term risk levels
have been determined based on the
quantified short-to-medium term risks and
the long-term impact and likelihood as
outlined in easyJet’s Corporate Risk Register.
The table below provides an indication of
the directional change in risk relative to the
present day, based on a well-below 2oC
climate-related scenario and in the absence
of actions taken by easyJet to manage our
climate change transition. The risks
identified as green are valued in the
FY23-27 period as being below the Group
materiality threshold of £104 million, and
risks identified as amber or red are above
that materiality threshold.
Short term
(0-1 year)
Medium
term
(1-5 years)
Long term
(5-30
years)
Risk
Compliance
costs
Legal
Technology
Consumer
sentiment
Investor/
market
sentiment
Reputation
Physical
Low
Medium
High
Opportunities summary
The key opportunities easyJet has identified are outlined below. The size of the bubble
indicates the relative impact at each time horizon.
Short term
(0-1 year)
Medium term
(1-5 years)
Long term
(5-30 years)
Opportunity
Fleet renewal: the use of more efficient Airbus
NEO aircraft, which reduce our fuel burn, carbon
emissions and related costs – easyJet has 168 A320neo
family aircraft on order valued at $21 billion at list prices
Optimising flight operations: initiatives to minimise fuel
burn, carbon emissions and related costs
Supporting development of zero carbon emission flight:
collaborations with industry partners including Rolls-Royce,
Airbus, GKN, and Cranfield Aerospace Solutions, which will
be a key long-term driver to decarbonise the industry
Shifting consumer preferences: opportunity for easyJet
to build brand preference and loyalty as consumer
preferences shift towards organisations that are
committed to tackling climate change
44 easyJet plc Annual Report and Accounts 2022
(b) The impact of climate-related risks
and opportunities on our businesses,
strategy and financial planning
Climate-related risks and opportunities are
integrated into the organisation’s strategic
plan and financial plan and have a material
influence on major business decisions.
These include our fleet strategy centred on
fleet portfolio decisions and the purchase
of next-generation aircraft, an increased
focus on fuel-saving initiatives to refine our
operation, entering into partnerships with
entities at the vanguard of decarbonisation
technologies and investigations into
transitioning from fossil fuels to electric
power for airport ground operations. Costs
associated with carbon, i.e. costs related to
SAF and to ETS, are incorporated into our
five-year financial plan and inform key
longer-term decisions such as fleet
planning. In addition to climate-specific
actions, sustainability is being embedded
into the daily management of the Group
and for our efforts, easyJet has been
awarded full IATA IEnvA certification for
our Environmental Management System,
the first low-cost airline to achieve this
accreditation.
Transition plan – net zero roadmap
In November 2021 easyJet joined the
UN-backed Race to Zero, through which
we committed to set an interim science-
based target for 2035 and reach net zero
carbon emissions by 2050. In 2022 we set
the interim target of 35% reduction in GHG
emissions intensity by 2035, and we were
the first low-cost carrier in Europe to have
our target validated by the Science Based
Target initiative (SBTi). easyJet’s net zero
roadmap provides the framework with
which to achieve these targets. The
pathway defines the levers with which we
intend to decarbonise airline operations,
along with how, when and to what extent
we need to use them, materially affecting
business decisions over the short, medium
and long term.
The net zero roadmap is aligned to the
SBTi aviation sectoral decarbonisation
pathway, which is aligned to the Paris
Agreement scenario (well below 2oC).
However, in the long term, easyJet’s
pathway drives emissions intensity
reductions that exceed the requirements of
the SBTi pathway.
In the short to medium term, our focus will
be on maximising efficiency and using
Sustainable Aviation Fuel (SAF) in line with
mandated requirements. These initiatives
will continue into the long term. This will
involve the following:
• Fleet renewal with Airbus NEO aircraft,
which are at least 15% more efficient
than the aircraft they replace.
• Airspace modernisation, which will lead
to more direct flight routings.
• A suite of operational efficiency
initiatives that minimise fuel burn at
various stages of flight.
In the long term, zero carbon emission
aircraft are the cornerstone of our
pathway. Based on today’s science, our
focus is on hydrogen-powered aircraft as
we believe it shows the most potential for a
short-haul airline like easyJet. Hydrogen has
no carbon emissions, provided it is green
hydrogen produced with renewable
electricity, and has the potential to reduce
non-CO2 emissions from flying. Please refer
to page 12 for more detail on the net zero
roadmap.
The pathway is supported by numerous
investments and partnerships to drive
emissions reduction in the short to medium
term and support the development of
technology that is required in the long term:
• We currently have 168 NEO aircraft
on order, at a list price of $21 billion,
including the confirmation of an order for
56 additional aircraft made in 2022.
• easyJet and Rolls-Royce partnership
that will pioneer the development of
hydrogen combustion engine technology
capable of powering a range of aircraft
including those in the narrowbody
segment.
• easyJet was the first airline partner on
Airbus’s ZEROe programme dedicated to
developing hydrogen-powered zero
emissions aircraft.
• Development of hydrogen ecosystems
to support the introduction of aircraft, as
a founding member of Hydrogen South
West, in close collaboration with Bristol
Airport.
• easyJet is part of a consortium led by
Airbus that is investing in Direct Air
Carbon Capture and Sequestration
(DACCS), a form of technical
carbon removal.
• Long-term agreements with our fuel
supply partners to ensure security of
supply of SAF.
• Multiple operational efficiency initiatives
are already underway, including Descent
Profile Optimisation, SkyBreathe, Single
Engine Taxi.
• Low-emissions ground operations
through electric ground-handling
equipment at Gatwick Airport.
The net zero roadmap provides the
framework with which to mitigate against
five of the six key transition risks –
compliance, legal, consumer sentiment,
investor/markets sentiment and reputation.
The key remaining risk is technology, as
delivery of the roadmap is dependent on the
scaling up of SAF production, and on the
development of nascent technologies such
as zero carbon emission aircraft, and the
potential increase in costs associated with
transition to these technologies and/or with
potential adjustment to net zero roadmap
delivery levers necessary.
More detail on our net zero
roadmap can be found pages
on pages 12 and 13, and on
climate-related risk mitigations
on page 67.
(c) The resilience of our strategy, taking into consideration different climate-
related scenarios, including a 2°C or lower scenario
Overview of scenario analysis
Scenario
Current policy
Stated policy Paris Agreement1
Paris Ambition
Temperature alignment
Target global emissions
reduction
Representative Concentration
Pathway
3oC
-50% by
2100
2.5oC
-75% by
2100
Well below
2oC
Net zero by
2050
1.5oC
Net zero by
2050
RCP 7.0
RCP 4.5
RCP 2.6
RPC 2.6
1. The Paris Agreement of well below 2oC was selected as the baseline scenario as it is aligned with the
SBTi aviation sectoral decarbonisation pathway. The analysis varied input assumptions across the
transition risks in line with these scenarios. As an example, the Paris Agreement scenario assumes a
55% increase in consumers adopting sustainable alternative products by 2030, compared to 59%
under the Paris Ambition and 32% under ‘stated policy’. 5yrEV@Risk was assessed under these
scenarios as described in the Risks summary on Page 44. These scenarios incorporate
socioeconomic projections from the Shared Socioeconomic Pathways (SSPs).
easyJet.com
45
STRATEGIC REPORT SUSTAINABILITY (CONTINUED)
easyJet’s net zero pathway is aligned to
the Science Based Targets initiative (SBTi)
aviation sectoral decarbonisation pathway,
which is aligned to the Paris Agreement
scenario (well below 2oC). The sensitivity of
the pathway and the ability to meet our
targets in the absence of different levers
has been assessed to ensure there is no
over-dependence on any single lever.
While there is currently no aviation sectoral
SBTi pathway aligned to the Paris Ambition
(1.5oC), easyJet’s net zero pathway aims to
achieve a reduction in carbon dioxide
intensity of 78% by 2050, with residual
emissions addressed via carbon dioxide
removal technology. This is a significantly
better reduction than the 57% threshold
defined for easyJet by the SBTi pathway.
This gives easyJet headroom and therefore
resilience in respect of our climate-change
risk and net zero strategy.
Risk management
(a) Our processes for identifying and
assessing climate-related risks and
opportunities
easyJet works in partnership with Risilience
to evaluate a range of climate change-
related risks across a range of scenarios. All
risks, including those related to climate
change, are quantified by a five-year
Enterprise Value at Risk (5yrEV@Risk)
metric for the period FY23-27, which shows
how risks could impact discounted cash
flows over five years. The quantified risks
are then assessed against the
organisation’s threshold for what
constitutes a risk of ‘major concern’ i.e.
substantive financial or strategic level of
impact and ‘above risk tolerance’. This
metric is defined by the overall Group
materiality principle of 1% of total assets
equating to a threshold of £104 million
which is defined in this report.
In parallel, we leverage our internal and
external network to understand and
critically evaluate UK and EU regulatory
requirements and policy and distil this into
risk and opportunities for the Group. Group
Finance, Legal, Investor Relations and
Marketing support the identification and
qualitative and quantitative assessment of
specific risks and opportunities, feeding
into Risilience’s analysis and into strategy
and financial planning for the Group.
Risilience conducted workshops focused on
climate-related risks identified to have a
potentially substantial financial impact. The
workshops involved colleagues from across
the business and identified the key
functional level risks within each corporate
level risk category. For full details of the
specific risks identified, see Strategy
section (a) on page 43.
The impact and likelihood inputs were then
calibrated in order to reach an aligned and
consistent view of each risk.
(b) Our processes for managing
climate-related risks and opportunities
Following the outputs of internal
stakeholders, the Risilience study and
external networks, risk workshops were
conducted to determine the appropriate
ownership and management of these risks.
This process confirmed climate change
transition is a principal risk, see page 67 of
our Risk section for further detail.
Mitigations and controls for these risks
were developed by the named risk owners
and are documented in the Climate
Change Transition Risk Register, overall
ownership of which sits with the CFO.
Governance for these risks and mitigations
will be regularly reviewed through easyJet’s
Sustainability Steering Committee.
Ownership of risks is outlined below.
Risk
Compliance
costs
Legal
Risk owner
CFO
Technology
Consumer
sentiment
Investor sentiment CFO
Reputation
Group General Counsel
& Company Secretary
CFO
Group Markets Director
Group Markets Director
(c) How our processes for identifying,
assessing and managing climate-
related risks are incorporated into the
business overall risk management
As described in the risk management
section (b) above, climate change
transition risks are incorporated into the
corporate risk framework and register. For
more detail on the overall risk management
of the business, see the Risk section, pages
59 to 69.
Mitigation options that are identified during
the above process have been incorporated
into easyJet’s net zero pathway, which will
be reviewed on an annual basis and feeds
into the corporate strategy and financial
planning process and principal risks and
uncertainties, see pages 59 to 69.
Metrics and targets
(a) The metrics we use to assess the
climate-related risks and opportunities
in line with our strategy and risk
management process
easyJet assesses financial impact in the
form of 5yEV@Risk. These figures are then
assessed against the materiality threshold,
which is defined by the Company as 1% of
total assets, i.e. a threshold of £104 million
in FY22.
Risks and mitigation options identified
through these metrics have been
incorporated into easyJet’s climate change
transition plan and continue to inform our
financial and strategic planning.
(b) Our disclosure of Scope 1, Scope 2,
and Scope 3 GHG and the related risks
easyJet has disclosed its full value chain
emissions in this Annual Report. Read our
comprehensive GHG and energy
performance table, including Scope 1, 2 and
3 emissions on page 33, where you can find
the breakdown by geography and the
methodology used. See page 33 for a link
to the detailed independent assurance
statement.
(c) The targets we use to manage
climate-related risks and opportunities
and performance against targets
In this financial year easyJet joined Race to
Zero, a global UN-backed campaign to
achieve net zero carbon emissions by 2050
at the latest. By joining Race to Zero we
committed to setting an interim science-
based target on carbon intensity for 2035
as well as to reach net zero carbon
emissions by 2050, aligning with the criteria
and recommendations of the Science
Based Targets initiative (SBTi).
As our interim target, easyJet plc has
committed to reducing well-to-wake GHG
emissions related to jet fuel by 35% per
Revenue Tonne Kilometre (RTK) by FY35
from a 2019 base year* **, which has been
approved by the SBTi.
easyJet’s net zero roadmap, outlined on
page 12, provides the framework with
which we intend to meet our targets in
2035 and beyond on our journey to net
zero in 2050.
easyJet has previously targeted a 10%
reduction in carbon dioxide emissions
intensity in grams of carbon dioxide per
Revenue Passenger Kilometre on our flights
by 2022, compared to a 2016 baseline
figure. This target has not been met due to
the impact of the Covid-19 pandemic,
which led to the deferral of previously
planned NEO aircraft deliveries and
reduced load factors.
For details of the CEO and CFO
sustainability-related targets, the
Remuneration Report on page 113.
* The target boundary includes biogenic emissions and removals from bioenergy feedstocks.
** Non-CO2e effects which may also contribute to aviation induced warming are not included in this target. easyJet plc commits to report publicly on its
collaboration with stakeholders to improve understanding of opportunities to mitigate the non-CO2e impacts of aviation annually over its target timeframe.
46 easyJet plc Annual Report and Accounts 2022
SASB INDEX
SASB Standards identify the subset of environmental, social and governance issues most relevant to financial performance and
enterprise value for 77 industries. Below we report on the metrics for the Airlines standard.
Table 1. Sustainability disclosure topics and accounting metrics
Accounting metric
Gross global Scope 1 emissions
Category
Quantitative Metric tonnes
Unit of measure
Code
Disclosure
TR-AL-110a.1 Annual Report (page 33)
Topic
Greenhouse
gas emissions
Labour
practices
Competitive
behaviour
Discussion of long-term and
short-term strategy or plan to
manage Scope 1 emissions, emissions
reduction targets, and an analysis of
performance against those targets
(1) Total fuel consumed
(2) percentage alternative
(3) percentage sustainable
Percentage of active workforce
covered under collective bargaining
agreements
(1) Number of work stoppages and
(2) total days idle1
Total amount of monetary losses as
a result of legal proceedings
associated with anticompetitive
behaviour regulations2
(t) CO-e
n/a
TR-AL-110a.3 Covered in the Annual Report,
(primarily pages 32 and 33)
Quantitative Gigajoules (GJ),
Percentage (%)
TR-AL-110a.3
(1) 86,363,466
Quantitative
Percentage (%) TR-AL-310a.1 86% - disclosed in ESG factsheet
Quantitative Number, days
TR-AL-310a.2 Not disclosed
idle
n/a
Discussion
and analysis
TR-AL-540a.1 The Company has not incurred
any monetary losses as a result
of legal proceedings associated
with anti-competitive behaviour
regulations
TR-AL-540a.1 Disclosed in ESG factsheet.
Also discussed in Annual Report
Risk section pages 59-69
Accident and
safety
management
Description of implementation and
outcomes of a safety management
system
Discussion
and analysis
n/a
Number of aviation accidents
Quantitative Number
TR-AL-540a.2 Zero
Number of governmental
enforcement actions of aviation
safety regulations
Quantitative Number
TR-AL-540a.3 Zero
Table 2. Activity metrics
Activity metric
Available Seat Kilometres (ASK)3
Category
Quantitative ASK
Unit of measure
Code
TR-AL-000.A Disclosed on page 58 of Annual
Disclosure
Report
Passenger load factor4
Quantitative Rate
TR-AL-000.B Disclosed on page 58 of Annual
Report
Revenue Passenger Kilometres (RPK)5
Quantitative RPK
TR-AL-000.C Disclosed on page 58 of Annual
Report
Revenue Tonne Kilometres (RTK)6
Quantitative RPK
TR-AL-000.D Disclosed on page 33 of Annual
Report
Number of departures
Quantitative Number
TR-AL-000.E Disclosed on page 58 of Annual
Average age of fleet
Quantitative Years
TR-AL-000.F 9.33 years
Report
1. Note to TR-AL-310a.2 – Disclosure shall include a description of the reason for each work stoppage, impact on operations and any corrective actions
taken.
2. Note to TR-AL-520a.1 – The entity shall briefly describe the nature, context and any corrective actions taken as a result of the monetary losses.
3. Note to TR-AL-000.A – Available Seat Kilometres (ASK) is defined as the maximum potential cumulative kilometres travelled by passengers (i.e. kilometres
travelled by occupied and unoccupied seats).
4. Note to TR-AL-000.B – Load factor is a measure of capacity utilisation and is calculated as passenger kilometres travelled, divided by ASK.
5. Note to TR-AL-000.C – Revenue Passenger Kilometres (RPK) is defined as the cumulative total kilometres travelled by revenue passengers. A revenue
passenger is a passenger for whose transportation an air carrier receives commercial remuneration.
6. Note to TR-AL-000.D – Revenue Tonne Kilometres (RTK) is defined as one metric tonne of revenue traffic transported one kilometre. RTK is computed
by multiplying the aircraft kilometres flown on each flight stage by the number of metric tonnes of revenue traffic carried on that flight stage
(e.g.passengers, baggage, freight and mail).
easyJet.com
47
STRATEGIC REPORT NON- FINANCI AL INFORMATION ST ATE ME NT
Non-financial
information statement
The table below and the information incorporated by reference comprises our Non-Financial Information Statement required by s414CA
and 414CB of the Companies Act 2006.
Policies mentioned below are available to view on our corporate website at
https://corporate.easyjet.com
Our approach
1. Environmental matters
easyJet seeks to lead and
challenge global aviation
towards net zero emissions,
recognising the need to
transition to a low-carbon
economy and the need for
aviation to play its part.
2. People
Our people are our greatest
asset and we want to
continue to attract, retain
and develop top talent by
focusing on creating an
inclusive and energising
environment that inspires
everyone to learn and grow,
enabling the Orange Spirit
to thrive.
Our policies
• Environment Policy – sets out our
approach to managing and
minimising our environmental
impact.
• Net zero roadmap – our
roadmap to net zero carbon
emissions by 2050 focuses on
zero carbon emission technology.
• Sustainability Strategy – easyJet’s
Due diligence, outcome and
Key Performance Indicators
• The Sustainability Steering
Committee is responsible for
monitoring the outcome of our
Sustainability Strategy, driving key
sustainability-related decisions,
delivering against strategic KPIs
and the consideration and
disclosure of climate-related risks
and opportunities.
Sustainability Strategy has
evolved to reflect our ambition to
pioneer positive change for our
planet, communities and people
while getting one step closer to
net zero every day.
• Further details on sustainability and
our roadmap to net zero can be
found on pages 12 and 13 and
pages 30 to 42.
• Streamlined Energy and Carbon
Reporting on page 33.
• Supplier Code of Conduct – we
require our suppliers to comply
with environmental standards.
• All our supplier contracts include a
clause requiring them to comply
with the Supplier Code of Conduct.
Related principal risks
• The impacts of climate
change on our business
and operations,
regulation/taxation and
changing consumer and
colleague expectations
are recognised as one
of our principal risks.
More information can
be found on page 67.
• Our strategy and risk
management on
climate-related risks and
opportunities can be
found in the Task Force
on Climate-related
Financial Disclosures
section on pages 43 to
46.
• Code of Business Ethics –
promotes a culture that
encourages open lines of
communication and free access
to information.
• Equal opportunity and inclusion
– encourages our employees to
make the best use of their skills
and experience and ensure we
treat staff, potential staff and the
public fairly.
• Diversity, Inclusion and Wellbeing
Strategy – creates an inclusive
and energising environment that
attracts the right people and
inspires everyone to learn and
grow.
• ‘Speak Up, Speak Out’
whistleblowing process – enables
easyJet employees and suppliers
to be able to raise concerns
about any safety, ethical or legal
issues.
• We continued to make progress
• Industrial action and
talent acquisition and
retention are
recognised as principal
risks and we seek to
control and mitigate
those risks in order to
reduce their impact.
Further information is
set out on page 66.
against our Diversity, Inclusion and
Wellbeing Strategy, focusing on
creating a culture of inclusion
where everyone can be themselves
and people look after their own
and each other’s wellbeing. More
information can be found on pages
24 to 25.
• Our focus has been on our people
and creation of an inclusive culture.
where differences are respected
and valued and people have the
opportunity to be the true version
of themselves. More information
on pages 24 to 25.
• We continue to measure how our
employees feel about the inclusive
environment that we are striving to
create, through our regular
employee listening activities such
as our anonymous Your Voice
Matters survey.
• Stakeholder engagement
(employees) on pages 26 and 27.
• Whistleblowing on page 88 and
102.
Details of our business model can be found on pages 8 and 9.
48 easyJet plc Annual Report and Accounts 2022
Our approach
3. Social matters
easyJet is committed to
doing the right thing for our
customers, our people, our
partners, the communities
in which we operate and
the environment.
Our policies
• easyJet has a pan-European
partnership with UNICEF to
support its work.
• Environment Management
System (EMS) – allows us to
manage and continually improve
our environmental performance
in a structured and systematic
way.
• Freedom to change – allowed all
our customers to change flights
to a different date or route,
fee-free, up to two hours before
departure during Covid-19.
• Travel restriction protection –
allows customers impacted by a
travel ban or mandatory hotel
quarantine to change their flights
fee-free, request a voucher or a
refund.
• We have a Diversity and Inclusion
Strategy and Equal Opportunity
and Inclusion Policy.
4. Human rights
We are committed to
human rights, both in our
business and our supply
chain. This includes
observance of the principles
set out by the International
Labour Organization
Declaration on Fundamental
Principles and Rights at
Work.
• Human Rights and Modern
Slavery Policy – supports
recognised human rights
principles.
• Supplier Code of Conduct –
easyJet’s suppliers have an
important role in delivering our
ambition, and we strive to ensure
that our suppliers have aligned
views on corporate responsibility
and compliance.
• Anti-bribery and Anti-corruption
Policy – sets out the
responsibilities of easyJet, and of
those working for and on behalf
of easyJet, to observe and
uphold easyJet’s prohibition on
bribery and corruption.
• Gifts and Hospitality Policy – sets
out the rules on receiving and
giving gifts and hospitality.
• Code of Ethics – ethical and
compliance policies, covering
topics that include bribery and
corruption, gift giving and fraud.
5. Anti-corruption and
anti-bribery
At easyJet we conduct all
of our business in an honest
and ethical manner. easyJet
takes a zero-tolerance
approach to bribery and
corruption and is
committed to acting
professionally, fairly and
with integrity in all business
dealings and relationships
wherever easyJet operates.
easyJet encourages its
employees and suppliers to
raise concerns on ethical
issues via the Speak Up,
Speak Out whistleblowing
process.
Related principal risks
• Social impact
matters are not
considered to be
principal risks.
However, these
matters are
considered by the
plc Board as part of
its stakeholder
engagement
programme; further
information is set out
on pages 26 to 29.
• We continue to use
the Global Slavery
Index to support our
analysis of
geographic risks and
assess whether the
country/area has a
high prevalence of
modern slavery or
other labour rights
violations.
• Compliance and
regulatory risks are
recognised as a
principal risk. More
details can be found
on page 65.
Due diligence, outcome and
Key Performance Indicators
• Our cabin crew make onboard
appeals for customers to make
donations in support of UNICEF’s
work to protect children around the
world from disease and keep them
safe during emergencies. More
information can be found on page 42.
• We achieved Stage 2 certification
under the IATA IEnvA accreditation
programme, making us the first
low-cost carrier worldwide with a fully
certified EMS. Further details on page
32 and our environmental
performance on pages 33.
• We provided customers with the
flexibility they required during
uncertain times, giving them
confidence to book their trip, knowing
that if plans changed so could their
flight.
• We recognise Pride to support our
LGBTQIA+ communities around the
world. More information can be found
on page 11.
• Both induction training and annual
refresher training at Group level
ensures the workforce is continually
mindful of human rights and modern
slavery.
• easyJet seeks to identify and prevent
adverse human rights impacts directly
linked to its business relationships,
through obtaining appropriate
contractual commitments and
undertaking appropriate due diligence
on suppliers (including enhanced due
diligence on high risk suppliers).
• Modern Slavery working group meets
quarterly and informs activities we are
undertaking to prevent slavery and
human trafficking in our business
operations and supply chain.
• All existing and new employees
receive mandatory ethics training
annually and upon joining the
business.
• Risks associated with bribery and
corruption are regularly reviewed by
the Audit Committee.
• Ethical and compliance policies are
monitored by the Business Integrity
Committee and People team. The
Business Integrity Committee’s
activities are reviewed by the Audit
Committee on a quarterly basis.
easyJet.com
49
STRATEGIC REPORT FINANCIAL REVIEW
OUR Financial Results
easyJet recorded its highest ever quarterly
headline EBITDAR performance in Q4 with
strong yields and load factors of 92% achieved
during the quarter.”
Kenton Jarvis
Chief Financial Officer
Headline loss before tax of £178 million for the year ended 30 September 2022 was a significant reduction on the loss of £1,136 million for
the year ended 30 September 2021. This improvement was driven by increased capacity and yields as customer confidence to travel
returned once Covid-19 related restrictions were lifted across Europe, along with enhanced contribution from our ancillary product
offering and easyJet holidays. easyJet flew 69.7 million passengers in the year ended 30 September 2022 (2021: 20.4 million), up 242%
on the prior year, reflecting that return of confidence. Load factor for the year was 85.5% (2021: 72.5%). Capacity for the year was 78%
of the level of the pre-pandemic year, FY19, and the load factor of 85.5% was 6 ppt lower.
Trading in the first half of the financial year was impacted by the emergence of the Omicron variant of Covid-19. Trading had been
relatively strong in October and early November but then travel restrictions were re-imposed at different times across Europe from
mid-November and remained in place until starting to be relaxed in February-April 2022, the timing and precise degree of relaxation
varying from country to country. The total number of passengers carried in H1 increased by 471% to 23.4 million (H1 2021: 4.1 million) with
a 13.6 percentage point increase in load factor to 77.3% (H1 2021: 63.7%). Capacity for H1 was 66% of FY19 and the load factor of 77.3%
was 12.8 ppt lower.
The other major event which occurred during H1 was the Russian invasion of Ukraine in February 2022. Whilst this did not impact
easyJet’s network directly as we do not fly to or over Ukraine, it has had an indirect effect through the increase in oil prices and therefore
jet fuel prices which has occurred since then.
Trading in our third quarter started to pick-up as the Omicron-related travel restrictions fell away across Europe and consumer
confidence to travel returned. In Q3 easyJet flew 22 million passengers, more than seven times higher than the same period in the
previous financial year, representing 87% of FY19 capacity. Load factors continued to build over the quarter, reaching highs of 92% in
June. The unprecedented ramp-up across the aviation industry, coupled with a tight labour market, resulted in widespread operational
challenges culminating in higher levels of cancellations in Q3 than normal and consequently higher disruption expenses were incurred.
The industry’s challenges were reflected in the flight caps announced at two significant airports, London Gatwick and Amsterdam.
Alongside these capacity caps, easyJet took swift action to reduce our capacity and build resilience into Q4. As a result, disruption in Q4
was much reduced and in line with historical levels.
After the operational issues experienced across the industry in Q3, the fourth quarter was characterised by more stable operations with
load factors of 92% being achieved. Headline EBITDAR in Q4 was the strongest quarterly headline EBITDAR in the history of the Group,
helping take the full year headline EBIT result to breakeven. Headline EBITDAR achieved for the year of £569 million was £1,120 million
better than the result in the prior year when easyJet recorded an EBITDAR loss of £551 million. Similarly, total loss after tax for the year
ended 30 September 2022 of £169 million was an improvement from the loss of £858 million in the year ended 30 September 2021.
Amounts presented at constant currency throughout this section are an alternative performance measure and are not determined in
accordance with International Financial Reporting Standards but provide relevant and comparative reporting for readers of these
financial statements.
50 easyJet plc Annual Report and Accounts 2022
Financial overview
£ million (Reported) – Group
Group revenue
Headline costs excluding fuel, balance sheet FX and ownership costs1
Fuel
Headline EBITDAR
Depreciation, amortisation and dry leasing costs
Headline EBIT
Net finance charges
Balance sheet foreign exchange (loss)/gain
Group headline loss before tax
Being:
Airline headline loss before tax
Holidays headline profit/(loss) before tax
Headline tax credit
Group headline loss after tax
Non-headline items
Non-headline tax credit/(charge)
Group total loss after tax
£ per seat – Airline only 2
Airline revenue
Headline costs excluding fuel, balance sheet FX and ownership costs
Fuel
Headline EBITDAR
Depreciation, amortisation and dry leasing costs
Headline EBIT
Net finance charges
Balance sheet foreign exchange (loss)/gain
Airline headline loss before tax
Headline tax credit
Airline headline loss after tax
Non-headline items
Non-headline tax credit/(charge)
Airline total loss after tax
2022
5,769
(3,921)
(1,279)
569
(566)
3
(117)
(64)
(178)
(216)
38
31
(147)
(30)
8
(169)
2022
66.23
(44.09)
(15.68)
6.46
(6.89)
(0.43)
(1.45)
(0.77)
(2.65)
0.38
(2.27)
(0.36)
0.10
(2.53)
2021
1,458
(1,638)
(371)
(551)
(485)
(1,036)
(110)
10
(1,136)
(1,124)
(12)
236
(900)
100
(58)
(858)
2021
50.54
(56.62)
(13.16)
(19.24)
(17.12)
(36.36)
(3.83)
0.32
(39.87)
8.39
(31.48)
3.53
(2.07)
(30.02)
1. Ownership costs defined as depreciation, amortisation and dry leasing costs plus net finance charges.
2. All per seat metrics are for the Airline business only, as the inclusion of hotel-related revenue and costs from the holidays business will distort the RPS and
CPS metrics as these are not directly correlated to the seats flown by the Airline. Our easyJet holidays business forms a separate operating segment to
the Airline, and easyJet holidays’ key metrics are included under key statistics.
The total number of passengers carried increased by 242% to 69.7 million (2021: 20.4 million), which was driven by a 189% increase in
seats flown to 81.5 million seats (2021: 28.2 million seats) and a 13.0 percentage point increase in load factor to 85.5% (2021: 72.5%).
This reflects the increased capacity following the reduction in travel restrictions across Europe over the year, and the associated
strengthening in customer demand as the recovery from Covid-19 continues. Note that capacity for the year was 78% of the level of the
pre-pandemic year, FY19, and the load factor of 85.5% was 6 ppt lower.
Total revenue increased by 296% to £5,769 million (2021: £1,458 million) and by 302% at constant currency. Airline revenue per seat
increased by 31% to £66.23 (2021: £50.54) and increased by 33% at constant currency. The increase in Airline revenue per seat is a
consequence of increased loads, reflecting the growth in demand through the year as travel restrictions eased across Europe, and strong
performance from both bag and seat initiatives which contributed to an Airline ancillary revenue per seat increase at constant currency
of 31%. Note that airline ancillary revenue is now 15% higher than it was in FY19 despite passenger numbers being 27% lower.
easyJet.com
51
STRATEGIC REPORT FINANCIAL REVIEW (CONT INUE D)
Total headline costs excluding fuel, balance sheet exchange movements and ownership costs increased by 139% to £3,921 million (2021:
£1,638 million) mainly as a result of the volume of flying and general cost pressures. Costs were also impacted by the disruption seen
throughout the year; wet lease costs of £23 million (2021: £nil) were incurred to support operational resilience and £205 million EU261
compensation and welfare costs were also incurred (2021: £7m credit arising from the release of a Covid specific welfare provision). In
addition, wet leases were required to provide coverage for new slots at Gatwick and Porto at a cost of £30 million (2021: £nil million).
This year also saw a significant reduction in furlough schemes as government support wound down across Europe with £8 million
support received in 2022 compared to £134 million support in the prior year. The cost impact was partly mitigated by continued
operational cost focus including maintaining a proportion of captains on seasonal contracts and a release of airport charge accruals of
£18 million (2021: £4 million) as the return of activity has reduced some of the uncertainty and risks which were previously accrued for.
On an Airline cost per seat basis total headline costs excluding fuel, balance sheet foreign exchange movements and ownership costs
decreased by 22% to £44.09 (2021: £56.62) and 22% at constant currency. This was mainly a result of increased flying, as fixed operating
costs were being spread across more flying capacity, combined with easyJet’s continued focus on cost, as noted above, which has also
contributed to the favourable movement.
Over the year the translation of revenue and costs, including fuel, from foreign currency has had a net adverse impact of £88 million
(2021: £22 million credit) on the Group income statement, with a further income statement charge of £64 million (2021: £10 million credit)
from the translation of foreign currency denominated monetary assets and liabilities on the statement of financial position. Conversely,
ownership costs benefited from the movement in US dollar interest rates with a credit of £71 million (2021: £20 million credit) from the
discounted maintenance reserves provision which uses long-term US dollar interest rates to set the discount rate.
Additionally, within ownership costs is the first full year impact of the change in estimation for the useful economic lives (UEL) of the
owned CEO fleet from 23 to 18 years and the amended approach to residual value estimation. This increased the depreciation charge in
the year by £50 million (2021: £13 million, three months’ impact).
Airline fuel cost per seat increased by 19% to £15.68 (2021: £13.16) and by 17% at constant currency. This is a result of both the significant
increase in the post hedge fuel price due to the war in Ukraine and an increased average sector length compared to the prior year,
arising from the destination mix shifting towards beach in the current financial year. The impact of higher fuel prices was partly offset by
the carry forward of the allocated free ETS (Emission Trading Systems) certificates from the prior year which were not utilised due to the
reduced flying volumes in prior year, and in-year allocation of free credits.
easyJet holidays performed strongly, with this summer being its first season of trading relatively unaffected by Covid-19 under its revised
operating model. Overall, it contributed incremental revenue of £368 million (2021: £34 million) to the Group from 1.1 million customers
(including affiliates), delivering £38 million of headline profit before tax (2021: £12 million loss).
A non-headline charge of £30 million (2021: £100 million gain) was recognised in the year, consisting of a £21 million loss on the sale and
leaseback of 10 aircraft (2021: £65 million gain from 35 aircraft and two engines), a £10 million loss on disposal of landing rights
surrendered as a consequence of the reduction in our operations at Berlin and a £1 million net fair value adjustment credit for hedge
discontinuation (2021: £26 million charge). Restructuring charges were net £nil million (2021: £61 million credit) as the £10 million provision
arising from the announcement of the downsizing of our operations at the Berlin base has been offset by releases following the
finalisation of restructuring programmes initiated in the prior year. Full details can be found in note 5 to the financial statements.
Corporate tax has been recognised at an effective rate of 18.7% (2021: 17.2%), resulting in an overall tax credit of £39 million (2021: £178
million credit). This splits into a tax credit of £31 million on the headline losses and a tax credit of £8 million on the non-headline items.
Whilst the non-headline loss is £30 million, after the necessary tax adjustments the tax adjusted non-headline items amount to a loss of
£22 million, which results in the non-headline tax credit of £8 million for the year.
Loss per share
Basic headline loss per share
Basic total loss per share
2022
2021
Pence per share
Pence per share
Change in pence
per share
(19.6)
(22.4)
(166.9)
(159.0)
147.3
136.6
Basic headline loss per share decreased by 147.3 pence and basic total loss per share decreased by 136.6 pence as a consequence of the
lower loss generated during the year.
52
easyJet plc Annual Report and Accounts 2022
Return on capital employed (ROCE)
Reported £m
Headline profit/(loss) before interest and tax
UK corporation tax rate
Normalised headline operating profit/(loss) after tax (NOPAT)
Average shareholders’ equity
Average net debt
Average adjusted capital employed
Headline return on capital employed
Total return on capital employed
2022
3
19%
2
2,586
790
3,376
0.1%
(0.6%)
2021
(1,036)
19%
(839)
1,741
1,570
3,311
(25.5%)
(22.4%)
ROCE is calculated by taking headline profit/(loss) before interest and tax, applying tax at the prevailing UK corporation tax rate at the
end of the financial year, and dividing by average capital employed. Capital employed is shareholders’ equity plus net debt.
Headline ROCE for the year was 0.1%, an improvement of 25.6 percentage points on the prior year, largely driven by the change from a
headline loss before interest and tax to a headline profit before interest and tax for the year. Total ROCE for the year was (0.6)%, an
improvement of 21.8 percentage points on the prior year. The total ROCE was adverse to the headline ROCE due to non-headline items
generating a £30 million charge before tax in the income statement, as noted earlier.
Summary net debt reconciliation
The table presents cash flows on a net cash basis. This presentation is different to the GAAP presentation of the statement of cash flows
in the financial statements as it includes non-cash movements on debt facilities.
Operating loss
Depreciation and amortisation
Increase in unearned revenue
Net working capital movement
Net tax (paid)/received
Net capital expenditure
Net proceeds from sale and leaseback of aircraft
Purchase of own shares for employee share schemes
Net decrease in restricted cash
Repayment of capital element of leases
Increase in lease liability
Net funding activities
Other (including the effect of exchange rate movements)
Decrease/(increase) in net debt
Net debt at the beginning of the year
Net debt at end of year
2022
£ million
2021*
£ million
Change
£ million
(27)
564
197
101
(4)
(530)
87
(9)
7
(206)
(53)
53
60
240
(910)
(670)
(910)
480
232
(538)
1
(149)
836
(6)
5
(261)
(693)
1,144
74
215
(1,125)
(910)
883
84
(35)
639
(5)
(381)
(749)
(3)
2
55
640
(1,091)
(14)
25
215
240
* There has been recategorisation of items in FY21 to better reflect line item classification.
Net debt as at 30 September 2022 was £670 million (30 September 2021: £910 million) and comprised cash and cash equivalents and
money market deposits of £3,640 million (30 September 2021: £3,536 million), borrowings of £3,197 million (30 September 2021: £3,367
million) and lease liabilities of £1,113 million (30 September 2021: £1,079 million).
The unearned revenue inflow of £197 million (2021: £232 million) has stabilised as customer bookings start to normalise in response to the
removal of Covid-19 travel restrictions and as flying schedules return to near pre-pandemic levels. Net working capital movement has
increased by £639 million to a £101 million inflow compared to the prior year outflow of £538 million. This increase was predominantly due
to increased flying volumes which have led to activity-related increases in trade payables. Furthermore, the prior year saw an unusually
large level of supplier payments as a catch-up effect from the initial lockdown period, when many supplier accounts were put onto
phased payment plans as part of our cash protection measures. The trade payables movement was partially offset by increases in trade
receivables including marketing income, again arising from the increased volume of activity. Additionally, working capital includes
provision movements and the prior year had a significant reduction in provisions with the release of restructuring provisions and other
movements.
Net capital expenditure in the year of £530 million (2021: £149 million) is predominantly the final delivery payments for the acquisition of
eight aircraft in the year (2021: nil aircraft), but also includes significant advance payments for long life parts. The sale and leaseback of
10 aircraft in 2022 (2021: 35 aircraft and two engines) resulted in a net cash inflow of £87 million compared to the more significant sale
and leaseback programme in 2021 which generated proceeds of £836 million. Repayment of the capital element of leases of £206 million
(2021: £261 million) has decreased by £55 million as a result of the prior year having additional deferred payments from H2 2020
included, and the increase in lease liability of £53 million (2021: £693 million) has reduced compared to prior year with the reduced
volume of sale and leasebacks.
In the prior year the net funding activities of £1,144 million predominantly related to the rights issue, with final funding received this
financial year.
easyJet.com
53
STRATEGIC REPORT FINANCIAL REVIEW (CONT INUE D)
Exchange rates
GBP/USD and GBP/EUR
1.5
1.4
1.3
1.2
1.1
1.0
0.9
2017
2018
2019
2020
2021
2022
GBP/USD rate
GBP/EUR rate
The proportion of revenue and headline costs denominated in currencies other than sterling is outlined below:
Revenue
Costs
Sterling
Euro
US dollar
Other (principally Swiss franc)
Average headline exchange rates**
Euro – revenue
Euro – costs
US dollar
Swiss franc
Closing exchange rates**
Euro
US dollar
Swiss franc
2022
51%
38%
1%*
10%
2021
34%
52%
0%
14%
2022
32%
37%
25%
6%
2022
€1.18
€1.18
$1.32
CHF 1.25
2022
€1.14
$1.11
CHF 1.09
2021
45%
29%
21%
5%
2021
€1.14
€1.15
$1.36
CHF 1.20
2021
€1.16
$1.35
CHF 1.26
* Our customers have the option of paying for flights in US dollars
** Exchange rates quoted are post-hedging and for revenue and headline costs
The Group’s foreign currency risk management policy aims to reduce the impact of fluctuations in exchange rates on future cash flows.
This year has seen considerable volatility in exchange rates and the weakening of sterling against both the euro and US dollar. Over the
year the translation of revenue and costs, including fuel, from foreign currency has had a net adverse impact of £88 million on the Group
income statement. The income statement includes a further charge of £64 million from the translation impact of foreign currency
denominated monetary assets and liabilities on the statement of financial position.
Headline exchange rate impact
Favourable/(adverse)
Total revenue
Fuel
Headline costs excluding fuel
Headline total before tax
Euro
£ million
Swiss franc
£ million
US dollar
£ million
Other
£ million
Total
£ million
(97)
–
46
(51)
6
–
(14)
(8)
3
(20)
(11)
(28)
(2)
–
1
(1)
(90)
(20)
22
(88)
easyJet recognises a significant element of revenue across its network in euros, and therefore a stronger sterling vs euro at average rates
has reduced revenue through the year, only partly offset by the converse impact on costs. easyJet’s cost base also includes US dollar
denominated costs, particularly fuel and lease payments, and therefore post-hedge US dollar strengthening has increased the sterling
value of those headline costs.
54 easyJet plc Annual Report and Accounts 2022
Financial performance
Revenue
£m Group
Passenger revenue
Ancillary revenue (excluding package holiday revenue)
easyJet holidays revenue*
Total revenue
2022
£ million
3,816
1,585
368
5,769
2021
£ million
1,000
424
34
1,458
* easyJet holidays revenue includes the elimination of intercompany airline transactions
Total revenue increased by 296% to £5,769 million (2021: £1,458 million) and 302% at constant currency. This was a combined result of
increased customer volumes and a focus on yield optimisation resulting in improved ticket yield, with ancillary yield performing strongly.
The total number of passengers carried increased by 242% to 69.7 million (2021: 20.4 million), which was driven by a 189% increase in
seats flown to 81.5 million seats (2021: 28.2 million seats) and a 13.0 percentage point increase in load factor to 85.5% (2021: 72.5%). This
reflects the increased capacity following the reduction in travel restrictions across Europe over the year, and the associated
strengthening in customer demand as the recovery from Covid-19 continues. Additionally, within revenue there was a £22 million credit
(2021: £10 million) arising from the release of aged contract liabilities within other payables, split £19 million against passenger revenue
and £3 million against ancillary revenue.
Total Airline revenue per seat of £66.23 was 33% ahead of 2021 at constant currency and load factors of 85.5% were 13.0 percentage
points ahead. Likewise, total yield of £77.48 was 13% favourable when compared against 2021 at constant currency, with passenger yields
14% favourable and ancillary yields 11% favourable.
Ancillary revenue of £1,585 million was 274% ahead of 2021, and 279% at constant currency. This was principally due to a good
performance on initiatives with strong attachment across both bags and seats, favourable yield and the increase in passenger numbers
compared to 2021. Note that airline ancillary revenue is now 15% higher than it was in FY19 despite passenger numbers being 27% lower.
easyJet holidays revenue increased by 1,082% to £368 million (2021: £34 million) with strong yields and growth in customer numbers to 1.1
million (2021: 0.1 million) as the holidays offer resonated with customers in its first full summer season of trading under its new operating
model.
Headline costs excluding fuel
Operating costs and income
Airports, ground-handling, holidays accommodation, and other
operating costs
Crew
Navigation
Maintenance
Selling and marketing
Other costs
Other income
Ownership costs
Aircraft dry leasing
Depreciation
Amortisation
Net finance charges
Foreign exchange loss/(gain)
Headline costs excluding fuel
2022
Group
£ million
Airline
£ per seat
2021
Group
£ million
Airline
£ per seat
1,716
767
339
301
173
635
(10)
3,921
2
539
25
117
683
64
747
4,668
17.70
9.40
4.16
3.69
1.88
7.38
(0.12)
44.09
0.04
6.60
0.25
1.45
8.34
0.77
9.11
53.20
446
495
102
222
60
319
(6)
1,638
5
456
24
110
595
(10)
585
2,223
15.01
17.56
3.62
7.90
1.94
10.80
(0.21)
56.62
0.20
16.19
0.74
3.83
20.95
(0.32)
20.63
77.25
Headline cost per seat excluding fuel for the Airline decreased by 31% to £53.20 (2021: £77.25), and also decreased by 32% at constant
currency.
Included within the Group headline costs excluding fuel of £4,668 million is £330 million (2021: £46 million) related to the holidays
business, the cost increase primarily being activity related due to the growth of the business compared to last year.
easyJet.com
55
STRATEGIC REPORT FINANCIAL REVIEW (CONT INUE D)
Operating costs and income
Airports, ground-handling and other operating costs increased by 285% to £1,716 million (2021: £446 million), and Airline cost per seat
increased by 18% to £17.70 (2021: £15.01), and by 19% at constant currency. Within the result for the year is a release of airport charge
accruals of £18 million (2021: £4 million) as the return of flying activity has reduced some of the contract uncertainty and risks which were
previously being accrued for. Together with increased marketing activity the release helped offset an overall increase in airport rates and
operating costs associated with improved load factors, and an increase in passenger and security charges that drove a cost increase on
a per seat basis.
Crew costs increased by 55% to £767 million (2021: £495 million), but Airline cost per seat decreased by 46% to £9.40, and Airline cost
per seat also decreased by 46% at constant currency. This cost per seat decrease was primarily due to fixed payroll costs being spread
over higher flying capacity, partially offset by the reduction in furlough schemes in the year (£8 million support 2022 vs £134 million
support 2021) and additional one-off crew payments, including retention bonuses. To help mitigate some of the cost pressures, a
proportion of captains remained on seasonal contracts.
Navigation costs increased by 232% to £339 million (2021: £102 million), and Airline cost per seat increased by 15% to £4.16 (2021: £3.62)
and by 17% at constant currency, as a result of an increase in the sector length of our commercial flying compared to the comparative
year and an increase in Eurocontrol rates effective from January 2022.
Maintenance costs increased by 36% to £301 million (2021: £222 million), and Airline cost per seat decreased by 53% to £3.69 (2021:
£7.90) and decreased by 53% at constant currency. This cost per seat decrease was driven by the fixed element of our maintenance
costs which have been spread over increased capacity in the year, whilst also having a reduction in repair costs and cleaning costs.
Selling and marketing costs increased by 188% to £173 million (2021: £60 million). This was due to a combination of factors: £37 million of
the increase was from increased marketing spend and the focus on easyJet holidays as a result of the revival of travel post-pandemic;
whilst £76 million of the increase was on sale and distribution costs, predominantly the result of credit card bookings and associated fees
increasing as activity returned.
Other costs increased by 99% to £635 million (2021: £319 million), and Airline cost per seat decreased by 32% to £7.38 (2021: £10.80), and
by 31% at constant currency. Other costs include the impact of the significant disruption experienced in the year, with EU261
compensation and welfare costs of £205 million (2021: £7m net credit arising from the release of a Covid specific welfare provision).
These compensation payments per customer were over double the level experienced pre-pandemic. In addition, wet lease costs of
£23 million (2021: £nil) were incurred to maintain capacity. Wet lease arrangements were also used to support the new slots secured in
Gatwick and Porto, increasing our route offer, at a cost of £30 million (2021: £nil million). The significant driver in the decrease in the cost
per seat is that fixed costs are being spread over higher flown capacity.
Ownership costs
Depreciation costs increased by 18% to £539 million (2021: £456 million), and Airline cost per seat decreased by 59% to £6.60 (2021:
£16.19). This increase was driven by higher maintenance-related depreciation as a result of increased flying hours, combined with an
increase in the number of leased aircraft, and the change in UEL estimation for CEO aircraft in the prior year, the first full year impact
being to increase the depreciation charge by £50 million in the year (2021: £13 million, three months’ impact). The overall increase in
depreciation costs was partially offset by the regular discounting of the maintenance provision which resulted in a credit to the income
statement of £71 million (2021: credit £20 million), principally due to the increase in US dollar interest rates over the year.
Net finance charges increased marginally by 6% to £117 million (2021: £110 million), and Airline cost per seat decreased by 62% to £1.45
(2021: £3.83). The decrease per seat is a consequence of the higher capacity, partially offset by increased interest costs.
Foreign exchange loss/(gain) moved to a loss of £64 million (2021: £10 million credit) with the increased impact of the retranslation of
foreign currency denominated monetary assets and liabilities arising from the currency movements in the year, with sterling being weaker
against both the US dollar and euro on 30 September 2022 compared to 30 September 2021.
Fuel
Fuel
2022
Group
£ million
1,279
Airline
£ per seat
15.68
2021
Group
£ million
371
Airline
£ per seat
13.16
Fuel costs for 2022 were £1,279 million, compared to £371 million in 2021. The higher costs were driven both by the 189% rise in flying
volumes as well as the significant increase arising from the unhedged portion of fuel purchases as a consequence of the upward
pressure on fuel prices over the year. Fuel cost per seat of £15.68 was a 19% increase on the prior year, and a 17% increase at constant
currency.
During the year the average market price payable for jet fuel increased by 92% from $554 per tonne in 2021 to $1,063 per tonne in 2022.
This was substantially mitigated by the hedging undertaken by the Group, with the overall post hedge fuel price for 2022 of $705 per
tonne being only 12% higher than the post hedge fuel price of $631 per tonne achieved in 2021. The fuel cost includes an offset of
allocated free ETS certificates, with a significant proportion of carbon costs in the year met by carried forward and in-year allocations.
The Group uses jet fuel derivatives to hedge against significant increases in jet fuel prices to mitigate cash and income statement
volatility in the short term. In order to manage the risk exposure, jet fuel derivative contracts are used in line with the Board approved
policy to hedge up to 18 months of estimated exposures in advance, with approximately 60% hedged on average in the first 12 months.
56 easyJet plc Annual Report and Accounts 2022
Summary consolidated statement of financial position
Goodwill and other non-current intangible assets
Property, plant and equipment (excluding RoU assets)
Right of use (RoU) assets
Derivative financial instruments
Equity investment
Other assets (excluding cash and money market deposits)
Unearned revenue
Trade and other payables
Other liabilities (excluding debt)
Capital employed
Cash and money market deposits*
Debt (excluding lease liabilities)
Lease liabilities
Net debt
Net assets
* Excludes restricted cash
2022
£ million
582
3,676
953
442
31
1,022
(1,043)
(1,685)
(775)
3,203
3,640
(3,197)
(1,113)
(670)
2,533
2021
£ million
582
3,639
1,096
203
30
619
(846)
(1,128)
(646)
3,549
3,536
(3,367)
(1,079)
(910)
2,639
Change
£ million
–
37
(143)
239
1
403
(197)
(557)
(129)
(346)
104
170
(34)
240
(106)
Since 30 September 2021 net assets have decreased by £106 million.
The net book value of property, plant and equipment, excluding right of use assets, has increased by £37 million, the impact of the sale
and leaseback of 10 aircraft being offset by the eight new owned aircraft brought into the fleet in the year and the depreciation charge
for the year.
At 30 September 2022, right of use (RoU) assets amounted to £953 million (2021: £1,096 million) and lease liabilities amounted to £1,113
million (2021: £1,079 million) which reflects additions during the year as a result of aircraft sale and leasebacks, as well as the impact of
lease payments, extensions and depreciation on RoU assets.
There has been a £239 million increase in the net asset value of derivative financial instruments, with a closing net asset balance of £442
million (2021: £203 million asset). The movement is largely due to mark-to-market gains on US dollar hedges and cross currency interest
rate swaps as a result of the weakened pound against the US dollar and euro in comparison to the rates at 30 September 2021. This gain
was partially offset by a reduction in the asset value of jet fuel hedges compared to 30 September 2021.
Other assets have increased by £403 million, mainly driven by increased current intangible assets reflecting the ETS credits held as a
result of increased flying and therefore carbon emissions (and pending surrender in 2023), and increased trade and other receivables.
Unearned revenue increased by £197 million, reflecting improved customer confidence and strong future bookings compared to the prior
year.
Trade and other payables have increased by £557 million predominantly as a result of higher activity and volumes, and an increase in ETS
payables due to higher credit prices, partially offset by a reduction in voucher liabilities with customers having greater opportunities to
utilise these vouchers during 2022.
Other liabilities have increased by £129 million, mainly as a result of increased provisions, in particular for maintenance with the increase in
flying over the year, and also the provision for customer claims reflecting the higher volume of disruption events in the year.
Debt has decreased by £170 million mainly as a result of the repayment of the final £300 million of the Covid Corporate Financing Facility
(CCFF) in the year, plus the $100 million partial repayment of the UKEF facility, offset by weaker sterling at 30 September 2022
increasing the translated value of the debt.
As at 30 September 2022, the Group is unable to assess the likely outcome or quantum of the claims of the investigation by the ICO,
group action and other claims following the cyber-attack in May 2020 and no provision has been recognised. (See note 1 under critical
accounting judgements – contingency liability recognition.)
easyJet.com
57
STRATEGIC REPORT FINANCIAL REVIEW (CONT INUE D)
Key statistics
Operating measures
Seats flown (millions)
Passengers (millions)
Load factor
Available Seat Kilometres (ASK) (millions)
Revenue Passenger Kilometres (RPK) (millions)
Average sector length (kilometres)
Sectors (‘000)
Block hours (‘000)
easyJet holidays passengers (thousands)1
Number of aircraft owned/leased at end of year
Average number of aircraft owned/leased during year
Number of aircraft operated at end of year
Average number of aircraft operated during year
Number of routes operated at end of year
Number of airports served at end of year
Financial measures
Total return on capital employed
Headline return on capital employed
Airline total loss before tax per seat (£)
Airline headline loss before tax per seat (£)
Airline total loss before tax per ASK (pence)
Airline headline loss before tax per ASK (pence)
Revenue
Airline revenue per seat (£)
Airline revenue per seat at constant currency (£)3
Airline revenue per ASK (pence)
Airline revenue per ASK at constant currency (pence)3
Airline revenue per passenger (£)2
Airline revenue per passenger at constant currency (£)2, 3
Costs
Per seat measures
Airline headline cost per seat (£)
Airline total cost per seat (£)
Airline headline cost per seat excluding fuel (£)
Airline headline cost per seat excluding fuel at constant currency (£)3
Airline total cost per seat excluding fuel (£)
Airline total cost per seat excluding fuel at constant currency (£)3
Per ASK measures
Airline headline cost per ASK (pence)
Airline total cost per ASK (pence)
Airline headline cost per ASK excluding fuel (pence)
Airline headline cost per ASK excluding fuel at constant currency (pence)3
Airline total cost per ASK excluding fuel (pence)
Airline total cost per ASK excluding fuel at constant currency (pence)3
2022
2021
81.5
69.7
85.5%
97,287
84,874
1,193
456
938
805
320
321
310
255
988
153
2022
(0.6%)
0.1%
(3.01)
(2.65)
(0.25)
(0.22)
66.23
67.33
5.55
5.64
77.48
78.77
68.88
69.24
53.20
52.66
53.56
53.02
5.77
5.80
4.46
4.41
4.49
4.45
28.2
20.4
72.5%
33,348
23,594
1,184
156
311
58
308
331
239
198
927
153
2021
(22.4%)
(25.5%)
(36.33)
(39.87)
(3.11)
(3.41)
50.54
50.54
4.37
4.37
69.72
69.72
90.41
86.87
77.25
77.57
73.72
74.04
7.64
7.34
6.53
6.55
6.23
6.26
Increase/
(decrease)
189.0%
241.7%
13.0ppt
191.7%
259.7%
0.8%
192.3%
201.6%
1,287.9%
3.9%
(3.0%)
29.7%
28.8%
6.6%
0.0%
Favourable/
(adverse)
21.8ppt
25.6ppt
(91.7%)
(93.4%)
(92.0%)
(93.5%)
31.0%
33.2%
27.0%
29.1%
11.1%
13.0%
(23.8%)
(20.3%)
(31.1%)
(32.1%)
(27.3%)
(28.4%)
(24.5%)
(21.0%)
(31.7%)
(32.7%)
(27.9%)
(28.9%)
1. Total holiday customers including affiliates is 1.1 million (FY21: 0.1 million).
2. Prior year comparative restated to show correct figure.
3. Constant currency metrics restate FY22 using FY21 rates, and exclude the impact of foreign exchange revaluations from both current year and prior year
results.
58 easyJet plc Annual Report and Accounts 2022
Risk management
Our corporate risk
management framework
The Board approves the strategy for easyJet,
including strategic initiatives and objectives, and
ensures suitable oversight and governance
through several management methods,
including monitoring and reporting, strategic
reviews, oversight committees and deep dives
into specific risk areas, especially in the airline
sector.
The Board is ultimately responsible for
determining the nature and extent of the
principal risks it is willing to take to achieve its
strategic objectives, its risk appetite, and
maintaining the Group’s systems of internal
control and risk management.
The Audit Committee, on behalf of the Board, is
accountable for reviewing and assessing the risk
management processes. The Risk and
Assurance team, which reports jointly to the
Chair of the Audit Committee and CFO, ensures
that robust processes are in place for identifying
and assessing the Group’s emerging and
principal risks. The Board has carried out a
robust assessment of the principal and
emerging risks facing the Group and how those
risks affect the prospects of the Group, with the
assistance of the Audit Committee.
The Risk and Assurance team is responsible for
creating, implementing and delivering the
corporate risk framework and reporting the
principal and emerging risks to the Board. Each
function across easyJet is responsible for
understanding and managing its risks and
considering the impact on all stakeholders. The
Risk and Assurance team then maintains a
programme of risk monitoring with each
function to ensure that risks are managed within
the framework and to promote cross-functional
management of risks.
We continue to develop our corporate risk
framework to ensure that risks, including
emerging risks, are identified, assessed,
managed and articulated. The Risk and
Assurance team identifies topics and relevant
lessons learned from across industry, both
within the aviation sector and beyond. These
lessons are used to identify emerging risks and
further enhance the easyJet corporate risk
framework and are fed into the functional risk
plans through continual dialogue with functional
risk contacts. The Risk and Assurance team
works with the functions to ensure that risk
information remains relevant and control
deficiencies or gaps are identified, and
development actions are implemented.
During FY22, the Corporate Risk team has
further developed the corporate risk framework.
All functional and operational risks have been
scored on the same basis using the same
taxonomy. Some facilitated functional risk
reviews have taken place to dive deeper into
key risk areas. The Internal Audit team, along
with Corporate Risk, has developed an
assurance map to identify key controls for
our principal risks and the assurance over
these controls.
Principal risks and uncertainties
easyJet faces a range of risks that could impact delivery of our corporate and strategic initiatives.
Our risk themes remain unchanged and are as follows:
Safety, security and operations: Our number one priority is the safety and security of our customers, colleagues and contractors.
The delivery of a safe and secure operation which meets the needs and expectations of our customers is critical to our business.
Asset efficiency and effectiveness: We maintain our competitive cost advantage by making the best use of capacity/slots and fleet
mix in the right airports at the right prices and driving value through our supply chain.
Legislative and regulatory landscape: The airline industry is heavily regulated and there is a continual need to keep well-informed and
adapt (as required) to any legislative or regulatory changes across the jurisdictions in which we operate.
People: Having the right people is a key part of our corporate strategy. In today’s environment we need to create an inclusive and
energising environment that attracts the right people and inspires everyone to learn and grow.
Environment and sustainability: The impacts of climate change transition risk on our business and operations, regulation/taxation
and changing consumer, colleague and shareholder expectations. easyJet’s promise is to take action to reduce our environmental
impact today and to pioneer a sustainable future for travel.
Technology and digital safety: The nature of these risks, our reliance on technology (particularly online devices) and the ever-
increasing sophistication of serious organised crime groups, terrorists, nation states and even lone parties means that, despite all the
mitigation detailed, an element of vulnerability regarding the availability, confidentiality and integrity of our information and data
will inevitably remain.
Macro-economic and geopolitical: The airline industry is sensitive to macro-economic and geopolitical conditions. These risk events
can affect our financial performance. These include supply/demand imbalance and general economic trends, as well as the impact of
fuel cost, foreign exchange rates, interest rates and counterparty performance.
As with all businesses, our principal risks and uncertainties are continually evolving. Last year we reported on the risk arising from climate
change with regards to both physical and transition risks, and this year climate change transition features as a principal risk, covering
both the carbon trading schemes and increased taxation risks which were reported previously. Within the legislative and regulatory
landscape, the brand licence and major shareholder risk has been split into a brand licence risk and a wider shareholder activism risk. In
the macro-economic and geopolitical field, supply/demand imbalance has been replaced by a newly-articulated risk of competitive
environment. When assessing risks, we consider the risks to our business and our stakeholders.
easyJet.com
59
STRATEGIC REPORT RI SK (CONTINUED)
Emerging risks – an example
The war in Ukraine was an emerging risk
arising during the year. While we were not
affected from an operational point of view
(as we do not fly near, over or to Ukraine
or Russia), we have continued to monitor
the situation and ensure that our crisis
management procedures are up to date
and that these procedures can be used
should the situation change and start to
have an impact on the airspace easyJet
uses. However, we did have to assess the
impact of sanctions, and easyJet
implemented a three-stage plan in
response to the categorisation of the rising
risks. Firstly, we looked at the IT supply
chain implications, considering how this
would impact our cyber risk exposures.
Secondly, we considered our non-IT supply
chain and whether the changes to the
geopolitical landscape would cause supply
chain risk events that would impact our
ability to operate. Finally, the fleet team
considered the impact that new sanctions
would have on our leased fleet. We worked
with our legal team to ensure that we had
up-to-date information on the sanctions
regime relevant to our operations and
assets. In a matter of weeks, we removed
the suppliers from our supply chain that
were impacted by sanctions or located in
impacted jurisdictions. These actions were
implemented swiftly with the Board’s
support and approval. In addition, we
terminated lease agreements of six aircraft
that were ultimately owned by the Russian
state.
Case study: Operational disruption
When operational disruption hits the
airline industry it affects a wide range of
industry participants in its highly
connected ecosystem. During the
Covid-19 pandemic, non-essential travel
was restricted by governments to
reduce the rate of infection. This
demand shock reduced passenger
volumes, leading to all airlines
dramatically scaling back operations,
which had knock-on effects throughout
the airline ecosystem.
As the industry ramped back operations
in spring 2022, due to a number of risk
factors, widespread disruption was
experienced, resulting in flight
cancellations and the reissuing of flying
schedules. easyJet experienced several
disruption incidents above expected
levels. However, the teams involved
identified the issues and impacts on
stakeholders, established alternative
plans to navigate the business through
a difficult period for the industry and
learned lessons from the experience
that will strengthen the operation
through FY23 and beyond.
During the ramp-up of operations, we
experienced an emerging labour
shortage risk arising from the after-
effects of the Covid-19 pandemic and
caused by the new legislative landscape
after Brexit. Ensuring sufficient cabin-
crew volumes in the UK, and especially
at our Gatwick base, proved a challenge
due to a reduced talent pool; before the
pandemic a significant percentage of
our people at our London Gatwick Airport
base were from mainland Europe, and are
no longer able to work for us.
Delays in processing airside security checks
for new recruits had a further impact on
the available team. easyJet reacted quickly
to address the issue by removing flying
volumes and redistributing the remaining
flying schedule to avoid high
concentrations of activity. This allowed us
to optimise resilience and ensure that the
resource available was more able to handle
the volume of flying. To attract and retain
cabin crew into the business, employee
packages were reviewed and improved,
with enhanced terms and conditions,
increased salaries, joining and retention
bonuses and better benefits. With rising
living costs affecting all of easyJet’s
markets, a review of employment packages
has been conducted in other areas of the
business.
Targeted improvements have been made
to recognise the efforts made during the
last two years, to ease the effects of the
cost-of-living crisis and ensure that easyJet
remains an employer of choice for new
talent. Further improvements following
these disruption events include extending
recruitment lead times, for example,
starting from September 2022, to uplift for
increased summer trade and considering
the possibility of looking outside Europe for
talent.
In addition to internal resourcing issues
impacting operational performance,
risks arising in the supply chain
contributed to the disruption
experienced during the beginning of
summer 2022. Air traffic control,
airports (including security, person of
restrictive movement and handlers),
ground-handlers and coaching providers
were all impacted by resourcing issues.
A key factor was the aggregation effect
of all members of the airline industry
ecosystem approaching the same talent
pool, along with other industries such as
domestic leisure, entertainment and
food and drink businesses. To mitigate
these effects on easyJet’s operations,
the teams have worked with our
suppliers to benchmark and improve
their terms and conditions to reduce
attrition, such as offering full-time
employment contracts rather than
seasonal contracts, and to also ensure
that our key suppliers have robust plans
in place to improve resilience.
We have emerged from this disruption
stronger and during Q4 FY22 we
experienced a reduction in operational
disruption. We have reviewed our
processes and procedures, continuing
to strengthen these in preparation for
the FY23 flying programme.
60 easyJet plc Annual Report and Accounts 2022
Key:
Increasing compared to 2021
Building Europe’s best network
Transforming revenue
Decreasing compared to 2021
Delivering ease and reliability
Driving our low-cost model
Stable
Safety, security and operations
Significant safety or
security event
Risk owner:
Chief Operating Officer
Change in risk
Primary link to strategy
Potential impacts
• Significant injury and/or loss of life
• Sustained adverse media coverage
• Reduction in future revenue
• Fines/regulatory sanctions
• Operational disruption
• Significant spike in costs
• Share price movement
Mitigations
• Functional Safety Action Groups from across the Airline and easyJet holidays are chaired by the
appropriate senior manager and are responsible for the identification, evaluation and control of
safety-related risks.
• The easyJet Safety Board meets monthly to review safety, security and compliance performance
across all Air Operator Certificates (AOC) chaired by the CEO, attended by the three AOC
accountable managers and periodically by AOC regulators.
• Safety Review Boards are held locally, including at AOC level, and are open for the local regulator
to attend.
• A Safety Policy is published that promotes the incident reporting process and supports the safety
culture.
• easyJet operates a Safety Management System using leading software systems to:
• report incidents and identify events;
• identify hazards and threats and take appropriate risk-mitigating actions;
• collect and analyse safety data (enabling potential areas of risk to be projected); and
• enable learning from easyJet and industry events/incidents to be captured and embedded into
future risk mitigations.
• Timely, credible and reliable information upon which to base operational decisions.
• easyJet has an emergency response process and performs crisis management exercises.
• A hull, spares and liabilities insurance policy is held.
• Security cleared specialists continually review geopolitical developments across the easyJet
network, in particular those countries deemed to be higher risk, and report back to the Board any
areas of concern.
• easyJet maintains an inspection regime of all our airports to ensure the security elements are
being effectively managed.
• easyJet continually reviews and develops its safety management processes.
easyJet.com
61
STRATEGIC REPORT RI SK (CONTINUED)
Key:
Increasing compared to 2021
Building Europe’s best network
Transforming revenue
Decreasing compared to 2021
Delivering ease and reliability
Driving our low-cost model
Stable
Safety, security and operations (continued)
Significant operational
disruption
Risk owner:
Chief Operating Officer
Change in risk
Primary link to strategy
Potential impacts
• Customer dissatisfaction
• EU261 compensation and welfare payable to customers
• Inefficient use of crew/aircraft
• Negative impact on brand
• Share price movement
• Adverse media coverage
• Reduction in revenue
• Operational disruption
Mitigations
• Maintaining operational resilience through:
• building appropriate schedule resilience into the flying schedule;
• maintaining aircraft and crew standby;
• reporting on the day of operations, including customer communication;
• monitoring airport performance and strategic supply chain;
• air traffic control system lobbying and flight planning enhancements; and
• the use of data across the operation to predict and manage events and aid decision support.
• Mitigating UK cabin crew recruitment, attrition and impact of Brexit through improved T&Cs., early
opening of recruitment for summer 2023 and aligning the schedule to crew supply.
• Mitigating pilot recruitment by early opening of recruitment for summer 2023. Training
commences pre-Christmas 2022.
• Liquidity buffer to better manage the impact of downturns in business or temporary curtailment
of activities.
• Business interruption insurance which provides some cover for very significant shock events such
as extreme weather, air traffic management issues and loss of access to key airports. The policy
could allow us to claim in the event of a very substantial number of cancellations.
• Significant focus on risk mitigation of and preparedness for a destructive cyber-attack, including
running a cyber crisis exercise for the senior Crisis team and the Airline Management Board (AMB).
Pandemic
Risk owner:
Chief Financial Officer
Change in risk
Primary link to strategy
Potential impacts
• Suppressed customer demand
• Sustained adverse media coverage
• Reduction in future revenue
• Increased regulatory requirements and scrutiny
• Operational disruption
• Significant spike in costs
• Share price movement
Mitigations
• A Biosecurity Standards Group is in place and includes safety and security experts including our
Company doctor and representatives from across the Airline and easyJet holidays. The Group is
responsible for developing and maintaining our single set of easyJet biosecurity standards, which
set out the requirements to ensure a safe and healthy environment for our people, customers and
contractors. Standards are translated into our Standard Operating Procedures (SOPs) and
Communications.
• Pandemic Playbook, which acts in partnership with our Incident & Crisis Management Playbook and
the Business Continuity Playbook, to manage and coordinate the response to future pandemics,
which includes the following Planning Principles: Precaution, Proportionality and Flexibility.
• A Communicable Disease Policy that promotes the incident-reporting process, provides processes
for immediate response actions for dealing with any communicable disease event and supports a
safe and healthy environment.
• Governance structure including a Steering Committee (SteerCo) involving the Chief Financial
Officer, Chief Operating Officer, Chief Commercial Officer and Director of Strategy, to manage
pandemic and epidemic events. The SteerCo is responsible for strategic oversight and
communication with the Board. It maintains focus on long-term recovery.
• Maintaining balance sheet strength.
• Dynamic planning and capacity management process to manage supply and demand fluctuations.
• Pandemic Lessons Learned review identified best practices and opportunities for improvement.
62 easyJet plc Annual Report and Accounts 2022
Asset efficiency and effectiveness
Single aircraft type
operations
Risk owner:
Chief Financial Officer
Change in risk
Potential impacts
• Schedule reductions/cancellations
• Grounding of all/part of the fleet
• Reduced customer confidence in aircraft type
• Financial impact related to (i) residual value of the asset, (ii) costs of modifications/corrections to
address any issues or perceived issues with the type, and (iii) costs of either reducing enterprise
size or providing alternative fleet capacity to maintain enterprise activities
Primary link to strategy
Mitigations
• There are c.8,200 A320 family (A319, A320, A321) aircraft operating, with a proven track record
for safety and reliability.
• Introduction of the A320neo in part mitigates this single fleet supplier risk as the aircraft is
equipped with a different engine type.
• The continued maturity of the aircraft types since their initial entry into service in part mitigates
this single fleet supplier risk, as the aircraft are subject to continuous improvement to address
learnings during operation and regulatory-imposed airworthiness directives.
• easyJet continues to work closely with Airbus to ensure full visibility of the delivery schedule for
new aircraft. If there are material delays, appropriate mitigation is put in place; for example,
short-term wet lease arrangements are used to minimise any operational impact.
• easyJet operates a rigorous established aircraft maintenance programme. Maintenance schedules
are approved by the relevant regulatory body.
• easyJet regularly reviews the second-hand market and has several different options when looking
at fleet exit strategies. Sale and leaseback facilitate the exit of aircraft from the fleet by
transferring residual value risk and provide flexibility in managing the fleet size.
• easyJet has a firm orderbook agreed with Airbus and CFM, which guarantees continued access to
new fleet inventory up to FY29. This allows the airline to continuously replace older aircraft and
avoids a prolonged service life for aircraft in easyJet’s fleet.
Non-delivery of
strategic initiatives
Risk owner:
Chief Data and
Information Officer
Change in risk
Potential impacts
• Business benefits not realised
• Financial underperformance
• Inefficient use of resource
Mitigations
• Complex, large-scale programmes have been initiated and prioritised through the Portfolio
Planning process and are aligned to the corporate strategy.
• The Enterprise Project Management Office is in place to oversee delivery of projects and
Primary link to strategy
programmes, ensuring dependencies are managed across the portfolio.
• A project management framework, which sets out approval processes, governance requirements
and key ongoing processes and controls, is followed by all projects and programmes, and reviews
are undertaken to ensure continuous improvement in this approach.
• Each strategic initiative has an executive sponsor and a Leadership 50 lead assigned, as well as its
own steering group which provides oversight and challenge to the project, monitors progress
against programme objectives (including budget, benefit realisation and appropriate resource)
and ensures that decisions are made at the appropriate level.
• Key strategic initiatives are managed by dedicated programme management resource with the
right skills and behaviours, complemented by subject matter specialist resource where
appropriate.
• The executive sponsor provides routine updates to the AMB and can use this as an escalation
channel for any issue resolution.
• The Board also receives updates on key strategic initiatives including any risks or issues that
threaten achieving the key milestones that enable the achievement of the five-year plan.
• The Internal Audit function provides independent programme assurance over our most significant
initiatives, drawing on independent subject matter expertise where appropriate.
• The Enterprise Architect Review Board (EARB) provides independent programme assurance over
key technology and strategy decisions, drawing upon independent subject matter expertise
where appropriate.
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63
STRATEGIC REPORT RI SK (CONTINUED)
Key:
Increasing compared to 2021
Building Europe’s best network
Transforming revenue
Decreasing compared to 2021
Delivering ease and reliability
Driving our low-cost model
Stable
Asset efficiency and effectiveness (continued)
Airport infrastructure
Risk owner:
Chief Operating Officer
Change in risk
Primary link to strategy
Potential impacts
• Weakened customer proposition
• Customer welfare and safety incidents, particularly relating to passengers with restricted mobility
• Loss of market share
• Inefficient use of crew and aircraft
• Significant increase in costs
• Slot portfolio pressure in coordinated airports
• Loss of crew engagement
• Shortage of ground-handling staff (due to shortage of available recruits in the UK) could lead to
delayed performance of the schedule, leading to impact on crew hours and slot compliance
• Shortage of airport staff (PRM and security) risks poor passenger handling experience
Mitigations
• Where easyJet is affected by industrial action or other service interruption by a key supplier,
resources are deployed to manage this as effectively as possible.
• Sophisticated processes and systems to ensure slot transactions are made in an efficient and
effective manner.
• Effective cross-functional governance to ensure optimal business decisions are made.
• easyJet closely monitors airport capacity through a dedicated airport development team. The
team works with airports to ensure the development of appropriate capacity for easyJet in a cost
efficient and timely manner.
• easyJet’s Schedule Strategy team monitors slot portfolios at airports and assesses potential
growth opportunities that may arise.
• Managing aircraft gauge to improve our ability to grow.
• Recruitment of new staff has continued throughout summer and into winter to deliver required
headcount for summer.
• Multiskilling of existing staff to provide greater flexibility of existing ground staff.
Continuity of services
Risk owner:
Chief Operating Officer
Change in risk
Primary link to strategy
Potential impacts
• System unavailability for customers and/or staff
• Inability to access key buildings/facilities
• Adverse media coverage
• Unavailability of critical staff
• Reliance on inadequate supplier recovery plans
• Brand/reputation impact
• Operational disruption
Mitigations
• The four key areas of business resilience (IT and processes, people, premises and suppliers) all
form part of easyJet’s functional business and airport Business Continuity Plans.
• Critical IT systems are identified with ongoing efforts to match the business needs with recovery
capabilities. The risk of system unavailability is now mitigated further, thanks to the adoption of
the cloud and the select use of externally hosted systems, in addition to easyJet’s two
datacentres.
• Crisis Management Framework in place, ensuring all functions and departments understand their
roles and responsibilities in the event of an incident.
• Incident Management Teams are in place 24/7 to manage low level IT incidents. If there is a major
incident or an escalation of an incident that has a wider impact on other parts of the business and
stakeholders, then it can be escalated into the Crisis Management Framework via the Network
Duty Manager.
• Time-critical staff have been identified via Business Impact Assessments and Business Continuity
Plans, with regularly tested recovery desks allocated at alternate locations, should the usual place
of work be unavailable. An increased provision of laptops and tablets also enables greater mobility
and remote ways of working.
• Procurement processes include risk assessments aligned with business objectives. These require
relevant third parties to have their own Business Continuity/Disaster Recovery plans and we are
implementing a process to review a sample of these each year.
• Maintain close working relationships with key stakeholders including, but not limited to, airport
authorities and slot coordinators, lobbying where appropriate.
64 easyJet plc Annual Report and Accounts 2022
Legislative and regulatory landscape
Shareholder activism
Risk owner:
Chief Financial Officer
Change in risk
Primary link to strategy
Potential impacts
• Sustained adverse media coverage
• Share price movement
• Loss of colleague/customer trust
• Unable to execute strategy
• Inadequate votes to approve decisions recommended by the management team
Mitigations
• Active shareholder engagement programme.
• Regular engagement with easyGroup Holdings Limited alongside other major shareholders.
easyJet has two major shareholders (easyGroup Holdings Limited and Polys Holdings Limited)
which, as a concert party, control approximately 15.27% of its ordinary shares.
• Representatives from the Board and senior management take collective responsibility for
addressing issues arising from any activist approach adopted by the major shareholder. The
objective is to address issues when they arise and anticipate and plan for potential future activism.
• Quarterly meeting and roadshows of senior representatives from easyJet and our major
shareholders, attended by the Chief Financial Officer.
• Programme to monitor and understand our shareholder base.
Changing legal and
regulatory landscape
Risk owner:
Group General Counsel &
Company Secretary
Change in risk
Primary link to strategy
Potential impacts
• Sustained adverse media coverage
• Fines/regulatory sanctions
• Reduction in future revenue
• Operational disruption
• Loss of operating licence
• Significant spike in costs
• Share price movement
• Loss of colleague/customer trust
Mitigations
• Policies, procedures and mandatory training programmes.
• easyJet has an in-house team of legal and regulatory experts to advise on legal issues and
developments, and to assist the business in interpreting any formal regulatory requirements.
Where appropriate, this expertise is supplemented with specialist external support relevant to a
specific discipline or jurisdiction.
• Panel of external legal advisers, both in the UK and across all easyJet markets, are briefed to
proactively keep easyJet informed of any changes or new legislation and to assist easyJet in
developing appropriate responses to such legislation.
• easyJet influences future and existing policy and regulations which affect the airline industry
through several different channels, including working with relevant industry bodies.
• easyJet adapts to new legislation and regulation, where possible adapting existing processes (for
example, mandatory training programmes and clear policies and associated guidance).
Potential impacts
• Eventual loss of the brand licence
• easyJet does not own its company name or branding, which is licensed from easyGroup Ltd. The
licence includes certain minimum service levels that easyJet must meet to retain the right to use
the name and brand
• Cost of rebrand
• Reputational issues
Brand licence
Risk owner:
Group General Counsel &
Company Secretary
Change in risk
Primary link to strategy
Mitigations
• Training for new joiners and regular refresh with key teams (brand, marketing, legal, commercial
and operations).
• Quarterly meeting of senior representatives from easyJet and our brand licence holder, attended
by the Chief Financial Officer and the Group General Counsel & Company Secretary, to actively
manage brand-related issues as they arise.
• Monitoring and reporting against brand licence KPIs.
• easyJet makes contributions to the joint brand protection fund.
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65
STRATEGIC REPORT RI SK (CONTINUED)
Key:
Increasing compared to 2021
Building Europe’s best network
Transforming revenue
Decreasing compared to 2021
Delivering ease and reliability
Driving our low-cost model
Stable
People
Talent acquisition
and retention
Risk owner:
Group People Director
Change in risk
Potential impacts
• Sustained inability to deliver key strategic initiatives
• Loss of corporate knowledge
• Potential operational disruption and associated costs
Mitigations
• Creation of retention programme co-sponsored by HR Director, M&A and People Development
Primary link to strategy
• Projects making up the programme include:
and Reward Director.
• Leadership and Management Capability Development
• Talent Development Programme
• Inclusion and Diversity
• Employee Value Proposition
• Wellbeing Framework
• Recognition Principles
• Reward approach, including:
• guaranteed bonus for the Management and Administration (M&A) community in FY22 of at
least 5% of basic salary paid in two instalments
• M&A salary adjustment effective 1 July 2022 in response to cost-of-living pressures and
market adjustments given salary freeze within M&A over the past two years
• summer retention incentive for UK cabin crew
• launch of easyJet holidays employee benefit credit across the network.
• Hybrid working across our office-based communities that support new ways of working with the
right policies, processes and technology to improve the employee experience.
• Engagement survey across communities to gain insight on employee sentiment.
Industrial action
Risk owner:
Group People Director
Change in risk
Primary link to strategy
Potential impacts
• Sustained adverse media coverage
• Operational disruption
• Significant spike in costs
• Reduction in future revenue
• Share price movement
• Loss of colleague/customer trust
Mitigations
• easyJet seeks to maintain positive working relationships with all trade unions and other
representative bodies and has a framework in place for consulting and engaging with trade unions
and consultative bodies.
• In the event of industrial action or expected disruption, easyJet has processes to mitigate the
impact to our operations. The Operations department also has specific procedures to deal with
such events.
66 easyJet plc Annual Report and Accounts 2022
Environment and sustainability
Climate change
transition
Risk owner:
Chief Financial Officer
Change in risk
Primary link to strategy
Potential impacts
• Increased operational costs driven by regulation relating to the use of Sustainable Aviation Fuel,
withdrawal of free allowances under the ETS, fuel taxes, taxation of non-carbon GHG emissions
and other air travel-related charges
• Suppression of demand driven by changes in consumer preferences
• Increased compliance and reporting requirements
• Shareholder activism
• Adverse publicity and impact on our reputation/brand
• Climate change-related regulatory and legal challenge
Mitigations
• The inclusion in financial modelling and projections of the increased operational costs arising from
climate regulation.
• The pathway to net zero provides the framework for easyJet to mitigate the climate change
transition risk with the objective of achieving net zero carbon emissions by 2050.
• Contractually committed volumes of Sustainable Aviation Fuel to manage security of supply and
competitive pricing.
• Lobbying efforts with competent authorities in the EU and UK to ensure that policies intended to
catalyse decarbonisation of the industry do not disproportionately disadvantage short-haul and/or
low-cost carriers.
• Securing next generation Airbus A320neo and A321neo aircraft which are at least 15% more fuel
efficient than the previous generation CEO aircraft.
• Optimise fuel usage through operational and technological initiatives to reduce emissions and
hence the potential financial impact of carbon and/or GHG emissions, for example ensuring
optimised route planning and climb, descent and landing techniques to improve fuel efficiency.
• Collaborating with airlines and trade bodies to develop a lobbying strategy for the modernisation
of airspace across the easyJet network.
• Supporting and influencing, via partnerships with key industry players, research and development
of new zero carbon emission propulsion technologies.
• Exploring and supporting the scaling-up of nascent technologies, through partnering with
appropriate stakeholders, to maximise the likelihood of all decarbonisation levers being available at
scale, for example investing in Direct Air Carbon Capture and Storage (DACCS) to support
development and formal recognition of carbon removal through a partnership with Airbus.
• Ensuring easyJet has credible partnerships with relevant stakeholders that aim to develop
technologies and policies to support aviation’s path to net zero. For example, proactively
supporting and investing in relevant hydrogen aircraft development programmes such as with
Rolls-Royce, Airbus and others.
• Appropriate governance and cross-functional working to ensure the management of risks. For
instance, the Sustainability Communications forum and Environmental Policy Group meet regularly
to discuss and assess risk and mitigating actions.
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67
STRATEGIC REPORT RI SK (CONTINUED)
Key:
Increasing compared to 2021
Building Europe’s best network
Transforming revenue
Decreasing compared to 2021
Delivering ease and reliability
Driving our low-cost model
Stable
Technology and digital safety
Failure of critical
technology
Risk owner:
Chief Data and
Information Officer
Change in risk
Potential impacts
• Sustained adverse media coverage
• Reduction in future revenue
• Fines/regulatory sanctions
• Operational disruption
• Significant spike in costs
• Share price movement
Primary link to strategy
Mitigations
• Monitoring and alerting of availability of critical technologies and their inter-dependencies.
• Security logging and monitoring.
• Vulnerability scanning and penetration testing.
• IT Change Management Process embedded to assess risk of all changes to technology including
changes made by third-party providers.
• Critical technologies are either cloud-hosted, hosted across two data centres or at third-party
provider locations with necessary failover protocols and security perimeters in place.
• IT Major Incident Management team is in place to respond rapidly to any unforeseen critical
technology incidents with defined escalation and communication with the easyJet Crisis
Management Framework as required.
• IT Supplier Relationship Management process to ensure that critical third-party services and
associated risks are regularly reviewed and assessed.
• IT and Digital Safety Policies and Standards that set out the technical and organisational measures
for keeping our data and systems safe, available and performing.
• As an Operator of Essential Services under the Network and Information Systems regulation in the
UK, we have to comply with the requirements laid out in the Cyber Assessment Framework for
Aviation which focuses on critical systems availability.
Significant digital
safety event
Risk owner:
Group General Counsel &
Company Secretary
Change in risk
Primary link to strategy
Potential impacts
• Sustained adverse media coverage
• Fines/regulatory sanctions
• Third-party liability/class actions
• Reduction in future revenue
• Operational disruption
• Significant spike in costs
• Share price movement
• Loss of colleague/customer trust
Mitigations
• A data and cyber risk governance structure exists to regularly review the data and cyber risk
landscape and determine required action to take place to manage risk effectively.
• Dedicated Digital Safety team provides a level of assurance over third parties, proactively
monitors threats and responds to incidents.
• Employee education and awareness programme including a network of champions, online training
and awareness campaigns.
• External threat intelligence monitoring.
• Security logging and monitoring.
• Vulnerability scanning and penetration testing.
• Digital safety programme to enhance compliance and ensure data control and protection.
• Credit card data is protected through PCI DSS compliance as a Level 1 Merchant. This is
revalidated annually by an external body, to which we (and they) attest.
• Digital safety is discussed monthly at our AMB and quarterly at our plc Board. Additionally, as part
of our governance processes, the Digital Safety Board meets regularly to discuss matters related
to our cybersecurity.
68 easyJet plc Annual Report and Accounts 2022
Macro-economic and geopolitical
Competitive
environment
Risk owner:
Chief Commercial Officer
Change in risk
Primary link to strategy
Volatility in financial
markets
Risk owner:
Chief Financial Officer
Change in risk
Primary link to strategy
Potential impacts
• Permanent and/or temporary reduction in earnings due to loss of competitive advantage across
multiple and/or singular network points
• This is underpinned by:
• Loss of scale leadership
• Loss of constraint network position
• Loss of cost advantage
Mitigations
• Established competitor capacity monitoring systems and processes (short and long term).
• Visibility of airport infrastructure development plans.
• Monitor slot availability.
• Monitor and review competitor commercial pricing behaviour.
• Use data and ongoing surveys to monitor key drivers of customer and market behaviour.
• Monitor state aid conditions to ensure fairness in market.
• Reactive plans ready for key scenarios including explicit trigger points.
• Retain fleet flexibility.
• Cohesive lobbying strategy.
• Focus on unit cost to enable low fares.
• Product differentiation.
Potential impacts
• Insufficient cash to meet financial obligations as they fall due and/or the inability to fund the
business when needed, leading to insolvency.
• Significant increase in costs.
Mitigations
• The Finance Committee (a committee of the plc Board) oversees the Group’s treasury and
funding policies and activities.
• Treasury Policy sets out plc Board-approved strategies for market price risk management,
counter-party credit risk management and liquidity risk management. Monthly reporting on all
treasury activity including reporting on compliance.
• Maintaining a liquidity buffer supported by cash and undrawn facilities.
• Ability to access diverse sources of funding to support liquidity requirements.
• Rolling hedging programmes on jet fuel and foreign exchange market price exposure.
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69
STRATEGIC REPORT GO ING CONCERN AND VIAB ILITY S T ATE ME NT
Disclosure for Going Concern
and Viability Statement
Assessment of prospects
The Strategic Report on pages 1 to 49 sets
out the activities of the Group and the
factors likely to impact its future
development, performance and position.
The Financial Review on pages 50 to 58
sets out the financial position of the Group,
cash flows, liquidity position and borrowing
activity. The notes to the accounts include
the objectives, policies and procedures for
managing capital, financial risk
management objectives, details of financial
instruments and hedging activities, and
exposure to credit risk and liquidity risk.
In accordance with the requirements of the
2018 UK Corporate Governance Code, the
Directors have assessed the long-term
prospects of the Group, taking into
account its current position and a range of
internal and external factors, including the
principal risks. The Directors have
determined that a three-year period is an
appropriate timeframe for this viability
assessment. In concluding on a three-year
period, the Directors considered the
reliability of forecast information, the
duration and impact of Covid-19 and
longer-term management incentives.
As at
September 2022
Eurobonds
Revolving credit
facility
UKEF backed
facility
Available
funds
(drawn and
undrawn)
Maturity date
€500m
February
2023
October 2023 €500m
June 2025 €500m
March 2028 €1,200m
$400m
September
2025*
January 2026
$1,770m
* Option to extend to September 2027 at
lender’s consent
The assessment of the prospects of the
Group includes the following factors:
• The strategic plan – which takes into
consideration market conditions, future
commitments, cash flow, expected
impact of key risks, funding requirements
and maturity of existing financing
facilities.
• The fleet plan – the plan retains some
flexibility to adjust the size of the fleet
in response to opportunities or risks.
including the estimated financial impact
within the base case cash flow projections
of the future estimated price of ETS
permits, the phasing out of the free ETS
permits from 2024, the expected price and
quantity required of Sustainable Aviation
Fuel usage and fleet renewals.
The business is exposed to fluctuations in
fuel prices and foreign exchange rates.
easyJet is currently c.74% hedged for fuel
in H1 of FY23 at c.US$814 per metric tonne,
c.51% hedged for H2 FY23 at c.US$903 and
c.25% hedged for H1 FY24 at c.US$922.
In modelling the impact of severe but
plausible downside risks, the Directors have
considered demand suppression leading to
a reduction in ticket yield of 5% and
reduced capacity of 5% as well as
sensitivities on fuel price (increase of $100
per metric tonne), operational costs
(additional inflation assumed on all costs),
reoccurrence of additional disruption costs
(at year ended 30 September 2022 levels)
and delays in the delivery of strategic
revenue initiatives. These impacts have
been modelled across the whole going
concern period. In addition, this downside
model also includes a grounding of 25% of
the fleet for one month in the peak trading
month of August to cover the range of
severe but plausible risks that could result
in significant operational disruption. This
downside scenario resulted in a significant
reduction in liquidity but still maintained
sufficient headroom on external liquidity
requirements.
After reviewing the current liquidity
position, committed funding facilities, the
base case and severe but plausible
downside financial forecasts incorporating
the uncertainties described above, the
Directors have a reasonable expectation
that the Group has sufficient resources to
continue in operation for the foreseeable
future. For these reasons the Directors
continue to adopt the going concern basis
of accounting in preparing the Group’s
financial statements.
• Strength of the balance sheet and
unencumbered assets – this sustainable
strength gives us access to capital
markets.
• Risk assessment – see detailed risk
assessment on pages 59 to 69.
Stress testing
The corporate risk management framework
facilitates the identification, analysis, and
response to plausible risk, including
emerging risks as our business evolves, in
an increasingly volatile environment.
Through our corporate risk management
process, a robust assessment of the
principal risks facing the organisation has
been performed (see pages 59 to 69) and
the controls and mitigations identified.
Both individually and combined, these
potential risks are unlikely to require
significant additional management actions
to support the business to remain viable,
however, there could be actions that
management would deem necessary to
reduce the impact of the risks. The stress
testing scenarios identified show that
there is sufficient liquidity assuming the
refinancing of the existing bonds.
Going concern statement
In adopting the going concern basis for
preparing these financial statements, the
Directors have considered easyJet’s
business activities, together with factors
likely to affect its future development and
performance, as well as easyJet’s principal
risks and uncertainties through to June
2024.
As at 30 September 2022, easyJet has a
net debt position of £0.7 billion including
cash and cash equivalents and money
market deposits of £3.6 billion, with
unrestricted access to £4.7 billion of
liquidity and has retained ownership of 57%
of the total fleet with 41% being
unencumbered.
The Directors have reviewed the financial
forecasts and funding requirements with
consideration given to the potential impact
of severe but plausible downside risks.
easyJet has modelled a base case
representing management’s best
estimation of how the business plans to
perform over the period. The future impact
of climate change on the business has
been incorporated into strategic plans,
70 easyJet plc Annual Report and Accounts 2022
Viability Statement
Based on the assessment performed, the
Directors have a reasonable expectation
that the Company and the Group will be
able to continue in operation and meet all
liabilities as they fall due up to September
2025. In making this statement, the
Directors have made the following key
assumptions:
1. easyJet has access to a variety of
funding options including capital
markets, aircraft financing and bank or
government debt. The stress testing
demonstrates that the current funding,
with refinancing of the existing bonds,
would be sufficient to retain liquidity in
both the base and downside cases.
2. In assessing viability, it is assumed that
the detailed risk management process
as outlined on pages 59 to 69. captures
all plausible risks, and that in the event
that multiple risks occur, all available
actions to mitigate the impact to the
Group would be taken on a timely basis
and have the intended impact.
3. There is no prolonged grounding of a
substantial portion of the fleet greater
than included in the downside risk
scenario. This includes a grounding of
25% of the fleet for one month in the
peak trading month of August to cover
the range of severe but plausible risks
that could result in significant
operational disruption.
The key risks that are most likely to have a
significant impact on easyJet’s viability are
shown below along with how the risk has
been considered in the stress testing and
what actions are in place to mitigate
against the identified risk. The principal risks
have continued to be assessed for any
changes in the risk environment.
Risk theme
Impact on viability
Risks considered
Management action and Board considerations
Safety, security, and
operations
1. Significant safety or
security incident
costs. (1, 2)
• Operational disruption and increase of
• easyJet Safety Board meets monthly.
2. Pandemic
3. Significant operational
disruption
• Significant media coverage and/or partial
grounding of fleet leading to a reduction in
future revenue of up to 10%. (1,2)
Asset efficiency and
effectiveness
4. Single aircraft type
operation
5. Non-delivery of strategic
initiatives
6. Airport infrastructure
7. Continuity of services
• Fines/regulatory sanctions. (1)
• Increased EU261 compensation. (3)
• Scheduled reductions/cancellations or
partial grounding of fleet leading to a
reduction in revenue of up to 10%. (4,7)
• Inefficient use of resources leading to
financial underperformance. (5)
• Loss of market share due to increased
competitor capacity. (6,7)
• Significant increase in costs. (6)
• Operational disruption, modelled by a
downside risk scenario. (4,6,7)
Functional Safety Action Groups in place across
the business. (1,2)
• Hull and liability insurance in place. (1,2,3)
• A safety policy is published. (1,2)
• Biosecurity Standards Group in place. (2)
• Operational resilience actions. (3)
• Enterprise Project Management Office in place
to oversee delivery of projects. (5)
• Monitoring of airport capacity. (6)
• Introduction of A320neo aircraft. (4)
• Work closely with Airbus to retain some
flexibility in fleet planning. (4)
• Airport business continuity plans in place. (7)
Legislative and
regulatory
landscape
8. Brand licence
9. Changing landscape
10. Shareholder activism
• Loss of brand licence. (8)
• Sustained adverse media coverage leading
to reduction in revenue of up to 10%.
(8,10)
• Regular engagement with easyGroup holdings
and proactive management of brand-related
issues. (8)
• Compliance framework in place including
• Significant spike in operational costs. (9)
• Fines/regulatory sanctions. (9)
mandatory training. (9)
• Use of in-house and external legal advisers. (9)
• Active shareholder engagement programme.
(10)
People
11. Industrial action
12. Talent acquisition and
• Operational disruption leading to increased
costs and loss of revenue of up to 10%. (11)
• Positive and ongoing relationship with trade
unions and employee workforce. (11)
Environment and
sustainability
retention within the Group
• Sustained inability to deliver strategic
initiatives by up to 50%. (12)
• Regular employee surveys and action groups to
focus on wellbeing, talent and retention. (12)
• Creation of retention programme. (12)
• Hybrid working. (12)
13. Climate change transition
• Increased costs including ETS, SAF,
• Framework in place – the roadmap to net zero.
additional legal and technology costs and
increased cost of maintenance and
replacement of aircraft. (13 a,b,d)
• Reduction in revenue of up to 10% due to
customer demand. (13 c)
(13 a-d)
• Contracting for SAF volumes. (13 a)
• More fuel efficient A320 and A321neo aircraft.
(13 a)
• Investing in hydrogen aviation initiatives. (13 a)
a. future environmental
legislation and
technology
b. changes to carbon
trading scheme
c. changing consumer
demand
d. increased taxation
Technology and
digital safety
14. Failure of critical
technologies
• Loss of the website leading to reduction in
• Ongoing monitoring of critical technologies and
revenue of up to 10%. (14)
interdependencies. (14)
15. Significant digital safety
• Significant spike in costs relating to legal
• IT major incident management team in place.
event
and settlement costs. (15)
(15)
• Data and cyber risk governance structure exists
to regularly review data and risk. (15)
• Dedicated Information Security team. (15)
Macro-economic
and geopolitical
16. Competitive environment
17. Volatility in financial
markets
• Reduction in earnings and cash and/or
• Strategic planning to ensure flying schedules are
increase in costs due to loss of
competitive advantage. (16)
responsive to demand. (16)
• Competitor monitoring systems and processes
• Modelling excluding uncommitted funding.
in place. (16)
(16, 17)
• Fuel sensitivities to +$100 MT/tonne on
forecast levels, adverse foreign exchange
rate movement by 10% and fluctuating
carbon prices. Cost inflation estimates
increased up to 10%. (17)
• Consideration of various sensitivities and stress
testing to the forecast presented to the Board
on an ongoing basis. (16,17)
• Finance Committee oversees the Group
treasury and funding policies. (17)
• Liquidity buffer maintained. (16,17)
• Rolling hedging programme in place. (17)
easyJet.com
71
STRATEGIC REPORT C H AIRMAN’S STAT EMENT ON CORP ORA TE GOV E RNA NC E
CHAIRMAN’S STATEMENT ON
CORPORATE GOVERNANCE
Contents of the Corporate
Governance Report
Board and Airline
Management Board profiles
Our governance framework
Board activity in 2022
Board Committees and
activities during the year
Directors’ Report
74
82
86
94
122
An intense year has seen the Board focus on
navigating industry-wide challenges from Covid
recovery, while charting a strong longer-term
strategy, positioning easyJet to be an industry
winner in the years ahead.”
Stephen Hester
Chairman
Introduction
I am pleased to introduce this report which
describes the activities of your Board
during the year, along with our governance
arrangements.
This has been an important year for
easyJet and its Board. The first half saw
Covid-19 in full effect across Europe, with
many travel restrictions and associated lack
of flying. Resilience and financial strength
were the overriding priorities. Quicker than
many forecast, economies opened up in
the spring and, across the industry in
Europe, flying has returned very fast. The
industry- and economy-wide challenges of
managing the bounceback have been well
publicised. The Board has been intensely
focused on working with management to
navigate this as well as possible for
customers, employees and shareholders. At
the same time, a two-year global ‘hiatus’ for
Covid-19, with its associated existential
challenge for aviation, required a careful
re-engagement this year with questions of
easyJet’s strategic positioning going
forward. The Board spent considerable
time on this, reviewing our purpose and
strategic aspiration, the roadmap and tools
to achieve it and confirming our belief that
easyJet is well-positioned to be an industry
winner in the years ahead. All of these
considerations have been underpinned by
our commitment to the highest standards
of corporate governance and a range of
other vital initiatives, not least relating to
sustainability on which major steps forward
were also accomplished.
Activities in the year
Strategy and purpose
The Board allocated a significant amount
of time to reviewing the strategic priorities
in the year, undertaking an iterative
approach in order to explore the risks and
opportunities in detail and ensure that our
purpose and ambition were aligned. This
included in-depth discussions over the
course of several meetings on topics such
as growth, cost, revenue and customers.
As a result of this process, the Board
articulated the refreshed purpose
statement, ‘Making low-cost travel easy’,
and the targeted destination of being
‘Europe’s most loved airline – winning for
our customers, shareholders and people”.
Further information is set out on pages 4
to 7. The Board continues to keep the
strategy under review and will monitor how
the purpose and destination are delivered.
Fleet
At the same time as these strategic
discussions were taking place, the Board
reviewed the longer-term fleet
requirements. In June, we announced that
we had reached agreement with Airbus to
supply 56 A320neo aircraft for delivery
between FY26 and FY29 and to convert 18
A320neo aircraft for delivery between
FY24 and FY27 into the larger A321neo
aircraft. The transaction firmed up the
order book with Airbus and secured a
number of other benefits, continuing the
fleet refresh as older aircraft leave the
business. Although the transaction was
already envisaged when shareholders
approved the 2013 Airbus Agreement,
72
easyJet plc Annual Report and Accounts 2022
in view of its size, it was conditional on
shareholder approval. The Board believes
the aircraft purchase will support positive
returns for the business and the delivery of
our strategic objectives, and we were
pleased with the strong support shown by
shareholders in approving the transaction.
The Board continues to keep the fleet plan
under regular review.
Operational performance
Delivering a safe and reliable operation for
our customers is easyJet’s highest priority.
While there was positive news in January
with the decision by the UK government to
remove pre-departure testing, which saw a
step change in bookings, the increased
travel restrictions introduced across Europe
at the end of the first quarter in response
to the Omicron variant paused this
momentum. In spite of this, we reduced
our losses over the first half, and the
pent-up demand provided for a strong and
sustained recovery in trading from April
onwards.
Given the unprecedented ramp-up, the
aviation industry across Europe
experienced operational issues in the
second half, including staff shortages in
ground-handling and at airports, supply
chain issues and air traffic control delays.
The very tight labour market for the whole
ecosystem including crew, compounded by
increased ID check times, reduced planned
resilience further. This resulted in delays
and cancellations and two of our largest
airports, London Gatwick and Amsterdam
Schiphol, introduced flight caps. We took
decisive action in response, proactively
consolidating a number of flights across
affected airports and revising the schedule
to build additional resilience. The Board has
been mindful of the impact that this
disruption has had on all of our
stakeholders, including customers and our
own people. We were pleased that as a
result of the actions we took the operation
stabilised, with a majority of customers able
to rebook on alternative flights and CSAT
increasing among those travelling during
the summer. However, we also recognise
that all parties, including easyJet, must
aspire to do better in the coming year.
Sustainability and climate change
Sustainability, including the impact of
climate change, has featured heavily on the
Board agenda during the year. In 2019,
easyJet led the aviation industry in
launching its Sustainability Strategy and in
November 2021, we joined the Race to
Zero campaign through which we
committed to set an interim science-based
target to reach 35% carbon reduction by
2035, as well as reach net zero emissions
by 2050.
The Board reviewed sustainability matters,
including the pathway to net zero which is
explained in detail on pages 12 and 13, on
multiple occasions during the year prior to
its launch in September 2022.
People and culture
The Board is always keen to understand
and respond to the views, concerns and
challenges of our people. Last year the
Board took the opportunity to review the
approach to bringing the employee voice
into the boardroom, and our four Employee
Representative Directors regularly updated
the Board on their discussions. You can
read more about this on page 27.
Further details on the Board’s activity
during the year can be found on pages 86
to 87.
Board composition
The Nominations Committee keeps the
balance of skills, knowledge and experience
on the Board under regular review and is
mindful of the best practice requirements
under the UK Corporate Governance Code
2018 (the ‘Code’ or ‘2018 Code’). During the
year, the Nominations Committee
conducted a thorough search for three
new Non-Executive Directors, following
which Ryanne van der Eijk, Harald
Eisenächer and Dr Detlef Trefzger were
appointed to the Board with effect from
1 September 2022. They bring extensive
airline and travel industry experience to the
Board’s deliberations, with a focus on
operations and logistics, customer
experience, digital and data, combined with
a European outlook, as we are mindful that
50% of our activities are in continental
Europe.
Nick Leeder stepped down from the Board
on 30 September 2022, following his
relocation to Singapore. Andreas Bierwirth
and Julie Southern have decided not to
seek re-election at the Company’s next
Annual General Meeting; Andreas, in line
with corporate governance best practice,
having served for nearly nine years, and
Julie having been appointed Chair
designate at RWS Holdings plc. Further
details can be found on pages 94 to 96. As
noted in my introduction to the Annual
Report, we are grateful to Nick, Andreas
and Julie for their significant contributions.
The Board is in the process of recruiting a
new Senior Independent Director, and
expects to meet the increased best
practice guidelines for gender diversity
when this appointment is finalised. The
Board continues to meet best practice
guidelines for ethnic diversity.
All new Board members participate in a
comprehensive induction programme.
Information on the induction programme
can be found on page 91.
Board performance
The Board undertakes a formal evaluation
of its own performance, and that of its
Committees and individual Directors, every
year. The evaluation is externally facilitated
every three years in accordance with the
Code. As the 2021 Board evaluation was
undertaken externally, an internal
evaluation was undertaken during 2022.
I am pleased that the Board was found to
operate effectively. Details of the process
followed, the outcomes and the proposed
actions can be found on pages 92 to 93.
Stakeholders
The Board takes account of the impact of
its decisions on all our stakeholders, be
they customers, employees, suppliers,
shareholders, the communities we operate
in or regulators, while taking steps to
secure the Group’s longer-term success.
Details of how we have engaged with all
our stakeholders to understand their views
can be found on pages 26 to 29.
A statement on how the Directors have
had regard to the matters set out in
section 172 of the Companies Act 2006
can be found on page 27.
The following pages set out details of the
composition of our Board, its corporate
governance arrangements, processes and
activities during the year, as well as reports
from each of the Board’s Committees, and
I hope it provides a useful insight.
Stephen Hester
Chairman
easyJet.com
73
GOVERNANCE BOA RD OF DI RECT ORS
AN EXPERIENCED BOARD
N
A
N
R
S
Stephen Hester
Chairman
Julie Southern
Senior Independent Non-Executive
Director
Johan Lundgren
Chief Executive Officer
Nationality:
British
Appointed:
September 2021
Nationality:
British
Appointed:
August 2018
Nationality:
Swedish
Appointed:
December 2017
Contribution to the Board:
• Strategic and successful leader with more
than 35 years of wide-ranging business
experience, including significant experience
leading major international businesses in
regulated industries.
• Brings strong track record of value creation
and listed company experience to the Board.
Contribution to the Board:
• In-depth commercial and financial expertise
from a varied executive and non-executive
career, including in aviation.
Contribution to the Board:
• Proven experience in European travel
with more than 30 years’ experience in the
travel industry.
• Extensive experience in finance-oriented
• Experienced leader who is strategic yet
roles, making her ideally suited for her role as
Chair of the Audit Committee.
operationally focused, having designed and
implemented a number of easyJet’s key
strategic initiatives since his appointment,
including the relaunch of easyJet holidays,
our Sustainability Strategy and our pathway
to net zero emissions which demonstrates
his desire to lead the decarbonisation of
aviation.
Experience
Prior to joining easyJet, Johan was the
Group Deputy Chief Executive Officer and
Chief Executive Officer of Mainstream
Tourism at TUI AG. He was the Managing
Director for the Northern Region at TUI
Travel plc from 2007 until 2011. From 2003
until 2007, he was the Managing Director
and Chief Executive Officer of TUI Nordic.
Johan led MyTravel’s businesses out of
Canada and Sweden between 1999 and
2003, prior to which he was Managing
Director of Always Tour Operations from
1996.
Current external appointments
Senior Adviser, Blackstone (private equity
group).
Experience
Stephen served as a Chief Executive of
RSA Insurance Group plc from February
2014 to May 2021, and prior to this as Chief
Executive of Royal Bank of Scotland Group,
Chief Executive of British Land plc and
Chief Operating Officer of Abbey National
plc, as well as holding a number of senior
executive roles at Credit Suisse First Boston
in London and New York. He has also held
senior non-executive positions as deputy
chairman of Northern Rock and Senior
Independent Director of Centrica plc.
Stephen holds a BA (Hons) in Politics,
Philosophy and Economics from Oxford
University.
Current external appointments
Lead Independent Director of Kyndryl
Holdings, Inc. and Chairman of Nordea
Bank Abp.
Experience
Julie served as Chief Commercial Officer of
Virgin Atlantic Limited from 2010 to 2013,
and prior to this was Chief Financial Officer
of Virgin Atlantic Limited for 10 years. Julie
was previously Group Finance Director at
Porsche Cars Great Britain and Finance and
Operations Director at WH Smith – HJ
Chapman & Co. Ltd. She was previously a
Non-Executive Director of Stagecoach
Group plc, Gategroup AG, Cineworld plc
and DFS Furniture plc. Julie holds a BA
(Hons) in Economics from the University of
Cambridge and is a qualified chartered
accountant.
Current external appointments
Non-Executive Director and Chair
Designate of RWS Holdings plc, Non-
Executive Director and Chair of the Audit
Committees of Rentokil Initial plc, NXP
Semi-Conductors N.V., and Ocado Group
plc.
74
easyJet plc Annual Report and Accounts 2022
Board Committees key
Committee Chair
Audit Committee
Finance Committee
A
F
N
R
S
Nominations Committee
Remuneration Committee
Safety Committee
S
F
F
A
N
Kenton Jarvis
Chief Financial Officer
Dr Andreas Bierwirth
Independent Non-Executive Director
Catherine Bradley CBE
Independent Non-Executive Director
Nationality:
British
Appointed:
February 2021
Nationality:
German
Appointed:
July 2014
Nationality:
French and British
Appointed:
January 2020
Contribution to the Board:
• Brings extensive experience of the travel
and aviation sector to the Board having
held senior group and divisional finance
roles at TUI and Airtours Holidays.
Contribution to the Board:
• Brings a valuable European perspective to
Board deliberations.
• Active commercial pilot which, combined
with his experience as an executive at
Germanwings, means he brings considerable
airline experience to the Board and to his role
as Chair of the Safety Committee.
• Andreas is also one of the Board’s nominated
Employee Representative Directors.
Contribution to the Board:
• Extensive financial expertise gained across
senior finance roles in investment banking
and M&A over 33 years, along with an
in-depth understanding of corporate
governance and regulatory matters.
• Her experience in financial and capital
markets makes her ideally suited as Finance
Committee Chair.
• Catherine is also one of the Board’s
nominated Employee Representative
Directors.
Experience
Before joining easyJet, Kenton was
previously CEO of Aviation, and Business
Improvement Director – Markets, at TUI
Group, having held a number of senior
group and divisional finance roles at TUI
since 2003. Kenton holds a BSc (Hons) in
Biochemistry from the University of
Manchester. Before joining TUI, Kenton was
the Finance Director of Airtours Holidays
and held a number of commercial finance
roles at Adidas, prior to which he qualified
as a chartered accountant with PwC.
Current external appointments
None.
Experience
Andreas previously served as Chief
Executive Officer of Magenta Telekom
(formerly T-Mobile Austria), and as a
Director and Chief Commercial Officer at
Austrian Airlines AG. Andreas also served
as Vice President of Marketing at Deutsche
Lufthansa AG (Frankfurt) and Chairman of
the Supervisory Board at T-Mobile Polska
SA. Prior to this, Andreas was Deputy
Managing Director and later Managing
Director at Germanwings.
Current external appointments
Chief Retail Officer of Erste Group Bank AG
and Chairman of the Supervisory Board of
Do&Co AG.
Experience
Catherine began her career with Merrill Lynch
in the US and finished the executive phase of
her career as Head of Advisory Global
Markets with Societe Generale in Asia.
Catherine then served as a Non-Executive
Director of the UK Financial Conduct
Authority and Chair of its Audit Committee
from 2014 to July 2020, and of WS Atkins
plc from 2015 until its delisting in 2017.
Catherine was also a member of the
Supervisory Board and Chair of the Finance
and Audit Committee of Peugeot S.A. from
2016 to 2021. Catherine graduated from HEC
Paris with a major in Finance and International
Economics.
Current external appointments
Senior Independent Director of Kingfisher
plc. Non-Executive Director of Johnson
Electric Holdings Limited and a Non-
Executive Director of abrdn plc and Chair
of their Audit Committee.
easyJet.com
75
GOVERNANCE BOA RD OF DI RECT ORS (CONT INUE D)
Board Committees key
Committee Chair
Audit Committee
Finance Committee
A
F
Nominations Committee
Remuneration Committee
Safety Committee
N
R
S
S
F
R
R
N
Ryanne van der Eijk
Independent Non-Executive Director
Harald Eisenächer
Independent Non-Executive Director
Moni Mannings
Independent Non-Executive Director
Nationality:
Dutch
Appointed:
September 2022
Nationality:
German
Appointed:
September 2022
Nationality:
British
Appointed:
August 2020
Contribution to the Board:
• Brings in-depth airline and customer
services experience, along with a
valuable European perspective to
Board deliberations.
• Ryanne is one of the Board’s
nominated Employee Representative
Directors.
Contribution to the Board:
• Brings extensive travel and aviation
sector experience as well as a deep
knowledge of digital and data driven
businesses, combined with a European
outlook.
Contribution to the Board:
• Experienced non-executive who brings
extensive legal and corporate finance
experience to the Board.
• Deep knowledge of executive remuneration
as an experienced Remuneration Committee
Chair means she is well placed as Chair of
the Remuneration Committee.
• Moni is also one of the Board’s nominated
Employee Representative Directors.
Experience
Ryanne has extensive airline operations and
customer service experience, having had a
20-year career with KLM, her last role being
as Chief Experience Officer. Her previous
senior executive appointments also include
Chief Operating Officer for Dubai Airports
and Chief Experience Officer for Ras Al
Khaimah Economic Zone in the UAE.
Current external appointments
Chief Operating Officer of Mentaal Beter
and Chair of Advisory Board, Child
Protection Research Centre, UAE.
Experience
Harald brings significant experience of the
travel and aviation industry, having held
senior executive positions with Lufthansa
and Sabre Travel Network. He most
recently served as Chief Commercial
Officer for Infare, the leading provider of
competitor air travel data based in
Denmark. He has previously held senior
positions with Deutsche Telekom, eBay and
Hoechst and served as a non-executive
director of Groz-Beckert SE (2007 to 2021)
and Ifolor AG (2013 to 2019).
Current external appointments
Member of the Supervisory Board of Infare
A/S and Advisory Board of Solytic GmbH.
Experience
From 2000 until 2016, Moni was a Partner
and Head of the International Banking and
Finance Division of Olswang LLP, before
which she held senior positions with Dewey
& LeBoeuf LLP, Simmons & Simmons and
Clifford Chance LLP. Until 2017, Moni was
Chief Operating Officer of Aistemos Limited.
Moni has also held a number of non-
executive positions, including as a Board
member of the Solicitors Regulation
Authority (chairing its Equality, Diversity and
Inclusion Committee) and at Cranfield
University. Moni has also served as a
Non-Executive Director of Polypipe Group
plc (2014 to 2019), Dairy Crest Group plc
(2017 until their acquisition and delisting in
2019) and Breedon Group plc (2019 to 2021).
Current external appointments
Non-Executive Director of Hargreaves
Lansdown plc and Investec Bank plc,
Non-Executive Director and Chair of the
Remuneration Committee of Cazoo Group
Ltd.
76
easyJet plc Annual Report and Accounts 2022
A
F
R
A
S
Changes to the Board
during the year and up to
29 November 2022
• Ryanne van der Eijk, Harald Eisenächer
and Dr Detlef Trefzger were appointed
with effect from 1 September 2022.
• Nick Leeder stepped down on 30
September 2022.
David Robbie
Independent Non-Executive Director
Dr Detlef Trefzger
Independent Non-Executive Director
Nationality:
British
Appointed:
November 2020
Nationality:
German
Appointed:
September 2022
Contribution to the Board:
• Brings strong financial, risk
management and corporate finance
experience to the Board.
• His international and strategic outlook,
combined with over 20 years serving as
a director on FTSE boards, provides a
valuable perspective in Board and
Committee discussions.
Contribution to the Board:
• Brings recent and in-depth experience
of global logistics and commercial
strategy, along with a European
outlook.
• Broad experience of technology
enabled and data supported business
transformation.
Experience
Detlef brings significant transportation and
logistics experience, having served as Chief
Executive Officer of Kuehne + Nagel
International AG, the global transport and
logistics company based in Switzerland,
from March 2013 to July 2022. Prior to this
he held senior positions with DB Schenker
and Roland Berger.
Current external appointments
Non-Executive Director of Accelleron
Industries AG, Founder and Chair of Larix
Equity AG.
Experience
David was Finance Director of Rexam plc
from 2005 until 2016. Prior to his role at
Rexam, David served in senior finance roles
at Invensys plc before becoming Group
Finance Director at CMG plc in 2000 and
then Chief Financial Officer at Royal P&O
Nedlloyd N.V. in 2004. He served as interim
Chairman, Senior Independent Director and
Chair of the Audit Committee of FirstGroup
plc from 2018 to 2021, and Non-Executive
Director and Chair of the Audit Committee
for the BBC between 2006 and 2010.
David qualified as a chartered accountant
at KPMG and holds an MA in English
Literature from St. Andrew’s University.
Current external appointments
Senior Independent Director and Chair of
the Audit Committee at DS Smith plc.
easyJet.com
77
GOVERNANCE BOA RD OF DI RECT ORS (CONT INUE D)
Board composition
The Board continues
to meet best practice
guidelines for
independence and
ethnic diversity and
keeps the balance of
skill, knowledge and
experience on the
Board under regular
review.
Independence
Tenure
Chairman: 1
Executive: 2
Non-Executive Directors: 8
0-3 years: 8
3-6 years: 2
6-9 years: 1
Ethnicity
Gender
White: 10
Asian: 1
Male: 7
Female: 4
Skills and experience
Airline/Travel
Finance
Strategy
Safety/
Sustainability
Commercial/
Consumer
Digital/Marketing
Ex CEO/CFO
Stephen Hester
Johan Lundgren
Kenton Jarvis
Catherine Bradley CBE
Dr Andreas Bierwirth
Ryanne van der Eijk
Harald Eisenächer
Moni Mannings
David Robbie
Julie Southern
Dr Detlef Trefzger
78
easyJet plc Annual Report and Accounts 2022
A FOCUSED
MANAGEMENT TEAM
Ella Bennett
Group People Director
Robert Birge
Chief Customer & Marketing Officer
Stuart Birrell
Chief Data & Information Officer
Nationality:
British
Appointed:
May 2018
Nationality:
American
Appointed:
August 2022
Nationality:
British
Appointed:
November 2020
Key areas of expertise:
• People, reward and digital
transformation.
Key areas of expertise:
• Customer, marketing.
Key areas of expertise:
• Data and information technology.
Experience
Ella is a skilled Group HR Director with
strong experience in the UK and
internationally in lean and digital
transformation, large-scale change as well
as talent development and reward. Ella
joined easyJet from Sainsbury’s Argos,
where she led the integration of their
non-food business to create a multi-
product, multi-channel business with fast
delivery networks. Ella was also Group HR
Director at Home Retail Group, leading the
people aspects of Argos’ digital
transformation. Prior to this she was a
member of the executive management
team at Fujitsu. She holds a BA (Hons)
degree in English Literature from the
University of Bristol and Master’s degree
from the University of London.
Experience
Robert is a highly experienced consumer
marketing and general management leader
with a track record of driving growth,
building brands and leading winning teams
across ecommerce, travel, online apparel,
wireless and consumer goods for both
large companies and start-ups. Before
joining easyJet, Robert was Chief Growth
Officer at ASOS in a role that encompassed
marketing, end-to-end customer
experience, data insight and media
publishing, increasing revenue growth from
13% in 2019 to 21% in 2021. Previously
Robert spent six years as CMO at KAYAK,
establishing it as a leader in the travel
industry, leading to public listing. He was
also part of the original start-up team that
created US online travel agency Orbitz.
Experience
Stuart spent five years as Director and
Chief Information Officer at Heathrow
Airport Ltd before joining easyJet. He
previously held the role of CIO at Formula
1’s McLaren Technology Group where he
worked in the high-performance
environment building a team of in-house
experts and specialist suppliers. Prior to
that he spent three years at Gatwick
Airport where he successfully separated
the airport systems from BAA and brought
improvements to complex IT foundations
and transformation processes. Stuart brings
with him significant experience and
expertise in IT security, cloud-based
solutions, big data sets and technology to
support business expansion.
easyJet.com
79
GOVERNANCE AI R LIN E MANA GEMENT BO AR D
Maaike de Bie
Group General Counsel &
Company Secretary
Sophie Dekkers
Chief Commercial Officer
Thomas Haagensen
Group Markets Director
Nationality:
Dutch and British
Appointed:
June 2019
Nationality:
British
Appointed:
December 2020
Nationality:
Danish
Appointed:
May 2018
Key areas of expertise:
• Legal, compliance and regulatory.
Key areas of expertise:
• Aviation and strategy.
Key areas of expertise:
• Commercial and operations
management.
Experience
Maaike is an experienced international
lawyer with over 25 years’ practical
experience in a variety of sectors. Maaike
joined easyJet in June 2019 from Royal Mail
plc where she was Group General Counsel,
accountable for all legal, compliance, claims
management, security and information
governance matters. Prior to Royal Mail,
Maaike was a Legal Director and part of the
governance body of EY LLP. Maaike also
spent six years with General Electric, five
years as General Counsel for one of its
Capital companies in EMEA and then
promoted into the HQ office of GE Capital
in Europe to lead the improvement of
enterprise risk management and corporate
governance across EMEA. She has also
held senior international legal positions at
the European Bank for Reconstruction and
Development LLP in London and White &
Case LLP in New York. She obtained her
legal degrees in the Netherlands (in
Amsterdam) and Canada (McGill in
Montreal) and is qualified to practise as a
solicitor in both New York and the UK.
Maaike is also a trustee for Blueprint for
Better Business which is an independent
charity that helps business be inspired and
guided by a purpose that respects people
and contributes to a better society.
Experience
Before joining the Airline Management
Board, Sophie held the role of Customer
Director for easyJet. Prior to this she was
Director of Scheduling for the airline,
implementing systems and process
improvements. She has also led easyJet in
the UK as Country Director for five years,
where she was responsible for driving the
airline’s commercial success and strategic
direction in the UK as well as representing
aviation at both House of Lords and House
of Commons Select Committees. Previous
roles in the airline include Head of Change
Management and Customer Insight, with a
background in customer insight, working
with a range of brands from Jaguar Land
Rover to Mars, Unilever and Vodafone.
Sophie was also Non-Executive Director for
Airport Co-ordination Limited from 2017 to
2021 and sat on their Remuneration and
Nomination Committees. Sophie is
easyJet’s business lead on diversity and
inclusion, a qualified MindGym coach,
business mentor, and a founding member
of easyJet’s Women’s Network.
Experience
Thomas has over 20 years’ experience in
operations management built in a variety of
roles across Europe. Danish, born and
educated in Switzerland, Thomas began his
career with Tetra Pak, working his way up to
Regional Manager of the East Med where he
developed and succeeded in implementing
ambitious growth and profitability
improvement plans. Since joining easyJet in
2008 Thomas has significantly grown the
Swiss market, developed easyJet’s market
entry strategy for Germany and developed
the business traveller segment in Northern
Europe. Most recently he was appointed
Managing Director of easyJet Europe,
establishing the Company’s Austrian AOC, a
key part of its Brexit migration plan, and
managed the transition of 100 aircraft to
easyJet Europe. Thomas holds a degree in
Business Administration with a focus on
management and marketing from University
of Lausanne.
80 easyJet plc Annual Report and Accounts 2022
David Morgan
Chief Operating Officer
Garry Wilson
Chief Executive Officer, easyJet
holidays
Johan Lundgren
Chief Executive Officer
Nationality:
British
Appointed:
July 2022
Nationality:
British
Appointed:
November 2018
Key areas of expertise:
• Flight operations.
Key areas of expertise:
• Travel, business transformation and
global markets.
Experience
David joined easyJet in September 2016 as
the airline’s Chief Pilot, and in December
2017 took up the position of Director of
Flight Operations, taking responsibility for
the safe and efficient operation of the
airline’s flights across Europe. David
previously served as interim COO in 2019,
when he oversaw operations across the
airline and delivered significant
improvements in operational performance.
David and his operations team focus on
safe, efficient and sustainable operations in
an increasingly complex and challenging
environment. Prior to joining the airline
David was Chief Flight Operations Officer
at Wizz Air. His long career in aviation has
taken him around the world including
Australia and the Middle East. He is a
graduate of the Royal Military Academy,
Sandhurst.
Experience
Garry is a highly experienced commercial
leader with over 25 years’ experience in the
travel sector. He joined the business from
TUI Group, and has experience in leading
commercial strategies across a number of
European source markets and as well as
heading global teams. Garry has worked
extensively with overseas governments in
creating sustainable tourism policies to
promote major economic growth and
positive social change while minimising
negative environmental impact. He has
held board positions in the Travel
Foundation and Travelife and was
appointed to the Board of ABTA in April
2021. He holds a BCom (Hons) degree in
Business Management and Languages
from the University of Edinburgh.
See Board of Directors’ profiles on page 74.
Kenton Jarvis
Chief Financial Officer
See Board of Directors’ profiles on page 75
Changes to the Airline
Management Board during the
year and up to 29 November 2022:
• David Morgan was appointed interim
Chief Operating Officer on 1 July 2022,
replacing Peter Bellew, and was
subsequently made permanent COO.
• Robert Birge was appointed Chief
Customer & Marketing Officer on 15
August 2022.
easyJet.com
81
GOVERNANCE GO VERNANCE F RAMEWORK
GOVERNANCE FRAMEWORK
SHAREHOLDERS
CHAIRMAN
The Chairman is responsible for the leadership of the plc Board and for ensuring that it operates
effectively through productive debate and challenge.
THE BOARD
The Board is responsible for providing leadership to the Group. It does this by setting strategic priorities and overseeing their delivery in a way that is
aligned with easyJet’s culture and enables sustainable long-term growth, while maintaining a balanced approach to risk within a framework of effective
controls and taking into account the interests of a diverse range of stakeholders. The Board is also responsible for environmental, social and governance
matters. There are certain matters which are reserved for the Board’s decision.
Biographies on pages 74
Strategic priorities on pages 6
Engagement with stakeholders on pages 26
Activity in the year on pages 86
BOARD COMMITTEES
The terms of reference of each Committee are documented and agreed by the Board. The committees’ terms of reference are reviewed
annually and are available in the Governance section of easyJet’s corporate website at https://corporate.easyjet.com.
The key responsibilities of each Committee are set out below.
FINANCE
COMMITTEE
To review and monitor
the Group’s treasury
policies, treasury
operations and funding
activities, along with the
associated risks.
To provide approvals in
relation to fuel and
currency hedging,
swaps, letters of credit
and guarantees.
AUDIT
COMMITTEE
To monitor the integrity
of the Group’s financial
and narrative reporting,
and the adequacy and
effectiveness of the
systems for risk
management and
internal control.
To monitor the
effectiveness and
independence of the
internal and external
auditors.
SAFETY
COMMITTEE
To examine specific
safety issues as
requested by the Board
or any member of the
Committee.
To receive, examine and
monitor reports on
actions taken by
departments.
To review and monitor
the implementation of
easyJet’s annual safety
plan.
REMUNERATION
COMMITTEE
To set remuneration for all
Executive Directors, the
Chairman and the AMB,
including pension rights
and any compensation
payments.
To oversee remuneration
and workforce policies and
practices and take these
into account when setting
the policy for Directors’
remuneration.
NOMINATIONS
COMMITTEE
To evaluate the balance
of skills, knowledge,
experience and diversity
on the Board, and keep
the composition,
structure and size of the
Board and its
Committees under
regular review.
To provide succession
planning for senior
executives and the
Board, leading the
process for all Board
appointments.
To oversee the Board
elements of the Diversity
& Inclusion Policy and
monitor Group-wide
initiatives.
Committee
report on pages
94 to 96
Committee
report on page
97
Committee
report on pages
98 to 103
Committee
report on pages
104 to 105
Committee
report on pages
106 to 121
CHIEF EXECUTIVE
Responsible for the day-to-day running of the Group’s business and performance,
and the development and implementation of strategy.
AIRLINE MANAGEMENT BOARD (AMB)
Led by the Chief Executive, the AMB members are collectively responsible for driving the performance of the Group against strategic KPIs and managing
the allocation of central funds and capital.
82 easyJet plc Annual Report and Accounts 2022
thE board
Chairman – Stephen Hester
• Responsible for leadership of the Board and ensuring effectiveness in all aspects of its role.
• Responsible for setting the Board’s agenda and ensuring adequate time is available for discussion of all agenda items, including
strategic issues.
• Responsible for encouraging and facilitating active engagement by and between all Directors, ensuring a culture of openness
is maintained and drawing on each of their extensive skills, knowledge and experience.
• Ensures effective engagement between the Board, its shareholders and key stakeholders.
Chief Executive Officer – Johan Lundgren
• Responsible for recommending the Group’s strategy to the Board and for delivering the strategy once approved.
• Together with the Chief Financial Officer, monitors the Group’s operating and financial results and directs the day-to-day
business of the Group.
• Responsible for recruitment, leadership and development of the Group’s executive management team below Board level.
• Keeps the Chair and the Board appraised of important and strategic issues facing the Group.
Senior Independent Director – Julie Southern
• Acts as a sounding board for the Chairman and as an intermediary for the other Directors when necessary.
• Responsible for addressing shareholders’ concerns that have not been resolved through the normal channels of
communication with the Chairman, Chief Executive or Chief Financial Officer.
• Responsible for evaluating the performance of the Chairman in consultation with the other Non-Executive Directors.
Chief Financial Officer – Kenton Jarvis
• Supports the Chief Executive Officer in developing and implementing strategy.
• Provides financial leadership to the Group and alignment between the Group’s business and financial strategy, including
developing the Group’s annual budget prior to the formal agreement of the Board.
Non-Executive Directors
• Provide an external perspective, sound judgement and objectivity to the Board’s deliberations and decision making.
• Use their diverse range of skills and expertise to support and constructively challenge the Executive Directors, and monitor and
scrutinise the Group’s performance against agreed goals and objectives.
• Responsible for determining appropriate levels of executive remuneration, appointing and removing Executive Directors, and
succession planning through their membership of the Remuneration and Nominations Committees.
• Review the integrity of financial reporting and that financial controls and systems of risk management are robust.
Employee Representative Directors – Andreas Bierwirth, Catherine Bradley, Moni Mannings,
Ryanne van der Eijk
• Provide the mechanism for the Board to engage with the workforce in line with the Code.
• Responsible for meeting the Company’s European Works Council (EWC) and Management & Administration Consultative
Group (‘MACG’) at least once a year, and other works councils on a periodic basis, along with other informal engagement.
• Provide regular updates to the Board to ensure employee voice is clearly reflected in the boardroom.
Company Secretary – Maaike de Bie
• Supports and works closely with the Chairman, the Chief Executive Officer and the chairs of the Board committees in setting
agendas for meetings of the Board and its committees.
• Supports the provision of accurate, timely and clear information flows to and from the Board and the Board committees, and
between Directors and senior management in order to ensure that the Board has the information and resources it needs in
order to function effectively.
• Supports the Chairman in designing and delivering Directors’ induction programmes and the Board and Committee
performance evaluations.
• Advises the Board on corporate governance matters and Board procedures and is responsible for administering the Share
Dealing Code and the AGM.
easyJet.com
83
GOVERNANCE Further information on the way that
easyJet uses its resources to fulfil this
purpose and create sustainable value is set
out in our business model on page 8.
Our stakeholders
As set out in the Code, the Board
recognises the importance of identifying its
key stakeholders and understanding their
perspectives. Through regular dialogue and
communication, the Board is mindful of all
stakeholders when planning or making
decisions of strategic significance.
The Board has continued to utilise the
employee voice mechanism which was
reviewed in the previous financial year and
set out in the 2021 Annual Report. The four
Employee Representative Directors have
met individually with the Company’s
European Works Council (‘EWC’) and
Management & Administration Consultative
Group (‘MACG’) and other works councils
on a periodic basis, as well as informal
engagement where possible.
Details of engagement with our
stakeholders are set out on pages 26 to 29
and in the summary of the Board’s activity
in the year on pages 86 to 87.
An example of how the Board considered
stakeholders in its decision making is
described on page 85.
C ORPORATE GOVERNANCE REP ORT
our governance
Principles of the UK
Corporate Governance Code
1
2
3
4
5
Board leadership and
company purpose
84
Division of responsibilities
89
Composition, succession
and evaluation
Audit, risk and internal
control (Audit
Committee report)
Remuneration
(Remuneration
Committee report)
90
98
106
easyJet follows the principles of the 2018
Code which sets out the standards of good
practice in relation to how a company
should be directed and governed. The full
text of the Code is available at www.frc.
org.uk. The Board is pleased to confirm
that the Company has applied the
Principles of the Code and complied with all
the Provisions of the Code throughout the
year. Our compliance with key areas of the
Code is summarised in this section,
together with cross references, where
applicable, to the relevant sections of this
report where more information can be
found (together with the Directors’
Remuneration Report on pages 106 to 121
and the Directors’ Report on pages 122 to
125).
1 Board leadership and
company purpose
Role of the Board
The Board is collectively responsible for
promoting the long-term sustainable
success of the Group, generating value for
shareholders as a whole and contributing
to wider society by fulfilling its purpose. In
exercising this responsibility, the Board
takes into account all relevant stakeholders
including customers, employees, suppliers,
shareholders, the communities we operate
in, regulators and governments, and the
effect of the activities of the Group on the
environment. The Board provides effective
leadership by setting the strategic priorities
of the Group and overseeing
management’s execution of the strategy in
a way that enables sustainable long-term
growth, while maintaining a balanced
approach to risk within a framework of
prudent and effective controls. Our robust
governance framework is also instrumental
in ensuring our strategy is delivered
successfully. Our governance framework is
summarised on page 82.
Our purpose
During the year the Board allocated a
significant amount of time to review the
strategic priorities in the year along with
easyJet’s purpose and aspiration. As a
result of this process, the Board articulated
the refreshed purpose statement, “Making
low-cost travel easy”. Our refreshed
purpose explains why we exist and guides
our decision making. We want to make
low-cost travel a positive and hassle-free
experience and aim to provide simple,
convenient travel at a competitive price.
We seek to deliver this purpose through
our strategy, by leveraging the low-cost
airline business model and combining this
with network and service differentiation, as
well as introducing strategic objectives that
help us achieve our destination, which is to
be ‘Europe’s most loved airline – winning
for our customers, shareholders and
people’. Further information is set out on
pages 20 to 21.
84 easyJet plc Annual Report and Accounts 2022
case study: STAKEHOLDERS in decision making
Decision:
Aircraft Purchase: 56 Airbus A320neo family aircraft and
conversion of 18 A320neo family aircraft to 18 A321neo aircraft
with related CFM engine arrangements.
Stakeholders:
Investors, suppliers, customers, community.
Rationale:
The transaction sought to firm up easyJet’s order book with
Airbus through to 2028, continuing the Company’s fleet refresh
as the 156-seat A319s and older A320s (180 and 186-seat) were
leaving the business to be replaced with new A320 (186-seat)
and A321neo (235-seat) aircraft (‘Aircraft Purchase’). The Board
believed the Aircraft Purchase would support the delivery of
easyJet’s strategic objectives and help build strong shareholder
returns with the following rationale:
• Secured certainty of aircraft supply: Airbus delivery slots are
increasingly scarce, with no slots being available until 2027.
By securing delivery slots with the transaction, easyJet would
secure deliveries between FY26 and FY29 to replace aircraft
leaving the fleet.
• Maintains operational scale: The new aircraft will be used to
replace older aircraft as they reach the end of their useful life.
These aircraft will become economically unviable for our
high-intensity low-cost operation and will need replacement
if easyJet was to maintain the current scale of its business.
• Agreement: The new aircraft will be purchased under the
2013 Agreement, meaning the Company will continue to
benefit from the highly competitive pricing and flexibility
rights in this agreement. The aircraft are priced very
substantially below the Airbus list price, and benefit from
attractive price escalation protection. In addition, the Aircraft
Purchase continues to offer flexibility with respect to delivery
dates and the ability to convert A320neo aircraft to A321neo
aircraft.
• New generation technology: The new aircraft will deliver
between a 15% and 25% unit cost fuel-efficiency
improvement (depending on which aircraft they replace).
This will significantly reduce easyJet’s fuel costs and therefore
improve its overall cost base. It will also reduce the costs of
compliance with various environmental regulations. The costs
of carbon emissions will increase significantly over the next
few years, and increased fuel efficiency will lead to a
proportional reduction in carbon emissions.
• Increased aircraft gauge: The new aircraft will also facilitate
further up-gauging of the fleet, increasing the average seat
count per aircraft. This will result in further improvements in
cost efficiency, with the cost of each flight spread across a
greater number of passengers. The A321neo is a highly
cost-efficient aircraft, well suited to higher demand or longer
sector length parts of the Company’s network.
• Sustainability: The new aircraft are aligned with easyJet’s
Sustainability Strategy, with the adoption of the more
efficient new technology aircraft being a core component of
easyJet’s path to net zero emissions. Alongside this, the new
aircraft are significantly quieter, with half the noise footprint
of the older aircraft they are replacing.
Consideration of stakeholders and the factors
under s.172:
• The Board considered that the Aircraft Purchase was likely
to promote the success of the Company in the long term:
The Company’s ability to maintain desirable slots and sustain
its route network depends on the timely delivery of aircraft.
Given constraints on Airbus delivery slots, if the Aircraft
Purchase had not been completed, easyJet would not have
a secure supply of aircraft between FY26 and FY29 and
would therefore need to either decrease its fleet size or
source alternative new generation aircraft with higher
ownership costs. If easyJet had to source aircraft from the
secondary market, it would require easyJet to use older
technology, increasing exposure to fluctuating fuel prices
and carbon-related taxes and easyJet would be competitively
disadvantaged relative to the more modern fleets operated
by its competitors. easyJet would also be delayed in
achieving its sustainability and net zero emissions objectives.
Additionally, the Board considered the longer-term funding
requirements, noting that the Aircraft Purchase would be
financed over a number of years through a combination of
easyJet’s internal resources, cash flow, sale and leaseback
transactions and debt.
• The transaction also helped to foster the Company’s
business relationships with suppliers, customers and
others, and takes account of the Company’s impact on
communities and the environment: The Board noted that
customers would benefit from the Company investing in
new technology in order to maintain a reliable and efficient
fleet, helping to protect the cost base due to the new
aircraft delivering unit cost fuel efficiency improvements.
The reduction in fuel costs and costs of compliance with
various environmental regulations would therefore help
mitigate any increase to the cost base.
Additionally, the Board was mindful that the new aircraft are
aligned with its Sustainability Strategy, which customers and
investors are increasingly engaged with, and the adoption
of more efficient new technology aircraft was a core
component of the path to net zero emissions. Alongside
this, the new aircraft are significantly quieter than the
aircraft they replace.
The Board also considered that Airbus and CFM, as suppliers,
would have certainty from the transaction by having clarity
over the commitments under the remainder of the contract
with easyJet committing to aircraft and engine delivery slots.
They would therefore be able to undertake their own
strategic and long-term planning as a result.
• The transaction was conducted with an appropriate
governance framework, maintaining the Company’s
reputation for high standards of business conduct: A cross
functional working group was established to ensure the
transaction was undertaken with appropriate governance
and regulatory oversight and engaged its sponsor and legal
advisers to ensure they were appropriately advised.
• Shareholders were able to vote on the transaction: The
Aircraft Purchase constituted a Class 1 transaction under the
Listing Rules, and was therefore conditional on shareholder
approval at a general meeting. In advance of the general
meeting, the Company’s major shareholders were consulted
to ensure they had the opportunity to discuss the transaction
with management. All shareholders were also able to submit
questions on the transaction in advance of, and during, the
general meeting.
Outcome
The Board approved the transaction and put it to shareholders
for approval at a General Meeting held on 20 July 2022. The
transaction was subsequently approved with 99.95% of votes
received in favour.
easyJet.com
85
GOVERNANCE C ORPORATE GOVERNANCE REP ORT (CONTINU ED)
Our activity in the year
The Board meets regularly and held 11
scheduled meetings and two ad hoc
meetings during the year. Each Board
meeting follows a carefully tailored agenda
agreed in advance by the Chairman, Chief
Executive Officer and Company Secretary.
A typical meeting will comprise: an
Operations & Trading update, which
includes reports from the CEO and CFO,
updates on current trading and operations,
a safety update, and periodic investor
relations updates; a Strategic Matters
update which allows for ‘deep dives’ into
areas of particular strategic importance;
and a Governance update for matters
requiring review and approval. The Board
also receives regular reports from the
Chairs of the Safety, Nominations, Audit,
Finance and Remuneration Committees.
Some, but not all, of the main activities of
the Board during the year are highlighted
below.
The Board actively seeks engagement with
investors and major institutional
shareholders and shareholder
representative bodies. Understanding the
views of our shareholders, and acting fairly
between them, has been a priority for the
Board during the year. The Chairman, CEO
and CFO have updated the Board on the
opinions of investors regularly and the
views of shareholders and market
perceptions are also communicated to the
Board via presentations from the Director
of Investor Relations at least every quarter,
and engagement with the brokers and
other advisers.
Q1
November
December
Q2
January
February
March
Board activity
• Discussion of Board evaluation outcomes
• Budget
• Sustainability and net zero
• Full-year results
• Annual Report and Accounts, including principal
and emerging risks, risk appetite, going concern and viability
• Inflight retail relaunch update and approval of
related contracts
• Investor relations update
• Safety update: Summer 22 ramp-up
Stakeholder engagement
and section 172 considerations
• Investor engagement around full-year results and Annual
Report and Accounts, and with regulators and
governments
• Development of new inflight retail offering for customers
using different suppliers and operating model for crew,
with improved regionalisation for customers
• Discussions with safety regulators and governments
around post-pandemic ramp-up
• Review of the Board forward agenda to ensure appropriate
time allocated to Strategy, Customer, Brand, ESG, People
and Risk
• Strategy: deep dive on historical position
• Approval of Annual General Meeting matters including new
Restricted Share Plan proposal, Director re-elections, Notice
of Meeting
• Consideration of stakeholders and long-term strategic
priorities
• Assessment of resolutions to be put to the AGM in the
interests of the Company and investors
• Remuneration Committee consultation with investors
and voting bodies on remuneration arrangements and
proposed Restricted Share Plan
• Employee Representative Director (ERD) update
• Engagement by ERD with Employee Works Council in
France
Board activity
• Impact of Omicron
• Budget review
• Q1 Trading Statement
• Annual General Meeting
• Investor relations update
• Strategy: deep dives on growth and cost
• EMTN increase and refresh
• ERD update
Stakeholder engagement
and section 172 considerations
• Investor engagement around first quarter trading update
and pre-AGM
• Consideration of the impact of Omicron on customers,
employees and investors, and related actions
• Investor engagement around AGM
• Consideration of stakeholders and long-term strategic
priorities
• Engagement by ERD with Portuguese Works Council
• Current affairs update: Ukraine
• Sustainability and net zero
• Fleet plans
• Strategy: deep dives on revenue, customers and purpose/
ambition
• Approval of Tax Strategy
• Approval of Modern Slavery statement
• ERD update
• Consideration of impact of Ukraine situation relative to
the Company
• Discussion of longer-term strategy relating to customers
and purpose
• Consideration of multiple stakeholders in reviewing tax
strategy
• Consideration of employees and supply chain relating to
preventing Modern Slavery
• Engagement by ERDs with the UK’s M&A Consultative
Group (MACG) and Flight Operations Leadership team
86 easyJet plc Annual Report and Accounts 2022
Q3
April
May
Board activity
Stakeholder engagement
and section 172 considerations
• Review of trading update for six months ending 31 March
• Investor engagement around trading update and
2022
post-AGM matters
• Investor relations update
• People and industrial relations update
• Operations and disruption remedial actions: Summer 22
• Review of principal risks at half year
• Half-year results
• Fleet plans
• Strategy: summary, purpose articulation and forward look
• IT project updates
• Annual review of delegated authorities
• Post-AGM engagement with investors
• Investor engagement around half-year results and
AGM matters in relation to significant votes against
received (described further on page 88)
• Customer, investor, supplier and regulator/government
considerations around operational disruption
• Consideration of long-term strategy and purpose
June
• Fleet plans and approval of Airbus transaction including
• Consideration of stakeholders in approving the Aircraft
related General Meeting.
Purchase (described further on page 85).
• Operations and disruption remedial actions: Summer 22
• People and industrial relations update
• Customer, investor, supplier and regulator/government
considerations around operational disruption
Q4
July
August
Board activity
Stakeholder engagement
and section 172 considerations
• Investor relations update
• Review of easyJet holidays performance and strategy
• Strategy: alternative scenarios
• Sustainability and net zero
• General Meeting to approve Aircraft Purchase and
related investor engagement
• Consideration of long-term strategy in different
economic scenarios
• Discussion of stakeholders in context of net zero plans
• Strategy: alternative scenarios
• Sustainability and net zero
• Operations and disruption: Summer 22
• Board composition and balance of skills and experience,
including the appointment of new Non-Executive Directors
and related Committee changes
• ERD update
• Consideration of long-term strategy in different
economic scenarios
• Consideration of longer-term net zero plans and
stakeholder impact
• Customer, investor, supplier and regulator/government
considerations around operational disruption
• Engagement by ERD with Engineering & Maintenance
employees
September
• Board evaluation
• Sustainability and net zero
• FY23 Budget
• Investor engagement around third quarter trading
update
• Launch of net zero pathway and feedback from
stakeholders
easyJet.com
87
GOVERNANCE C ORPORATE GOVERNANCE REP ORT (CONTINU ED)
Our culture and values
easyJet has a unique culture, which is
open, positive and collaborative, and is
embodied as the ‘Orange Spirit’. The
Board seeks to ensure these values are
integrated into its decision making and
that the policies and procedures put in
place maintain this culture. Where
policies, practices or behaviour are not
aligned with the Company’s purpose,
values or strategy, the Board and
management seek to ensure that
appropriate action is taken.
Our culture is underpinned by the values
and behaviours we call ‘Our Promise’:
• Safety at our heart: Safety is our
number one priority. It runs through
everything we do and is everyone’s
responsibility.
• Always challenging cost: We’re always
challenging costs and strive to be
highly efficient in how we work. We
continually innovate, aim for simplicity
and invest where it matters the most.
We may not always be the lowest cost
but we always deliver the best value
for our customers.
• Making a positive difference: We’re
passionate about making a meaningful
difference for our planet, communities
and people. Sustainability is important
to us and we’re creating a positive
impact today and taking action to
pioneer a sustainable future for travel.
• Always warm and welcoming: We are
the warm and welcoming low-cost
airline. We strive to create a hassle-free
travel experience. We build trust with
our customers by being fair and
transparent and we consistently deliver
the friendly service we are known for.
• Living the Orange Spirit: We’re proud
easyJetters. We can be ourselves and
challenge the status quo so that we fly
high. We bring passion and energy,
working together to do the right thing
for our customers and each other.
How the Board monitors culture
The Board believes culture should be a
subject of continuous focus and not just
in the time of crisis. As well as aiming to
lead by example, it used a number of
methods to understand and monitor the
Company’s culture during the year:
• Employee engagement: The four
Employee Representative Directors
update the Board regularly on their
discussions and the key themes raised
in their meetings with employees.
Employee surveys carried out
throughout the year also help identify
key areas where employees feel that
the reality diverges from the stated
culture.
• External benchmarks: Such as
Glassdoor ratings.
• Compliance with policies and
procedures: With the assistance of its
Committees, the Board oversees the
effectiveness of a number of Company
policies in relation to Modern Slavery,
Digital Safety (including data
protection and cyber security), and
Inclusion and Diversity.
• Whistleblowing: The ‘Speak Up, Speak
Out’ (SUSO) whistleblowing
arrangements ensure that incidents
can be openly reported and areas of
concern addressed, monitored and
mitigated as required. The Audit
Committee regularly reviews reports
on the operation and efficacy of the
SUSO policy and updates the Board,
which considers incidents and their
outcome, on an anonymous basis, in
line with the Code. In the year
whistleblowing featured regularly on
the Board’s agenda through Audit
Committee updates reporting on
significant matters, which allowed the
Board to regularly review the
adequacy of the whistleblowing policy
in line with its requirement to do so
under the Code.
• Health and safety: easyJet has a
safety policy that promotes a ‘just
culture’ within the airline, to ensure that
any incidents are openly reported
without negative repercussions for
individuals. The Board’s Safety
Committee regularly reviews internal
and external safety incidents (including
near misses) and risks to ensure
appropriate mitigations are in place
and any trends identified, which are
then reported to the Board.
2022 Annual General Meeting
The Annual General Meeting (AGM) allows
shareholders the opportunity to
communicate directly with the Board.
Shareholders are given the opportunity to
raise issues formally at the AGM or
informally with Directors after the meeting.
All Directors attend the AGM where
possible and the Chairs of the Committees
are available to answer questions. The
Company’s 2022 AGM was held on 10
February 2022, and shareholders had the
opportunity to ask questions in advance of
the meeting or during the meeting, in
person and electronically.
All resolutions put to the meeting were
passed, however the Board noted that
Resolution 2 (Remuneration Policy),
Resolution 15 (Political Donations),
Resolution 16 (Authority to Allot Shares)
and Resolution 17 (Restricted Share Plan)
received less than 80% in favour. In
accordance with the Code, the Board
continued its engagement with
shareholders to discuss their concerns on
the resolutions. Engagement with
shareholders throughout the year was
carried out by the Chair and Committee
chairs where appropriate, as well as the
executive directors.
Resolutions 2 and 17
In advance of the AGM, the Remuneration
Committee undertook a thorough review
of remuneration arrangements, including
extensively consulting with major
shareholders and employee
representatives. As a result of that
consultation the Committee noted that the
majority of shareholders were supportive of
the revised Remuneration Policy, but also
reflected on the views of those
shareholders who had different
expectations on award levels, vesting
periods and underpins. Certain
amendments were made to the proposals
to reflect feedback. The Committee
concluded that on balance, replacing the
Long Term Incentive Plan with a Restricted
Share Plan and the structure proposed was
the best approach for the Company going
forward. While the Committee understood
the rationale for certain shareholders voting
against the resolutions, it contacted them
again following the AGM and offered
further engagement on the Company’s
approach to remuneration. The Board
continues to believe that the updated
Remuneration Policy not only supports
long-term strategic decision making and
helps retain and motivate management to
drive the performance of the business as
we continue to recover from the pandemic,
but also supports the longer-term
performance of the business including
delivering sustainable shareholder value.
Resolutions 15 and 16
Resolution 15 sought authority for the
Company to make political donations and
incur political expenditure. The definitions
of political donations and political
expenditure used in the Companies Act
2006 are very wide. In line with UK market
practice, the authority under Resolution 15
is therefore sought only as a precautionary
measure to ensure that easyJet and its
subsidiaries do not inadvertently breach the
relevant provisions of the legislation. The
Company does not make and does not
intend to make political donations or to
incur political expenditure. Resolution 16
sought a routine authority to allot shares in
accordance with the Investment
Association share capital management
guidelines. The Directors do not have any
present intention to exercise this authority,
however they consider it appropriate to
maintain the flexibility that this authority
provides.
88 easyJet plc Annual Report and Accounts 2022
Since the AGM we have engaged with
shareholders and provided the opportunity
for them to raise any issues concerning the
above resolutions. We are aware that some
institutional investors, including those
outside the UK, have policies that mean
they do not support allotment authorities
at the level sought at the AGM. We also
note that certain shareholders did not feel
they could support further allotment
authorities following the Company’s rights
issue. However we note that the level of
allotment authority continues to be
supported by the majority of our
shareholders and is in line with the
Investment Association’s share capital
management guidelines applicable to UK
listed companies.
A circular for the Company’s next AGM,
comprising a letter from the Chairman,
Notice of Meeting and explanatory notes
on the resolutions proposed, will be issued
separately at the appropriate time and will
also be published on easyJet’s corporate
website at https://corporate.easyjet.com/
investors.
2 Division of
responsibilities
Independence
The Board consists of 11 Directors – the
Chairman, two Executive Directors and
eight independent Non-Executive Directors.
Over half of our Board (excluding the
Chairman) are Independent Non-Executive
Directors and the composition of all Board
Committees complies with the Code.
Additionally, the Chairman was considered
independent on appointment. More
information about the Board members is
available on pages 74 to 77.
The independence of the Non-Executive
Directors is considered by the Board and
reviewed on an annual basis. The Board
considers factors such as length of tenure
and relationships or circumstances that are
likely to affect, or appear to affect, the
Directors’ judgement, in determining
whether they remain independent.
Non-Executive Directors do not participate
in any of the Group’s share option or bonus
schemes. The Non-Executive Directors
together with the Chairman meet regularly
without any Executive Directors being
present.
Following this year’s Board effectiveness
review, the Board concluded that all of the
Non-Executive Directors continue to remain
independent in character and judgement
and are free from any business or other
relationships that could materially affect
the exercise of their judgement. The Board
and Nominations Committee also review
Committee membership annually to ensure
that undue reliance is not placed on any
individual.
Roles
The Board has a formal schedule of
matters reserved for its decision. Certain
governance responsibilities have been
delegated by the Board to Board
Committees, to ensure that there is
independent oversight of internal control
and risk management and to assist the
Board with carrying out its responsibilities.
The Board Committees comprise
Independent Non-Executive Directors and,
in some cases, the Chairman. Each
individual Committee Chair reports to the
Board on matters discussed at Committee
meetings and highlights any significant
issue that requires Board attention. For a
summary of the roles of each Committee
see the governance framework on page
82. The matters reserved for the Board and
the terms of reference of the Board
Committees are available in the
Governance section of easyJet’s corporate
website at https://corporate.easyjet.com.
The roles of Chairman and Chief Executive
are set out in writing, clearly defined and
approved by the Board. These are also
available on easyJet’s corporate website at
https://corporate.easyjet.com.
Further information on each of the Board
members’ roles is set out on page 83.
Board attendance
A summary of the Board’s key activities
during the year is set out on pages 86 to
87. The Directors’ attendance at the Board
and Committee meetings held during the
year can be found on page 90. In addition
to the regular Board meetings, and to
provide opportunities for the Board to
engage with senior management to discuss
key elements of the business, a number of
Board dinners and lunches were held.
The core activities of the Board and its
Committees are covered in scheduled
meetings held during the year. Additional
ad hoc meetings are also held to consider
and decide matters outside of the
scheduled meetings. Non-Executive
Directors are encouraged to communicate
directly with each other and senior
management between Board meetings.
Directors are encouraged and invited to
attend all Board and Committee meetings,
but in certain circumstances meetings are
called at short notice and, due to prior
business commitments and time
differences, Directors may not always be
able to attend.
Even if a Director is unable to attend a
meeting because of exceptional
circumstances, they continue to receive
the papers in advance of the meeting and
have the opportunity to discuss with the
relevant Chair or the Company Secretary
any matters on the agenda which they
wish to raise. Feedback is provided to the
Directors not able to attend on the
decisions taken at the meeting.
In addition, and in line with the Code, the
Chairman holds meetings with the
Non-Executive Directors without the
Executive Directors present. There is a
standing agenda item at the end of each
Board meeting for the Non-Executive
Directors to meet without the Executive
Directors.
For further information regarding when
Board members joined or stepped down
from Committees during the financial year,
please refer to the ‘Committee changes’
sections in the relevant Committee reports
(pages 94 to 121).
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89
GOVERNANCE C ORPORATE GOVERNANCE REP ORT (CONTINU ED)
Meeting attendance
Number of meetings
Executive Directors
Johan Lundgren
Kenton Jarvis
Non-Executive
Directors
John Barton1
Stephen Hester
Catherine Bradley CBE
Dr Andreas Bierwirth4
Ryanne van der Eijk2
Harald Eisenächer2
Nick Leeder3,4
Moni Mannings5
David Robbie
Julie Southern
Dr Detlef Trefzger2
Notes:
Board
(scheduled)
Board
(ad hoc)
Audit
Finance
Nominations
Remuneration
Safety
11
11/11
11/11
1/1
11/11
11/11
11/11
1/1
1/1
11/11
11/11
11/11
11/11
1/1
2
2/2
2/2
–
2/2
2/2
0/2
–
–
1/2
2/2
2/2
2/2
–
5
–
–
–
–
5/5
–
–
–
–
–
5/5
5/5
1/1
5
–
–
–
–
5/5
4/5
–
1/1
–
–
5/5
–
–
6
–
–
1/1
6/6
6/6
–
–
–
5/6
1/1
–
6/6
–
6
–
–
–
–
–
–
–
–
–
6/6
6/6
6/6
–
4
–
–
–
–
–
4/4
–
–
4/4
–
–
4/4
–
1. John Barton stepped down from the Board on 1 December 2021.
2. Ryanne van der Eijk, Harald Eisenächer and Dr Detlef Trefzger were appointed to the Board on 1 September 2022.
3. Nick Leeder stepped down from the Board on 30 September 2022.
4. Absences were due to meetings being arranged at short notice or unavoidable prior commitments. Directors who are unable to attend meetings continue
to receive the papers in advance of the meeting and have the opportunity to discuss with the relevant Chair or the Company Secretary. Feedback is
provided on the decisions taken at the meeting.
5. Moni Mannings joined the Nominations Committee on 1 September 2022.
Time commitment and external
appointments
The expected time commitment of the
Chairman and Non-Executive Directors is
agreed and set out in writing in the Letter
of Appointment, standard terms and
conditions of which are available in the
Governance section of easyJet’s corporate
website at https://corporate.easyjet.com.
The Board has considered the individual
Directors’ attendance, their contribution,
and their external appointments, and is
satisfied that each of the Directors is able
to allocate sufficient time to the Group to
discharge his or her responsibilities
effectively. As evidenced by the
attendance table above, the attendance
remained high and demonstrates the
Directors’ ability to devote sufficient time to
their role.
Executive Directors and the AMB are
permitted to take up non-executive
positions on the Board of one other listed
company as long as this is not deemed to
interfere with the business of the Group.
In line with the Code, Directors are required
to seek Board approval prior to taking on
any additional significant external
appointments and the following were
approved during the year in line with this
requirement:
• Catherine Bradley’s appointment as a
Non-Executive Director of abrdn plc.
• Stephen Hester’s appointment to Nordea
Bank Abp and Kyndryl Holdings Inc.
• Julie Southern’s appointment as Chair
Designate of RWS Holdings plc.
Prior to these appointments, the Board
considered the time required, including
whether the role would impact the
Director’s ability to devote sufficient time to
their current role, and concluded that the
appointments would not interfere with their
roles with the Company.
The Board is comfortable that all Directors
continue to devote sufficient time to
discharge their duties, as can be seen in
the high attendance rates set out in the
table above.
Information and support
All members of the Board are supplied with
appropriate, clear and accurate information
in a timely manner covering matters which
are to be considered at forthcoming Board
or Committee meetings. The papers for
each meeting are made available via an
electronic Board portal along with
supporting and reference material at least
one week in advance of the meeting to
allow for sufficient time for detailed review
and consideration prior to the meetings.
The Company Secretary acts as the
Secretary of the Board and its committees
and attends all meetings. The Company
Secretary is responsible for advising the
Board on all governance matters and
ensuring that Board procedures are
complied with. Where Directors deem it
necessary to seek independent legal advice
about the performance of their duties with
the Group, they are entitled to do so at the
Group’s expense.
The Chairman and Chief Executive Officer
meet regularly to discuss the current
environment and its impact on the business
of the Company. The Chairman regularly
visits different bases across Europe and the
Board as a whole aims to visit the Group
operations at least annually to meet and
engage with the local team and to ensure
better understanding of the business.
3 Composition, succession
and evaluation
The Nominations Committee leads the
process for appointments to the Board and
ensures plans are in place for the orderly
succession to both Board and senior
management.
90 easyJet plc Annual Report and Accounts 2022
Appointments to the Board
The Board ensures that appointments are
made on merit against objective criteria to
ensure Non-Executive Directors can apply
their wider business skills, knowledge and
experience to the oversight of the Group,
and provide input and challenge in the
boardroom to assist in the development
and execution of the Board’s strategy.
Similarly, Executive Director appointments
are made to ensure the effective
formulation and implementation of the
Group’s strategy.
The Nominations Committee, on behalf of
the Board, reviews the skills of Board
members at least annually, identifying any
areas of skills, experience and knowledge
that can be strengthened further. Due
consideration is given to all aspects of
diversity, including gender, social and ethnic
backgrounds and personal strengths. All
Director appointments are made by the
Board and are subject to a formal, rigorous
and transparent process.
A number of changes to the composition
of the Board and its Committees were
made during the year. In making these
changes, the Nominations Committee and
Board took into account various
considerations including Board diversity,
independence and the combination of
skills, knowledge and experience of the
Directors:
• Harald Eisenächer was appointed to the
Board and as a member of the
Remuneration Committee with effect
from 1 September 2022.
• Ryanne van der Eijk was appointed to
the Board and as a member of Safety
Committee with effect from 1 September
2022.
• Dr Detlef Trefzger was appointed to the
Board and as a member of the Audit
Committee and Safety Committee with
effect from 1 September 2022.
• Moni Mannings became a member of
the Nominations Committee with effect
from 1 September 2022.
• Nick Leeder stepped down from the
Board on 30 September 2022 due to
his relocation to Singapore.
In addition to the above changes,
Andreas Bierwirth will not be seeking re-
election at the Company’s next AGM in
2023 after nearly nine years on the
Board and in line with corporate
governance best practice.
Julie Southern has also indicated she
will not be seeking re-election at the
Company’s next AGM following her
appointment as Chair Designate of
RWS Holdings plc. The Board has
therefore commenced the recruitment
process for a new Senior Independent
Director.
The activities of the Nominations
Committee, Board appointments and
induction, succession planning and a
description of the Board’s policy on
diversity, inclusion and wellbeing are set
out in the Nominations Committee
report on pages 94 to 96.
INDUCTION PROGRAMME 2022
Ryanne van der Eijk, Harald Eisenächer and Dr Detlef Trefzger,
who were appointed during the year, are following a tailored
induction programme covering a range of key areas of the
business, a sample of which is given below. They were given a
Board induction pack containing Company and Board
information to assist with building an understanding of the
nature of the Group, its business, markets and people, and to
provide an understanding of the Group’s main relationships. The
pack included information to help facilitate a thorough
understanding of the role of a Director and the framework
within which the Board operates. In addition, they are meeting
with key colleagues across the business to better understand
the areas of the business.
• Meeting with the Chief Information Security Officer to discuss
cyber risk and the digital safety programme.
Finance and audit
• Attended briefing sessions on easyJet’s trading performance,
budget, cash burn, liquidity forecast, cost efficiency
programme and financial controls with the Director of
Financial Planning & Analysis.
• Attended a briefing session with the Director of Risk &
Assurance to understand easyJet’s risk management
framework and internal audit structure.
• Met with the Chair of the Audit Committee to understand
the role of the Committee.
Safety and operations
• Attended a session hosted by the Director of Safety, Security
Board and senior management
• Met separately with the Chairman and Senior Independent
& Compliance which included briefings on the regulatory
framework, safety management system, AOC structures,
safety governance, compliance monitoring and current risks
and priorities.
• Met with the Interim Chief Operating Officer to discuss the
Summer 22 readiness programme framework.
Director to understand the role of the Board and the
individual contribution required.
• Met separately with the Chief Executive Officer and other key
members of the Airline Management Board, including the
Chief Financial Officer, Chief Commercial Officer, Group
Markets Director and Chief Data & Information Officer.
Governance, legal and remuneration
• Attended a briefing session with the Group People Director
and Director of Reward to discuss easyJet’s approach to
reward and our remuneration policy.
• Attended a briefing session with the Group People Director
to discuss easyJet’s five-year People Strategy, our inclusion
and wellness strategy and industrial relations landscape.
• Meeting with the Chair of the Remuneration Committee to
understand the remuneration framework and received a brief
introduction to the work of the Remuneration Committee.
• Meeting with the Group General Counsel & Company
Secretary to discuss and understand the Board and
Committee procedures, compliance with the Market Abuse
Regulations, legal risk, and EU261 amongst other matters.
Business and functions
• Met with the Director of Sustainability to understand the
Sustainability Strategy and the net zero roadmap.
• Met with the Director of Treasury to understand easyJet’s
capital structure and funding obligations.
• Met with the Strategy Director to gain a deeper
understanding of easyJet’s five-year plan and fleet overview.
• Met with the Director of Investor Relations to understand
relationships with major shareholders and the market
environment.
• Met with the Company’s brokers to understand easyJet from
a market and brokers’ perspective.
• Met with the Director of Government Affairs to understand
policy positions and lobbying activity.
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91
GOVERNANCE C ORPORATE GOVERNANCE REP ORT (CONTINU ED)
Election and re-election
All Board appointments are subject to
continued satisfactory performance
following the Board’s annual effectiveness
review. The Company’s Articles of
Association require the Directors to submit
themselves for election or re-election by
shareholders at every AGM. All continuing
Executive and Non-Executive Directors will
stand for election or re-election at the
Company’s next AGM.
Training and development
Directors’ training and development needs
are of key importance in order to discharge
their duties effectively. Directors are
encouraged to highlight specific areas
where they feel their skills or knowledge
would benefit from further development as
part of the annual Board evaluation
process. Training opportunities are
provided through internal meetings,
workshops, presentations and briefings by
internal advisers and business heads, as
well as external advisers.
Our Directors also receive training on their
duties (including under section 172(1) of the
Companies Act) as part of their induction
and annually to ensure they are aware of
their duties to promote the long-term
success of the Company for the benefit of
its key stakeholders.
2021 findings and actions
In addition, they also receive training on the
UK Market Abuse Regulation and the rules
around identifying, managing and
disclosure of inside information and
Directors’ shareholdings.
On joining the Board, all newly appointed
Directors receive a full, formal and tailored
induction, which is organised by the
Company Secretary. The induction
programme covers a range of key areas of
the business including, amongst other
things, the business and functions of the
Group, their legal and regulatory
responsibilities as Directors, briefings and
presentations from relevant executives, and
opportunities to visit and experience
easyJet’s business operations. Further
details are set out on page 91.
Conflicts of interests
Directors have a statutory duty to avoid
situations in which they have, or may
have, interests that conflict with those of
easyJet, unless that conflict is first
authorised by the Board. The Company
has in place procedures for managing
conflicts of interest. The Company’s
Articles of Association also contain
provisions to allow the Directors to
authorise potential conflicts of interest
so that a Director is not in breach of his
or her duty under company law.
Should a Director become aware that he or
she has an interest, directly or indirectly, in
an existing or proposed transaction with
easyJet, they should notify the Board in line
with the Company’s Articles of Association.
If a conflict does arise, the Director is
excluded from discussions. Directors have a
continuing duty to update any changes to
their conflicts of interest.
Board evaluation
In line with the Code, the Board undertakes
a rigorous annual evaluation of the
performance of the Board, its Committees,
the Chairman and individual Directors. The
evaluation aims to identify the Board’s
strengths and any opportunities for
improvement, as well as highlighting any
training and development needs.
2021 Board evaluation
The Board follows a formal three-year
cycle for an externally facilitated annual
evaluation. The 2021 evaluation was
externally facilitated by Manchester Square
Partners following the process set out in
last year’s Annual Report. The evaluation
identified a number of focus areas which
the Board addressed during 2022 which
are set out below.
Areas
Actions
Exploring opportunities to allow more open-ended discussions
and collaboration on strategic matters.
The Board forward agendas were reviewed to ensure that
regular, structured and iterative strategy discussions took place
throughout the year, including more days dedicated to
discussing strategic matters.
Increasing time spent together, formally and informally, to
continue to build relationships with newer members of the Board
and management, and review the evolution of the Board over
time.
With the lifting of many of the pandemic restrictions, the Board
has been able to hold a number of in-person meetings. Regular
NED-only sessions continue to be held, including dinners, to help
build relationships amongst Board members.
The Directors also met management for lunches and dinners to
facilitate informal time together. Key members of the
management such as the Chief Operating Officer and Chief
Commercial Officer regularly attend Board meetings to discuss
operations and trading matters. Other members of the AMB
also present to the Board on their specific areas at periodic
intervals.
Rebalancing the Board forward agenda, with a return to a more
normal forward-looking and strategic agenda incorporating
forward-looking matters, including strategy; stakeholders;
sustainability; brand and marketing; talent, succession, culture,
diversity and inclusion.
The Board forward agendas were reviewed to ensure all
appropriate areas were covered at the right time in the year,
with input sought from all Board members. The forward agenda
is kept regularly updated and the Board’s activities in the year,
including around risk, can be found on pages 86 to 87.
Enhancing discussions around risk and risk appetite as the Board
looks to the post-pandemic recovery phase.
Reviewing the remit and membership of the Board’s Committees
to ensure the Board is focused on value add.
Continued focus on Board composition and succession, with a
view to enhancing European and aviation experience on the
Board.
The membership of the Committees has evolved in line with the
changes made to the composition of the Board. Further work is
underway to review the remit of the Committees.
The Nominations Committee continues to keep the
composition, skills and experience of the Board under review,
and execute against succession plans, as can be seen in the
appointment of Ryanne van der Eijk, Harald Eisenächer and Dr
Detlef Trefzger.
92 easyJet plc Annual Report and Accounts 2022
2022 Board evaluation
The 2022 performance evaluation was undertaken by the Nominations Committee and, in relation to the Chair’s performance, the Senior
Independent Director. The review extended to all aspects of Board and Committee performance, including: composition and dynamics,
the Chair’s leadership, agenda and focus, time management, strategic oversight, overview of risk, succession planning and priorities for
change. The evaluation process undertaken is explained below.
PREPARATION
• Questionnaires for the Board and its Committees were developed by the Company Secretary in
consultation with the Chair and Senior Independent Director.
COMPLETION OF
QUESTIONNAIRES
• Questionnaires were completed by the Board with answers provided on the following themes:
• Board effectiveness
• Link between the Board and business
• Strategic oversight
• Stakeholders
• Information flow
• Individual performance
• Committee strengths and weaknesses
COLLATION OF
RESPONSES &
INDIVIDUAL
DISCUSSIONS
• The Senior Independent Director spoke to each Director individually to discuss their feedback
on the Chair and more generally.
• Responses to the questionnaires were collated by the Company Secretary who prepared
anonymised summaries.
BOARD DISCUSSION
• The findings were discussed at the Board and actions agreed for implementation and
monitoring.
2022 findings and actions
The evaluation concluded that the Board continued to operate effectively, with the Board‘s deliberations, number and length of
meetings, information presented by management, and the composition of the Board all rated positively. The iterative deep dives on the
strategy had been well received, and the transition to a new Chair had been well managed. The relationships between Board members
were also viewed positively. The key focus areas identified are set out below.
Areas
Actions to be taken
Continued focus on succession planning throughout
the business.
Refinement of the Board forward agenda, with deep
dives on customer experience, people and culture.
Reviewing the remit and membership of the Board’s
Committees.
Allowing sufficient time together, formally and
informally, to continue to build relationships with
newer members of the Board and management.
The Nominations Committee and Board will continue to review succession
planning and talent pipelines for the AMB and their functions, along with
keeping the composition of the Board under review. A deep dive will be
added to the Board agenda.
The Board forward agenda will be designed to ensure all areas identified are
covered at the right time in the Board calendar, with input sought from
management and all Board members on any additional topics.
Work is underway to review the work of the Committees, their terms of
reference, and composition following the changes to the composition of the
Board.
The Board has been able to meet regularly in person and will continue to do
so in the coming year. Meetings are planned to be held around the easyJet
network, including in Milan, and opportunities provided to experience other
parts of the business. Regular NED-only sessions will be held, including
dinners, to help build relationships amongst Board members, which is
particularly important given the new members.
Members of the AMB attend Board meetings for specific updates, and
opportunities will be identified for the Board to meet a wider group of senior
management and key talent during the year.
Review of the Chairman’s performance
The evaluation of the Chair was led by the Senior Independent Director, who gathered performance feedback through separate meetings
with each of the Non-Executive Directors, with supplementary views from the Executive Directors. The findings confirmed that Stephen
Hester had been successful in his first year as Chair and the focus on the iterative strategy process had been well received. He also
encouraged collegiate discussion, his chairmanship of Board meetings was effective, and he continues to devote sufficient time to the role.
easyJet.com
93
GOVERNANCE C ORPORATE GOVERNANCE REP ORT (CONTINU ED)
Board committees
NOMINATIONS COMMITTEE REPORT
The Committee facilitated effective
succession planning and the
development of a diverse and
effective Board in the year.”
Stephen Hester
Chair of the Nominations Committee
I am pleased to present an overview of the
Nominations Committee’s activities during
the year. The main purpose of the
Committee is to ensure plans are in place
for orderly succession of Board and senior
management positions while maintaining
an appropriate balance of skills, experience,
independence and diversity. The
Committee regularly reviews the structure,
size and composition of the Board and
makes recommendation to the Board with
regard to any changes.
During the year the Committee led the
process to identify three new Non-
Executive Directors for appointment to the
Board and undertook an internal evaluation
of the Board’s performance following the
external review carried out in the prior year.
The Committee also reviewed the
Company’s talent and succession plans for
the executive management and FY22
talent development and retention
strategies. Further details are set out in this
report.
Stephen Hester
Chair of the Nominations Committee
Key activities during the year
Non-Executive Director
appointments
The Committee is responsible for the
orderly succession of both the Board and
senior management positions and oversees
the development of a diverse pipeline for
succession. It is also responsible for
maintaining a formal, rigorous and
transparent procedure for Board
appointments based on merit and objective
criteria. As part of this responsibility, the
Committee identifies and nominates
candidates for approval by the Board. The
Committee also considers the succession
plans for the Board as well as senior
management below the Board level.
As the longer-serving members of the
Board have stepped down in recent years,
and the composition of the Board has
evolved, the Committee has been
executing its succession plans and
identifying suitable candidates for
appointment to the Board to maintain an
appropriate balance of skills and
experience.
During the year, and in anticipation of Dr
Andreas Bierwirth reaching nine years of
service in 2023, the Committee reviewed
the current composition of the Board and
identified the skills and experience it would
like to enhance on the Board, specifically
candidates with a European outlook and
airline experience. The Committee engaged
search consultants Egon Zehnder (EZ) to
help define the role profile and identify
suitable candidates and the appointment
Membership, meetings
and attendance
• Stephen Hester (Chair)
(from 1 December 2021)
• John Barton (Chair)
(until 1 December 2021)
• Julie Southern
• Catherine Bradley CBE
• Nick Leeder (until 30 September
2022)
• Moni Mannings (from 1 September
2022)
The Committee consists of the Chair
of the Board and the Independent
Non-Executive Directors listed above.
All members of the Committee are
Independent Non-Executive
Directors. Member biographies can
be found on pages 74 to 77.
The Chairman of the Board acts as
Chair of the Committee with
members of the executive
management invited to attend
meetings. The Company Secretary
acts as Secretary to the Committee.
The Committee met six times in the
year. Meeting attendance can be
found in the table on page 90.
The Committee’s terms of
reference can be found on
the Company’s website at
https://corporate.easyjet.com
94 easyJet plc Annual Report and Accounts 2022
process is described in more detail below.
EZ are signatories to the Code of Conduct
for Executive Search Firms. EZ do not have
any other connection with the Company
nor individual Directors, except where they
may have liaised with them as prospective
candidates for other board positions. The
strength of the shortlist identified allowed
the Committee to recommend three of the
candidates for appointment by the Board,
being Ryanne van der Eijk, Harald
Eisenächer and Dr Detlef Trefzger.
With Nick Leeder stepping down at the end
of September 2022 and Andreas Bierwirth
and Julie Southern indicating that they
would not seek re-election at the next
AGM, the Committee felt that the
appointment of three new Non-Executive
Directors suitably rebalanced the Board.
Non-Executive Director
appointment process
• Independent search consultants EZ
engaged to develop the role profile
and identify suitable candidates for a
longlist.
• EZ canvassed the view of the Board to
refine the desired skills and experience
in the new Non-Executive Directors.
• EZ compiled a longlist of candidates
for review by the Committee.
• The Committee discussed the longlist
and considered the balance of skills,
knowledge, independence, diversity
and experience of the Board, together
with an assessment of the time
commitment expected, and created a
shortlist.
• Interviews were held between
candidates and Board members, the
Group People Director and Group
General Counsel & Company Secretary.
• The Committee discussed the shortlist
and Ryanne van der Eijk, Harald
Eisenächer and Dr Detlef Trefzger
were identified as leading candidates
who would strengthen the Board with
diverse mix of skills and experience.
• The appointments were recommended
to and approved by the Board.
Biographical details of the new Non-
Executive Directors are set out on pages 76
to 77 and details of their induction
programme are set out on page 91.
Board Committee membership
Following the changes to the Board during
the year and to ensure that the Board
Committees retain the correct balance of
skills and experience, the Committee
reviewed the overall composition and
membership of each of the Board
committees. As a result, a number of
changes to the membership of Board
committees were recommended to and
approved by the Board with effect from 1
September 2022:
• Harald Eisenächer joined the
Remuneration Committee and
Finance Committee.
• Dr Detlef Trefzger joined the Audit
Committee and Safety Committee.
• Ryanne van der Eijk joined the Safety
Committee and became one of the
Board’s Employee Representative
Directors (ERD). Ryanne was felt to be
an appropriate candidate for being an
ERD due to her previous experience
within an airline and her European
location.
• Moni Mannings joined the
Nominations Committee.
The Committee is reviewing the changes
that need to be made to the Committees
when Julie Southern and Andreas Bierwirth
stand down in 2023.
Talent and succession planning
The Board continues to review plans for
the orderly succession for appointments to
the Board so that the right balance of
appropriate skills and experience is
represented, building on the work
previously undertaken. During the year, the
Committee reviewed the balance of skills,
experience, diversity and independence of
Board members to ensure appropriate
succession plans were in place.
The Committee also recognises that
building a broader talent pipeline for
executive succession, the AMB and the
Executive Leadership Team (ELT) is a key
priority to lead the growth of easyJet’s
business. During the year, the Committee
reviewed the Group’s senior management
talent pipeline and succession plans, as well
as the Talent and Development framework.
With higher attrition rates, a challenging
recruitment market, and a number of
internal promotions, it was noted that
further work was required to address
succession planning for senior
management and would be a priority.
In the succession planning process, each
leadership team role, along with other
critical roles, is evaluated against whether
there are successors ready now, in the
short term or medium term, as well as
whether emergency successors for those
roles have been identified. For those
identified as successors, we carry out a
targeted development assessment and
planning process where we identify
strengths and skills gaps. We use the
information from this to help create
effective development plans.
Election and re-election of Directors
In line with the provisions of the Code and
the Company’s Articles, each Director is
required to seek election or re-election
annually at the Company’s AGM. The
effectiveness and commitment of each of
the Non-Executive Directors is reviewed
annually as part of the Board evaluation.
The Committee has satisfied itself as to the
individual skills, relevant experience,
contributions and time commitment of all
the Non-Executive Directors, taking into
account their other external appointments
and interests held.
The Board is therefore recommending the
election or re-election of all continuing
Directors at this year’s AGM. Details of the
service agreements for the Executive
Directors and letters of appointment for
the Non-Executive Directors, and their
availability for inspection, are set out in the
Directors’ Remuneration Report on page
119.
Inclusion and diversity
The Committee and Board are committed
to ensuring that together the Directors
possess the requisite diversity of skills,
experience, knowledge and perspectives to
support the long-term success of the
Company. In this regard, the role of
diversity in promoting balanced and
considered decision making which aligns
with the Group’s purpose, values and
strategy is fully recognised. All Board
appointments are made on an objective
and shared understanding of merit, in line
with required competencies relevant to the
Company as identified by the Committee,
and consistent with the Company’s
Diversity and Inclusion Policy.
The Committee reviewed the Policy in the
year and no changes were recommended.
easyJet.com
95
GOVERNANCE C ORPORATE GOVERNANCE REP ORT (CONTINU ED)
At the year end, female representation on
the Board was 37% (four out of 11). The
Committee is mindful of both the FTSE
Women Leaders Review and the FCA’s
diversity targets at Board level (which will
apply for the next financial year) that at
least 40% of the Board should be female,
and one of the Chair, CEO, CFO and SID
should be female. It is anticipated that the
proportion of female representation on the
Board will meet this requirement when the
appointment of a new Senior Independent
Director is finalised, and both Julie and
Andreas Bierwirth step down from the
Board at the AGM. We also continue to
have one Director from an ethnic minority
background in line with the Parker Review
recommendations.
The Nominations Committee also oversees
the development of a diverse pipeline for
future succession to Board and senior
management appointments, including
reviewing the gender balance of senior
management and its direct reports. Where
there is a known desire to improve diversity
at a certain level or in a certain function in
the organisation, the recruiting team will
ask to see a higher proportion of
candidates fitting the diversity criteria.
However, the final selection will always be
on merit.
As at 30 September 2022, the AMB (which
represents the first layer of management
below Board level and includes the
Company Secretary) has 30% female
representation, and among their direct
reports, female representation is 22%.
Further detail on the approach being taken
to diversity and inclusion, and the
implementation of the policy across the
Group, is set out on pages 24 to 25.
Board evaluation
During the year the Committee undertook
an internally facilitated evaluation of the
Board, its Committees, the Chairman and
individual directors. Further details can be
found on pages 92 to 93.
Diversity and Inclusion Policy
The Policy covers diversity and inclusion
across the Company, but in relation to
the Board it specifically notes that:
‘easyJet recognises the importance of a
diverse Board, bringing together an
appropriate mix of skills and experience
to ensure the future success of our
business. We understand the richness a
diverse Board brings in providing the
range of perspectives, insight and
challenge needed to support good
decision making and create a positive
culture in the organisation.’
When considering the optimum
make-up of the Board, all aspects of
diversity will be appropriately reviewed
and balanced where possible.
The diversity of the Board will typically
be reviewed on an annual basis as part
of the annual performance evaluation.
New appointments to the Board will be
made on merit, in the context of the
requirements of the Board at that time.
The Nominations Committee will identify
suitable candidates based on merit
against objective criteria and with due
regard for the benefits of diversity on
the Board including social and ethnic
background, cognitive and personal
strengths as well as diversity of gender.
Where there is a known requirement to
improve the diversity of the Board, the
Nominations Committee will ask to see
a higher proportion of candidates fitting
the diversity criteria. However, the final
selection will, as stated, always be on
merit.
The new appointments to the Board were
made with consideration given to the
policy. When making these appointments,
the Committee also considered the
recommendations set out in the FTSE
Women Leaders Review (which
recommends that at least 40% of board
and executive committee members of
FTSE 350 companies should be female),
and the Parker Review (which recommends
at least one director from an ethnic
minority background for Boards of FTSE
100 companies).
96 easyJet plc Annual Report and Accounts 2022
Board committees
FINANCE COMMITTEE REPORT
Membership, meetings
and attendance
• Catherine Bradley CBE (Chair)
• Dr Andreas Bierwirth
• David Robbie
• Harald Eisenächer
(from 1 September 2022)
The Committee consists of the
Independent Non-Executive Directors
listed above. All members of the
Committee are Independent
Non-Executive Directors. Member
biographies setting out their skills
and experience can be found on
pages 74 to 77. The Company
Secretary acts as Secretary to the
Committee and members of the
executive management are invited to
attend meetings.
The Committee met five times
during the year. Meeting attendance
can be found in the table on page
90.
The Committee’s terms of
reference can be found
on the Company’s website
at https://corporate.
easyjet.com
The Committee monitored treasury policies
and hedging strategies to ensure easyJet
responded appropriately to challenging
financial market conditions.”
Catherine Bradley CBE
Chair of the Finance Committee
I am pleased to present the Finance
Committee report for the year ended 30
September 2022.
The Committee’s key role continued to be
the review and monitoring of the Group’s
treasury policies, treasury operations and
funding activities along with associated
risks. The Committee is also responsible for
providing approvals in relation to International
Swaps and Derivatives Association (ISDA)
arrangements, and guarantees.
During the year, the Committee’s focus
continued to be monitoring liquidity, debt,
fuel and currency hedging along with
oversight of hedging strategies to ensure
easyJet responded appropriately to
challenging financial market conditions.
The Committee also oversaw the proactive
transition of hedging strategies providing
the Company with improved cashflow
certainty as it emerged from the pandemic.
After each Committee meeting, I presented
an update to the Board on the key issues
discussed during our meetings.
Catherine Bradley CBE
Chair of the Finance Committee
Key activities during the year
Liquidity and debt
The Committee continued to monitor the
Company’s liquidity during the year,
including how cash balances were held.
easyJet had liquidity in excess of its liquidity
policy throughout the year to ensure it was
able to manage volatile financial markets
and to protect the Company against
macro-economic and geopolitical shocks.
The Committee also approved the refresh
of the Group’s Euro Medium Term Programme
(EMTN), along with an increase in size to
£4 billion, to provide flexibility around debt
refinancing. The Committee also set a new
interest rate policy during the year.
Hedging
The Committee monitored hedging activity
and reviewed easyJet’s jet fuel and USD
hedging policies in order to set the level of
cash flow protection the hedging
programme provided, and to ensure
hedging policies were benchmarked
appropriately. Counterparty credit risk
exposures were monitored throughout the
year with no significant issues or losses
occurring. Counterparty credit limits were
also assessed and amended during the year.
The Committee approved the execution of
cross currency interest rate swaps in order
to mitigate the impact of FX retranslations
and approved the restart of the EUR and
CHF hedging programmes as revenues
increased during the year.
The Committee also approved restarting
the easyJet holidays hedging programme
and continued to monitor its effectiveness.
easyJet holidays is exposed to a
predominantly EUR currency cost base,
whereas the majority of its revenue are in
GBP.
Treasury risk
During the year the Committee reviewed
the Treasury Risk Management Strategy,
which sets out the key principles of
easyJet’s treasury activities, business
context, risks and responsibilities and
overall approach to treasury management.
The treasury risks and controls were
reviewed twice in the year.
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97
GOVERNANCE C ORPORATE GOVERNANCE REP ORT (CONTINU ED)
Board committees
AUDIT COMMITTEE REPORT
The Committee continues to play a key
role in helping the Board fulfil its
oversight responsibility.”
Julie Southern
Chair of the Audit Committee
Membership, meetings
and attendance
• Julie Southern (Chair)
• Catherine Bradley CBE
• David Robbie
• Dr Detlef Trefzger
(from 1 September 2022)
The Committee consists of the
Independent Non-Executive Directors listed
above. All members of the Committee are
Independent Non-Executive Directors as
required by the Code. Member biographies
can be found on pages 74 to 77.
The Board has confirmed that it is
satisfied that Committee members have
recent and relevant financial experience
and offer a depth of financial and
commercial experience including the
travel sector in which the Company
operates. The Board also confirmed that
Julie Southern and David Robbie have
recent and relevant financial experience.
The Committee met five times during the
year, with members of senior
management required to attend as and
when appropriate. Meeting attendance
can be found on page 90. The
Committee also met with the external
auditors and Director of Risk and
Assurance separately after each meeting.
In addition, the Committee Chair holds
regular private sessions with the Chief
Financial Officer, the senior finance team,
the Director of Risk and Assurance and
the external audit team, to ensure that
open and informal lines of communication
exist should they wish to raise any
concerns outside formal meetings.
The Committee’s terms of
reference can be found on
the Company’s website at
https://corporate.easyjet.com
I am pleased to present the Audit
Committee report for the year ended
30 September 2022.
The Committee continued to play a key
role in assisting the Board in its oversight
responsibility and monitoring the integrity
of the financial information for the benefit
of our shareholders. This has included
challenging management on the significant
accounting judgements made in our
financial reporting, as well as reviewing the
analysis behind our going concern and
viability statements and considering the
processes that underpin the production of
the Annual Report and Accounts.
The Committee continued to oversee the
programme of financial control
improvements that had begun in the
previous financial year, receiving regular
updates on the progress of key initiatives
such as improving the documentation of
the basis for judgemental decision making.
We have also spent time this year
reviewing the development of the
corporate risk management framework,
ensuring that current and emerging risks
are appropriately identified, assessed and
have effective mitigations in place, and that
the Board is able to undertake a robust
assessment of principal risks. This has
included evaluating climate change risk.
We continue to receive regular updates at
each meeting from the Risk and Assurance
function, covering internal audit,
whistleblowing, business integrity and fraud
matters. In addition to improving processes,
we have also continued our focus on
people. To strengthen our compliance and
assurance function in FY23, the Committee
supported the decision to create a central
role which will coordinate the activities of
existing compliance work. We also continue
to strengthen the wider finance team,
albeit against a challenging recruitment
market given wider macro-economic
pressures.
After each Committee meeting, I provided
an update to the Board on the key issues
discussed during our meetings. I have also
met separately with the external audit
partner and key management on a number
of occasions during the year, and the
Committee met with the external auditors
after each Committee meeting without
management present.
Looking forward, the Committee will
continue to review the financial reporting of
the Group and its accounting policies, with
any major accounting issues of a subjective
nature discussed by the Committee. We
will continue to develop our work on the
effectiveness of the risk management
process, and are also mindful of the
changing regulatory landscape. This
includes the proposals around government
audit and governance reforms, and we will
ensure compliance with any new
requirements.
Julie Southern
Chair of the Audit Committee
98 easyJet plc Annual Report and Accounts 2022
Role of the Committee
The principal roles and responsibilities of the Committee are set out in its terms of reference, and include, but are not limited to:
Financial and narrative
reporting
• monitoring the integrity of the financial statements of the Company and the Group, preliminary
results and announcements
• reviewing the appropriateness and consistency of significant accounting policies
• reviewing and reporting to the Board on significant financial issues and judgements
• reviewing the processes underpinning the production of the Annual Report and Accounts and
whether it is fair, balanced and understandable
Internal control and
risk management
• reviewing the effectiveness of the Group’s internal financial controls systems and risk management
framework, and reviewing the assurance reports from management on the internal control and risk
management systems
• carrying out a robust assessment of the Group’s emerging and principal risks on an annual basis on
behalf of the Board
Compliance,
whistleblowing
and fraud
Internal and
external audit
• reviewing the adequacy and security of the Group’s arrangements for employees to raise concerns
about possible wrongdoing in financial reporting or other matters on behalf of the Board
• reviewing the procedures for detecting fraud
• reviewing and approving the role and mandate of Internal Audit, monitoring and reviewing the
effectiveness of its work and carrying out a periodic assessment of the effectiveness of the Internal
Audit function
• considering and making recommendations to the Board, to be put to shareholders for approval at
the Annual General Meeting (AGM), in relation to the appointment, reappointment and removal of
the Company’s external auditor
• overseeing the relationship with the external auditor
Key activities during the year
The main areas of Committee activity
during the 2022 financial year included
the following areas:
Financial and narrative reporting
• The integrity of the 2021 full-year and
2022 half-year financial statements and
formal announcements relating to the
financial performance and governance
of the Group.
• The material areas in which significant
judgements were applied, based on
reports from both the Group’s
management and the external auditor.
Further information is provided in the
significant judgements section on
page 100.
• The information, underlying assumptions
and stress-test analysis presented in
support of the viability statement and
going concern status.
• Reviewed and approved management’s
updated criteria for the assessment of
when to classify an item as a non-
headline item, with a more detailed
framework for the decision making in
place.
• The consistency and appropriateness of
the financial control and reporting
environment.
• The fair, balanced and understandable
assessment of the Annual Report and
Accounts for the 2021 financial year and
the 2022 half-year statement.
• Reviewing the plans and process for the
preparation of the Annual Report and
Accounts for the 2022 financial year,
including timelines and reviewing the
approach to ESEF tagging.
Internal control and
risk management
• The adequacy and effectiveness of the
Group’s risk management systems and
internal control processes, through
evaluating: risk and assurance plans;
Internal Audit reports; risk assessments;
and control themes.
• The financial control improvements as
part of the financial control framework.
• The Group’s risk framework, including the
corporate risk framework and a robust
review of the Company’s principal and
emerging risks and uncertainties,
including climate change risk.
• Reviewing the Group’s Delegated
Authority Policy.
• Reviewing principal and emerging digital
safety risks and receiving regular updates
on the progress of the Group’s Digital
Safety Programme.
• Reviewing the activities of the
Procurement function and efforts
relating to supplier relationship
management.
• Reviewing the Group’s insurance
programme.
Compliance, whistleblowing
and fraud
• Business integrity measures including the
‘Speak Up, Speak Out’ process, overseeing
and investigations into whistleblowing
concerns.
• Reviewing reports on anti-bribery and
anti-corruption procedures, fraud and
loss prevention procedures and reports
on credit card fraud, together with
monitoring and investigations.
• Reviewing the FY22-FY23 action plan on
fraud reporting requirements.
Internal Audit effectiveness and
review of activities
• An assessment of the effectiveness and
independence of the Internal Audit
function, including consideration of:
• key Internal Audit reports
• stakeholder feedback on the quality of
Internal Audit activity
• Internal Audit’s compliance with
prevailing professional standards
• the implementation of Internal Audit
recommendations
• Approval of the Internal Audit Charter,
Annual Plan, Budget and Annual Report
of Internal Audit and Business Integrity
activities.
Relationship with the external
auditor
• Reviewed the scope of, and findings
from, the external audit undertaken by
PricewaterhouseCoopers LLP (‘PwC’) as
the external auditor.
• The effectiveness of the external audit
process.
• Assessment of the performance,
continued objectivity and independence
of PwC.
• The level of fees paid to PwC for
permitted non-audit services.
• The reappointment of PwC as external
auditor.
• Reviewed the non-audit services policy
and processes.
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99
GOVERNANCE C ORPORATE GOVERNANCE REP ORT (CONTINU ED)
Financial and narrative reporting
Significant judgements
Through its activities, the Committee
focuses on maintaining the integrity and
quality of our financial reporting,
considering the significant accounting
judgements made by management and the
findings of the external auditors. The
Committee assesses whether suitable
accounting policies have been adopted and
whether management has made
appropriate estimates and judgements. The
Committee reviewed accounting papers
prepared by management which provided
details of significant financial reporting
judgements. The Committee also reviewed
the reports by the external auditors on the
half-year and full-year results, which
highlighted any issues arising from the work
undertaken on the audit.
The Committee’s process included the
comprehensive review of financial issues
through the challenge of management,
consideration of the findings of the external
auditors and comparison with other
organisations. The significant issues
considered in relation to the financial
statements are detailed on this page.
Reporting controls
Management is responsible for maintaining
adequate internal control over the financial
reporting of the Group. A summary of the
Group’s financial results and commentary
on performance measures is provided to
the Board each month. Controls are in
place over the preparation of financial data
including: balance sheet reconciliations,
review meetings on key balances and
commentary on variances to forecast and
prior periods. On a monthly basis, senior
management, including the Director of
Reporting and Financial Control and the
Chief Financial Officer, review the
management reporting packs.
The Annual Report and Accounts are
produced by the Group Financial Control
team based on submissions from individual
teams across the business including
Investor Relations, Finance, HR, Company
Secretariat and Risk and Assurance. The
report contributors are required to maintain
supporting evidence for their submissions
and ensure they are reviewed. The figures
are then independently validated by the
Group Financial Control team.
The Annual Report and Accounts are
reviewed by the AMB, Board of Directors
and the Committee for accuracy and to
ensure a fair, balanced and understandable
view is presented. Senior members of the
Finance team including the Chief Financial
Officer, Director of Reporting and Financial
Control and the Chief Accountant meet
with the Committee to present key events
and discuss areas of judgement or
estimates as outlined above. In-depth
presentations on significant areas are
Significant judgements and Estimates
In general, the Committee assesses key
judgements by receiving a report on the
topic prepared by management which
details the decision-making process
which management have been through
in making that judgement and any
assumptions used. The Committee is
then able to challenge management on
critical aspects of the judgement and
discuss the matter with the external
auditors in arriving at their own
assessment of the position.
Going concern
The Committee reviewed and challenged
management’s assessment of base case
and downside forecast cash flows,
including sensitivity to macro-economic
uncertainties such as a sustained
downturn in demand and higher interest
rates and fuel prices, combined with
significant operational disruption. Having
considered and challenged these severe
but plausible downside scenarios and
reviewed the associated going concern
disclosures in the Financial Statements,
the Committee was comfortable with
recommending to the Board that it
adopt the going-concern basis of
preparation for these Financial
Statements.
Carrying value of assets
The Committee considered whether the
carrying value of goodwill, landing rights
and aircraft assets held by easyJet
should be impaired or otherwise
adjusted. There is judgement in the
assumptions underlying the calculation
of the value in use of the business being
tested for impairment – primarily
whether the forecasted cash flows are
achievable, the potential impact of
climate change on those cash flows, and
the overall macro-economic
assumptions. The Committee addressed
these matters by challenging
management on the stress testing
performed on the calculation of the
value in use and other relevant information
used to support the carrying value of
assets. The forecasted cash flows used in
the calculation were presented to the
Board. In relation to the disposal of landing
rights at Berlin airport, the Committee
reviewed management’s paper and
challenged the assumptions used in
determining the value of the slots disposed.
Aircraft maintenance provisions
The Committee reviewed the maintenance
provision at the year end as it is such a
material item. A number of judgements are
used in the calculation of the provision,
primarily pricing, utilisation of aircraft and
timing of maintenance checks. The
Committee addressed these matters using
reports received from management which
detailed the basis of assumptions used and
challenged those assumptions to test their
validity.
Other key judgemental accruals,
provisions and contingent liabilities
The Committee reviewed and challenged
the level and calculations of key accruals
and provisions which are judgemental in
nature, including customer claims in
respect of flight delays and cancellations,
legal liabilities and restructuring provisions.
The Committee also considered the
appropriateness of the recognition of
contingent liabilities as at the year end.
Deferred tax asset
The Committee has considered the
recoverability of the deferred tax asset
based on the expected future taxable
income of the Group and is comfortable
with the position taken.
Fleet accounting
The Committee has considered the
appropriateness of the estimates used for
the useful economic life and residual value
of aircraft. The Committee considered
these matters using reports received from
management and external experts which
underpin the estimations.
provided throughout the year as
appropriate.
The Finance team have regular proactive
conversations with the external auditors on
topics which are of audit relevance. The
external auditor performs audit procedures
and challenge of the Annual Report and
Accounts and presents their findings to the
Committee.
At its meeting in November 2022, the
Committee reviewed the Group’s Going
Concern and Viability Statements (as set
out on pages 70 to 71) and considered the
thorough assessment reports prepared by
management in support of these
Statements. Details of the going concern
assessment are included under significant
judgements. The Viability Statement
section of this Annual Report provides
details of the base case and downside
scenarios applied in assessing the
appropriateness of this statement and the
Committee provided robust challenge of
the assumptions applied by management
as part of this assessment.
100 easyJet plc Annual Report and Accounts 2022
easyJet’s system of internal controls, along
with its design and operating effectiveness,
which includes the Group’s financial
reporting process, is subject to review by
the Committee, through reports received
from management, along with those from
both internal and external auditors. Any
control deficiencies identified are followed
up, with action plans tracked by the AMB
and the Committee. There were no
significant financial control deficiencies
identified by the Committee during the
year.
To ensure that the Group is ready to meet
the potential future requirements as part of
the UK government’s audit and governance
reform package, the Group has initiated a
Financial Control Improvement programme.
Working with their selected advisers BDO
LLP on this initiative, management has
begun the process of documenting key
financial processes and identifying control
improvements or gaps. It is expected that
the documentation and control remediation
phase will be substantially completed
during the forthcoming financial year
ending 30 September 2023. An explicit
financial control monitoring regime will also
start to be put in place during the
forthcoming financial year, based on a
mixture of self-certification by control
operators and independent control testing
led by the Group Financial Control team.
The Committee received several updates
during the year on progress and was
pleased to see that no significant control
gaps had been identified to date. The
Committee will continue to receive updates
over the next year as the overall control
framework is enhanced and the monitoring
regime begins to be established.
As a result of this annual review of the
effectiveness of the risk management and
internal control systems, which the
Committee undertakes on behalf of the
Board, it is considered that the Board has
fulfilled its obligations under the Code.
Further details on the Group’s principal risks
and uncertainties and their impact on the
prospects of the Group are set out on
pages 59 to 69.
The Committee also gave careful
consideration to the period of assessment
used for the Viability Statement and
concluded that the time period of three
years remained appropriate. Based on
these assessments, the Committee
confirmed that the application of the going
concern basis for the preparation of the
financial statements continued to be
appropriate and recommended the
approval of the Viability Statement.
The Committee reviewed the approach to
meeting the ESEF requirements that will
apply to the Annual Report and Accounts
for 2022. This includes making the report
available in XHTML format and for key
elements to be ‘tagged’ using Extensible
Business Reporting Language (iXBRL). The
Committee agreed the approach and the
related controls and verification processes
proposed.
Fair, balanced and understandable
At its meeting in November 2022, the
Committee conducted an assessment and
recommended to the Board that, taken as
a whole, the 2022 Annual Report and
Accounts (which the Board subsequently
approved) is fair, balanced and
understandable and provides the necessary
information for shareholders to assess the
Group and Company’s position and
performance, business model and strategy.
In reaching this conclusion, the Committee
considered the overall review and
confirmation process around the Annual
Report and Accounts, including:
• the input of subject matter experts, the
AMB and other senior management and,
where applicable, the Board and its
Committees.
• the processes and controls which
underpin the overall review and
confirmation process, including the
preparation, control process, verification
of content and consistency of
information being carried out by internal
financial controls specialists.
• review of the Annual Report and
Accounts held by senior management
and other subject matter experts to
focus solely on the reporting being fair,
balanced and understandable.
The Committee was provided with the
opportunity to review and comment on
iterations of the draft copy of the Annual
Report and Accounts.
In carrying out the above assessment, key
considerations included ensuring that there
was consistency between the financial
statements and the narrative provided in
the front half of the Annual Report, and
that there was an appropriate balance
between the reporting of weaknesses,
difficulties and challenges, as well as
successes, in an open and balanced
manner, including linkage between key
messages throughout the document.
Financial Reporting Council
engagement
In common with other companies, the
FRC’s Corporate Reporting Review Team
carried out a review of the Company’s 2021
Annual Report and Accounts during the
year and the Committee was pleased that
they raised no questions or queries based
on that review. The FRC noted some areas
that could be reviewed in future reporting
and these have been addressed in the
2022 Annual Report and Accounts where
appropriate.
The FRC requests that in disclosing this
engagement we note the limitations of
their review, namely that it was based
solely on their reading of the Annual Report
and Accounts and did not benefit from a
detailed knowledge of our business or an
understanding of the underlying
transactions entered into. They also noted
that their review provided no assurance
that the report and accounts are correct in
all material respects and that the FRC’s role
is not to verify the information provided but
to consider compliance with reporting
requirements.
Risk management and
internal control
The Board as a whole, including the
Committee members, considers the nature
and extent of easyJet’s risk management
framework and the risk profile that is
acceptable in order to achieve the Group’s
strategic objectives. The Committee has
reviewed the work undertaken by
management, the Committee itself and the
Board on the assessment of the Group’s
emerging and principal risks, including their
impact on the prospects of the Group.
During the year the Committee reviewed
the corporate risk management framework,
including the process for identifying,
evaluating and managing the Company’s
principal risks. The programme, led by the
Risk and Assurance function, was focused
on understanding current and emerging
risks and how these are managed in line
with the risk appetite, developing a risk and
assurance map, and implementing a
consistent risk scoring mechanism and risk
taxonomy to cover all risks. The principal
risks were reviewed and amended with
previous climate change risks changed to
climate change transition risks and the
brand licence risk amended to a wider
shareholder activism risk. Further work is
planned for FY23 to review risk appetite
and to determine the nature and extent of
the principal risks the Board is willing to
take to achieve its strategic objectives.
easyJet.com
101
GOVERNANCE C ORPORATE GOVERNANCE REP ORT (CONTINU ED)
Compliance, whistleblowing
and fraud
To strengthen the compliance and
assurance function in FY23, the Committee
has supported the decision to create a
central role which will coordinate the
existing compliance activity performed
within functions. This will give increased
visibility going forwards of compliance with
policies and procedures across the
business and will better enable us to
identify any assurance gaps.
The Group is committed to the highest
standards of quality, honesty, openness
and accountability. The Code includes a
provision that there should be a means for
the workforce to raise concerns and that
the Board should routinely review this
mechanism and the reports arising from its
operation. The Group and all operating
companies have whistleblowing policies in
place. The Board and Committee receive
regular reports on this subject, which is
communicated internally as the ‘Speak Up,
Speak Out’ mechanism, and the Committee
assists the Board in ensuring that adequate
arrangements are in place for the
proportionate and independent
investigation of such matters and for
appropriate follow-up action, with the
findings being regularly reported to the
Board.
Employees are encouraged to raise
concerns under the policy and any
concerns raised are investigated carefully
and thoroughly to assess what action, if
any, should be taken. All employees are
able to report concerns in their local
language. The Business Integrity
Committee is a management forum on
whistleblowing. It receives summaries of all
reported concerns; it monitors any ongoing
concerns and ensures that the proposed
outcomes of investigations are fair,
transparent and robust, with root causes
identified and remedial actions agreed. Any
matters of significance are reported to the
Committee and the Board, along with a
comprehensive full-year report.
In FY22, we undertook a significant internal
communications campaign across the
network, with the support of several works
councils and trade unions, on the ‘Speak
Up, Speak Out’ mechanism. That,
combined with the ramp-up in operations
to pre-pandemic levels, resulted in a
significant increase in reports under the
mechanism, as intended. A total of 105
reports were received, compared with 15 in
FY21. All reports were followed up and
investigated where appropriate. The
Committee was pleased to see both the
increased use of the whistleblowing
channels and that nothing material had
been reported.
The Board supports the objectives of the
Bribery Act 2010 and the Company has
procedures in place to minimise the risk of
any breaches occurring. Any breach of the
Bribery Act will be regarded as serious
misconduct, potentially justifying immediate
dismissal.
The Committee reviewed the fraud risks
during the year, including activity to
prevent and detect all types of fraud. The
Internal Audit plan covers fraud risks with
audits on Fraud Controls over Bonus
Arrangements & Incentive Schemes and
Fraud Controls over Financial Reporting
having been conducted.
Internal Audit
The Committee is responsible for
overseeing the work of the Internal Audit
function. It reviews and approves the scope
of the Internal Audit annual plan, the
resourcing levels and assesses the quality
of Internal Audit reports, along with
management’s actions relating to findings
and the closure of recommended actions.
During 2022, a carefully targeted internal
audit plan was agreed and undertaken
across easyJet’s operations, systems and
support functions. The Committee agreed
an FY22 Internal Audit plan with a
heightened focus on Finance including
audits covering Liquidity, Delegated
Authority, Customer Credit Card Payments,
Airport Charges, and the Record to Report
process in easyJet holidays. There was also
an emphasis on reviewing third-party
management, including audits on the
overall Supplier Relationship Management
processes, as well as IT Supplier
Management in particular. Subsequent
reports, including management responses,
recommended action plans and follow-up
reviews have been considered by the
Committee during its meetings.
In order to safeguard the independence of
the Internal Audit function, the Director of
Risk and Assurance (who heads up the
Internal Audit function) is given the
opportunity to meet privately with the
Committee without any other members of
management being present.
The Committee also considers stakeholder
feedback on the quality of Internal Audit’s
work. The Internal Audit function is subject
to an independent External Quality
Assessment (EQA) every five years, in line
with the Institute of Internal Auditors
Standards. The last external EQA was
conducted in 2017, with the next external
review becoming due in 2022. However, it
was agreed that an independent internal
review would be carried out during the year
instead, with the intention that a full
external EQA be carried out when activity
was less affected by the disruption from
the Covid-19 pandemic, expected to be
within the next 24 months. This approach
was supported by the external third parties
consulted, who all suggested that an
external EQA at this time would not add
significant value.
The independent internal review took place
in late 2021 and the findings were reported
to and discussed by the Committee. There
were no significant concerns raised, and a
number of actions were identified including
changes required to the Internal Audit
charter; ensuring the Committee formally
approve the charter, budget and Internal
Audit annual report; and some
amendments to processes.
External audit
PwC, as the external auditor, is engaged to
conduct a statutory audit and express an
opinion on the financial statements. PwC
was reappointed as auditor of the Group at
the AGM held on 10 February 2022. The
last tender process was undertaken in 2015
for the financial year ended 30 September
2016.
The current external audit engagement
partner is Owen Mackney, Senior Statutory
Auditor. The external audit plan and the
£1.1 million fee proposal for the financial
year under review (2021: £1.1 million) was
prepared by PwC and presented to the
Committee for consideration and approval.
External auditor effectiveness
and independence
Senior management monitors the external
auditor’s performance, behaviour and
effectiveness during the exercise of its
duties, which informs the Committee’s
decision on whether to recommend
reappointment on an annual basis.
The Committee also assesses the
effectiveness, independence and objectivity
of the external auditor by, among other
things:
• considering all key external auditor plans
and reports; in particular those
summarising audit work performed on
significant risks and critical judgements
identified, and detailed audit testing
thereon.
• having regular engagement with the
external auditor during Committee
meetings and ad hoc meetings (when
required), including meetings without any
member of management being present.
102 easyJet plc Annual Report and Accounts 2022
The policy sets out the categories of
non-audit services and related approvals
required, and those non-audit services
which the auditor is prohibited from
undertaking. Certain audit-related non-audit
services are deemed pre-approved by the
Committee but only up to a value of
£100,000, such as reporting on regulatory
returns. Other non-audit services require
Audit Committee approval as set out in the
policy.
An additional protection is provided by way
of a non-audit services fee cap. The Audit
Committee (or the Company) may not
approve an engagement of the external
auditor if annual non-audit services fees
would exceed 70% of the average audit
fees (not including fees for audit-related
services or for services required by
regulation) charged in the previous three
financial years.
In the 2022 financial year, PwC undertook
non-audit services for the Company with a
total value of £0.7 million, as set out in
note 3 to the financial statements. These
fees were within the limit of the non-audit
services fee cap mentioned above and
included audit-related non-audit service
fees of £0.4 million and other assurance
related non-audit services fees of
£0.3 million, primarily related to a working
capital review to support the Class 1
transaction arising from the agreement
with Airbus and CFM.
External audit tendering
PwC was first appointed to audit the
Annual Report and Accounts for the year
ended 30 September 2006 and has
therefore served a 16-year term. Under
applicable audit legislation, companies are
required to have a mandatory tender of
auditors after 10 years, or 20 years if there
is a competitive retender at 10 years.
During the 2015 financial year, the
Committee led a tender process for
external audit services, following which the
Committee agreed to recommend that the
Board reappoint PwC as, on balance, it
performed best against the Committee’s
pre-agreed selection and assessment
criteria. Due to the tender undertaken in
2015, and the rotation of the audit partner
in 2020, the Committee believes that a
tender being undertaken in the 2024/25
financial year remains appropriate and is in
the best interests of shareholders. The
Company confirms that it has complied
with the provisions of the Statutory Audit
Services for Large Companies Market
Investigation (Mandatory Use of
Competitive Tender Processes and
Audit Committee Responsibilities)
Order 2014 relating to tendering and
non-audit services.
• the Committee Chair having discussions
with the Senior Statutory Auditor ahead
of each Committee meeting.
• understanding the extent to which the
auditor challenges management’s
analysis.
• considering FRC audit quality inspection
reports.
• following the end of the financial year,
each Committee member completing an
auditor effectiveness review
questionnaire.
The Committee was satisfied that the
external audit had provided appropriate
focus to those areas identified as the key
risk areas to be considered by the
Committee and that the auditors had
challenged management as part of the
process. It had also continued to address
the areas of significant accounting
estimates. On this basis, and considering
the views of senior management, the
Committee concurred that the external
audit had been effective, and that PwC
remained independent.
External auditor objectivity
To preserve objectivity and independence,
the external auditor does not provide
consulting services unless this is in
compliance with the Group’s Non-audit
Services Policy which reflects the applicable
audit regulations and the FRC’s Revised
Ethical Standard on permitted services. The
Policy also covers the approach around
hiring former external audit employees in
order to avoid any conflict of interest and
to protect external auditor independence.
The Committee reviewed and
made minor updates to the policy
during the year and the updated
policy is available on the Company’s
website at https://corporate.easyjet.
com
External audit tendering timeline
2006
PwC appointed
2015
Full competitive
tender; PwC
reappointed for
financial year ending
30 September 2016
2020
Mandatory
appointment of new
external audit lead
partner after five
years
2024/2025
Competitive tender to
take place unless
carried out earlier
2026
PwC cannot continue
beyond financial year
end 30 September
2025
easyJet.com
103
GOVERNANCE C ORPORATE GOVERNANCE REP ORT (CONTINU ED)
Board committees
SAFETY COMMITTEE REPORT
The Committee monitored systems
and processes to ensure the safety of
our customers and people remained
the highest priority.”
Dr Andreas Bierwirth
Chair of the Safety Committee
I am pleased to present the Safety
Committee report for the year ended 30
September 2022.
easyJet remains committed to the safety
of our customers and our people and the
delivery of a secure and safe operation
which meets the expectations of our
customers. The objective of the Committee
is to oversee the effectiveness of the
safety and security systems, processes,
operations and resources to ensure safety
receives the highest level of the Board’s
attention. The Committee is supported by
the easyJet Safety Board, which reports to
the AMB, to ensure safety risks and issues
are identified and prioritised and action
plans are in place to mitigate existing and
emerging risks.
During the year the Committee’s key areas
of focus included a review of readiness for
winter 2021 and summer 2022, following
the ramp-up of operations post pandemic.
The Committee discussed the risks and
action plans in place to deliver a safe
operation.
The Committee received a progress update
on the implementation of an Integrated
Management System (IMS) to support the
alignment of different processes and
procedures and remove complexity and
duplication as a result of multiple regulatory
requirements.
The Committee also spent time at each
meeting conducting deep dives into
different aspects of safety, security and
compliance at easyJet as set out on
page 105.
The Committee received regular reports
from the Director of Safety, Security &
Compliance and continues to ensure the
team is adequately resourced and has the
appropriate information to perform its
function effectively and in accordance
with the relevant professional standards.
The Director of Safety, Security &
Compliance reports regularly to the AMB,
the Committee and the Board. He has the
right of direct access to me and to the
Chair of the Board, which reinforces the
independence of safety oversight.
I provided an update to the Board regularly
with my own assessment of safety
management within the airline throughout
the year and updated it on the issues
discussed by the Committee.
Dr Andreas Bierwirth
Chair of the Safety Committee
Membership, meetings
and attendance
• Dr Andreas Bierwirth (Chair)
• Ryanne van der Eijk
(from 1 September 2022)
• Nick Leeder
(until 30 September 2022)
• Julie Southern
• Dr Detlef Trefzger
(from 1 September 2022)
The Committee consists of the
Independent Non-Executive Directors
listed above. All members of the
Committee are Independent Non-
Executive Directors. Member
biographies can be found on pages 74
to 77. The Company Secretary acts as
the Secretary of the Committee and
attends all the meetings.
The Committee met four times during
the year. Meeting attendance can be
found in the table on page 90.
The Director of Safety, Security &
Compliance has attended all Safety
Committee meetings during the year.
Other key invitees include the Interim
Chief Operating Officer, Director of
Engineering & Maintenance and Head
of Safety. Subject matter experts in
flight operations, engineering and
other functions have attended as
required.
The Committee’s terms of
reference can be found on
the Company’s website at
https://corporate.easyjet.com
104 easyJet plc Annual Report and Accounts 2022
Safety, Security and
Compliance Plan
The Committee approved the topics
proposed to be covered by the FY22 to
FY27 Safety, Security and Compliance Plan
to capture the strategic improvements
across safety, security, compliance
including all aspects that may impact on
our operational safety and security, for
example Information Technology, and the
safety and health of those who interact
with easyJet (our people, customers or
suppliers).
Risk management
The Committee received an update on the
safety risks within the ground operations
and how they were being managed with
the assistance of the Airport Risk
Management approach. This led to
significant improvement in the identification
and management of risks by providing the
necessary tools to assess airport risks and
implement mitigating strategies in
conjunction with relevant stakeholders.
As a result of Russia’s invasion of Ukraine,
easyJet’s safety team continued to monitor
the related physical security risks. While
there was limited direct physical risk to
easyJet as our network does not extend to
Ukraine, the wider impact of the conflict
was, and continues to be, closely
monitored.
Looking forward
The Committee will monitor compliance
with regulations and standards, and
improvement of easyJet’s safety, security
and environmental performance as well
as provide support to management on
embedding the strong safety culture
which will ensure high standards of
safety continue to be delivered across
the Group and all its operating entities.
Key activities during the year
Deep dives
During the year, the Committee monitored
the safety, security and compliance
priorities including routine and support
activities, summer readiness framework
and risk management framework to ensure
easyJet remained safe and responsible and
foundations for continuous improvement
were in place. In addition, the Committee
continued to monitor notable incidents to
ensure process improvements and
mitigating actions had been undertaken,
where necessary. Deep dives were
undertaken on a range of topics and these
included the following:
Seasonal readiness
Given the unprecedented ramp-up required
post pandemic, the Committee reviewed
the seasonal readiness for winter 2021 and
summer 2022 to ensure safe ramp-up of
operations. This included ensuring that all
aircraft were in appropriate airworthiness
condition following any extended periods
without operating, and ensuring the
competency and recency for crew and
pilots.
Integrated Management System (IMS)
The Safety, Security and Compliance team
has developed an IMS to establish a
common approach to Safety, Security,
Compliance and the Environment (SSCE)
across easyJet. The primary aim of the
IMS is to embed key processes and
procedures within easyJet to ensure safe
and responsible journeys for our customers
and a safe working environment for our
employees and suppliers.
The Committee received an update on the
implementation of the IMS to understand
lines of accountability and responsibility
given the extent of our network and multi
AOC structure. The Committee also
received a presentation from Roland
Berger benchmarking various different
approaches among operators with multiple
AOC operations. The Committee endorsed
easyJet’s IMS approach for multiple AOC
operations which benefits safety, improved
efficiency and optimised processes
and resources.
easyJet.com
105
GOVERNANCE DI RE CTORS’ REMUNERATIO N R EPORT
Annual statement by the Chair
of the Remuneration Committee
the summer months supported us in
delivering a £1.1 billion uplift in headline
EBITDAR performance. The rapid ramp-up
in demand we saw over the summer
resulted in industry-wide operational
challenges which impacted our customer
experience and we worked quickly to
mitigate this impact for our customers.
During the year, we have seen progress on
a number of our key strategic initiatives,
with airline ancillary yield per passenger
increasing to £22.73 and easyJet holidays
delivering a positive profit contribution in its
first full year of operation. We go into FY23
in a much stronger position strategically and
financially and believe we are well positioned
to deliver our shareholders value in the future.
The impact of Omicron, war in Ukraine and
the industry-wide issues experienced this
summer all affected operational
performance during the financial year.
Despite this, demand was strong for
easyJet’s optimised primary airport network
which continues to deliver alongside
step-changed ancillary revenue and the
rapid growth of easyJet holidays.
Operations have significantly improved as a
result of management actions to mitigate
the disruption that the whole airline
ecosystem experienced through Q3. Since
the start of July, easyJet’s operations
normalised, with Q4 on-the-day
cancellations being below 2019 levels.
In addition, passenger numbers almost
doubled since last summer to 24 million
with a load factor of 92%, as demand for
our leading network and services remains
strong. When our summer 2023 season
went on sale, we were filling the equivalent
of more than four A320 aircraft a minute in
the opening hours, demonstrating the
continued demand.
However, the Committee is acutely aware
of the economic outlook and the
challenges this will pose to the business
going forward. With FY22 being the first
year where our new policy was
implemented, the Committee remains
confident that the approved remuneration
structure will continue to support the
Directors and the business through this
period, directly align management with the
interests of shareholders and help to deliver
sustainable, long-term growth.
It is against this financial backdrop that the
Committee assessed remuneration
outcomes and implementation.
Engagement with the workforce in
the year
There continues to be regular dialogue with
employee consultative groups to gauge their
feedback on remuneration and benefit
structures within easyJet, including the
remuneration approaches for executives and
other employee groups, to help inform
decision making. This includes providing
updates on the arrangements for the
Executive Directors. Regular meetings are
held with the Reward Director and the Group
People Director to discuss developments in
reward over the year, whilst structured
meetings have also been held with members
of the Airline Management Board (AMB) and
also separately with Nick Leeder when he
was one of the Board’s Employee
Representative Directors. The outcomes of
these interactions are discussed as part of
the Remuneration Committee meetings.
Cost of living
The Committee has been mindful of the
impact that inflation and increases in the cost
of living is having on individuals, and this has
been a regular item of discussion with the
Committee. The Committee supported
actions taken by management to help
address these challenges including an interim
pay review conducted for the non-negotiated
teams in July and the provision of voluntary
financial education workshops. Management
continues to review further options to help
with the cost of living, in conjunction with
employee representative groups. The
Committee is pleased that the financial
performance that management delivered in
the year allows the payment of bonuses
across all teams. This is particularly important
having been unable to pay a bonus for the
last two years and with no LTIPs vesting,
which has impacted reward and retention,
and allows us to recognise the significant
work that all employees have put into the
business with bonus awards being paid in
respect of FY22.
Engagement with shareholders
As Chair of the Committee I remain
committed to regular engagement with our
shareholders to answer any questions and
respond to feedback.
The 2022 Remuneration Policy was
approved by shareholders at the 2022 AGM.
Although the Committee noted the number
of votes against the resolution. Whilst
through its engagement the Committee
understood the rationale for certain
Membership, meetings
and attendance
• Moni Mannings (Chair)
• Julie Southern
• David Robbie
• Harald Eisenächer
(from 1 September 2022)
There was one change to the
membership of the Committee during
the year as set out above. The
Company Secretary acts as Secretary
of the Committee. Other key invitees
include the Chief Executive, the Group
People Director, the Reward Director,
the Chief Financial Officer and external
advisers as relevant.
Member biographies setting out
their skills and experience can be found
on pages 74 to 77. The Committee met
six times during the year. Meeting
attendance can be found in the table
on page 90.
The Committee’s terms of
reference can be found on
the Company’s website at
https://corporate.easyjet.com
The FY22 financial year
While FY22 has not been without its
challenges, the performance achieved
during the year has been strong. easyJet,
alongside the whole industry, has faced
multiple headwinds throughout the 2022
financial year from Omicron, the impact of
Russia’s invasion of Ukraine and operational
challenges, as demand returned at scale
following the widespread removal of travel
restrictions across Europe. Despite these
challenges, the return of demand during
106 easyJet plc Annual Report and Accounts 2022
shareholders voting against the resolutions,
it contacted them again following the AGM
to offer further engagement on the
Company’s approach to remuneration.
The Board continues to believe that the
updated Remuneration Policy and the new
Restricted Share Plan not only support
long-term decision making but also help
retain and motivate management to drive
the performance of the business as we
continue to recover from the pandemic and
support the longer-term performance of the
business including delivering sustainable
shareholder value.
Incentive outcomes in the year
Annual bonus
The FY22 annual bonus was based 30% on
EBITDAR performance, 50% on a balanced
scorecard of key performance targets
including free cash flow, cost control,
customer feedback, and ancillary revenue,
and 20% on individual performance including
measures linked to sustainability, strategy
and employee engagement. These
measures were selected to align with our key
priorities for the year. The Committee chose
to use a balanced scorecard approach to
assess performance for 50% of the bonus to
ensure that the bonus provided a balanced
incentive to drive performance across a
range of key strategic areas and to provide
flexibility to ensure that payouts were fair,
taking into account the underlying
performance and stakeholder experience.
The performance achieved this year
against these measures was strong in a
highly unpredictable environment, and
represents tangible progress as we
continue to recover from the impact of
Covid-19 positioning us strongly for the
future. This year has seen us return to
profitability on an EBITDAR basis, and we
have recorded significant achievements in
our key areas of focus on costs, cashflow
and growing ancillary revenues. This
resulted in an initial outcome of 63.625%
out of a maximum score of 80% across the
EBITDAR and scorecard measures.
However, as part of its assessment of
performance the Committee was mindful of
the operational challenges that we faced
during the year, in particular the impact of
the disruption to flights on our customers
and other stakeholders, and the overall
experience of our shareholders during the
year in the context of macro-economic
impacts on our share price. While our
operational challenges have now been largely
addressed, the Committee decided that it
was still appropriate to reduce the Group
scorecard outcome by 2.5%, resulting in an
overall outcome for Executive Directors of
61.125% out of a maximum of 80% (i.e. 76.4%
of maximum for this element).
The Committee then considered the
individual performance of the Executive
Directors and determined that the
individual objectives had been met in full.
Details of the objectives and performance
is provided on pages 115 – 116. As a result of
this assessment, the Group performance
achieved and the Committee’s
discretionary reduction to the scorecard,
the final bonuses agreed were £1,200,650
for Johan Lundgren (81.125% of maximum),
and £738,238 for Kenton Jarvis (81.125% of
maximum), of which one third will be
awarded in deferred shares.
LTIP
Awards granted in 2019 were due to vest
based on performance to 30 September
2022. Awards were based on a
combination of performance conditions,
being three-year average headline ROCE,
total headline EPS and relative TSR
compared to FTSE 51-150 companies
measured over the three financial years to
30 September 2022. In addition, the TSR
awards will not vest unless there has been
positive TSR over the performance period.
The stretching performance targets for the
2019 LTIP award, which were set before the
pandemic, were not met and therefore this
award will lapse.
Restricted Share Plan (RSP)
In 2022, we made our first awards under
the RSP that was approved by shareholders
at the 2022 AGM.
The face value of the award granted to
Johan Lundgren was £925,000 (125% of
salary) and for Kenton Jarvis £520,000
(100% of salary). The awards are subject to
the following underpins: that easyJet does
not fall below its minimum liquidity target
(such that a credit risk is triggered) through
the vesting period and that there is
satisfactory governance performance
including no ESG issues that result in
material reputational damage to the
Company (as determined by the Board).
The Committee will also operate a further
underpin such that if the Company’s
performance taken as a whole materially
underperforms what might reasonably have
been expected for the sector for reasons
attributable to management action or
inaction, the Committee will, at its discretion,
reduce the award quantum appropriately.
Subject to the underpins being met, the
awards will vest in December 2024.
Implementation of remuneration
for FY23
With FY22 being the first full year under our
new Remuneration Policy, the Committee is
satisfied that it continues to best support
the business and long-term strategic decision
making. Therefore, we are not proposing
any changes for the year ahead and will
continue to operate remuneration similar to
that used last year. Our intended approach
for the year ahead is set out below.
Base salary
Salaries for our Executive Directors have
been considered very carefully against the
pay awards made for our employees in 2022
and into 2023. easyJet has made significant
step changes in salary and packages for the
wider workforce for 2022 and into 2023,
reflecting that generally no increases were
awarded over the last few years in the
context of the significant cost control needed
in light of the impact Covid-19 on the business.
The Committee has reviewed the salary for
the CEO and CFO with effect from 1 January
2023. The Committee noted that the CEO
had not received an increase in base pay
since 1 January 2020 but also recognised the
broader considerations for restraint. At the
same time the Committee noted that the
average pay increase proposed for our
wider employee groups in FY23 was more
than 6%. Balancing these considerations the
Committee decided to increase the CEO
salary to £780,000 (5.4% increase) and to
increase the CFO salary to £550,000 (5.7%
increase). In making these decisions the
Committee also considered the impact this
would have on variable remuneration set by
reference to salary and deemed the outcome
to be appropriate.
Annual bonus
The operation of the annual bonus will
continue broadly unchanged. The maximum
opportunity will continue to be 200% of base
salary (Chief Executive) and 175% of base
salary (Chief Financial Officer).
The bonus for the 2023 financial year will
continue to be based 30% on EBITDAR
performance, 50% on a balanced score of
Group performance targets including from free
cash flow, cost control, customer feedback,
operational performance and revenue, and
20% on individual performance including
measures linked to sustainability, strategy and
employee engagement. Details of the targets
for the year ending 30 September 2023 will be
disclosed retrospectively in next year’s annual
report on remuneration, by which time they will
no longer be deemed commercially sensitive
by the Board.
RSP
The RSP will operate on the same basis in
FY23. The face value of the award granted
to Johan Lundgren will be 125% of salary and
for Kenton Jarvis 100% of salary.
The awards will be subject to the same
underpins as in FY22.
The Committee is conscious that the current
share price is lower than the share price used
to determine award levels last year, reflecting
market volatility and uncertainty in the
macro-economic environment. In this context
the Committee carefully considered whether it
would be appropriate to scale back the grant
of awards. However, given the continued need
to incentivise and motivate the executives to
continue to drive recovery in the business post
Covid to execute on our future growth
strategy, the Committee did not consider that
it was appropriate at this stage to reduce
awards. The Committee will, however, review
the payout at vesting, considering whether
management have benefited from ‘windfall
gains’, in which case the intention would be to
scale back vesting levels.
On behalf of the Committee I would like to
thank shareholders for their continued support
during 2022 and ahead of the next AGM.
Moni Mannings
Chair of the Remuneration Committee
easyJet.com
107
GOVERNANCE DI RE CTORS’ REMUNERATIO N R EPORT (CONTI NUE D)
Remuneration at a glance
Reward principles
The Remuneration Committee’s primary objective is to design a remuneration framework that promotes the long-term success of the
Group. For some time, we have been guided by the following reward principles:
Principle
Application in remuneration framework
Simple and cost-
effective
Aligned with
business strategy
To establish a simple and cost-effective reward package in line with our low-cost and efficient business
model.
To support the achievement of our business strategy of long-term sustainable growth and returns. The
combination of our annual bonus plan based on a mix of financial, operational and strategic targets and
our new long-term Restricted Share Plan ensures that value is delivered to shareholders and that
Executive Directors are rewarded for the successful and sustained delivery of the key strategic objectives
of the Group.
Sustainable
long-term success
Total remuneration is weighted towards elements which align with sustainable long-term shareholder value
creation. This ensures that there is a clear link between the value created for shareholders and the amount
paid to our Executive Directors.
Mindful of the
wider stakeholder
experience
Notwithstanding the financial performance of the business, overall remuneration outcomes will be mindful
of the wider stakeholder experience to ensure Executive Director remuneration remains fair, responsible
and sustainable.
Single total figure of remuneration (£’000)
Johan Lundgren (Chief Executive)
2022
2021
Kenton Jarvis (Chief Financial Officer)1
2022
2021
£2,959
£794
XX
£2,118
£363
£0
£500
£1000
£1500
£2000
£2500
£3000
Fixed
Bonus
RSP
Other
1. Includes payment of £300,000 for cash buy-out awards, disclosed in the FY21 Annual Report, paid in December 2021
108 easyJet plc Annual Report and Accounts 2022
Application of the Remuneration Policy in 2023
Salary
The Committee has reviewed the salary for the Executive Directors with effect from 1 January 2023 and
agreed to increase the CEO salary to £780,000 (5.4% increase) and the CFO salary to £550,000 (5.7%
increase). These increases are below the average increase for the wider workforce in 2023, which is more
than 6% and follows a significant period of pay freezes.
Benefits and pension
Pension allowance of 6.15% of salary plus modest benefits aligned to the market and the wider workforce.
Annual bonus –
One-third of bonus
is deferred into
shares for three
years
Maximum will remain at 200% of base salary for the Chief Executive and at 175% of base salary for the Chief
Financial Officer.
The bonus for the 2023 financial year will be based 30% on EBITDAR performance, 50% on a balanced score
card of Group performance targets including from free cash flow, cost control, customer feedback,
operational performance and revenue, and 20% on individual performance including measures linked to
sustainability, strategy and employee engagement. Details of the targets for the year ending 30 September
2023 will be disclosed retrospectively in next year’s annual report on remuneration, by which time they will no
longer be deemed commercially sensitive by the Board.
Restricted Share
Plan (RSP) – Three-
year vesting period
plus two-year
post-vesting holding
period
The normal maximum award will be 125% of salary for the Chief Executive and 100% of salary for the Chief
Financial Officer.
Awards will be subject to the following performance underpins measured over the vesting periods. If any
underpin is not met the Committee will consider whether it is appropriate to reduce the portion of the award
vesting, based on its judgement of the context. The underpins for 2023 awards will be:
1. That easyJet does not fall below its minimum liquidity target (such that a credit risk is triggered) through
the vesting period.
2. Satisfactory governance performance including no Environmental, Social and Governance (ESG) issues that
result in material reputational damage to the Company (as determined by the Board).
If the Company does not meet one or more of the underpins the Committee will consider whether it is
appropriate to scale back the level of payout under the award to reflect this.
The Committee will operate a further underpin such that if the Company’s performance, taken as a whole,
materially underperforms what might reasonably have been expected for the sector for reasons attributable
to management action or inaction, the Committee will at its discretion reduce the award quantum appropriately.
The Committee will also retain discretion to determine what level of scale back, if any, is appropriate. The
Committee also may, at its discretion, adjust the vesting level of an award if it considers that the vesting level
would not reflect the underlying performance of the Executive, the Group, the experience of shareholders, other
stakeholders or if such level would not be appropriate in the circumstances. The Committee is conscious that the
current share price is lower than the share price used to determine award levels last year, reflecting market
volatility and uncertainty in the macro-economic environment. In this context, the Committee carefully considered
whether it would be appropriate to scale back the grant of awards. However, given the continued need to
incentivise and motivate the executives to continue to drive recovery in the business post-Covid-19 and to execute
our future growth strategy, the Committee did not consider that it was appropriate at this stage to reduce awards.
The Committee will, however, review the payout at vesting, considering whether management have benefited
from ‘windfall gains’, in which case the intention would be to scale back vesting levels.
Share ownership
guidelines
Expected to hold shares worth 250% of base salary for the Chief Executive and 200% of base salary for the
Chief Financial Officer. Executive Directors will be required to maintain a minimum shareholding equal to the
guideline (or their actual shareholding if lower) for two years following stepping down as an Executive Director.
Non-Executive
Director fees
The fees for the Chairman and Non-Executive Directors from 1 January 2023 will be increased by 5% (with the
exception of the SID fee which remains at its current level). Fees from 1 January 2023 are summarised below:
Chairman
Basic fee for other Non-Executive Directors
Fees for SID role
Chair of the Audit, Safety and Remuneration Committees1
Chair of the Finance Committee1
1. Supplementary fees increased by 5%
January 2023
January 2022
£330,296
£66,060
£25,000
£15,750
£10,500
£314,568
£62,914
£25,000
£15,000
£10,000
The fees payable to the Non-Executive Directors are reviewed annually. The last increase of 2.8% was applied
three years ago on 1 January 2020, which was below the typical increase for the wider workforce at the time.
The Board has determined that a 5% increase will apply to the base fees and supplementary fees (with the
exception of the SID fee) from 1 January 2023, which is below the average increase for the UK workforce.
easyJet.com
109
GOVERNANCE DI RE CTORS’ REMUNERATIO N R EPORT (CONTI NUE D)
Directors’ Remuneration Policy
During 2021, the Committee undertook a detailed review of our Directors’
Remuneration Policy to ensure that the remuneration arrangements in place
best support the long-term strategy of the business and continue to motivate
the Executive Directors, the AMB and the broader management population.
After careful consideration and consultation with our largest shareholders, the Remuneration Committee concluded that a Restricted
Share Plan is the best approach for the Company going forward to align management with shareholders and support the execution of
our strategy and the creation of long-term sustainable shareholder value. The renewed policy including the RSP was approved by
shareholders at the AGM on 10 February 2022.
The table below summarises the approved Remuneration Policy, which can be found in full in last year’s Annual Report on the Company
website:
https://corporate.easyjet.com/investors/reports-and-presentations/2021
Policy
Framework used to assess performance
and provisions for the recovery of sums paid
Increases normally up to the average workforce
level (though may be increased at higher rates in
certain circumstances, for example where a new
Executive Director has been appointed to the
Board at a lower than typical market salary to
allow for growth in the role).
The Committee considers individual salaries at the
appropriate Committee meeting each year after
having due regard to the factors noted in operating
the salary policy.
No recovery provisions apply to base salary.
Executive Directors are entitled to a combination
of modest benefits aligned to the market,
such as life assurance and other insurance
arrangements, as well as a range of voluntary
benefits including the purchase of additional
holiday.
Pension allowance of 6.15% of salary (being the
cash alternative to a 7% employer contribution
less the equivalent value of UK employers’
national insurance contributions). This is in line
with pension contributions provided for the wider
workforce.
Not applicable.
No recovery provisions apply to benefits.
Not applicable.
No recovery provisions apply to employer pension
contributions.
Salary
To provide the core
reward for the role.
Set at a sufficient level
to recruit and retain
individuals of the
necessary calibre to
execute the Company’s
business strategy.
Benefits
In line with the
Company’s policy to
keep remuneration
simple and consistent.
Pension
To provide employees
with long-term savings
via pension provisions
in line with the
Company’s strategy to
keep remuneration
simple and consistent.
110 easyJet plc Annual Report and Accounts 2022
Annual bonus
To incentivise and
recognise execution of
the business strategy
on an annual basis.
Rewards the
achievement of annual
financial and
operational goals.
Compulsory deferral of
a portion of the bonus
provides alignment
with shareholders.
Restricted Share Plan
(RSP)
To incentivise the
execution of the
business strategy over
the longer term.
Rewards sustained
increase in shareholder
value.
Share ownership
guidelines
To ensure alignment
between the interests
of Executive Directors
and shareholders.
Post-cessation share
ownership guidelines
Non-Executive fees
To attract and retain a
high-calibre Chairman
and Non-Executive
Directors by offering
market-competitive fee
levels.
Policy
Framework used to assess performance
and provisions for the recovery of sums paid
Maximum opportunity is 200% of base salary
(Chief Executive) and 175% of base salary (Chief
Financial Officer).
Bonuses are normally based on stretching financial
and non-financial measures, including personal and/or
strategic performance measures.
One-third of bonus is deferred into shares for
three years. Majority of the award is based upon
the achievement of performance conditions
based on financial metrics. Withholding and
recovery provisions apply.
Normal maximum awards of 125% of salary
(Chief Executive) and 100% of salary (Chief
Financial Officer). Up to 150% of salary in
exceptional circumstances.
Three-year performance period plus two-year
post-vesting holding period.
Awards will be subject to performance underpins
measured over the vesting periods. Withholding
and recovery provisions apply.
Performance measures are set and assessed by the
Committee at its discretion, with performance
normally measured over a one-year period.
Malus and clawback provisions apply.
The Committee may, at its discretion, adjust the level
of bonus payout if it considers that the formulaic
outcome was not aligned with performance in the
year.
Awards will be subject to performance underpins
measured over the vesting periods.
If the Company does not meet one or more of the
underpins the Committee would consider whether it
was appropriate to scale back the level of payout
under the award to reflect this.
Malus and clawback provisions apply.
The Committee may, at its discretion, adjust the
vesting level of an award if it considers that the
vesting level would not reflect the underlying
performance of the executive.
250% of salary (Chief Executive) and 200% of
salary (Chief Financial Officer).
Not applicable.
Expected to retain 50% of post-tax shares
vesting under the RSP and 100% of post-tax
deferred bonus shares until guideline is met.
Chief Executive and Chief Financial Officer
required to hold up to 100% of their shareholding
requirement for two years after leaving office.
Not applicable.
The Chairman is paid an all-inclusive fee for all
Board responsibilities.
The other Non-Executive Directors receive a
basic Board fee, with supplementary fees
payable for additional responsibilities including
Board or Committee responsibilities.
Fee levels are reviewed on a regular basis, and may be
increased, taking into account factors such as the time
commitment of the role and market levels in
companies of comparable size and complexity.
easyJet.com
111
GOVERNANCE DI RE CTORS’ REMUNERATIO N R EPORT (CONTI NUE D)
Illustration of how much the Executive Directors could earn under the Remuneration Policy
The charts below show how much the Chief Executive and Chief Financial Officer could earn through easyJet’s Remuneration Policy
under different performance scenarios in the 2023 financial year. The following assumptions have been made:
Minimum (performance below threshold) – fixed pay only, with no vesting under any of easyJet’s incentive plans.
Mid (performance in line with expectations) – fixed pay plus a bonus at the mid-point of the range (giving 50% of the maximum
opportunity), plus 100% vesting of the Restricted Share Plan.
Maximum (performance meets or exceeds maximum) – fixed pay plus maximum bonus, plus 100% vesting of the Restricted Share Plan.
Fixed pay comprises:
Salaries – salary effective as at 1 January 2023.
Benefits – amount received in the 2023 financial year.
Pension – employer contributions or cash-equivalent payments received in the 2023 financial year.
Matching Shares under the all-employee Share Incentive Plan.
CHIEF EXECUTIVE (JOHAN LUNDGREN)1
Minimum
CHIEF FINANCIAL OFFICER (KENTON JARVIS)2
Minimum
100%
£874,970
Mid
100%
£592,825
Mid
33%
30%
37%
£2,629,970
37%
30%
34%
£1,624,075
Maximum
26%
46%
29%
£3,409,970
28%
46%
26%
£2,105,325
Maximum
Maximum + share price growth (50%)
Maximum + share price growth (50%)
22%
40%
25% 13%
£3,897,470
25%
40%
23% 12%
£2,380,325
Fixed pay
Annual bonus
RSP
Fixed pay
Annual bonus
RSP
Change in share price
Change in share price
1. Were easyJet’s share price to increase by 50%, Johan Lundgren’s total remuneration would increase to £3,897,000k under a ‘maximum’ scenario – driven
by the increased value of the RSP awards
2. Were easyJet’s share price to increase by 50%, Kenton Jarvis’ total remuneration would increase to £2,380,000k under a ‘maximum’ scenario – driven by
the increased value of the RSP awards
The scenarios shown above do not include any dividend assumptions. It should be noted that since the analysis above shows what could
be earned by the Executive Directors based on the Remuneration Policy described above, these numbers will differ to values included in
the table on page 114 detailing the actual earnings by Executive Directors.
UK Corporate Governance Code – Provision 40 disclosures
When developing the proposed Remuneration Policy and considering its implementation, the Committee was mindful of the UK
Corporate Governance Code and considers that the executive remuneration framework appropriately addresses the following
factors:
• Clarity – the Committee is committed to providing open and transparent disclosures regarding our executive remuneration
arrangements.
• Simplicity – remuneration arrangements for our executives and our wider workforce are simple in nature and well understood by
both participants and shareholders. Our RSP further simplifies incentive arrangements.
• Risk – the Committee considers that the incentive arrangements do not encourage inappropriate risk-taking. Malus and
clawback provisions apply to annual bonus and RSP awards, and the Committee has overarching discretion to adjust formulaic
outcomes to ensure that they are appropriate.
• Predictability and proportionality – the RSP increases the predictability of outcomes in line with recovery strategy and minimises
the potential of unintended outcomes. Our policy illustrates opportunity levels for Executive Directors under various scenarios for
each component of pay.
• Alignment to culture – any financial and strategic targets set by the Committee are designed to drive the right behaviours
across the business. The RSP encourages our executives to focus on making the right decisions for the execution of our strategy
and the creation of long-term shareholder value.
112 easyJet plc Annual Report and Accounts 2022
Annual report on remuneration
Overview
Role of the Remuneration Committee
The key role of the Committee is to make recommendations to the Board on executive remuneration packages and to ensure
that the Remuneration Policy and practices of the Company reward fairly and responsibly, with a clear link to corporate and
individual performance.
The Committee’s terms of reference can be found on the
Company’s website at https://corporate.easyjet.com
Key responsibilities
• To set the Remuneration Policy for all Executive Directors and the Company’s Chairman.
• To set the remuneration packages for the AMB and monitor the principles and structure of remuneration for other senior
management.
• To oversee remuneration and workforce policies and practices, and take these into account when setting the policy for
Director and AMB remuneration to ensure that they remain reasonable and appropriate in comparison with the wider
workforce and external market.
• To approve the design of, and determine targets for, all employee share schemes operated by the Group.
• To oversee any major changes in employee benefit structures throughout the Company or Group.
• To review and monitor the Group’s compliance with relevant gender pay reporting requirements.
• To assess that all incentives implemented are consistent with Company culture and purpose.
Key activities during the year
• Assessed the level of performance in respect of the bonus for the 2022 financial year, and LTIP awards set in December 2019
and vesting in December 2022, to determine appropriate payouts.
• Monitored developments in the internal and external environment and in relation to the impact of Covid-19.
• Reviewed and approved the remuneration packages for the new AMB members.
• Reviewed the total packages and service contracts of the AMB and senior management.
• Reviewed the outcome of the AGM and agreed appropriate actions following engagement with shareholders.
• Considered the results and implications of the UK gender pay gap report and reviewed and commented on recommendations
to address the gap and challenges faced by the aviation sector.
• Reviewed and approved no award of the all-employee Performance Share Award in respect of the 2022 financial year and
cessation of selected other all-employee share scheme features.
• Provided oversight on the broader remuneration framework for the wider workforce across easyJet and in particular the
response to retaining key employees and the cost of living crisis.
On balance, having taken into account a number of internal and external measures as well as the pay ratio analysis, the
Committee believes the proposed remuneration decisions in this report appropriately reflect the needs of the business and
long-term interests of shareholders. The Committee also believes the Remuneration Policy operated as intended in terms of
reflecting Company performance and the overall level of quantum delivered was considered appropriate given the business
context.
easyJet.com
113
GOVERNANCE DI RE CTORS’ REMUNERATIO N R EPORT (CONTI NUE D)
Single total figure of remuneration for the year ended 30 September 2022
The table below sets out the amounts earned by the Directors (audited).
£’000
Salary Benefits6 Bonus7
RSP
Pension8 Other9
Total
Fees
and
FY22
Total
Fixed
Total
Variable
Fees
and
Salary Benefits Bonus
LTIP Pension
Total
FY21
Total
Fixed
Total
Variable
Executive
Johan
Lundgren
Kenton Jarvis
Non-
Executive
John Barton1
Stephen
Hester2
Dr Andreas
Bierwirth5
Catherine
Bradley CBE
Ryanne van
der Eijk3
Harald
Eisenächer3
Nicholas
Leeder4
Moni
Mannings
David Robbie
Julie
Southern5
Dr Detlef
Trefzger3
Total
740
520
47 1,201
738
8
925
520
46
n/a 2,959
32 300 2,118
833
860
2,126
1,258
740
342
54
273
78
73
5
5
63
78
63
103
5
2,060
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
55 1,939 1,445
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
54
54
273
273
78
73
5
5
63
78
63
78
73
5
5
63
78
63
103
103
–
–
5
78 300 5,877 2,493
5
315
5
78
73
63
78
52
103
–
–
–
–
–
–
–
–
–
–
–
3,384 1,849
8
0
–
–
–
–
–
–
–
–
8
0
0
–
–
–
–
–
–
–
–
0
0
–
–
–
–
–
–
–
–
46
21
794 794
363
363
–
–
–
–
–
–
–
–
315
315
5
5
78
78
73
73
63
63
78
52
78
52
103
103
0
0
67 1,924 1,924
0
0
–
–
–
–
–
–
–
–
0
1. Stepped down from the Board on 1 December 2021.
2. Chair from 1 December 2021.
3. Harald Eisenächer, Ryanne van der Eijk and Dr Trefzger were appointed to the Board on 1 September 2022.
4. Stepped down from the Board 30 September 2022.
5. Will step down from the Board at the 2023 AGM.
6. Benefits relate to the cost to the Company of life assurance (which increased from 0.5x basic salary to 4x basic salary in line with the wider head office
teams benefit provision), other insurance, as well as reimbursements made to the Chief Executive for business-related travel expenses in respect of
domestic car travel to the value of £24,500.
7. One third of the annual bonus is deferred in shares for a period of three years. There are no performance conditions attached to the deferred elements
other than continued employment.
8. Johan Lundgren and Kenton Jarvis received a cash alternative to pension contributions equivalent to 6.15% of base salary. No Director who served during
the year accrued any other pension benefits.
9. Payment of £300,000 for cash buy-out awards, disclosed in the FY21 Annual Report, paid to Kenton Jarvis in December 2021.
Payments for loss of office and payments to past directors (audited)
There were no payments for loss of office or payments to past directors.
Annual bonus outturn for performance in the 2022 financial year (audited)
The measures selected for the FY22 annual bonus aligned with our key priorities for the year and were 30% on EBITDAR performance,
50% on a balanced score card of Group performance targets including free cash flow, cost control, customer feedback and ancillary
revenue, and 20% on individual performance including measures linked to sustainability, strategy and employee engagement.
The Committee has chosen to use a balanced scorecard approach to assessing performance for 50% of the bonus this year to ensure
that we are providing a balanced incentive to drive performance across a range of areas. At least 40% of the scorecard was linked to
financial measures ensuring that at least 50% of the overall bonus is linked to financial measures.
The Committee reviewed performance against these measures including the balanced scorecard and it was determined that the bonus
would pay out at 81.125% of maximum. The Committee also had the discretion to determine the appropriate level of award at the end of
the financial year based on performance achieved. In assessing the outcome against overall Company individual performance, the
Committee determined that the outcome was appropriate.
114 easyJet plc Annual Report and Accounts 2022
Measure
FY22 Targets
Weighting
CEO & CFO
Threshold
(10% minimum
award)
On-target
(50% award)
Maximum
(100% award)
EBITDAR (at constant currency) £m
30%
447
559
615
Balanced scorecard
• Cost programme performance £m
• Free cash flow £m
• Customer satisfaction
• Ancillary yield £
Individual
Total
50%
20%
100%
380
111
71%
17.20
n/a
430
211
74%
19.20
50%
455
261
77%
20.20
100%
Outcome
Pay-out
Headline EBITDAR £569m
(bonus targets are set at
constant currency to allow for
exchange rate fluctuation - at
constant currency EBITDAR
outcome is £641m)
30%
Assessed outcome
Discretionary reduction
33.625%
(2.5%)
Final outcome
31.125%
100%
20%
81.125%
The performance achieved this year against the bonus measures was strong in a highly unpredictable environment, and represents
tangible progress as we continue to recover from the impact of Covid-19 positioning us strongly for the future. This year has seen us
return to profitability on an EBITDAR basis, and we have recorded significant achievements in our key areas of focus on costs, cashflow
and growing ancillary revenues. This resulted to an initial outcome of 63.625% out of a maximum score of 80% across the EBITDAR and
scorecard measures.
However, as part of its assessment of performance the Committee was mindful of the operational challenges that we faced during the
year, in particular the impact of the disruption to flights on our customers and other stakeholders, and the overall experience of our
shareholders during the year in the context of macro-economic impacts on our share price. While our operational challenges have now
been largely addressed, the Committee decided that it was still appropriate to reduce the Group scorecard outcome by 2.5%, resulting in
an overall outcome for Executive Directors of 61.125% out of a maximum of 80% (i.e. 76.4% of maximum for this element).
The Committee then considered the individual performance of the Executive Directors and determined that the individual objectives had
been met in full (see below). As a result of this assessment, the Group performance achieved and the Committee’s discretionary
reduction to the scorecard, the final bonuses agreed were £1,200,650 for Johan Lundgren (81.125% of maximum), and £738,238 for
Kenton Jarvis (81.125% of maximum) of which one third will be awarded in shares deferred for three years.
Personal objectives (20% weighting)
This component focuses on personal performance against the priorities set by the Board for the Executive Directors in 2022.
The Remuneration Committee considers their performance holistically in relation to the development and driving of strategy, financial
performance, sustainability, customer and people initiatives (both what was delivered and how). The assessment for each Executive
Director was as shown in the following tables:
Johan Lundgren (CEO)
The Committee assessed performance against the objective focus areas set out below and determined that the personal objectives
element had been met in full. Details of performance against these objective focus areas is provided below.
Objective focus area
Performance achieved
Sustainability
Net zero CO2 2050 roadmap
Signed up to UN initiative ‘Race to Zero’, pledging easyJet’s commitment to set a
science-based target (SBT) and to reach net zero CO2 by 2050.
Achieved validation of 2035 SBT by Science Based Targets Initiative (consortium of UNGC,
CDP, WWF).
Published easyJet’s net zero roadmap outlining key enablers and supporting partnerships and
investments.
Evidenced net zero roadmap integration with easyJet’s strategy (five-year plan and beyond) and
with easyJet’s advocacy on regulation.
Environmental Management System.
Achieved Stage 1 IEnvA certification (ISO14001-compliant IATA EMS).
Achieved Stage 2 IEnvA certification.
Delivered a year-on-year improvement in employee engagement as measured through our
Peakon employee survey scores.
Ensured the development, delivery, and growth of easyJet Holidays to meet its FY22 financial
targets and KPIs.
Reviewed and refreshed the easyJet strategy with approval of the PLC Board and commenced
roll-out and engagement with all stakeholders.
Sustainability
Employee engagement
easyJet holidays growth
Business strategy review
easyJet.com
115
GOVERNANCE DI RE CTORS’ REMUNERATIO N R EPORT (CONTI NUE D)
Kenton Jarvis (CFO)
The Committee assessed performance against the objective focus areas set out below and determined that the personal objectives
element had been met in full. Details of performance against these objective focus areas is provided below.
Objective focus area
Financial
Reporting
Financial control
Investor relations
Employee engagement
Cost reduction
Strategy
Sustainability
Net zero CO2 roadmap
Performance achieved
Group rating on CDP improved from Rating C to rating B.
Developed fleet plan and converted the Airbus purchase option rights Class 1 action achieved
with strong shareholder support.
Separate ancillary KPI monitoring established to track progress and close gaps to competition.
Delivered control improvement plan in FY22.
Developed IR engagement plan.
Conducted roadshows in USA.
Finance attrition rate reduced against a challenging recruitment market.
Focus on talent and retention.
Improved year-on-year employee engagement score.
Implemented and delivered cost reduction plan.
Reviewed and refreshed the easyJet strategy with approval of the PLC Board and commenced
roll-out and engagement with all stakeholders.
Completed climate Change Risk Register.
Identification of priority climate change transition risks relation to emissions, technology,
investors, civil society.
Best practice TCFD report in FY22 AR.
Improve ESG Reporting & Performance with Gap Analysis easyJet FY21 reporting vs key ESG
indices Sustainalytics & MSCI.
Agreed approach to net zero roadmap as key component of refreshed business strategy.
LTIP (audited)
The 2019 LTIP awards vesting in respect of the three performance years to 30 September 2022 were subject to a combination of
performance conditions, being three-year average headline ROCE, total headline EPS and relative TSR compared to FTSE 51-150
companies measured over the prior three financial years (with a minimum positive TSR underpin) to 30 September 2022. The percentage
which could be earned was determined using the following vesting schedule:
Below threshold
(0% vesting)
Threshold
(25% vesting)
On-target
(50% vesting)
Maximum
(100% vesting)
Actual
Vesting
(% of element)
ROCE awards (40% of total)
EPS awards (40% of total)
TSR awards (20% of total)
<9.5%
<288p
< Median
9.5%
288p
Median
11.5%
310p
n/a
13.5%
335p
Upper quartile
<9.5%
<288p
below median
0%
0%
0%
Three-year average headline EPS and ROCE performance along with TSR performance were below threshold due to the impact of
Covid-19 on the business. The Committee considered this outcome and determined that no payment was an appropriate outcome given
the current business context.
Executive Directors’ share awards outstanding at the financial year end (audited)
Details of share options and share awards outstanding at the financial year end are shown in the following tables:
Johan Lundgren
No. of shares/
options at
30 September
20211
Shares/
options
granted
in year
Shares/
options
lapsed
in year
Shares/
options
exercised
in year
No. of shares/
options at
30 September
20221
Scheme
Date of grant
Market
price on
exercise
date
(£)
Exercise
price
(£)
A
A
A
B
C
C
D
198,361
153,770
254,621
–
–
–
–
129,334
36,775
6,273
1,865
–
–
–
(198,361)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
19 Dec 20182
153,770
19 Dec 20193
254,621 29 Dec 20204
129,334
16 Feb 20226
36,775
19 Dec 2018
6,273
19 Dec 2019
–
–
–
–
–
–
1,865
14 Jun 2019
6.75
–
–
–
–
–
–
–
Date from which
exercisable
Expiry date
19 Dec 2021
19 Dec 2028
19 Dec 2022
19 Dec 2029
29 Dec 2023
29 Dec 2030
19 Dec 2024
16 Feb 2032
19 Dec 2021
19 Dec 2028
19 Dec 2022
19 Dec 2029
1 Aug 2022
1 Feb 2023
116 easyJet plc Annual Report and Accounts 2022
Kenton Jarvis
No. of shares/
options at
30 September
20211
Shares/
options
granted
in year
Shares/
options
lapsed
in year
Shares/
options
exercised
in year
No. of shares/
options at
30 September
20221
Scheme
Date of grant
Market
price on
exercise
date
(£)
Exercise
price
(£)
159,803
–
–
72,706
1,963
–
–
1,353
–
–
–
–
–
–
–
–
159,803
20 May 20215
72,706
16 Feb 20226
–
–
1,963
1,353
20 Jul 2021
6.42
19 Jul 2022
3.99
–
–
–
–
A
B
D
D
Key:
A Long Term Incentive Plan –
C Deferred Share Bonus Plan
Performance Shares
B Restricted Share Plan
D Save As You Earn Awards (SAYE)
Date from which
exercisable
Expiry date
29 Dec 2023
20 May 2031
19 Dec 2024
16 Feb 2032
1 Sep 2024
1 Mar 2025
1 Sep 2025
1 Mar 2026
The closing share price of the Company’s ordinary shares at 30 September 2022 was £2.96 and the closing price range during the year
ended 30 September 2022 was £2.93 to £7.27.
Note 1: Number of share awards granted
The number of shares is calculated according to the scheme rules of individual plans based on the middle-market closing share price on
the day prior to grant.
As is usual market practice, the option price for SAYE awards is determined by the Committee in advance of the award by reference to
the share price following announcement of the half-year results the day immediately preceding the date the invitations are sent.
Note 2: LTIP awards made in December 2018
40% of vesting is based on three-year average headline ROCE (including lease adjustment) performance for the three financial years
ending 30 September 2021; 40% of vesting is based on three-year total headline EPS performance for the three financial years ending
30 September 2021; and 20% of vesting is based on relative TSR performance compared to companies ranked FTSE 51-150. In addition,
the TSR awards will not vest unless there has been positive TSR over the performance period.
The face value of the award granted was £1,800,300 (250% of salary) to Johan Lundgren. As set out in the 2021 annual report on
remuneration none of the targets were met at the end of the three year performance period, so the options lapsed.
Note 3: LTIP awards made in December 2019
40% of vesting is based on three-year average headline ROCE performance for the three financial years ending 30 September 2022;
40% of vesting is based on three-year total headline EPS performance for the three financial years ending 30 September 2022; and 20%
of vesting is based on relative TSR performance compared to companies ranked FTSE 51-150. In addition, the TSR awards will not vest
unless there has been positive TSR over the performance period.
The face value of the award granted was £1,850,000 (250% of salary) to Johan Lundgren. The targets set on page 116 were not met at
the end of the three year performance period and as a result the award will not vest.
Note 4: LTIP awards made in December 2020
The face value of the award granted to Johan Lundgren was £1,850,000 (250% of salary) at a share price at award of £8.63. The award
is based 100% on TSR performance compared to companies from the FTSE 51-151 and will vest on 29 December 2023. In addition, the
award will not vest unless there has been positive TSR over the performance period. Performance will be assessed at the end of the
three year performance period to 30th September 2023.
Note 5: LTIP awards made in May 2021
The face value of the award granted to Kenton Jarvis was £1,040,000 (200% of salary) at a share price of £7.73. The award is based
100% on TSR performance compared to companies from the FTSE 51-151 and will vest on 29 December 2023. In addition, the award will
not vest unless there has been positive TSR over the performance period.
Note 6: RSP awards made in February 2022
The face value of the award granted to Johan Lundgren was £925,000 (125% of salary) and for Kenton Jarvis £520,000 (100% of
salary). This was based on the middle-market closing share price on the day prior to grant, being £7.15. The awards will be subject to the
following underpins: that easyJet does not fall below its minimum liquidity target (such that a credit risk is triggered) through the vesting
period and that there is satisfactory governance performance including no ESG issues that result in material reputational damage to the
Company (as determined by the Board).
Subject to the underpins being met, the awards will vest on 19 December 2024.
easyJet.com
117
GOVERNANCE DI RE CTORS’ REMUNERATIO N R EPORT (CONTI NUE D)
Shareholding guidelines in the 2022 financial year (audited)
The Chief Executive and Chief Financial Officer are expected to build up a shareholding of 250% and 200% of salary respectively over
the first five years from appointment to the Board. The Committee has discretion to extend the five-year timeframe in certain
circumstances, for example where there have been limited payouts under the incentive schemes.
Until the guideline is met, Executive Directors are required to retain 50% of net vested shares from the LTIP and RSP and 100% of net
vested deferred bonus shares. Similarly, the Non-Executive Directors, including the Chairman of the Board, are required to build up a
shareholding of 100% of annual fees over a period of five years from appointment.
Details of their holdings are set out below.
Directors’ current shareholdings (audited)
The following table provides details on current Directors’ interests in shares at 30 September 2022 (unless otherwise noted).
Stephen Hester
Johan Lundgren8
Kenton Jarvis
Dr Andreas Bierwirth7
Catherine Bradley CBE
Ryanne van der Eijk5
Harald Eisenächer5
Nicholas Leeder6
Moni Mannings
David Robbie
Julie Southern7
Dr Detlef Trefzger5
Unconditionally
owned shares1
Shareholding
guidelines
achieved2
120,000
66,713
15,401
8,715
6,000
–
5,000
3,847
6,990
16,596
8,968
20,000
100%
27%
7%
100%
61%
–
40%
52%
48%
100%
57%
100%
Deferred
bonus
–
43,048
–
–
–
–
–
–
–
–
–
–
LTIP3
–
408,391
159,803
–
–
–
–
–
–
–
–
–
RSP
–
129,334
72,706
–
–
–
–
–
–
–
–
–
SAYE
–
1,865
3,316
–
–
–
–
–
–
–
–
–
Interests in share
schemes
SIP4
Total in share
schemes
–
–
–
–
–
–
–
–
–
–
–
–
–
582,638
235,825
–
–
–
–
–
–
–
–
–
1. Includes SIP Partnership Shares, vested SIP Performance (Free) Shares, vested SIP Matching Shares, and any shares owned by connected persons.
2. Based on the shareholding guidelines and including unconditionally owned shares and for the Executive Directors vested but unexercised LTIPs and the
post-tax value of share interests under the DSBP. The extent to which the guidelines have been achieved is calculated based in the price at purchase or
vesting, therefore, the values will be different for each director base on their purchase history.
3. LTIP shares are granted in the form of nil cost options subject to performance.
4. Consists of unvested SIP Performance (Free) Shares and unvested SIP Matching Shares. Last award made in 2019.
5. Harald Eisenächer, Ryanne van der Eijk and Dr Detlef Trefzger were appointed to the Board on 1 September 2022.
6. Stepped down from the Board on 30 September 2022.
7. Will step down from the Board at the 2023 AGM.
8. Shareholding guideline increased from 200% to 250% in 2021. Given the participation in the rights issue, and the limited incentive payouts over the last
four years, the Committee is currently satisfied with the progress being made towards meeting the shareholding guidelines.
Changes in share ownership levels throughout the year
may be found on our corporate website https://corporate.easyjet.com
Executive Directors are deemed to be interested in the unvested shares held by the easyJet Share Incentive Plan Trust and the easyJet
plc Employee Benefit Trust.
At 30 September 2022, ordinary shares held in the Trusts were as follows:
easyJet Share Incentive Plan Trust
easyJet plc Employee Benefit Trust
Total
Number of
ordinary shares
1,251,236
1,647,399
2,898,635
Changes since the year end: as at 28 November 2022, there were no changes to the easyJet plc Share Incentive Plan Trust balance and
the easyJet plc Employee Benefit Trust held 1,647,399 shares.
Dilution limits
easyJet complies with the Investment Association’s Principles of Remuneration with regard to dilution limits. These principles require that
commitments under all the Company’s share incentive schemes must not exceed 10% of the issued share capital for all plans, and 5% for
executive (discretionary) schemes, in any rolling 10-year period.
Employee share plan participation
A key component of easyJet’s reward philosophy is to provide share ownership opportunities throughout the Group by making annual
awards of performance-related shares to all eligible employees, when necessary financial targets are achieved. In addition, easyJet
operates a voluntary discounted share purchase arrangement for all employees via a Save As You Earn scheme and a Buy As You Earn
arrangement with matching shares in the UK under the tax-approved Share Incentive Plan. A 10% discount was offered on Save As You
Earn 2022, however, Matching Shares remain suspended.
118 easyJet plc Annual Report and Accounts 2022
Details of Directors’ service contracts and letters of appointment
Details of the service contracts and letters of appointment in place as at 30 September 2022 for Directors are as follows:
Stephen Hester
Johan Lundgren
Kenton Jarvis
Dr Andreas Bierwirth
Catherine Bradley CBE
Ryanne van der Eijk
Harald Eisenächer
Nicholas Leeder1
Moni Mannings
David Robbie
Julie Southern
Dr Detlef Trefzger
Date of
appointment
Date of current
service contract
Unexpired term at
30 September 2022
1 September 2021
1 December 2017
3 February 2021
22 July 2014
1 January 2020
1 September 2022
1 September 2022
1 January 2019
6 August 2020
17 November 2020
1 August 2018
1 September 2022
20 August 2021
10 November 2017
15 September 2020
19 July 2017
9 December 2019
22 August 2022
22 August 2022
14 December 2018
5 August 2020
16 November 2020
7 June 2018
22 August 2022
Executive Directors are
subject to a 12 month notice
period. Letters of
appointment for the Non-
Executive Directors do not
contain fixed term periods;
however, they are appointed
in the expectation that they
will serve for a maximum of
nine years, subject to
satisfactory performance and
re-election at AGMs.
1. Stepped down from the Board on 30 September 2022.
Review of past performance
The chart below sets out the TSR performance of the Company relative to the FTSE 250, FTSE 100, and a group of European airlines1
since 30 September 2012. The FTSE 100 and FTSE 250 were chosen as easyJet has been a member of both indices during the period.
This graph shows the value, by 30 September 2022, of £100 invested in easyJet on 30 September 2012, compared with the value of
£100 invested in the FTSE 100 and FTSE 250 Indices or a comparator group of airlines on the same date.
The other points plotted are the values at intervening financial year ends. Overseas companies have been tracked in their local currency,
i.e. ignoring exchange rate movements since 30 September 2012.
400
350
300
250
200
150
100
50
30 Sep 2012
30 Sep 2013
30 Sep 2014
30 Sep 2015
30 Sep 2016
30 Sep 2017
30 Sep 2018
30 Sep 2019
30 Sep 2020
30 Sep 2021
30 Sep 2022
easyJet
FTSE 100 Index
FTSE 250 Index
Comparator airlines
1. Lufthansa, Ryanair, Air France-KLM, and Wizz Air have all been included in the comparative European airlines group. Wizz Air has been tracked from listing.
Chief Executive total remuneration table
The table below shows the total remuneration figure earned for the Chief Executive over the same 10-year period. The total remuneration
figure includes the annual bonus and LTIP awards which vested based on performance in those years or RSP awarded.
The annual bonus and LTIP/RSP vesting percentages show the payout for each year as a percentage of the maximum.
2013
2014
2015
2016
2017
20182
2019
2020
2021
2022
Single total figure of
remuneration (£’000)
Annual bonus (%)
LTIP/RSP vesting (%)
Johan
Lundgren
Carolyn
McCall
Johan
Lundgren
Carolyn
McCall
Johan
Lundgren
Carolyn
McCall
–
–
–
–
–
1,500
1,006
7551
794
2,9596
7,777
9,2095
6,2414
1,4533
757
125
–
–
–
–
–
–
–
–
–
73%
16%
0%
0%
81%
87%
76%
66%
13%
0%
–
–
–
–
–
100%
100%
100%
32%
0%
–
–
–
–
–
–
–
–
–
0%
0%
100%6
–
–
–
1. This amount is after the voluntary 20% reduction in base salary during April, May and June 2020.
2. Johan Lundgren was appointed to the Board on 1 December 2017 and Carolyn McCall stepped down from the Board on 30 November 2017.
3. Includes 48,509 LTIP shares (inclusive of dividend equivalents) at the vesting date share price of £10.43, a decrease of 30% on the share price at grant of £14.99.
4. Includes 266,899 LTIP shares vesting for the period; share price is £17.15 (the actual share price at vesting), an increase of 133% on the share price at grant of £7.37.
5. Includes 445,575 LTIP shares vesting for the period; share price was £16.71 (the actual share price at vesting), an increase of 325% on the share price at
grant of £3.93.
6. Includes RSP awarded in February 2022.
easyJet.com
119
GOVERNANCE DI RE CTORS’ REMUNERATIO N R EPORT (CONTI NUE D)
Change in Directors’ pay for the year in comparison to that for easyJet employees
The table below shows the year-on-year percentage change in pay for the Directors, compared to the average earnings of all other
easyJet UK employees.
2022
2021
2020
Salary
Benefits12
Annual
bonus
Salary
Benefits
Annual
bonus
Salary
Benefits
Johan Lundgren
Kenton Jarvis1
Andrew Findlay2
John Barton3
Stephen Hester4
Dr Andreas Bierwirth10
Catherine Bradley
Ryanne van der Eijk8
Harald Eisenächer8
Moya Greene5
Charles Gurassa5
Dr Anastassia Lauterbach6
Nicholas Leeder8
Moni Mannings
Andy Martin
David Robbie7
Julie Southern10
Dr Detlef Trefzger8
Average pay based on
easyJet’s UK employees11
0.%
52%
–
(82.9%)
5360%
0%
0%
n/a
n/a
–
–
–
0%
0%
–
21.2%
0%
n/a
487.5%
n/a
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1.9%
0%
n/a
n/a
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
n/a
6.0%
n/a
(24.8%)
6.1%
n/a
5.4%
62.2%
–
–
(76.5%)
(73.8%)
(72.9%)
6.8%
680%
–
n/a
32.1%
–
(43%)
n/a
0%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0%
0%
n/a
n/a
n/a
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0%
(2.6%)
–
1.0%
(2.6%)
–
(2.6%)
n/a
–
–
19.1%
(16.8%)
28.3%
28.3%
n/a
(11.3%)
–
8.3%
–
0%
–
0%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Annual
bonus
(100%)
–
(100%)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2.0%
0%
(100%)
n/a refers to a nil value in the previous year, meaning that the year-on-year change cannot be calculated
1. Appointed Executive Director on 3 February 2021.
2. Stepped down as Executive Director on 3 February 2021, employed until 25 May 2021.
3. Stepped down from the Board on 1 December 2021.
4. Appointed to the Board on 1 September 2021 and Chair from 1 December 2021.
5. Stepped down from the Board on 23 December 2020.
6. Stepped down from the Board on 21 December 2020.
7. Appointed to the Board on 17 November 2020.
8. Appointed to the Board on 1 September 2022.
9. Stepped down from the Board on 30 September 2022.
10. Will step down from the Board at the 2023 AGM.
11. There are no employees in easyJet plc, therefore, the Committee decided to use the average for all UK employees as the appropriate comparator group
given they comprise over 50% of total employees and therefore this is considered to be the most representative for comparison. There was a general
salary increase for UK employees of 3% in July 2022, however, this excluded cabin crew and pilots. This reflects the change in FY22, outlined earlier, the
average change in pay for FY23 is expected to be over 6%.
12. Benefits relate to the cost to the Company of life assurance and other insurance, as well as reimbursements made to the Chief Executive for business-
related travel expenses in respect of domestic car travel, noting that life assurance cover was improved to 4x basic salary in the year in line with other UK
employees.
Relative importance of spend on pay
The table below shows the total pay for all easyJet’s employees compared to other key financial indicators.
Employee costs (£ million)
Ordinary dividend (£ million)
Average monthly number of employees
Revenue (£ million)
Headline (loss)/profit before tax (£ million)
Year ended
30 September 2022
Year ended
30 September 2021
948
–
13,951
5,796
(178)
623
–
13,6892
1,458
(1,136)
Change %
52%
0%
2%
296%
(84%)
1. Additional information on the number of employees, total revenue and profit has been provided for context. The majority of easyJet’s employees
(around 90%) perform flight and ground operations, with the rest performing administrative and managerial roles.
2. Employee numbers were previously disclosed on a full-time equivalent basis. The disclosure is now reporting average headcount numbers and prior year
has been restated.
120 easyJet plc Annual Report and Accounts 2022
Chief Executive pay ratio
The table below sets out the Chief Executive pay ratio as at 30 September 2022. The report will build up over time to show a rolling
10-year period. The ratios compare the single total figure of remuneration of the Chief Executive with the equivalent figures for the lower
quartile (P25), median (P50) and upper quartile (P75) employees.
We have used the ‘Option A’ methodology which uses actual earnings for the Chief Executive Officer and UK employees over the
financial year to provide the most accurate comparison. The total FTE remuneration paid during the year for each employee in each of
the groups was then calculated, on the same basis as the information set out in the single figure table for the Chief Executive on
page 108.
In calculating the figures, the following considerations were made:
• The single total figure of remuneration of our UK colleagues was calculated as at 30 September 2022
• Annual bonus will be paid in relation to the year ended 30 September 2022
• No LTIPs will vest in relation to the year ended 30 September 2022
• Earnings for those who are part-time or joined during the year have been annualised on an FTE basis
• This data then identified those employees at the 25th, 50th (median) and 75th percentile points
Year
2020
2021
2022
2022
2022
25th percentile
75th percentile
Method
pay ratio
Median pay ratio
Option A
Option A
Option A
Total pay and benefits
Salary
30:1
27:1
110:1
£27,002
£15,576
23:1
21:1
82:1
£36.312
£25,698
pay ratio
12:1
10:1
36:1
£83,422
£66,335
Unlike the total remuneration for the majority of employees, total remuneration for the Chief Executive is mostly dependent on business
performance and share price movements over time. As a result, the ratios may fluctuate significantly from year to year. For example no
bonus was paid in 2020 or 2021 but will be paid in 2022. This is a significant portion of the Chief Executive’s total remuneration in 2022
and this is reflected in the pay ratio. The Committee has agreed that the ratio reflects easyJet’s wider policies on pay and reward in line
with market, experience, and skills.
Statement of shareholders’ voting at AGM
The table below provides details of shareholder voting in respect of the Directors’ Remuneration Policy (approved in February 2022), and
the annual report on remuneration (in February 2022).
Votes cast in favour
Votes cast against
Total votes cast in favour or against
Votes withheld
Policy
(February 2022 AGM)
Annual report on remuneration
(February 2022 AGM)
186,561,503
67,687,412
254,248,915
19,999,292
73.38%
26.62%
100%
–
258,407,932
7,355,130
265,763,062
8,482,821
97.23%
2.77%
100%
–
The 2022 Remuneration Policy was approved by shareholders at the 2022 AGM although the Committee notes the number of votes
against the resolution. While the Committee understood the rationale for certain shareholders voting against the resolutions, typically in
regards to the quantum of awards or the details of the underpins being considered, it contacted them again following the AGM to offer
further engagement on the Company’s approach to remuneration and the reasons taken for the approach. Whilst further changes may
be considered in the future, the Committee felt that this was the right structure at this time. The Board continues to believe that the
updated Remuneration Policy not only supports long-term strategic decision making and helps retain and motivate management to drive
the performance of the business as we continue to recover from the pandemic, but also supports the longer-term performance of the
business including delivering sustainable shareholder value. Further detail is included on page 88.
Advisers to the Remuneration Committee
The Remuneration Committee is advised by Deloitte which was appointed by the Committee in 2021 following an independent review
process. Deloitte advises the Committee on developments in executive pay and on the operation of easyJet’s incentive plans. Other than
to the Committee, advice is also provided to easyJet in relation to, for example, senior management pay practices and the fees of the
Non-Executive Directors. Total fees (excluding VAT) paid to Deloitte in respect of services to the Committee during the 2022 financial
year were £75,700, based on time and materials. Deloitte is a founding member of the Remuneration Consultants Group and a signatory
to its Code of Conduct. Any advice received is governed by that code. Deloitte LLP also provided strategic and technology consulting
and wider risk advisory and assurance services to the Company during the year.
The Committee is satisfied that the Deloitte engagement team, which provides remuneration advice to the Committee, does not have
connections with easyJet plc or its Directors that may impair its independence. The Committee has reviewed the operating processes in
place at Deloitte and is satisfied that the advice it receives is independent and objective.
easyJet.com
121
GOVERNANCE DI RE CTORS’ REPORT
DIRECTORS’ REPORT
The Directors present their Annual Report
and Accounts together with the audited
consolidated financial statements for the
year ended 30 September 2022. This
Directors’ Report and the Strategic Report,
which includes the trends and factors likely
to affect the future development,
performance and position of the business
and a description of the principal risks and
uncertainties of the Group (which can be
found on pages 59 to 69 and are
incorporated by reference), collectively
comprise the management report as
required under the Disclosure Guidance
and Transparency Rules (DTRs).
Results and dividend
The loss for the financial year after taxation
amounts to £169 million (last year: loss of
£858 million).
Given a reported loss, the Board is not
recommending the payment of a dividend
in respect of the year ended 30 September
2022. The Board is mindful of the
importance of capital returns to
shareholders and will reassess the potential
for, and structure of future shareholder
cash returns when the market conditions
and financial performance of the Group
allows. Details of any important events
affecting the Group since the year end can
be found on page 176.
Board
Board of Directors and
their interests
Details of the Directors who held office at
the end of the year and their biographical
details are set out on pages 74 to 77.
Changes to the Board during the year and
up to the date of this report are set out on
page 77. The Directors’ interest in the
ordinary shares and options of the
Company are disclosed within the Directors’
Remuneration Report on pages 116 to 118.
Appointment and retirement
of Directors
The Directors may from time to time
appoint one or more Directors. Any such
Director shall hold office only until the next
Annual General Meeting (AGM) and shall
then be subject to appointment by the
Company’s shareholders.
It is the current intention that at the
Company’s next AGM all continuing
Executive and Non-Executive Directors will
retire and offer themselves for
reappointment. Further information is set
out in the Governance section on page 92.
Directors’ conflicts of interest
Directors have a statutory duty to avoid
situations in which they have, or may have,
interests that conflict with those of easyJet,
unless that conflict is first authorised by the
Board. The Company has in place
procedures for managing conflicts
of interest. The Company’s Articles
of Association also contain provisions to
allow the Directors to authorise potential
conflicts of interest so that a Director is not
in breach of his or her duty under company
law. Should a Director become aware that
he or she has an interest, directly or
indirectly, in an existing or proposed
transaction with easyJet, he or she should
notify the Board in line with the Company’s
Articles of Association. Directors have a
continuing duty to update any changes to
their conflicts of interest.
Directors’ indemnities
Directors’ and officers’ insurance cover has
been established for all Directors to provide
appropriate cover for their reasonable
actions on behalf of the Company. A deed
was executed in 2007 indemnifying each
of the Directors of the Company and/or its
subsidiaries as a supplement to the
directors’ and officers’ insurance cover.
The indemnities, which constitute a
qualifying third-party indemnity provision as
defined by section 234 of the Companies
Act 2006, were in force during the 2022
financial year and remain in force for all
current and past Directors of the Company.
Employees
Employees with a disability
As part of our commitment to diversity and
inclusion, we treat every applicant in our
recruitment process fairly, including those
requiring reasonable adjustments. We also
continue to support employees who
require reasonable adjustments to achieve
their full potential. However, for our two
largest communities, pilots and cabin crew,
we are bound by regulatory requirements
for ability with which all applicants and
employees must comply, for operational
safety reasons.
Communication and engagement
Details on how the Board and management
have communicated and engaged with
employees and the wider workforce
while taking into account their interests
in decision making during the year can
be found in the Stakeholder engagement
section on pages 26 to 27 and the
Corporate Governance Report on pages 86
to 87.
122 easyJet plc Annual Report and Accounts 2022
Participation in share schemes
A key component of easyJet’s reward
philosophy is to provide share ownership
opportunities throughout the Group by
making annual awards of performance-
related shares to all eligible employees
when certain criteria are met. In addition,
easyJet operates a voluntary discounted
share purchase arrangement for all
employees via a Save As You Earn scheme,
and a Buy As You Earn arrangement in the
UK under the tax-approved Share Incentive
Plan. Further details of the Company’s
share schemes are set out in the Directors’
Remuneration Report on page 118.
Stakeholders
Details on the methods the Board has used
to engage and build strong business
relationships with the Group’s suppliers,
customers and other key stakeholders are
given on pages 26 to 29 of the Strategic
Report. Further information on how the
Board considered stakeholders in its
decision making can be found in the
Corporate Governance Report on page 86
to 87. The section 172 statement is available
on page 27 of the Strategic Report.
Shares
Share capital and rights
attaching to shares
The Company’s issued share capital as at
30 September 2022 comprised a single
class of ordinary shares. Further details of
the Company’s share capital during the
year are disclosed in note 21 to the
consolidated financial statements.
All of the issued ordinary shares are
fully paid and rank equally in all respects.
The rights and obligations attaching
to the Company’s ordinary shares are set
out in its Articles of Association. Holders
of ordinary shares are entitled, subject to
any applicable law and the Company’s
Articles of Association, to:
• have shareholder documents made
available to them, including notice of any
general meeting;
• attend, speak and exercise voting rights
at general meetings, either in person or
by proxy, unless they are subject to
disenfranchisement; and
• participate in any distribution of income
or capital.
Directors’ powers in relation to
issuing or buying back shares
Subject to applicable law and the
Company’s Articles of Association the
Directors may exercise all powers of the
Company, including the power to authorise
the issue and/or market purchase
of the Company’s shares (subject to
an appropriate authority being given
to the Directors by shareholders in a
general meeting and any conditions
attaching to such authority).
At the AGM held on 10 February 2022,
the Directors were given the following
authority:
• to allot shares up to a nominal amount
of £68,253,388 representing
approximately one-third of the
Company’s then-issued share capital;
• to allot shares comprising equity
securities up to a further aggregate
nominal amount of £68,253,388 in
connection with an offer by way of a
rights issue, representing approximately
one-third of the Company’s then issued
share capital;
• to allot shares, without first offering
them to existing shareholders in
proportion to their holdings, up to a
maximum nominal value of £10,341,422,
representing approximately 5% of the
Company’s then issued share capital; and
• to purchase in the market a maximum
of 75,801,002 shares representing
approximately 10% of the Company’s
then share capital.
No other shares were allotted or bought
back under the above authorities during
the year and up to the date of this report.
The Directors will seek to renew the
authorities at the next AGM as a matter
of routine.
Voting rights and restrictions on
transfer of shares
None of the ordinary shares carry any
special rights with regard to control
of the Company. There are no restrictions
on transfers of shares other than:
• certain restrictions which may from
time to time be imposed by laws or
regulations such as those relating to
insider dealing;
• pursuant to the Company’s Share
Dealing Code, whereby the Directors and
designated employees require approval
to deal in the Company’s shares;
• where a person with an interest in the
Company’s shares has been served with
a disclosure notice and has failed to
provide the Company with information
concerning interests in those shares;
• where a proposed transferee of
the Company’s shares has failed
to provide to the Directors a declaration
of nationality (together with such
evidence as the Directors may require)
as required by the Company’s Articles
of Association; and
• the powers given to the Directors by the
Company’s Articles of Association to
implement disenfranchisement and to
limit the ownership of the Company’s
shares by non-UK nationals or, following
a decision of the Directors, by non-EU
nationals, and powers to enforce this
limitation, including the right to force a
sale of any affected shares.
There are no restrictions on exercising
voting rights save in situations where the
Company is legally entitled to impose such
a restriction (for example under the Articles
of Association where an Affected Share
Notice has been served, amounts remain
unpaid in the shares after request,
or the holder is otherwise in default
of an obligation to the Company).
Those shareholders who own shares whose
voting rights will be suspended at the AGM
will receive an Affected Share Notice by
post from Equiniti, our registrars in January
2023 notifying them of the suspension of
voting rights in respect of their Affected
Shares. Shareholders in receipt of an
Affected Share Notice will not be entitled
to attend, speak or vote at the AGM, in
respect of those shares subject to an
Affected Share Notice. The Company is not
aware of any other arrangements between
shareholders that may result in restrictions
on the transfer of securities or voting
rights.
Variation of rights
Subject to the Companies Act 2006, rights
attached to any class of shares may be
varied with the consent in writing of the
holders of three-quarters in nominal value
of the issued shares of the class or with the
sanction of a special resolution passed at
a separate general meeting of such class.
Employee share schemes – rights
of control
The trustees of the easyJet UK Share
Incentive Plan, which is used to acquire and
hold shares in the Company for participants
in the UK Share Incentive Plan, does not
seek to exercise voting rights on shares
held other than on direction of the
underlying beneficiaries. The trustees take
no action in respect of ordinary shares for
which they have received no direction to
vote, or in respect of ordinary shares which
are unallocated.
The trustee of the easyJet plc Employee
Benefit Trust (the Trust), which is used
to acquire and hold shares in the Company
for the benefit of employees, including in
connection with the easyJet Long Term
Incentive Plan, the International Share
Incentive Plan and Save As You Earn plans,
has the power to vote or not vote, at its
absolute discretion, in respect of any
shares in the Company held unallocated in
the Trust. However, in accordance with
good practice, the trustee adopts a policy
of not voting in respect of such shares.
Both the trustees of the easyJet UK Share
Incentive Plan and the easyJet plc
Employee Benefit Trust have a dividend
waiver in place in respect of shares which
are the beneficial property of each
of the trusts.
easyJet.com
123
GOVERNANCE DI RE CTORS’ REPORT (CONTINUE D)
Additional information
Substantial interests
As at 30 September 2022 the Company had been notified of the following disclosable interests in its issued ordinary shares in
accordance with DTR 5:
The Haji-Ioannou family concert party shareholding, consisting of easyGroup Holdings
Limited (holding vehicle for Sir Stelios Haji-Ioannou and Clelia Haji-Ioannou) and Polys
Haji-Ioannou (through his holding vehicle Polys Holdings Limited)
Societe Generale
Number of shares as
% of issued share capital as
notified to the Company
at 30 September 2022
115,737,821
33,384,779
15.27%
4.40%
The Company was not notified of any changes between 30 September 2022 and 29 November 2022.
Annual General Meeting
The Board currently intends to hold the
AGM on 9 February 2023. The
arrangements for the Company’s
2023 AGM and details of the resolutions
to be proposed, together with explanatory
notes, will be set out in the Notice of AGM
to be published on the Company’s website.
Articles of Association
The Company’s Articles of Association may
only be amended by a special resolution
at a general meeting of the shareholders.
The Company’s Articles of Association
were last amended at the AGM on 23
December 2020. A copy of the Articles
is available on the Company’s website:
https://corporate.easyjet.com/investors.
Branches
The Group, through various subsidiaries,
has established branches in France,
Germany, Italy, Netherlands, Portugal and
Spain, in which the business operates.
Financial instruments
Details of the Group’s use of financial
instruments, together with information on
our financial risk management objectives
and policies, hedging policies and our
exposure to financial risks, can be found in
notes 25 and 26 of the consolidated
financial statements.
Going concern and viability
statement
The Company’s going concern and viability
statement are detailed on pages 70 and 71
of the Strategic Report.
Independent auditor and
disclosure of information to the
auditor
Each Director has taken all the steps that
they ought to have taken as a Director in
order to make themself aware of any
relevant audit information and to establish
that the Group’s auditor is aware of that
information. So far as each Director is
aware, there is no relevant audit
information of which the Group’s auditor
is unaware. A resolution to reappoint
PricewaterhouseCoopers LLP as auditor
of the Group will be put to shareholders
at the forthcoming AGM.
Political donations and
expenditure
easyJet works constructively with all
levels of government across its network,
regardless of political affiliation. easyJet
believes in the rights of individuals to
engage in the democratic process;
however, it is easyJet’s policy not to make
political donations. There were no political
donations made or political expenditure
incurred during the 2022 financial year.
Greenhouse gas emissions and
energy consumption
Details of the Company’s greenhouse gas
emissions (GHG), energy consumption,
energy efficiency action and Streamlined
Energy and Carbon Reporting (SECR)
disclosures can be found on page 33 of the
Strategic Report.
Significant agreements – change
of control
The Company licenses the easyJet brand
from easyGroup Limited. Further details
are set out in note 29 to the financial
statements.
The following significant agreements, which
were in force at 29 November 2022, take
effect, alter or terminate on a change of
control of the Company.
EMTN Programme and
Eurobond issue
On 7 January 2016, the Group established
a Euro Medium Term Note Programme
(the EMTN Programme) which provides the
Group with a standardised documentation
platform to allow for senior unsecured debt
issuance in the Eurobond markets. The
maximum potential issuance under the
EMTN Programme is £4 billion.
Under the EMTN Programme, the following
notes (the Notes) have been issued by the
Company and easyJet Finco B.V.:
• February 2016: Eurobonds consisting
of €500 million guaranteed Notes
paying 1.75% coupon and maturing
in February 2023;
• October 2016: Eurobonds consisting
of €500 million guaranteed Notes
paying 1.125% coupon and maturing
in October 2023;
• June 2019: Eurobonds consisting
of €500 million guaranteed Notes
paying 0.875% coupon and maturing
in June 2025; and
• March 2021: Eurobonds consisting
of €1.2 billion guaranteed Notes
paying 1.875% interest and maturing
in March 2028.
124 easyJet plc Annual Report and Accounts 2022
Pursuant to the final terms attaching
to the Notes, the Company will be required
to make an offer to redeem or purchase
the notes at their principal amount plus
interest up to the date of redemption or
repurchase if there is a change of control
of the Company which results in a
downgrade of the credit rating of the
Notes to a non-investment grade rating
or withdrawal of the rating by both
Moody’s and Standard & Poor’s.
UK Export Finance Facilities
Agreement
On 7 January 2021, easyJet entered into
a five-year term loan facility of $1.87 billion
underwritten by a syndicate of banks and
supported by a partial guarantee from
UK Export Finance under their Export
Development Guarantee Scheme.
$100 million of this facility was repaid
in April 2022 reducing the overall facility
size from $1.87 billion to $1.77 billion.
Revolving Credit Facility
The Group is party to a Revolving Credit
Facility (RCF) which contains change of
control provisions. The current RCF
amounts to a $400 million commitment,
supported by a consortium of five banks,
and has a termination date of September
2025 (unless extended).
Other agreements
The Company does not have agreements
with any Director or employee that would
provide compensation for loss of office or
employment resulting from a change of
control on takeover, except that provisions
of the Company’s share schemes and plans
may cause options and awards granted to
employees under such schemes and plans
to vest on a takeover.
The Annual Report and Accounts
have been drawn up and presented in
accordance with UK company law and the
liabilities of the Directors in connection with
the report shall be subject to the limitations
and restrictions provided by such law.
easyJet plc is incorporated as a public
limited company and is registered in
England under number 3959649.
easyJet plc’s registered office is
Hangar 89, London Luton Airport, Luton,
Bedfordshire LU2 9PF.
The Strategic Report (comprising pages 1
to 71) and Directors’ Report (comprising
pages 72 to 105 and 122 to 125) were
approved by the Board and signed on its
behalf by the Company Secretary.
By order of the Board
Maaike de Bie
Company Secretary
London, 29 November 2022
Disclosures required under Listing Rule 9.8.4
The information to be included in the 2022 Annual Report and Accounts under LR 9.8.4, where applicable, can be located as set
out below.
Information
Details of long-term incentive schemes
Shareholder waiver of future dividends
Other information that is relevant to this report, and which is incorporated by reference, can be located as follows:
Information
Membership of Board during 2022 financial year
Directors’ service contracts
Financial instruments and financial risk management
Greenhouse gas emissions, energy consumption and energy efficiency
Environmental, Social and Governance (ESG) matters
Corporate governance report
Future developments of the business of the Group
Employee equality, diversity and inclusion
Employee engagement
Stakeholder engagement
Section 172 Statement
Hedge accounting policies
Activities in relation to Research and Development
Post balance sheet events
Page
165-167
123
Page
74-77
119
168-175
33
12-13, 30-47
84-121
6-23
24-25
24-27
26-29
27
146-147
20-21, 32-42
176
easyJet.com
125
GOVERNANCE In the case of each Director in office at the
date the Directors’ Report is approved:
• so far as the Director is aware, there is
no relevant audit information of which
the Group’s and Company’s auditors are
unaware; and
• they have taken all the steps that they
ought to have taken as a Director in
order to make themselves aware of any
relevant audit information and to
establish that the Group’s and
Company’s auditors are aware of that
information.
The Annual Report on pages 1 to 126 was
approved by the Board of Directors and
authorised for issue on 29 November 2022
and signed on its behalf by:
JOHAN LUNDGREN
Chief Executive
KENTON JARVIS
Chief Financial Officer
DI RE CTORS’ REPORT (CONTINUE D)
The directors are also responsible for
keeping adequate accounting records that
are sufficient to show and explain the
Group’s and Company’s transactions and
disclose with reasonable accuracy at any
time the financial position of the Group and
Company and enable them to ensure that
the financial statements and the Directors’
Remuneration Report comply with the
Companies Act 2006.
The directors are responsible for the
maintenance and integrity of the
Company’s website. Legislation in the
United Kingdom governing the preparation
and dissemination of financial statements
may differ from legislation in other
jurisdictions.
Directors’ confirmations
Each of the Directors, whose names and
functions are listed on pages 74 to 77
confirm that, to the best of their
knowledge:
• the Group financial statements, which
have been prepared in accordance with
UK-adopted international accounting
standards, give a true and fair view of
the assets, liabilities, financial position
and loss of the Group;
• the Company financial statements, which
have been prepared in accordance with
United Kingdom Accounting Standards,
comprising FRS 101, give a true and fair
view of the assets, liabilities and financial
position of the Company; and
• the Strategic Report, included in the
Annual Report, includes a fair review of
the development and performance of
the business and the position of the
Group and Company, together with a
description of the principal risks and
uncertainties that it faces.
Statement of Directors’
responsibilities in respect of
the financial statements
The Directors are responsible for preparing
the Annual Report and Accounts 2022 and
the financial statements in accordance with
applicable law and regulation.
Company law requires the Directors to
prepare financial statements for each
financial year. Under that law the Directors
have prepared the Group financial
statements in accordance with UK-adopted
international accounting standards and
the Company financial statements in
accordance with United Kingdom Generally
Accepted Accounting Practice (United
Kingdom Accounting Standards,
comprising FRS 101 “Reduced Disclosure
Framework”, and applicable law).
Under company law, directors must not
approve the financial statements unless
they are satisfied that they give a true and
fair view of the state of affairs of the Group
and Company and of the profit or loss of
the Group for that period. In preparing the
financial statements, the directors are
required to:
• select suitable accounting policies
and then apply them consistently;
• state whether applicable UK-adopted
international accounting standards have
been followed for the Group financial
statements and United Kingdom
Accounting Standards, comprising FRS
101 have been followed for the Company
financial statements, subject to any
material departures disclosed and
explained in the financial statements;
• make judgements and accounting
estimates that are reasonable and
prudent; and
• prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the Group
and Company will continue in business.
The directors are responsible for
safeguarding the assets of the Group and
Company and hence for taking reasonable
steps for the prevention and detection of
fraud and other irregularities.
126 easyJet plc Annual Report and Accounts 2022
Independent auditors’ report
to the members of easyJet Plc
Report on the audit of the financial statements
Opinion
In our opinion:
• easyJet Plc’s Group financial statements
and Company financial statements (the
“financial statements”) give a true and
fair view of the state of the Group’s and
of the Company’s affairs as at 30
September 2022 and of the Group’s
loss and the Group’s cash flows for the
year then ended;
• the Group financial statements have
been properly prepared in accordance
with UK-adopted international
accounting standards;
• the Company financial statements have
been properly prepared in accordance
with United Kingdom Generally
Accepted Accounting Practice (United
Kingdom Accounting Standards,
comprising FRS 101 “Reduced Disclosure
Framework”, and applicable law); and
• the financial statements have been
prepared in accordance with the
requirements of the Companies Act
2006.
We have audited the financial statements,
included within the Annual Report and
Accounts 2022 (the “Annual Report”),
which comprise: Consolidated and
Company statements of financial position
as at 30 September 2022; Consolidated
income statement and Consolidated
statement of comprehensive income, the
Consolidated and Company statements of
changes in equity, and the Consolidated
statement of cash flows for the year then
ended; and the notes to the financial
statements, which include a description of
the significant accounting policies.
Our opinion is consistent with our
reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance
with International Standards on Auditing
(UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further
described in the Auditors’ responsibilities
for the audit of the financial statements
section of our report. We believe that the
audit evidence we have obtained is
sufficient and appropriate to provide a
basis for our opinion.
Independence
We remained independent of the Group in
accordance with the ethical requirements
that are relevant to our audit of the
financial statements in the UK, which
includes the FRC’s Ethical Standard, as
applicable to listed public interest entities,
and we have fulfilled our other ethical
responsibilities in accordance with these
requirements.
To the best of our knowledge and belief,
we declare that non-audit services
prohibited by the FRC’s Ethical Standard
were not provided.
Other than those disclosed in note 3 to
the financial statements and the Audit
Committee Report, we have provided no
non-audit services to the Company in the
period under audit.
Our audit approach
Context
There were no significant changes to the
Group’s operations during the year. Travel
restrictions across Europe and particularly
in the UK market continued to ease
throughout the year. Whilst this resulted in
some operational challenges for the
business and across the industry as
passenger volumes returned, by the final
quarter of the financial year more
normalised levels of trading had returned,
broadly equivalent to pre-pandemic levels.
easyJet holidays also grew significantly
during the year as it experienced its first
summer of trading without extensive
travel restrictions in place, generating a
profit for the first time since its launch in
late 2019.
There are a number of changes to our key
audit matters this year as explained later
in the report. This year we have continued
to specifically set out our consideration of
the impact of climate change on the audit
which is further explained below. Climate
change risk is expected to have a
significant impact on the aviation industry.
As explained in the Sustainability Report
the Group is clearly mindful of their impact
on the environment and in September
2022 set out their roadmap to net zero
carbon emissions by 2050, including an
interim target to have reduced well-to
wake GHG emissions by 35% by 2035,
aligned with the Science-Based Targets
initiative and how they aim to deliver on
these targets.
In planning and executing our audit we
have considered the Group’s risk
assessment process and the steps the
business expects to take to deliver on its
GHG emissions targets (described in the
Sustainability Report above, see page 30).
This, together with discussions with our
own sustainability specialists, provided us
with a good understanding of the
potential impact of climate change on the
financial statements. We assessed that
the key financial statement line items and
estimates which are more likely to be
materially impacted by climate risks are
those associated with future cash flows,
given the more notable impacts of climate
change on the business are expected to
arise in the medium to long term. These
include the impairment assessment of
goodwill and landing rights, the
assessment of impairment of the total
investment held by easyJet plc (as a
standalone Company) in easyJet Airline
Company Limited (including intercompany
receivables) and the recoverability of the
Group’s deferred tax assets; our key audit
matters further explain how we have
evaluated the impact of climate change in
these areas. We have also specifically
considered how easyJet’s net zero targets
impact on likely aircraft ownership periods,
residual value changes for less fuel-
efficient aircraft, and the related impact
on ongoing depreciation charges in
respect of aircraft assets held at 30
September 2022.
Whilst the Group has started to quantify
some of the impacts that may arise on its
pathway towards its net zero targets, the
future financial impacts are clearly
uncertain given the medium to long term
time horizon and the technological
advancements that will be necessary
including zero emissions aircraft. We have
discussed with management and the
Audit Committee that the estimated
financial impacts of climate change, which
are expected to be significant, will need to
be frequently reassessed and our
expectation that climate change
disclosures will continue to evolve as
easyJet.com
127
FINANCIAL STATEMENTS IN D EPENDENT AUDIT ORS’ REP OR T (CONT INUE D)
greater understanding of the actual and
potential impacts on the Group’s future
operations is obtained.
• Assessment of impairment of goodwill
and other intangible assets (Group)
• Recoverability of deferred tax assets
Overview
Audit scope
• We performed full scope audit
procedures over the Company and two
individually significant components in
the Group. Procedures over material
financial statement lines were
performed in five further components.
• Separate audit procedures were
performed in relation to consolidation
adjustments and balances which arise
on consolidation of the Group financial
statements, including goodwill and post-
employment benefit obligations.
• This provided coverage of 100% of
external consolidated revenue and 95%
of the consolidated loss before tax.
Key audit matters
• Assessment of impairment of easyJet
plc’s investment in, and recoverability of
intercompany receivables due from,
easyJet Airline Company Limited
(parent)
• Valuation of the leased aircraft
maintenance provision (Group)
(Group)
Materiality
• Overall Group materiality: £21,500,000
(2021: £21,500,000) based on an
average of 5% of headline profit/loss
before tax over the last 5 years on an
absolute basis, capped at £21.5 million.
• Overall Company materiality:
£19,350,000 (2021: £19,350,000) based
on 1% of total assets, capped at 90% of
Group materiality.
• Performance materiality: £16,125,000
(2021: £16,125,000) (Group) and
£14,500,000 (2021: £14,500,000)
(Company).
The scope of our audit
As part of designing our audit, we
determined materiality and assessed the
risks of material misstatement in the
financial statements.
Key audit matters
Key audit matters are those matters that,
in the auditors’ professional judgement,
were of most significance in the audit of
the financial statements of the current
period and include the most significant
assessed risks of material misstatement
(whether or not due to fraud) identified by
the auditors, including those which had
the greatest effect on: the overall audit
strategy; the allocation of resources in the
audit; and directing the efforts of the
engagement team. These matters, and
any comments we make on the results of
our procedures thereon, were addressed
in the context of our audit of the financial
statements as a whole, and in forming our
opinion thereon, and we do not provide a
separate opinion on these matters.
This is not a complete list of all risks
identified by our audit.
The assessment of impairment of easyJet
plc’s investment in, and recoverability of
intercompany receivables due from,
easyJet Airline Company Limited is a new
key audit matter this year relevant to the
Company. Going concern, Estimates in the
valuation of owned aircraft assets and
Impact of the Covid-19 pandemic, which
were key audit matters last year, are no
longer included because the risks
associated with these matters have
significantly reduced in the current year.
Otherwise, the key audit matters below
are consistent with last year.
How our audit addressed the key audit matter
Key audit matter
Assessment of impairment of easyJet plc’s investment in, and recoverability of intercompany receivables due from, easyJet Airline
Company Limited (parent)
At 30 September 2022, easyJet plc holds an investment
of £1,000m (2021: £970m) and intercompany
receivables of £3,400m (2021: £3,575m), with easyJet
Airline Company Limited (EACL), resulting in a total
investment (total investment) balance of £4,400m.
the purposes of performing the assessment of impairment of the total
investment held in EACL. These cash flows were assessed as described in
the ‘Assessment of impairment of goodwill and other intangible assets
(Group)’ key audit matter below.
• We have concluded that using the Airline CGU cash flows is appropriate for
The directors have considered the cash flow projections
for the Airline CGU (“CGU”), used in the value in use
(‘‘VIU’’) calculation performed for the assessment of
impairment of goodwill and other intangible assets of
the Group. These cash flows are also considered to be
the relevant cash flows for the purposes of assessing
impairment of the total investment in EACL.
We focused on the risk of impairment as the impairment
test involves estimates to be made by management,
many of which are forward-looking. These estimates
include key assumptions underpinning the strategic plan,
fuel prices including exchange rates (including the ability
of cost increases to be passed through to the
customer), contracted increases in fleet size, revenue
per seat and long-term economic growth rates and the
impacts of climate change on future cash flows. In
addition we noted a potentially heightened risk in the
current year due to the decline in market capitalisation.
Refer to the Accounting policies, judgements and
estimates note (note 1), Note 10 to the consolidated
financial statements and Note c) to the Company
financial statements, for management’s disclosures of
the relevant judgements and estimates involved in
assessing the total investment balance for impairment.
• We evaluated the appropriateness of management’s sensitivity analysis of
reasonable alternative individual and combined risk scenarios, which was
consistent with the sensitivity analysis performed as described in the
‘Assessment of impairment of goodwill and other intangible assets (Group)’
key audit matter below. This included the same consideration in respect of
the additional impacts which could arise in the future as a result of climate
change. Having also performed our own independent sensitivity analysis,
consistent with the assessment of the goodwill and other intangibles
balance below, we concluded that there were no reasonably possible
scenarios which gave rise to an impairment of the total investment held.
• We assessed the implied enterprise value based on current market
capitalisation and compared this to the underlying CGU assets carrying
value. We have also understood management’s rationale for the difference
between the current implied enterprise value and the cash flows derived on
a VIU basis. The evidence obtained supports management’s conclusion that
there is no impairment required to the total investment in EACL.
• We reviewed the adequacy of disclosures made in the financial statements
and assessed compliance with disclosure requirements, including
challenging management to be transparent about the underlying risk
scenarios which have been assessed and embedded into its future cash
flow assumptions.
Based on our work summarised above, we have concluded that the
investment in and amounts due from, easyJet Airline Company Limited are
not impaired at 30 September 2022 and that appropriate assumption and
sensitivity disclosures have been made in the financial statements.
128 easyJet plc Annual Report and Accounts 2022
How our audit addressed the key audit matter
Key audit matter
Valuation of the leased aircraft maintenance provision (Group)
The Group operates aircraft which are held
under lease arrangements and for which it
incurs liabilities for maintenance costs
during the term of the lease. These arise
from legal and contractual obligations
relating to the condition of the aircraft when
they are returned to the lessor. Maintenance
provisions of £636 million (2021: £550
million) for aircraft maintenance costs in
respect of leased aircraft were recorded in
the financial statements at 30 September
2022. At each statement of financial
position date, the calculation of the
maintenance provision includes a number of
variable factors and assumptions including
primarily the expected cost of the heavy
maintenance check and the time it is
expected to occur.
We focused on this area because of the
inherent level of management estimation
required in calculating the amount of
provision needed as a result of the complex
and subjective elements around these
variable factors and assumptions.
• We evaluated the maintenance provision model and tested the calculations therein.
• We evaluated the judgements made by management to calculate certain elements of
the provision based on the expectation of incurring penalties rather than performing
maintenance restoration work before the lease end date. Where relevant we agreed
these penalty rates back to the contractual agreements.
• We assessed the process by which the variable elements within the provision are
estimated, evaluating the reasonableness of the assumptions, testing the input data and
re-performing calculations. Our testing has focussed on those elements of the cost
assumptions which are most exposed to estimation uncertainty, being the non-fixed
elements of the current estimate of event costs and the future inflation/escalation of
these costs to the date at which the event is expected to arise.
• We challenged the key assumptions using both the Group’s internal data, such as
maintenance contract terms and pricing, historical experience, business plans and
forecasts as well as external data points such as external contracts, industry
benchmarks and price indices. We also performed sensitivity analysis in respect of the
key cost and inflationary assumptions identified above, which are the elements most
exposed to estimation uncertainty. We found no material exceptions from these
assessments and comparisons.
• We have assessed the methodology by which the gross provision has been discounted
back to present value and considered it to be appropriate.
• Having ascertained the magnitude of movements in those key assumptions that would
be required for the provision to be misstated, we considered the likelihood of such
movements arising and any impact on the overall level of aircraft maintenance
provisions recorded in the financial statements. Our assessment as to likelihood and
magnitude of misstatement did not identify any material exceptions.
• We reviewed the adequacy of disclosures made in the financial statements and
challenged management to be clear on what the critical sources of estimation
uncertainty are with respect to this balance and to ensure that the sensitivity disclosures
provided are relevant to those specific areas.
Based on the work performed, as summarised above, we have concluded the Group’s
valuation of maintenance provisions on leased aircraft and disclosure of the related critical
estimates is materially appropriate.
Refer to the Accounting policies,
judgements and estimates note (note 1) and
Note 19, for management’s disclosures of
the relevant judgements and estimates
involved in assessing this provision valuation.
Refer to the Audit Committee report on
page 98 for a description of its assessment
of significant judgements.
Assessment of impairment of goodwill and other intangible assets (Group)
At 30 September 2022, the aggregate
value of goodwill and landing rights, which
are both assessed to have indefinite lives,
amounted to £523 million (2021: £533
million). Under IAS 36 ‘Impairment of Assets’,
goodwill must be tested for impairment at
least annually.
• We obtained management’s annual impairment assessment and ensured the
calculations were mathematically accurate and that the methodology used was in line
with the requirements of IAS 36 ‘Impairment of Assets’.
• We evaluated the future cash flow forecasts of the CGU, and the process by which the
forecasts were drawn up. In doing this, we confirmed that the forecasts used for the
impairment assessment were consistent with the latest available Board plans (excluding
the impact of easyJet holidays which is a separate CGU to which no goodwill is
assigned).
• We compared these plans to the final approved Board plans which we noted were
marginally more optimistic.
• We evaluated the inputs in the VIU calculation and challenged the key assumptions
including:
• assessment of short-term flying assumptions, seat pricing and load factors, long-term
growth rates in the forecasts and the impact of macro-economic trends by
comparing them to third party economic and industry forecasts;
• using our internal valuation experts to calculate an independent WACC rate range,
with reference to comparable businesses, to assess the appropriateness of the WACC
rate used in management’s assessment;
• assessment of the fuel price assumptions, to ensure the rates used at 30 September
2022 were appropriate and that sufficient disclosure of the underlying assumptions
for dealing with future potential fuel price volatility via pass through to customers
have been adequately disclosed in the financial statements; and
• we evaluated the extent to which the considerations of climate change, such as costs
associated with emissions trading schemes and the expected increased use of
sustainable aviation fuels, had been reflected in the underlying cash flows. This
included an assessment of the consistency of the assumptions used with the latest
impact assessments that have been carried out by easyJet’s sustainability team,
including the continuing fleet transition.
easyJet.com
129
All goodwill and landing rights belong to a
single Airline cash-generating unit (‘‘CGU’’),
being easyJet’s route network, and a single
value in use (‘‘VIU’’) calculation is performed
in order to assess their recoverability. We
focused on the risk of impairment as the
impairment test involves a number of
subjective judgements and estimates by
management, many of which are forward-
looking. These estimates include key
assumptions underpinning the strategic
plan, fuel prices including exchange rates
(including the ability of cost increases to be
passed through to the customer),
contracted increases in fleet size, revenue
per seat, long-term economic growth rates
and the impacts of climate change on
future cash flows.
FINANCIAL STATEMENTS IN D EPENDENT AUDIT ORS’ REP OR T (CONT INUE D)
Key audit matter
How our audit addressed the key audit matter
Assessment of impairment of goodwill and other intangible assets (Group) continued
Refer to the Accounting policies,
judgements and estimates note
(note 1) and Note 10, for
management’s disclosures of the
relevant judgements and estimates
involved in assessing goodwill and
landing rights for impairment. Refer
to the Audit Committee report on
page 98 for a description of its
assessment of significant
judgements.
• We recalculated management’s own sensitivity analysis of key assumptions used in the VIU
assessment. This included management’s assessment of a reasonably possible climate change
sensitivity. Whilst still assuming direct variable cost changes would be passed onto customers,
this scenario modelled a combination of factors being adjusted into perpetuity including potential
demand suppression, additional costs of compliance with the changing regulatory requirements
and an element of incremental capital expenditure due to technological changes into perpetuity.
• We also performed our own independent sensitivity testing to include the application of
reasonable alternative individual and combined risk scenarios in order to assess for any potential
material impairment under such conditions. This included running an alternative scenario that
ignores cash flows beyond 2040 to recognise the uncertainties relating to the transition to zero
emissions aircraft which is currently expected to commence at scale after this time horizon.
• We reviewed the adequacy of disclosures made in the financial statements and assessed
compliance with IAS 36 including challenging management to be transparent about the
underlying risks which have been assessed and the significant assumptions embedded in the
future cash flows.
Based on our work summarised above, we have concluded that goodwill and other intangible
assets balances are not impaired at 30 September 2022 and that appropriate assumption and
sensitivity disclosures have been made in the financial statements.
Recoverability of deferred tax assets (Group)
At 30 September 2022 significant
deferred tax assets(‘‘DTAs’’) of
£443 million (Sep 21: £425 million)
have been recognised, primarily in
respect of accumulated UK tax
losses.
We have focussed on this area
given the significant judgement
required in assessing whether full
recognition and recoverability of
the asset is appropriate. When
considering the accumulated losses
carried forward there continues to
be a long time horizon associated
with the future recovery of the
DTAs which therefore has a greater
level of uncertainty.
Refer to the Accounting policies,
judgements and estimates note
(note 1) and Note 6, for
management’s disclosures of the
relevant judgements and estimates
involved in assessing the
recoverability of DTAs.
Refer to the Audit Committee
report on page 98 for a description
of its assessment of significant
judgements.
• We obtained management’s calculation for assessing the recognition and recoverability of
deferred tax assets and assessed the methodology and ability to offset and recognise certain
DTAs against the unwind of existing deferred tax liabilities, primarily in respect of UK fixed assets.
• We have assessed the future profit forecasts which have been used to support the recognition
and recovery of DTAs (in excess of the amounts supported by existing DTLs). This included
assessment of whether the forecast operating profit each year had been appropriately adjusted
for tax purposes in order to estimate the quantum of future taxable profits. We have also
ensured that the methodology applied by management is in line with the requirements of IAS 12
and the associated guidance issued by the European Securities and Markets Authority. In
addition, we have reviewed additional sensitivity calculations prepared by management which
support the conclusion that full recognition of all DTA balances at 30 September 2022 is
appropriate.
• We assessed the consistency of the forecasts used to justify the recognition of DTAs to those
used elsewhere in the business such as in the assessment of goodwill and landing rights
recoverability and the Directors’ viability and going concern statements. Further assessment was
made of the forecasts for periods which extended beyond the period which had already been
assessed as part of our audit work in these other areas to ensure the assumptions used
appeared reasonable.
• In assessing the future forecasts across the relevant time horizon, whilst recognising the inherent
uncertainty in assessing the impacts which may arise, we challenged management as to whether
allowance had been made for the potential impact of climate change to reflect the current risks
which have been identified.
• We reviewed the adequacy of disclosures made in the financial statements in respect of this
judgemental estimate including challenging management to ensure this reflected the specific
underlying risks which have been assessed and embedded into its future cash flow assumptions
in the current year.
Based on our work summarised above, we have concluded that the full recognition of the DTAs at
30 September 2022 is appropriate and that appropriate disclosure of the judgements applied has
been included within the financial statements.
How we tailored the audit scope
We tailored the scope of our audit to
ensure that we performed enough work
to be able to give an opinion on the
financial statements as a whole, taking
into account the structure of the Group
and the Company, the accounting
processes and controls, and the industry
in which they operate.
The Group operates through the
Company and its fourteen subsidiary
undertakings of which nine were actively
trading through the year. The remaining
subsidiaries are either holding companies
or currently dormant. The accounting for
these subsidiaries, each of which is
considered to be a separate component
in the way we scope our audit, is primarily
centralised in the UK.
We determined the most effective
approach to scoping was to perform full
scope audit procedures over the
Company and two individually significant
components in the Group which are
registered in the UK. Procedures over
material financial statements lines were
performed in five further components. In
some cases, financial statement line items
are tested in aggregate to the Group
materiality where they arise on
consolidation. All Group audit work has
been performed by the UK Group
engagement team.
Additional audit procedures were
performed in relation to consolidation
adjustments by the UK Group
engagement team. The testing approach
ensured that appropriate audit evidence
was obtained over all financial statement
line items in order to support our opinion
on the Group financial statements as a
whole. Based on the detailed audit work
performed across the Group, we have
obtained coverage of 100% of external
consolidated revenue and 95% of the loss
before tax.
130 easyJet plc Annual Report and Accounts 2022
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These,
together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit
procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually
and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall
materiality
How we
determined it
Rationale for
benchmark
applied
Financial statements – group
£21,500,000 (2021: £21,500,000).
Financial statements – Company
£19,350,000 (2021: £19,350,000).
an average of 5% of headline profit/loss before tax over the
last 5 years on an absolute basis, capped at £21.5 million
We consider that the income statement remains the principal
measure used by the shareholders in assessing the underlying
performance of the Group and therefore an approach to
materiality based on 5% of the headline loss before tax has
been applied. However, given the volatility in trading caused by
the impact of Covid, we have used an average of the headline
profit/loss before tax over the last 5 years on an absolute basis,
capped at £21.5 million. This is consistent with the materiality
applied in 2021, 2020 and in 2019.
1% of total assets, capped at 90% of Group materiality
We believe that a total asset benchmark is appropriate
given that the Company does not generate revenues
of its own. The value is capped at 90% of the Group
overall materiality.
For each component in the scope of our
Group audit, we allocated a materiality
that is less than our overall Group
materiality. The range of materiality
allocated across components was
between £3,755,218 and £19,350,000.
Additional classes of transactions and
balances tested across other components
were audited to a materiality that was less
than our overall group materiality.
We use performance materiality to reduce
to an appropriately low level the
probability that the aggregate of
uncorrected and undetected
misstatements exceeds overall materiality.
Specifically, we use performance
materiality in determining the scope of our
audit and the nature and extent of our
testing of account balances, classes of
transactions and disclosures, for example
in determining sample sizes. Our
performance materiality was 75% (2021:
75%) of overall materiality, amounting to
£16,125,000 (2021: £16,125,000) for the
Group financial statements and
£14,500,000 (2021: £14,500,000) for the
Company financial statements.
In determining the performance
materiality, we considered a number of
factors - the history of misstatements, risk
assessment and aggregation risk and the
effectiveness of controls - and concluded
that an amount at the upper end of our
normal range was appropriate.
We agreed with the Audit Committee that
we would report to them misstatements
identified during our audit above
£1,075,000 (Group audit) (2021:
£1,075,000) and £1,075,000 (Company
audit) (2021: £1,075,000) as well as
misstatements below those amounts that,
in our view, warranted reporting for
qualitative reasons.
Conclusions relating to going
concern
Our evaluation of the directors’
assessment of the Group’s and the
Company’s ability to continue to adopt
the going concern basis of accounting
included:
• Review of management’s base case and
severe but plausible downside scenario,
ensuring the directors have considered
appropriate factors. This included
consideration of the cash flows against
current industry forecasts, the liquidity
position of the Group, available
financing facilities, the timing of
contractual debt repayments and
committed capital expenditure and the
relevant liquidity requirements that exist
as part of the contractual arrangements
with current card acquirers.
Based on the work we have performed,
we have not identified any material
uncertainties relating to events or
conditions that, individually or collectively,
may cast significant doubt on the group’s
and the Company’s ability to continue as a
going concern for a period of at least
twelve months from when the financial
statements are authorised for issue.
In auditing the financial statements, we
have concluded that the directors’ use of
the going concern basis of accounting in
the preparation of the financial
statements is appropriate.
However, because not all future events or
conditions can be predicted, this
conclusion is not a guarantee as to the
group’s and the Company’s ability to
continue as a going concern.
In relation to the directors’ reporting on
how they have applied the UK Corporate
Governance Code, we have nothing
material to add or draw attention to in
relation to the directors’ statement in the
financial statements about whether the
directors considered it appropriate to
adopt the going concern basis of
accounting.
Our responsibilities and the responsibilities
of the directors with respect to going
concern are described in the relevant
sections of this report.
Reporting on other information
The other information comprises all of the
information in the Annual Report other
than the financial statements and our
auditors’ report thereon. The directors are
responsible for the other information,
which includes reporting based on the
Task Force on Climate-related Financial
Disclosures (TCFD) recommendations.
Our opinion on the financial statements
does not cover the other information and,
accordingly, we do not express an audit
opinion or, except to the extent otherwise
explicitly stated in this report, any form of
assurance thereon.
In connection with our audit of the
financial statements, our responsibility is
to read the other information and, in doing
so, consider whether the other information
is materially inconsistent with the financial
statements or our knowledge obtained in
the audit, or otherwise appears to be
materially misstated. If we identify an
apparent material inconsistency or
material misstatement, we are required to
perform procedures to conclude whether
there is a material misstatement of the
financial statements or a material
misstatement of the other information. If,
based on the work we have performed,
we conclude that there is a material
misstatement of this other information, we
are required to report that fact. We have
nothing to report based on these
responsibilities.
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FINANCIAL STATEMENTS IN D EPENDENT AUDIT ORS’ REP OR T (CONT INUE D)
With respect to the Strategic report and
Directors’ Report, we also considered
whether the disclosures required by the
UK Companies Act 2006 have been
included.
Based on our work undertaken in the
course of the audit, the Companies Act
2006 requires us also to report certain
opinions and matters as described below.
Strategic report and Directors’
Report
In our opinion, based on the work
undertaken in the course of the audit, the
information given in the Strategic report
and Directors’ Report for the year ended
30 September 2022 is consistent with the
financial statements and has been
prepared in accordance with applicable
legal requirements.
In light of the knowledge and
understanding of the Group and Company
and their environment obtained in the
course of the audit, we did not identify
any material misstatements in the
Strategic report and Directors’ Report.
Directors’ Remuneration
In our opinion, the part of the Directors’
Remuneration Report to be audited has
been properly prepared in accordance
with the Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the
directors’ statements in relation to going
concern, longer-term viability and that
part of the corporate governance
statement relating to the Company’s
compliance with the provisions of the UK
Corporate Governance Code specified for
our review. Our additional responsibilities
with respect to the corporate governance
statement as other information are
described in the Reporting on other
information section of this report.
Based on the work undertaken as part of
our audit, we have concluded that each of
the following elements of the corporate
governance statement, included within the
Corporate Governance Report is materially
consistent with the financial statements
and our knowledge obtained during the
audit, and we have nothing material to
add or draw attention to in relation to:
going concern basis of accounting in
preparing them, and their identification
of any material uncertainties to the
Group’s and Company’s ability to
continue to do so over a period of at
least twelve months from the date of
approval of the financial statements;
• The directors’ explanation as to their
assessment of the Group’s and
Company’s prospects, the period this
assessment covers and why the period
is appropriate; and
• The directors’ statement as to whether
they have a reasonable expectation
that the Company will be able to
continue in operation and meet its
liabilities as they fall due over the period
of its assessment, including any related
disclosures drawing attention to any
necessary qualifications or assumptions.
Our review of the directors’ statement
regarding the longer-term viability of the
Group was substantially less in scope than
an audit and only consisted of making
inquiries and considering the directors’
process supporting their statement;
checking that the statement is in
alignment with the relevant provisions of
the UK Corporate Governance Code; and
considering whether the statement is
consistent with the financial statements
and our knowledge and understanding of
the Group and Company and their
environment obtained in the course of the
audit.
In addition, based on the work undertaken
as part of our audit, we have concluded
that each of the following elements of the
corporate governance statement is
materially consistent with the financial
statements and our knowledge obtained
during the audit:
• The directors’ statement that they
consider the Annual Report, taken as a
whole, is fair, balanced and
understandable, and provides the
information necessary for the members
to assess the Group’s and Company’s
position, performance, business model
and strategy;
• The section of the Annual Report that
describes the review of effectiveness of
risk management and internal control
systems; and
• The directors’ confirmation that they
have carried out a robust assessment of
the emerging and principal risks;
• The section of the Annual Report
describing the work of the Audit
Committee.
• The disclosures in the Annual Report
that describe those principal risks, what
procedures are in place to identify
emerging risks and an explanation of
how these are being managed or
mitigated;
• The directors’ statement in the financial
statements about whether they
considered it appropriate to adopt the
We have nothing to report in respect of
our responsibility to report when the
directors’ statement relating to the
Company’s compliance with the Code
does not properly disclose a departure
from a relevant provision of the Code
specified under the Listing Rules for review
by the auditors.
Responsibilities for the financial
statements and the audit
Responsibilities of the directors for
the financial statements
As explained more fully in the Statement
of Directors’ responsibilities, the directors
are responsible for the preparation of the
financial statements in accordance with
the applicable framework and for being
satisfied that they give a true and fair
view. The directors are also responsible for
such internal control as they determine is
necessary to enable the preparation of
financial statements that are free from
material misstatement, whether due to
fraud or error.
In preparing the financial statements, the
directors are responsible for assessing the
Group’s and the Company’s ability to
continue as a going concern, disclosing, as
applicable, matters related to going
concern and using the going concern
basis of accounting unless the directors
either intend to liquidate the Group or the
Company or to cease operations, or have
no realistic alternative but to do so.
Auditors’ responsibilities for the
audit of the financial statements
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from
material misstatement, whether due to
fraud or error, and to issue an auditors’
report that includes our opinion.
Reasonable assurance is a high level of
assurance, but is not a guarantee that an
audit conducted in accordance with ISAs
(UK) will always detect a material
misstatement when it exists.
Misstatements can arise from fraud or
error and are considered material if,
individually or in the aggregate, they could
reasonably be expected to influence the
economic decisions of users taken on the
basis of these financial statements.
Irregularities, including fraud, are instances
of non-compliance with laws and
regulations. We design procedures in line
with our responsibilities, outlined above, to
detect material misstatements in respect
of irregularities, including fraud. The extent
to which our procedures are capable of
detecting irregularities, including fraud, is
detailed below.
Based on our understanding of the Group
and industry, we identified that the
principal risks of non-compliance with laws
and regulations related to regulatory
compliance to ensure Air Operator’s
Certificates (held in the UK, Switzerland,
Austria and the Netherlands) and travel
provider licences remain valid and fully
operational, the majority of voting rights
being held by EU persons, Task Force on
Climate-Related Financial Disclosures,
Streamlined Energy and Carbon Reporting
132 easyJet plc Annual Report and Accounts 2022
(SECR) requirements, consumer
protection legislation, adherence to data
protection requirements in the jurisdictions
in which easyJet operates and holds data,
regulatory compliance requirements to
and non-compliance with employment
regulations in the UK and other
jurisdictions in which the Group operates,
and we considered the extent to which
non-compliance might have a material
effect on the financial statements. We
also considered those laws and regulations
that have a direct impact on the financial
statements such as compliance with the
requirements of emissions trading
schemes and customer claims regulation,
The Listing Rules, UK and overseas tax
legislation, The UK Corporate Governance
Code 2018 and Companies Act 2006. We
evaluated management’s incentives and
opportunities for fraudulent manipulation
of the financial statements (including the
risk of override of controls), and
determined that the principal risks were
related to inappropriate journal entries in
the underlying books and records and
management bias in accounting
estimates. Audit procedures performed by
the engagement team included:
• Discussions with management, internal
audit and the Group’s legal team,
including consideration of known or
suspected instances of non-compliance
with laws and regulations and fraud.
This included an assessment of matters
identified with larger potential
exposures to ensure that the provisions
held were supportable and that
appropriate disclosure had been
included within the financial statements
in instances where the Group is
currently unable to reliably assess the
likely outcome or quantum of the
financial exposure related to such
matters
• Challenging assumptions and
judgements made by management in
it’s significant accounting estimates that
involved making assumptions and
considering future events that are
inherently uncertain. We focused on the
valuation of the maintenance provision,
the assessment of impairment of
intangible assets, for the Company the
assessment of impairment of the
investment in and intercompany
receivables due from easyJet Airline
Company Limited and the recoverability
of deferred tax assets (see related key
audit matters above). We also
specifically assessed the provisions held
in respect of actual and potential
litigation matters, provisions held for
customer compensation, the
assessment of the loss on disposal of
landing rights and breakage on contract
liabilities held with customers
• Consideration of recent
correspondence with the Group’s legal
advisors to ensure that it aligned with
the conclusions drawn on obligations
recognised and contingent liabilities
disclosed in respect of uncertain legal
matters
• Identifying and testing journal entries, in
particular any journal entries posted
with unusual account combinations
• Designing audit procedures to
incorporate unpredictability around the
nature, timing or extent of our testing
There are inherent limitations in the audit
procedures described above. We are less
likely to become aware of instances of
non-compliance with laws and regulations
that are not closely related to events and
transactions reflected in the financial
statements. Also, the risk of not detecting
a material misstatement due to fraud is
higher than the risk of not detecting one
resulting from error, as fraud may involve
deliberate concealment by, for example,
forgery or intentional misrepresentations,
or through collusion.
Our audit testing might include testing
complete populations of certain
transactions and balances, possibly using
data auditing techniques. However, it
typically involves selecting a limited
number of items for testing, rather than
testing complete populations. We will
often seek to target particular items for
testing based on their size or risk
characteristics. In other cases, we will use
audit sampling to enable us to draw a
conclusion about the population from
which the sample is selected.
A further description of our responsibilities
for the audit of the financial statements is
located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities
This description forms part of our
auditors’ report.
Use of this report
This report, including the opinions, has
been prepared for and only for the
Company’s members as a body in
accordance with Chapter 3 of Part 16 of
the Companies Act 2006 and for no other
purpose. We do not, in giving these
opinions, accept or assume responsibility
for any other purpose or to any other
person to whom this report is shown or
into whose hands it may come save
where expressly agreed by our prior
consent in writing.
Other required
reporting
Companies Act 2006 exception
reporting
Under the Companies Act 2006 we are
required to report to you if, in our opinion:
• we have not obtained all the information
and explanations we require for our
audit; or
• adequate accounting records have not
been kept by the Company, or returns
adequate for our audit have not been
received from branches not visited by us;
or
• certain disclosures of directors’
remuneration specified by law are not
made; or
• the Company financial statements and
the part of the Directors’ Remuneration
Report to be audited are not in
agreement with the accounting records
and returns.
We have no exceptions to report arising
from this responsibility.
Appointment
Following the recommendation of the
Audit Committee, we were appointed by
the members on 22 February 2006 to
audit the financial statements for the year
ended 30 September 2006 and
subsequent financial periods. The period of
total uninterrupted engagement is 17 years,
covering the years ended 30 September
2006 to 30 September 2022.
Other matter
As required by the Financial Conduct
Authority Disclosure Guidance and
Transparency Rule 4.1.14R, these financial
statements form part of the ESEF-
prepared annual financial report filed on
the National Storage Mechanism of the
Financial Conduct Authority in accordance
with the ESEF Regulatory Technical
Standard (‘ESEF RTS’). This auditors’ report
provides no assurance over whether the
annual financial report has been prepared
using the single electronic format specified
in the ESEF RTS.
Owen Mackney
(Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and
Statutory Auditors
Watford
29 November 2022
easyJet.com
133
FINANCIAL STATEMENTS Consolidated income statement
Year ended 30 September
Passenger revenue
Ancillary revenue
Total revenue
Fuel
Airports, ground handling, holidays
accommodation, and other operating costs
Notes
8
Crew
Navigation
Maintenance
Selling and marketing
Other costs
Other income
EBITDAR
Aircraft dry leasing
Depreciation
Amortisation of intangible assets
Operating profit/(loss)
Interest receivable and other financing
income*
Interest payable and other financing
charges
Foreign exchange (loss)/gain*
Net finance charges
Loss before tax
Tax credit/(charge)
Loss for the year
Loss per share, pence
Basic
Diluted
11
10
2
3
6
7
7
2022
Non-headline
(note 5)
£ million
–
–
–
–
–
–
–
–
–
(30)
–
(30)
–
–
–
(30)
–
–
–
–
Headline
£ million
3,816
1,953
5,769
(1,279)
(1,716)
(767)
(339)
(301)
(173)
(635)
10
569
(2)
(539)
(25)
3
26
(143)
(64)
(181)
Total
£ million
3,816
1,953
5,769
(1,279)
(1,716)
(767)
(339)
(301)
(173)
(665)
10
539
(2)
(539)
(25)
(27)
26
(143)
(64)
(181)
2021
Non-headline
(note 5)
£ million
–
–
–
Headline
£ million
1,000
458
1,458
Total
£ million
1,000
458
1,458
(371)
(446)
(495)
(102)
(222)
(60)
(319)
6
(551)
(5)
(456)
(24)
–
–
–
–
–
–
47
79
126
–
–
–
(1,036)
126
40
(150)
10
(100)
33
(59)
–
(26)
(371)
(446)
(495)
(102)
(222)
(60)
(272)
85
(425)
(5)
(456)
(24)
(910)
73
(209)
10
(126)
(178)
(30)
(208)
(1,136)
100
(1,036)
31
8
39
236
(58)
178
(147)
(22)
(169)
(900)
42
(858)
(22.4)
(22.4)
(159.0)
(159.0)
* Interest receivable and other financing income, and foreign exchange (loss)/gain recognised in the prior year has been re-presented, see note 1a for details.
134 easyJet plc Annual Report and Accounts 2022
134 easyJet plc Annual Report and Accounts 2022
Consolidated statement of comprehensive income
F I N A N C I A L S T A T E M E N T S
Loss for the year
Other comprehensive income/(loss)
Items that may be reclassified to the income statement:
Cash flow hedges
Fair value gains in the year
Gains transferred to income statement
Hedge discontinuation (gains)/losses transferred to income statement
Related tax charge
Cost of hedging
Related tax (charge)/credit
Items that will not be reclassified to the income statement:
Remeasurement gain of post-employment benefit obligations
Related deferred tax credit
Fair value gains/(loss) on equity investment
Total comprehensive loss for the year
Notes
Year ended
30 September
2022
£ million
(169)
Year ended
30 September
2021
£ million
(858)
6
6
20
6
774
(730)
(5)
(11)
8
(2)
41
(10)
1
66
(103)
477
(17)
25
(93)
(3)
1
5
(4)
(3)
388
(470)
Fair valuation gains in the year are primarily due to increases in the market price of jet fuel, along with movements in the foreign
exchange rates used when valuing derivatives held in the hedging reserve.
For capital expenditure cash flow hedges, the accumulated gains and losses recognised in other comprehensive income will be
transferred to the initial carrying amount of the asset acquired, within property, plant and equipment.
(Gains)/losses on cash flow hedges reclassified from other comprehensive income to the income statement by income statement
captions are as follows:
Revenue
Fuel
Maintenance
Eurobonds (within foreign exchange (loss)/gain)
Other costs
2022
£ million
(9)
(663)
(7)
(30)
(21)
(730)
2021
£ million
(8)
41
–
(49)
(1)
(17)
easyJet.com 135
easyJet.com
135
FINANCIAL STATEMENTS
Consolidated statement of financial position
As at
30 September
2022
Notes
£ million
As at
30 September
2021
£ million
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Derivative financial instruments
Equity investment
Restricted cash
Other non-current assets
Deferred tax assets
Current assets
Trade and other receivables
Intangible assets
Derivative financial instruments
Restricted cash
Money market deposits
Cash and cash equivalents
Current liabilities
Trade and other payables
Unearned revenue
Borrowings
Lease liabilities
Derivative financial instruments
Current tax payable
Provisions for liabilities and charges
Net current assets
Non-current liabilities
Borrowings
Unearned revenue
Lease liabilities
Derivative financial instruments
Non-current deferred income
Post-employment benefit obligation
Provisions for liabilities and charges
Net assets
Shareholders' equity
Share capital
Share premium
Hedging reserve
Cost of hedging reserve
Translation reserve
(Accumulated losses)/Retained earnings
Total equity
10
10
11
25
25
14
12
6
13
10
25
14
14
14
15
16
17
18
25
6
19
17
16
18
25
20
19
21
365
217
4,629
127
31
3
91
62
5,525
367
495
423
4
126
3,514
4,929
(1,685)
(1,042)
(437)
(247)
(86)
(5)
(176)
(3,678)
365
217
4,735
86
30
1
135
39
5,608
291
140
185
13
–
3,536
4,165
(1,128)
(844)
(300)
(189)
(31)
(2)
(183)
(2,677)
1,251
1,488
(2,760)
(1)
(866)
(22)
(4)
(1)
(589)
(4,243)
(3,067)
(2)
(890)
(37)
(4)
(37)
(420)
(4,457)
2,533
2,639
207
2,166
170
5
(6)
(9)
2,533
207
2,166
156
(1)
–
111
2,639
The financial statements on pages 134 to 176 were approved by the Board of Directors and authorised for issue on 29 November 2022
and signed on behalf of the Board.
Johan Lundgren
Director
Kenton Jarvis
Director
136 easyJet plc Annual Report and Accounts 2022
136 easyJet plc Annual Report and Accounts 2022
F I N A N C I A L S T A T E M E N T S
Consolidated statement of changes in equity
At 1 October 2021
Loss for the period
Other comprehensive income
Total comprehensive (loss)/income
Transfers to property, plant & equipment
Share incentive schemes
Employee share schemes - value of employee
services (note 22)
Purchase of own shares
Currency translation differences
At 30 September 2022
At 1 October 2020
Loss for the period
Other comprehensive income/(loss)
Total comprehensive (loss)/income
Net proceeds from rights issue
Share incentive schemes
Employee share schemes - value of employee
services (note 22)
Related tax (note 6)
Purchase of own shares
Currency translation differences
At 30 September 2021
Share
capital
£ million
207
–
–
–
–
Share
premium
£ million
2,166
–
–
–
–
Hedging
reserve
£ million
156
–
28
28
(14)
–
–
–
207
–
–
–
2,166
–
–
–
170
Cost of
hedging
reserve
£ million
(1)
–
6
6
–
–
–
–
5
Retained
earnings/
(Accumulated
losses)
£ million
111
(169)
32
(137)
–
Translation
reserve
£ million
–
–
–
–
–
Total
£ million
2,639
(169)
66
(103)
(14)
–
–
(6)
(6)
26
(9)
–
(9)
26
(9)
(6)
2,533
Share
capital
£ million
125
–
–
–
82
–
–
–
–
207
Share
premium
£ million
1,051
–
–
–
1,115
–
–
–
–
2,166
Hedging
reserve
£ million
(236)
–
392
392
–
Cost of
hedging
reserve
£ million
1
–
(2)
(2)
–
–
–
–
–
156
–
–
–
–
(1)
Translation
reserve
£ million
(2)
–
–
–
–
–
–
–
2
–
Retained
earnings
£ million
960
(858)
(2)
(860)
–
15
2
(6)
–
111
Total
£ million
1,899
(858)
388
(470)
1,197
15
2
(6)
2
2,639
On 9 September 2021 the Company invited its shareholders to subscribe to a rights issue of 301,260,394 ordinary shares at an issue price
of 410 pence per share on the basis of 31 shares for every 47 fully paid ordinary shares held, with such shares issued on 28 September
2021.
The rights issue resulted in £1,235 million of gross proceeds. Shares totalling 280.2 million were taken up by existing shareholders (93%)
with the remaining rump of 21.0 million shares being underwritten. As at 30 September 2021, there were £91 million of
proceeds outstanding, which were subsequently received in October 2021. Costs of £38 million were incurred on the rights issue.
At 30 September 2022 amounts in the cost of hedging reserve comprised of a £7 million gain related to cross-currency basis (2021: £nil)
and a £2 million loss related to the time value of options (2021: £1 million loss).
easyJet.com 137
easyJet.com
137
FINANCIAL STATEMENTS
Consolidated statement of cash flows
Cash flows from operating activities
Cash generated from/(used in) operations
Interest and other financing charges paid*
Interest and other financing income received
Settlement of derivatives*
Net tax (paid)/received
Net cash generated from/(used in) in operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of non-current other intangible assets
Net (increase)/decrease in money market deposits
Net proceeds from sale and leaseback of aircraft
Net cash (used in)/generated from investing activities
Cash flows from financing activities
Proceeds from issue of ordinary share capital
Share issue transaction costs
Purchase of own shares for employee share schemes
Proceeds from debt financing
Repayment of bank loans and other borrowings
Repayment of capital element of leases
Decrease in restricted cash
Net cash (used in)/generated from financing activities
Effect of exchange rate changes
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Year ended
30 September
2022
Notes
£ million
Year ended
30 September
2021
£ million
23
11
10
24
24
24
24
14
14
892
(130)
11
7
(4)
776
(501)
(29)
(126)
87
(569)
91
(38)
(9)
–
(377)
(206)
7
(532)
303
(22)
3,536
3,514
(755)
(127)
1
(155)
1
(1,035)
(140)
(9)
32
836
719
1,144
–
(6)
1,804
(1,045)
(261)
5
1,641
(73)
1,252
2,284
3,536
* Historically cash settlement of derivatives relating to cash flows for ineffective and discontinued hedging derivatives and fair value derivatives through profit and loss
have been historically presented on the face of the consolidated statement of cash flows within interest and other financing charges paid. In order to give greater
clarity to the users of the financial statements, these derivatives have been presented as a separate line within the consolidated statement of cash flows for the
current and prior year (see note 1a).
138 easyJet plc Annual Report and Accounts 2022
138 easyJet plc Annual Report and Accounts 2022
F I N A N C I A L S T A T E M E N T S
Notes to the financial statements
1. Accounting policies, judgements and estimates
Statement of compliance
easyJet plc (the ‘Company’) and its subsidiaries (‘easyJet’ or the ‘Group’ as applicable) is a low-cost airline carrier and package holiday
Group operating principally in Europe. The Company is a public limited company (company number 03959649), incorporated and
domiciled in the United Kingdom, whose shares are listed on the London Stock Exchange under the ticker symbol EZJ. The address of its
registered office is Hangar 89, London Luton Airport, Luton, Bedfordshire, LU2 9PF.
On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and became UK-adopted
International Accounting Standards, with future changes being subject to endorsement by the UK Endorsement Board. easyJet plc
transitioned to UK-adopted International Accounting Standards in its consolidated financial statements on 1 October 2021. This change
constitutes a change in accounting framework. However, there is no impact on recognition, measurement or disclosure in the period
reported as a result of the change in framework. The consolidated financial statements of easyJet plc have been prepared in accordance
with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006 as applicable to companies
reporting under those standards.
Basis of preparation
The financial statements are prepared based on the historical cost convention except for certain financial assets and liabilities, including
derivative financial instruments, financial guarantees, equity investments and certain contingent liabilities and commitments, which are
measured at fair value.
easyJet’s business activities, together with factors likely to affect its future development and performance, are described in the Strategic
Report on pages 2 to 71. Principal risks and uncertainties are described on pages 59 to 71. Note 26 to the financial statements sets out
the Group’s objectives, policies and procedures for managing its capital and gives details of the risks related to financial instruments held
by the Group.
The financial statements have been prepared on a going concern basis. In adopting the going concern basis for preparing these financial
statements, the Directors have considered easyJet’s business activities, together with factors likely to affect its future development and
performance, as well as easyJet’s principal risks and uncertainties through to June 2024.
As at 30 September 2022 easyJet has a net debt position of £0.7 billion including cash and cash equivalents and money market deposits
of £3.6 billion, with unrestricted access to £4.7 billion of liquidity and has retained ownership of 57% of the total fleet with 41% being
unencumbered.
The Directors have reviewed the financial forecasts and funding requirements with consideration given to the potential impact of severe
but plausible downside risks. easyJet has modelled a base case representing management’s best estimation of how the business plans to
perform over the period. The future impact of climate change on the business has been incorporated into strategic plans, including the
estimated financial impact within the base case cash flow projections of the future estimated price of ETS permits, the phasing out of
the free ETS permits from 2024, the expected price and quantity required of Sustainable Aviation Fuel usage and fleet renewals.
The business is exposed to fluctuations in fuel prices and foreign exchange rates. easyJet is currently c.74% hedged for fuel in H1 of FY23
at c.US$814 per metric tonne, c.51% hedged for H2 FY23 at c.US$903 and c.25% hedged for H1 FY24 at c.US$922.
In modelling the impact of severe but plausible downside risks, the Directors have considered demand suppression leading to a reduction
in ticket yield of 5% and reduced capacity of 5% as well as sensitivities on fuel price (increase of $100 per metric tonne), operational
costs (additional inflation assumed on all costs), re-occurrence of additional disruption costs (at year ended 30 September 2022 levels)
and delays in the delivery of strategic revenue initiatives. These impacts have been modelled across the whole going concern period. In
addition, this downside-model also includes a grounding of 25% of the fleet for one month in the peak trading month of August to cover
the range of severe but plausible risks that could result in significant operational disruption. This downside scenario resulted in a
significant reduction in liquidity but still maintained sufficient headroom on external liquidity requirements.
After reviewing the current liquidity position, committed funding facilities, the base case and severe but plausible downside financial
forecasts incorporating the uncertainties described above, the Directors have a reasonable expectation that the Group has sufficient
resources to continue in operation for the foreseeable future. For these reasons the Directors continue to adopt the going concern basis
of accounting in preparing the Group’s financial statements.
The use of critical accounting estimates and management judgement is required in applying relevant accounting policies to the Group’s
consolidated financial statements. Areas involving a higher degree of judgement, or where assumptions and estimates are significant to
the financial statements and carry estimation risk, are highlighted on pages 149 to 151.
easyJet.com 139
easyJet.com
139
FINANCIAL STATEMENTS
Notes to the financial statements (CONTINUED)
1. Accounting policies, judgements and estimates (continued)
Climate change
In preparing the financial statements, the Directors have considered the impact of climate change, particularly in the context of the
climate change risks identified in the Sustainability section of the Strategic Report and the Group’s stated target of net zero carbon
emissions by 2050 and our commitment to reducing our carbon emissions by 35% by 2035. These targets and risks have been
considered in relation to the financial reporting judgements and estimates in the current year and these have not materially impacted the
conclusions reached. This is consistent with the conclusion that climate change is not expected to have a significant impact on the
Group’s short-term cash flows including those considered in the going concern and viability assessments. It is expected that in the short-
term there will not be any impact on demand or significant regulatory changes impacting cost as a result of climate change. It is noted
that it is expected that free ETS permits will be phased out by 2027, progressively reducing year on year from 2024, and this increase in
cost has been factored into the future cash flows in the short and longer term. In preparing the financial statements, the directors have
considered the medium and longer term cash flow impacts of climate change including the future estimated price of ETS permits, the
phasing out of the free ETS permits from 2024, the expected price and quantity required of Sustainable Aviation Fuel usage and fleet
renewals on a number of key estimates within the financial statements, including:
• the estimates of future cash flows used in impairment assessments of the carrying value of non-current assets;
• the estimates of future profitability used in our assessment of the recoverability of deferred tax assets in the UK; and
• the useful economic lives and related residual values for our less fuel-efficient aircraft.
1a. Significant accounting policies
The significant accounting policies applied in the preparation of the consolidated financial statements are summarised below. Unless
otherwise stated they have been applied consistently to both years presented. The explanations of these policies focus on areas where
judgement is applied or which are particularly significant in the financial statements.
Basis of consolidation
The consolidated financial statements incorporate those of easyJet plc and its subsidiaries for the years ended 30 September 2021 and
2022. A full list of subsidiaries can be found in the Notes to the Company financial statements on page 181.
A subsidiary is an entity controlled by easyJet plc. Control is achieved when easyJet is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns through its power, directly or indirectly, over the investee.
Intragroup balances, transactions, and any unrealised gains and losses arising from intragroup transactions, are eliminated in preparing
the consolidated financial statements.
Foreign currencies
The primary economic environment in which a subsidiary operates determines its functional currency. The consolidated financial
statements of easyJet are presented in sterling, rounded to the nearest £ million, which is the Company’s functional currency and the
Group’s presentation currency. Certain subsidiaries have operations that are primarily influenced by a currency other than sterling.
Exchange differences arising on the translation of these foreign operations are taken to shareholders’ equity until all or part of the
interest is sold, when the relevant portion of the accumulated exchange gains or losses is recognised in the income statement. Profits
and losses of foreign operations are translated into sterling at average monthly rates of exchange during the year, as this approximates
the rates on the dates of the transactions.
Transactions arising in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies are translated into the functional currency using the rate of exchange ruling at the end of
a reporting period and (except where the asset or liability is designated as a cash flow hedge) the gains or losses on translation are
included in the income statement. Non-monetary assets and liabilities denominated in foreign currencies are translated into the functional
currency at foreign exchange rates ruling at the dates the transactions were effected.
Change in presentation
Net foreign exchange gains and losses
Net foreign exchange gains and losses arising from the revaluation of monetary assets and liabilities have historically been included within
either ‘interest receivable and other financing income’ or ‘interest payable and other financing charges’ on the face of the income
statement. During the year it was concluded that it would be clearer for users of the financial statements if net foreign exchange gains
and losses were a separate financial statement line item. The prior year has been presented on a consistent basis, which has resulted in
the re-presentation of the consolidated income statement as below.
Interest receivable and other financing income
Interest payable and other financing charges
Foreign exchange (loss)/gain
Net finance charges
2021 - reported
2021 – re-presented
Headline Non-headline
Total
Headline
Non-headline
Total
£ million
£ million
50
(150)
–
(100)
33
(59)
–
(26)
83
(209)
–
(126)
40
(150)
10
(100)
33
(59)
–
(26)
73
(209)
10
(126)
140 easyJet plc Annual Report and Accounts 2022
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F I N A N C I A L S T A T E M E N T S
Cash settlement of derivatives
Cash settlement of derivatives relating to cash flows for ineffective and discontinued hedging derivatives and fair value derivatives
through profit and loss has been historically included within interest and other financing charges paid on the face of the consolidated
statement of cash flows. During the year it was concluded that it would be clearer to users of the financial statements if this is presented
as a separate line within the consolidated statement of cash flows. The prior year has been presented on a consistent basis, which has
resulted in the re-presentation of the consolidated statement of cash flows as below.
Cash flows from operating activities
Cash generated from/(used in) operations
Interest and other financing charges paid
Interest and other financing income received
Settlement of derivatives
Net tax (paid)/received
Net cash generated from/(used in) operating activities
Year ended
30 September
2021 -
reported
Year ended
30 September
2021 –
re-presented
£ million
£ million
(755)
(282)
1
–
1
(1,035)
(755)
(127)
1
(155)
1
(1,035)
Impairment of non-financial assets
easyJet has identified two separate cash-generating units (CGUs) which are two separate groups of assets which generate largely
independent cash flows, these being easyJet’s airline route network and its holidays business.
All goodwill, landing rights, current intangible assets, associated working capital balances, aircraft, and spares belong to the Airline CGU
which is tested annually for impairment or where there is an indication of impairment. A single value in use (‘‘VIU’’) calculation is
performed in order to assess the recoverability of the assets.
The holidays CGU includes other intangible assets which are subject to amortisation and working capital in the holidays segment and is
tested for impairment annually or where there is an indication of impairment.
A further description of the calculation of the value in use and current year outcome and sensitivities for the Airline CGU is given in
note 10.
Goodwill and other intangible assets
Goodwill arising on acquisition has been recognised as an asset and initially measured at cost, being the excess of the cost of the
business combination over easyJet’s interest in the net fair value of the identifiable assets acquired and the liabilities assumed. Goodwill is
stated at cost less any accumulated impairment losses. It has an indefinite expected useful life and is tested for impairment as part of the
Airline cost generating unit (CGU) on an annual basis or where there is any indication of impairment.
Landing rights are stated at cost less any accumulated impairment losses. They are considered to have an indefinite useful life as they will
remain available for use for the foreseeable future provided minimum utilisation requirements are observed. Landing rights form part of
the Airline CGU and are therefore tested for impairment at least annually or where there is any indication of impairment. Landing rights
with a carrying value that have no further value in use and have been surrendered for nil value are de-recognised and a loss on disposal is
recognised in the income statement.
When assessing for impairment or reassessing useful economic lives, easyJet consider significant future changes including in relation to
market, technological, economic and legal developments. The potential future impacts of climate change have been incorporated by
including the estimated financial impact within cash flow projections of the increased cost of carbon-offsetting, the future estimated
price of ETS (Emissions Trading System) permits, and the expected price and quantity required of Sustainable Aviation Fuel (SAF) usage.
Additional risks associated with climate change have also been stress tested, including sensitivities of SAF usage and ETS costs,
additional legal and technology costs, reduced demand and increased cost of maintenance and replacement aircraft.
Computer software is stated at cost less accumulated amortisation, which is calculated to write off their cost, on a straight-line basis over
their expected useful lives. Expected useful lives are reviewed annually.
Computer software
Expected useful life
3-7 years
Annual license agreements to use Cloud software are expensed and treated as a service agreement. Perpetual licenses to use Cloud
software are capitalised if easyJet has both a contractual right to the software and the ability to run the software independently of the
host vendor. Customisation and configuration costs related to the implementation of Cloud based applications is expensed unless it
creates an asset that is separate and identifiable from the software.
EU ETS, CH ETS and UK ETS carbon allowances
easyJet participates in the EU ETS, CH (Swiss) ETS and UK ETS schemes. Participants are required to purchase and surrender ETS
carbon allowances (allowances) to cover their annual carbon emissions from flying. The surrendering process takes place ahead of the
compliance deadline of 30 April each year in respect of the preceding calendar year. A proportion of allowances are issued for free and
are recognised at fair value, being the market value on the date they are received, with a corresponding liability recognised
simultaneously. Purchased allowances are recognised at the purchase price. Both free and purchased carbon allowances are held as
current intangible assets and are not subsequently revalued as they are held for own use.
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FINANCIAL STATEMENTS
Notes to the financial statements (CONTINUED)
1. Accounting policies, judgements and estimates (continued)
As part of the annual surrender process free allowances will be surrendered first with purchased allowances then surrendered on a first in,
first out (FIFO) basis. The income statement expense, recognised throughout the year as the liability is incurred through flying, is based on a
weighted average cost of the free and purchased allowances estimated to be surrendered (on the FIFO basis described above) as part of
the annual surrender process. A corresponding liability of the same value is also recognised. As such for any financial year three months of
the related expense will be known having already been surrendered, with nine months of the expense subject to a degree of estimation.
Where insufficient allowances are held in easyJet's registry at the financial year end, when compared with the expected calendar year
surrender that will be required, the remainder of the income statement expense is estimated using the market price of allowances as at the
financial year end date. Both the related asset and liability are extinguished only at the point that the allowances are surrendered.
These current intangible assets form part of the Airline CGU and are reviewed for impairment annually or when there is an indication of
impairment within the Airline cash generating unit.
Carbon offsetting and Verified Emission Reductions
easyJet operates a voluntary policy to offset every tonne of carbon and carbon equivalents (collectively ‘carbon’) emitted from fuel used
for all its flights, by investing in projects which will mean there is one tonne less in the atmosphere, whether by reducing carbon by
physically removing it from the air, or by avoiding the release of additional carbon.
easyJet purchases Verified Emission Reductions (VERs) arising from Gold Standard or Verified Carbon Standard (VCS) accredited
projects to offset the carbon emitted from flights. The cost of purchasing VERs is recognised in the income statement when the flight
occurs with a corresponding carbon offsetting liability. This is measured using the purchase price of VERs on a FIFO basis, then a
weighted average of expected future purchases where all purchased VERs have been allocated. VERs are recorded as a current
intangible asset at historical cost when delivery into the easyJet registry account has taken place. At regular intervals the VERs are retired
to settle the obligation, at which point the VER asset and carbon offsetting liability are derecognised.
It is of note that this scheme is being retired and will no longer apply to flights booked after 31 December 2022. It is anticipated that the
majority of the VER assets held at 30 September 2022 will be utilised by bookings up to 31 December 2022, with any residual balance
being immaterial.
Property, plant and equipment
Property, plant and equipment (PPE) is stated at cost less accumulated depreciation. Depreciation is calculated to write off the cost, less
estimated residual value, of assets, on a straight-line basis over their expected useful lives. Expected useful lives (UELs) and residual
values are reviewed annually.
Aircraft*
Aircraft spares***
Aircraft – prepaid maintenance
Leasehold improvements
Freehold land
Fixtures, fittings and equipment****
Computer hardware****
Expected useful life
18-23 years**
18 years
7-10 years
5-10 years or the length of lease if shorter
Not depreciated
3 years or length of lease of property where equipment is used if shorter
3-5 years
* Aircraft held as right of use assets are depreciated over the lease term; see leases section. Contractual capital maintenance associated with leased aircraft is
charged as depreciation to the income statement as the usage that defines the maintenance event occurs.
** easyJet operate a fleet of Airbus CEO and NEO aircraft. The newer NEO aircraft have a UEL of 23 years. Aligning to the longer-term plan for CEO aircraft, and the
ambition to replace these over time with the more fuel efficient NEO aircraft as part of easyJet’s net zero commitment, CEO aircraft have a shorter UEL of 18 years.
This change to 18 years was applied prospectively from 1 July 2021.
***In the year, the expected useful economic life estimate for aircraft spares was revised from 14 years to 18 years in line with expected usage and the useful economic
life estimate of the majority of easyJet’s owned aircraft. This change was applied prospectively from 1 October 2021 and had an immaterial impact.
****Other assets within note 11.
Residual values are reviewed annually against prevailing market rates for equivalently aged assets at the end of the reporting period, and
depreciation rates are adjusted accordingly on a prospective basis. The carrying value of PPE assets is part of the Airline CGU and is
therefore reviewed for impairment at least annually or when there is any indication of impairment within the CGU. For aircraft, easyJet is
dependent on Airbus as its sole supplier. This gives rise to an increased valuation risk, which crystallises when aircraft exit the fleet, where
easyJet is reliant on the future demand for second-hand aircraft and specifically Airbus aircraft. Future developments, such as the impact
of climate change on the technological, market, economic or legal environment, are considered when assessing residual values and
useful economic lives.
An element of the cost of a new aircraft is attributed on acquisition to prepaid maintenance, reflecting the ‘full-life’ maintenance status of
key components of the aircraft at the point of transition of ownership. This cost is depreciated over a period of between seven to ten
years from the date of manufacture, in accordance with the maintenance schedule for the aircraft. Subsequent costs incurred which
lend enhancement to future periods, such as long-term scheduled maintenance and major overhaul of aircraft and engines, are
capitalised at the time of the event and depreciated over the length of the period benefitting from these enhancements. All other
maintenance costs for owned aircraft are charged to the income statement as incurred.
Pre-delivery payments made in respect of aircraft are recorded in PPE at cost. These amounts are not depreciated. Interest attributed to
pre-delivery payments made in respect of aircraft and other qualifying assets under construction are capitalised and added to the cost of
the asset concerned.
Gains and losses on disposals (other than aircraft-related sale and leaseback transactions) are determined by comparing the net
proceeds with the carrying amount of the asset and are recognised in the income statement.
Freehold land is recorded at cost and not depreciated as it is considered to have an indefinite useful life.
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F I N A N C I A L S T A T E M E N T S
Leases
When a contractual arrangement contains a lease easyJet recognises a lease liability and a corresponding right of use asset at the
commencement of the lease.
At the commencement date the lease liability is measured at the present value of the future lease payments, discounted using the
Group’s incremental borrowing rate where the interest rate in the lease is not readily determined. Subsequently, the lease liability is
adjusted by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease
payments made, and remeasuring the carrying amount to reflect any reassessment or lease modifications.
The lease term is determined from the commencement date of the lease and the duration of the non-cancellable term. If easyJet has an
extension option, which it considers it is reasonably certain to exercise, then the lease term will be considered to extend beyond that
non-cancellable period to the end of the extension period available. If easyJet has a termination option, which it considers it reasonably
certain to exercise, then the lease term will be accounted for until the point the termination option will take effect.
At the commencement date the right of use asset is measured at an amount equal to the lease liability plus any lease payments made
before the commencement date and any initial direct costs, less any lease incentive payments. An estimate of costs to be incurred in
restoring an asset before return to the lessor, in accordance with the terms of the lease, is also included in the right of use asset at initial
recognition. Subsequently, the right of use asset attracts maintenance work in accordance with the lease contractual obligations; a
provision for the maintenance work is built up as the aircraft is flown, with the offset being against the right of use asset. This asset is
immediately depreciated as the liability is incurred as the aircraft is flown. Adjustment is also made to the right of use asset to reflect any
remeasurement of the corresponding lease liability. The right of use assets form part of the Airline CGU and are therefore subject to
review for impairment annually or when there is an indication of impairment within the Airline CGU.
Short-term leases less than 12 months in length and low-value leases are not recognised as lease liabilities and right of use assets but are
recognised as an expense on a straight-line basis over the lease term.
Payments for the interest element of recognised lease liabilities are included in interest and other financing charges paid within cash
flows from operating activities. Payments for the principal element of recognised lease liabilities are presented within cash flows from
financing activities.
easyJet periodically enters into sale and leaseback transactions whereby it sells either new or mid-life aircraft or engines to a third party
and immediately leases them back. Where the transaction is judged to reflect the aircraft’s fair value, any gain or loss arising on disposal
is recognised in the income statement, to the extent that it relates to the rights that have been transferred. Gains and losses that relate
to the rights that have been retained are included in the carrying amount of the right of use asset recognised at commencement of the
lease. If sale proceeds received were determined to not be at the aircraft’s fair value, any below market terms would be recognised as a
prepayment of lease payments, and above market terms recognised as additional financing provided by the lessor. Gains on sale and
leaseback transactions are recognised in other income, with losses on sale and leaseback transactions recognised in other costs.
Proceeds received for the sale of the fair value of the asset are recognised in the statement of cash flows within investing activities as it
relates to property, plant and equipment.
Other non-current assets
Non-current assets include both general lease deposits, as stipulated in lease agreements, as well as lessor receivables for maintenance
obligations incurred on mid-life aircraft before easyJet acquired the aircraft. The payments and receivables are recorded within current
and non-current assets as applicable, pending reimbursement or receipt in accordance with contract specific terms. Management assess
the recoverability of these assets on an annual basis through consideration of the credit position of the debtors and other relevant inputs.
Any payment or receivable that is not expected to be reimbursed by the lessor or received when contract terms are met, is recognised
immediately within operating expenses in the consolidated income statement.
Financial guarantees
Financial guarantees are initially measured at fair value and subsequently at the higher of the initial fair value or the amount of the loss
allowance determined by an expected credit loss calculation.
A loss allowance is calculated where easyJet is jointly and severally liable for financial guarantee contracts. This is calculated based on the
probability-weighted estimate of cash shortfalls to reimburse the holder for a credit loss that it incurs and based on the agreements
which may exist between any co-guarantors.
Tax
Tax expense in the income statement consists of current and deferred tax. Tax is recognised in the income statement except when it
relates to items credited or charged directly to other comprehensive income or shareholders’ equity, in which case it is recognised in
other comprehensive income or shareholders’ equity. The charge for current tax is based on the results for the year as adjusted for
income that is exempt and expenses that are not deductible, using tax rates that are applicable to the taxable income.
Deferred tax is provided in full on temporary differences relating to the carrying amount of assets and liabilities, where it is probable that
the recovery or settlement will result in an obligation to pay more, or a right to pay less, tax in the future, with the following exceptions:
• where the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and
liabilities in a transaction that affects neither taxable income nor accounting profit; and
• deferred tax arising on investments in subsidiaries is not recognised where easyJet is able to control the reversal of the temporary difference
and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax is calculated at the tax rates that are expected to apply in the periods in which recovery of assets and settlement of
liabilities are expected to take place, based on tax rates or laws enacted or substantively enacted at the date of the statement of
financial position.
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FINANCIAL STATEMENTS
Notes to the financial statements (CONTINUED)
1. Accounting policies, judgements and estimates (continued)
Deferred tax assets represent amounts considered recoverable in future periods in respect of deductible temporary differences, losses
and tax credits carried forward. Deferred tax assets are recognised to the extent that these are estimated to be fully recoverable against
the unwind of taxable temporary differences and future taxable income.
Deferred tax liabilities represent the amount of income taxes payable in future periods in respect of taxable temporary differences.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and it is the intention to settle these on a net basis.
Provisions
Provisions are recognised when a present legal or constructive obligation arises as a result of a past event, it is probable that the Group
will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation. Amounts provided for
represent the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account
all related risks and uncertainties.
Restructuring
Provisions for restructuring arise principally in relation to network optimisation and head office reviews. Provisions for restructuring
programmes are made when easyJet has a demonstrable commitment to a restructuring programme, for example through an
announcement made to the impacted employees.
Restructuring provisions are measured based on the expected outcome of consultations with impacted employees. Where specific
individuals at risk have not been identified, estimations are based on information available such as average payroll data, employee age
and length of service.
Customer claims
Provisions for customer claims comprise amounts payable to customers who make claims in respect of a) flight delays and cancellations
and refunds of air passenger duty or similar charges, where the provision is measured based on known eligible events, passengers
impacted and the best estimate of claim rates which is in part informed by historical claim rates, and b) performance and quality issues,
and personal injuries and illnesses experienced on holidays, where the provision is based on estimated cost rates, updated as historical
data and trends develop.
Maintenance
easyJet incurs liabilities for maintenance and restoration costs in respect of leased aircraft during the term of the lease. These arise from
legal and constructive contractual obligations relating to the condition of the aircraft when it is returned to the lessor or when heavy
maintenance events occur during the period of the lease. Contractual maintenance obligations arising from the ongoing use of the
aircraft are provided for over the term of the lease based on the estimated future costs of the maintenance events, discounted to
present value. The provision is built as the aircraft are flown, and recognised against the right of use asset, where it is immediately
depreciated as the flying hours that determine the provision have taken place. The restoration cost obligation is described in the lease
section.
Other
Other provisions include amounts in respect of onerous contracts and potential liabilities for employee related matters and litigation
which arise in the normal course of business. Onerous contracts are recognised at the first indication that a loss is anticipated, and the
provision based on the expected economic outflow arising from the contracts.
Employee benefits
easyJet contributes to defined contribution pension schemes for the benefit of employees. The assets of the schemes are held
separately from those of easyJet in independently administered funds. easyJet's contributions are charged to the income statement in
the year in which they are incurred. easyJet has no further payment obligations once the contributions have been paid for defined
contribution schemes. See below for the treatment of the defined benefit Swiss pension scheme.
The expected cost of compensated annual leave and other employee benefits is recognised at the time that the related employees'
services are provided.
Switzerland pension scheme
easyJet contributes to an independently administered post-employment fund for employees in Switzerland. The final benefit is
contribution-based with certain minimum guarantees required by Swiss law. Due to these minimum guarantees, the Swiss pension plan
meets IAS 19 Employee Benefits requirements to be treated as a defined benefit plan for the purposes of these consolidated financial
statements.
The easyJet portion of the current service cost and the net interest cost are charged to the consolidated income statement in the year
in which they relate. Actuarial gains and losses are recognised in the consolidated statement of comprehensive income and the
consolidated statement of financial position reflects the net surplus or deficit at the reporting date.
The actuarial assumptions used to calculate the defined benefit obligation are based on the requirements set out in IAS 19. They are set
by management, based on advice from an independent actuary. The defined benefit obligation is calculated using the projected unit
credit method. The costs of managing the plan assets are deducted as incurred in determining the return on plan assets and the present
value of projected future general administration expenses that are a direct consequence of past service are included as part of the
retirement benefit obligation.
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F I N A N C I A L S T A T E M E N T S
Share capital and dividend distribution
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in
equity as a deduction, net of tax, from the proceeds.
Where any Group company or employee benefit trust purchases the Company’s equity shares, the consideration paid, and any directly
attributable incremental costs are deducted from retained earnings until the shares are cancelled or reissued. Proceeds from re-issue are
shown as a credit to retained earnings.
easyJet settles share awards under the Long Term Incentive Plan, the Save As You Earn scheme, Restricted Share Plan and Share
Incentive Plans by purchasing its own shares on the market through employee benefit trusts. The cost of such purchases are deducted
from retained earnings in the period that the transaction occurs.
Final dividend distributions to the Company’s shareholders are recognised as a liability in the period in which the dividends are approved
by the Company’s shareholders. Interim dividends are recognised when paid.
Share-based payments
easyJet has a number of equity-settled share incentive schemes. The fair value of share options granted under the Save As You Earn
scheme is measured at the date of grant using the Binomial Lattice option pricing model. The fair value of grants under the Long Term
Incentive Plan is measured at the date of grant using the Black-Scholes model for awards based on Return on Capital Employed (ROCE)
performance targets, and the Stochastic model (also known as the Monte Carlo model) for awards based on Total Shareholder Return
(TSR) performance targets. The fair value of all other awards is the share price at the date of grant.
The fair value of the estimated number of options and awards that are expected to vest is expensed to the income statement on a
straight-line basis over the period that employees’ services are rendered, with a corresponding increase in shareholders’ equity. Where
non-market performance criteria (such as ROCE) attached to the share options and awards are not met, any cumulative expense
previously recognised is reversed. For awards with market-related performance criteria (such as TSR), an expense is recognised
irrespective of whether the market condition is satisfied.
The social security obligations payable in connection with the grant of the share options are an integral part of the grant itself and the
charge is treated as a cash-settled transaction. A deferred tax balance is recognised based on the intrinsic value of the outstanding
options.
Financial instruments
Financial instruments are recognised when easyJet becomes a party to the contractual provisions of the relevant instrument and
derecognised when it ceases to be a party to such provisions. Financial assets are also derecognised (written-off) when the Group has
no reasonable expectation of recovering the financial asset.
With the exception of trade receivables that do not contain a significant financing component, financial instruments are initially measured
at fair value plus or minus (in the case of a financial asset or financial liability not at fair value through the income statement) directly
attributable transaction costs. Trade receivables that do not contain a significant financing component are initially measured at the
transaction price.
Where market values are not available, the fair value of financial instruments is calculated by discounting expected cash flows at
prevailing interest rates and by applying period end exchange rates.
The equity investment in The Airline Group Limited is measured at fair value. Movements in fair value are assessed at each reporting
period and recorded in other comprehensive income. The fair value is measured using a dividend income model in line with IFRS 13
requirements. See note 25 for further details.
Non-derivative financial assets
Non-derivative financial assets are classified and measured according to easyJet's business model for managing a specified group of
financial assets, and the nature of the contractual cash flows arising from that group of financial assets.
Financial assets measured at amortised cost
Subsequent to initial recognition, this classification of financial asset is measured at amortised cost using the effective interest rate
method.
Financial assets are measured at amortised cost when both of the following criteria are met:
• the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amounts outstanding.
Financial assets measured at amortised cost include refundable lease deposits and other refundable lease contributions, restricted cash,
trade and other receivables, money market deposits and cash and cash equivalents (excluding money market funds).
Restricted cash comprises cash deposits which have restrictions governing their use and is classified as a current or non-current asset
based on the estimated remaining length of the restriction. Movements in restricted cash are shown within financing activities in the
consolidated statement of cash flow is as the movements arise from cash held relating to guarantees.
Cash and cash equivalents comprise cash held in bank accounts with no access restrictions and bank term deposits and tri-party repos
repayable on demand or maturing within three months of inception.
Money market deposits comprise bank term deposits and tri-party repos maturing greater than three months from inception.
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FINANCIAL STATEMENTS
Notes to the financial statements (CONTINUED)
1. Accounting policies, judgements and estimates (continued)
Financial assets measured at fair value through other comprehensive income
On initial recognition, equity investments, excluding interests in associates, are irrevocably designated as measured at fair value through
other comprehensive income. Subsequently they are measured at fair value with changes recognised in other comprehensive income
with no recycling of these gains and losses.
Financial assets measured at fair value through the income statement
Financial assets are measured at fair value through the income statement when they do not meet the criteria to be measured at
amortised cost or at fair value through other comprehensive income.
Subsequent to initial recognition, this classification of financial assets is measured at fair value through the income statement.
Financial assets measured at fair value through the income statement solely comprise money market funds as at 30 September 2022.
Impairment of financial assets
At each reporting date easyJet recognises a loss allowance for expected credit losses on financial assets measured at amortised cost.
In establishing the appropriate amount of loss allowance to be recognised, easyJet applies either the general approach or the simplified
approach, depending on the nature of the underlying group of financial assets.
General approach --- impairment assessment
The general approach is applied to the impairment assessment of refundable lease deposits and other refundable lease contributions,
restricted cash, money market deposits and cash and cash equivalents.
Under the general approach easyJet recognises a loss allowance for a financial asset at an amount equal to the 12-month expected
credit losses calculated using expected future default probabilities, unless the credit risk on the financial asset has increased
significantly since initial recognition, in which case a loss allowance is recognised at an amount equal to the lifetime expected credit
losses.
Simplified approach --- impairment assessment
The simplified approach is applied to the impairment assessment of trade and other receivables.
Under the simplified approach easyJet recognises a loss allowance for a financial asset at an amount equal to the lifetime expected
credit losses using a historical loss probability method.
Non-derivative financial liabilities
Non-derivative financial liabilities are initially recorded at fair value less directly attributable transaction costs, and subsequently at
amortised cost, and include trade and other payables and borrowings. Interest expense on borrowings is recognised using the effective
interest method.
Borrowings are classified as current liabilities unless there is an unconditional right to defer settlement of the liability for at least 12 months
after the reporting period date.
Financial liabilities measured at amortised cost
Subsequent to initial recognition at cost, this classification of financial liability is measured at amortised cost.
Financial liabilities measured at amortised cost include trade and other payables, lease liabilities and borrowings.
Derivative financial instruments and hedging activities
Derivative financial instruments are measured at fair value through the income statement with the exception of derivative financial
instruments that are designated as a hedging instrument in a cash flow hedge relationship.
easyJet uses foreign currency forward exchange contracts to hedge foreign currency risks on transactions denominated in US dollars,
euros and Swiss francs. These transactions primarily affect revenue, fuel, lease costs and pre-delivery payments, and the carrying value of
owned aircraft. easyJet also uses cross-currency interest rate swaps to hedge currency and interest rate risk on certain borrowings, and
jet fuel forward swap and option contracts to hedge fuel price risks. easyJet has a small number of euro-denominated lease contracts
which result in a committed schedule of euro lease rental payments; these are matched against forecasted euro revenue cash flows to
provide a cash flow hedge against the sterling/euro exchange rate. Hedge accounting is applied to those financial instruments that are
designated as cash flow hedges or fair value hedges.
Fair value hedges
Changes in the fair values of derivatives that are designated and qualify as fair value hedges are recorded in the income statement,
together with any changes in the fair values of the hedged assets or liabilities that are attributable to the hedged risk. Any difference
between the hedge item and hedge instrument fair valuation is recorded as hedge ineffectiveness within the income statement.
Fair value changes in the derivative instrument attributable to the currency basis are not designated as part of the hedged instrument.
Such fair value changes are recognised through other comprehensive income as cost of hedging and are recycled to the income
statement on a rational basis, according to the nature of the underlying hedged item.
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F I N A N C I A L S T A T E M E N T S
Cash flow hedges
Gains and losses arising from changes in the fair value of foreign exchange forwards, jet fuel forward swaps, jet fuel options and cross-
currency interest rate swap contracts designated as cash flow hedges are recognised in other comprehensive income and deferred in
the hedging reserve to the extent that the hedges are determined to be effective.
All foreign exchange contracts in a cash flow hedge relationship are designated on a forward basis with the full fair value as the hedge
instrument. Jet fuel option contracts in a cash flow hedge relationship are designated using the intrinsic value of the derivative as the
hedge instrument only. The time value element of the full fair value for these derivatives is recognised through other comprehensive
income as a cost of hedging and recycled to the income statement at the same time as the hedge item also impacts the income
statement.
Fair value changes in foreign currency derivative instrument attributable to currency basis are not designated as part of the hedged
instrument. Such fair value changes are recognised through other comprehensive income as a cost of hedging, and are recycled to the
income statement on a rational basis, according to the nature of the underlying hedged item. All other changes in fair value are
recognised immediately in the income statement.
When the hedged forecast transaction relates to an item of property, plant and equipment, the relevant accumulated gains and losses
are transferred from the hedging reserve and included in the initial carrying amount of that purchased asset. Otherwise they are
recognised in the income statement in the same period in which the hedged transaction affects the income statement and against the
same line item.
In the event that a hedged forecast transaction is no longer expected to occur, any related gains and losses are immediately transferred
from the hedging reserve and recognised in the income statement. Derivative instruments that have been derecognised from hedge
relationships are classified as fair value through the income statement thereafter with subsequent fair valuation movements being
recognised in the income statement.
Hedge accounting is discontinued when a hedging instrument is derecognised (e.g. through expiry, disposal or termination of a
derivative), or no longer qualifies for hedge accounting. Where the hedged item continues to be expected to occur, the related gains and
losses remain deferred in the hedging reserve until the transaction takes place.
Hedge relationship
The Group determines that the criteria for each hedge accounting relationship are met where:
• all relationships demonstrate a strong economic correlation;
• the effects of credit do not dominate the change in value of the associated hedged risk; and
• all Group hedge relationships have a hedge ratio of one to one, aligning to the Group’s risk management strategy.
Revenue recognition
easyJet categorises total revenue earned on the face of the income statement between passenger and ancillary revenue. Passenger
revenue arises from the sale of flight seats and administration fees and is recognised when the performance obligation has been
completed, which is when the flight takes place. Amounts paid by ‘no-show’ customers are recognised as passenger revenue when the
booked service is provided, that is when the flight takes place, as such customers are not generally entitled to change flights or seek
refunds once a flight has departed.
Ancillary revenue includes revenue from the provision of checked baggage, allocated seating and change fees, package holidays revenue
(excluding flights which are recognised as passenger revenue) and revenue arising from commissions earned from services sold on
behalf of partners and inflight sales. It is measured as the price paid by the customer for the service booked or commission earned (for
partner and inflight sales). Ancillary revenue is recognised when the performance obligation is complete, which is generally when the
related flight takes place, with the following exceptions:
• cancellation fees which are recognised when the cancellation requested by the customer is processed;
• in the case of commission earned from travel insurance, revenue is recognised at the time of booking as easyJet acts solely as the appointed
representative of the insurance company; and
• package holiday revenue attributable to the accommodation element of the holiday is recognised evenly over the duration of the holiday.
Revenue from easyJet plus cards is recognised evenly over time. Revenue from easyJet plus cards for the current financial year totalled
£15 million (2021: £14 million).
Partner revenue and revenue from inflight sales is recognised at the value of the commission earned as easyJet is deemed to be the
agent and does not control the related services or goods. The key considerations to reach this conclusion are that it is deemed the
partner is responsible for inventory risk and fulfilment of the goods and services.
Airline flights and package holiday deposits are paid for at the point of booking. Unearned revenue from flights not yet flown, and the
non-flight elements of package holidays for which the customer has paid but the service has not yet taken place, is held in the statement
of financial position until it is realised in the income statement when the performance obligation is complete. Package holiday balances
due from customers are offset against unearned revenue until paid in full, due 28 days before departure. Vouchers issued by easyJet in
lieu of refunds are held on the statement of financial position in other payables as a contract liability (see note 16) until they are
redeemed against a new booking, at which point they are recognised as unearned revenue, or they expire at which point they will be
recognised as revenue.
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FINANCIAL STATEMENTS
Notes to the financial statements (CONTINUED)
1. Accounting policies, judgements and estimates (continued)
If easyJet cancels a flight, unless a customer immediately re-books on an alternative flight, at the point of the cancellation the amount
paid for the flight is derecognised from unearned revenue and a contract liability is recognised within trade and other payables to refund
the customer or provide a voucher or flight transfer if requested. Where customers do not request either a voucher, refund or flight
transfer the liability continues to be recognised in other payables and breakage has been applied on low value balances aged over 24
months on the basis that the likelihood of the customer exercising their remaining rights to be repaid these amounts is a remote
probability. If easyJet cancels a holiday, and the customer does not elect to rebook or receive a voucher, the price of the holiday
(including flights) is refunded to the customer.
Compensation payments made to customers (in respect of flight delays) are offset against revenues recognised up to the amount of the
flight, with the excess compensation being recorded within expenses.
Operational costs and income
Costs and income are presented in the income statement based on the nature of the cost/income as this is most relevant to enable
users of the financial statements to understand easyJet’s financial performance. Separate financial statement line items are shown for
material income and expenses, other income and costs include items not reported elsewhere. Other income includes insurance receipts,
supplier compensation payments, rental income and gains on sale and leaseback transactions. Other costs are expensed as incurred and
includes disruption costs, IT costs, cost of third party providers, some employee costs, wet lease costs and insurance.
Finance charge/income
Interest payable/receivable and other financing charges/income includes interest expense/income on bank and borrowings which is
recognised using the effective interest method, interest on lease liabilities which is recognised using the interest rate implicit in the lease,
and fair value movements of derivative financial instruments that are not designated hedging instruments in a cash flow hedge
arrangement.
Net exchange gains/losses on monetary assets are presented as a separate financial statement line item.
Within the consolidated statement of cash flows interest paid on bank, borrowings and leases is included within net cash generated
by/used in operating activities as allowable by IAS 7 and this includes the settlement of the derivatives used to hedge borrowings. In
addition, the settlement of derivatives relating to cash flows for ineffective and discontinued hedging derivatives and fair value derivatives
through profit and loss are also shown within operating activities as they relate to transactions that primarily affect revenue, fuel and
lease costs. The settlement of operational hedged derivatives that have already been recycled through the income statement are
included in the operating result.
Segmental reporting
easyJet has two operating segments, being its Airline business, which operates easyJet’s route network, and the Holidays business, which
sells holiday packages. The Chief Operating Decision Maker has been assessed as the easyJet plc Board, which receives regular reporting
on the Airline and Holidays’ results in order to make resource allocation decisions. Presentation of separate segmental reporting is
included in note 8.
Geographic revenue is allocated on the following basis:
• revenue earned from customers is allocated according to the location of the first departure airport on each booking; and
• commission revenue earned from partners is allocated according to the domicile of each partner.
Passenger revenue recognised within the Airline segment includes intra-segment sales of flights to the Holidays segment. Passenger
revenue is recognised in the Airline segment when the flight takes place.
Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received. Loans provided and/or
guaranteed by governments that represent market rates of interest are recorded at the amount of the proceeds received and
recognised within borrowings. All existing loans are considered to be at market value. Grants that compensate the Group for expenses
incurred are recognised in the income statement in the relevant financial statement line on a systematic basis in the periods in which the
expenses are recognised to present the net expense to the Group.
Alternative performance measures (APMs)
Within the financial statements on pages 134 to 176, a number of APMs have been disclosed which, in the Directors opinion, provide
additional understanding to users of the financial statements in their assessment of underlying performance. Refer to the glossary for a
list of APMs disclosed in the financial statements, including definitions and reconciliations to IFRS measures.
New and revised standards and interpretations
A number of amended standards became applicable during the current reporting period. The Group did not have to change its
accounting policies or make retrospective adjustments as a result of adopting these standards. The amendments that became applicable
for annual reporting periods commencing on or after 1 January 2021, and did not have a material impact were:
• IFRS 3 Reference to the conceptual framework
• IAS 37 Onerous contracts - Cost of fulfilling a contract
• IAS 16 PPE proceeds before intended use amendments
• IFRS 1, IFRS 9 and IFRS 16 Annual improvements to IFRS standards
• Interest rate benchmark reform – Phase 2 – amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
During the current reporting period, the Group has adopted the Interest Rate Benchmark Reform Phase 2 amendments to IFRS 9, and
IFRS 7 and has applied this to the specific hedging relationship identified. Three cross-currency interest rate swaps are used to convert
the entire €500 million fixed rate Eurobond maturing in February 2023 to a sterling floating rate exposure. All three swaps originally were
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F I N A N C I A L S T A T E M E N T S
based on three-month LIBOR. Following the cessation of GBP LIBOR, the floating interest transitioned to the ISDA Fallback Rate for
fixings from January 2022.
The Group has elected to apply the phase 2 reliefs and has amended its hedge designation and documentation to reflect these changes
which are required by IBOR reform. Such amendments did not give rise to the hedge relationship being discontinued.
The LIBOR transition working group which was formed in the prior year continues to consider the wider impacts on the business of these
changes. No other material impacts have emerged during the period.
There are no new or revised standards that have not been applied that would materially impact these financial statements in the current
reporting period.
1b.Critical accounting judgements and estimates
The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make
judgements as to the application of accounting standards to the recognition and presentation of material transactions, assets and
liabilities within the Group, and the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements, and the reported amounts of income and expenses during the reporting period. Estimations are based
on management’s best evaluation of a range of assumptions; however events or actions may mean that actual results ultimately differ
from those estimates, and these differences may be material. The estimates and the underlying assumptions are reviewed regularly.
1b.(i) Critical accounting judgements
The following are the critical judgements, apart from those involving estimation (which are dealt with separately below), that the
Directors have made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts
recognised and presented in the financial statements.
Classification of income or expenses between headline and non-headline items (note 5)
Non-headline items are those where, in management’s opinion, their separate reporting provides an additional understanding to users of
the financial statements of easyJet’s underlying trading performance, and which are significant by virtue of their size and/or nature. In
considering the categorisation of an item as non-headline, management’s judgement includes, but is not limited to, a consideration of:
• whether the item is outside of the principal activities of the easyJet Group (being to provide point-to-point airline services and package
holidays);
• the specific circumstances which have led to the item arising, including, if extinguishing an item from the statement of financial position,
whether that item was first generated via headline or non-headline activity. The rebuttable presumption being that when subsequently
extinguishing an item from the statement of financial position, any impact on the income statement should be reflected in the same way as
that which was used in the initial creation of the item;
• the likelihood and potential regularity of recurrence; and,
• whether the item is unusual by virtue of its size.
Non-headline items may include impairments, amounts relating to corporate acquisitions and disposals, expenditure on major
restructuring programmes and the gain or loss resulting from the initial recognition of sale and leaseback transactions.
Consolidation of easyJet Switzerland
Judgement has been applied in consolidating easyJet Switzerland S.A. as a subsidiary on the basis that the Company exercises a
dominant influence over the undertaking. A non-controlling interest has not been reflected in the consolidated financial statements on
the basis that the holders of the remaining 51% of the shares have no entitlement to any dividends from that holding and the Company
has an option to acquire those shares for a pre-determined minimal consideration.
Vouchers issued
It is currently easyJet policy in the event of flight cancellations to offer customers the option to accept vouchers in lieu of cash refunds.
The liability for these vouchers is classified as other payables until the voucher is redeemed against a future booking when it is reclassified
to unearned revenue.
Vouchers issued by easyJet holidays have a 12-month redemption period and any vouchers not redeemed by their expiry date are
recognised in the consolidated income statement as revenue. Over the course of the pandemic, and the following period of recovery, the
expiry date for easyJet holidays vouchers was extended on a number of occasions to allow customers more time to utilise the vouchers.
For airline flight vouchers, to date no vouchers have expired as expiry dates have been extended to ensure customers have the
maximum opportunity to utilise their vouchers. Additionally, no breakage has been recognised for airline vouchers as it is judged that
customer behaviour, and therefore redemption levels, have not yet normalised post pandemic given the flight disruption seen as the
industry starts to return to pre-pandemic levels of flying. For vouchers issued to customers in countries where regulations stipulate
unused vouchers should be refunded to the customer before the expiry of the statutory period, the required refunds have been made.
Applying breakage to the balance of the airline flight vouchers at 30 September 2022 at a rate of 10% would result in a reduction in the
liability of c.£11 million.
Sale and leaseback transactions
Judgement is required when determining if sale and leaseback proceeds and lease rentals are at fair value. The sale and leaseback
transactions completed in the year have been evaluated with reference to external valuations specific to the easyJet fleet and assessed
to be at fair value. The accounting treatment would have been different if the transactions had not been at fair value (see leases
accounting policy).
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FINANCIAL STATEMENTS
Notes to the financial statements (CONTINUED)
1. Accounting policies, judgements and estimates (continued)
Contingent liability recognition
On 19 May 2020, easyJet announced that it had been the target of a cyber-attack from a highly sophisticated source. The email
addresses and travel details of approximately nine million customers were accessed and for a very small subset of customers (2,208),
credit card details were accessed.
The cyber-attack continues to be under investigation by the Information Commissioner's Office (ICO). As the cyber-attack took place
before the United Kingdom left the European Union, the Group expects the ICO to be investigating on behalf of all EU data protection
authorities as lead supervisory authority under the General Data Protection Regulation (GDPR). Any penalty or enforcement action will
need to be reviewed and approved by the other EU data protection authorities under the GDPR's cooperation process. In addition, in
May 2020, a class action claim was filed in the UK High Court by a law firm representing a class of affected customers and claims have
also been commenced or threatened in other courts and jurisdictions.
Judgement has been applied in assessing the merit, likely outcome and potential impact on the Group of the continued investigation by
the ICO, group action and other claims. These are still subject to a number of significant uncertainties and therefore the Group is unable
to assess the likely outcome or quantum of the claims as at the date of these financial statements, and no provision has been made.
1b.(ii) Critical accounting estimates
The following critical accounting estimates involve a higher degree of judgement or complexity and are the major sources of estimation
uncertainty that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the
next year.
Owned aircraft carrying values --- £3,598 million (2021: £3,559 million) (note 11)
The key estimates used in arriving at aircraft carrying values are the useful economic lives and residual values of the owned aircraft.
Aircraft are depreciated over their useful economic life to their residual values in line with the property, plant and equipment accounting
policy. The useful economic life is based on easyJet’s long-term fleet plan and intended utilisation of the current fleet which include long-
term assumptions of market conditions and customer demands which by their nature are inherently uncertain.
Residual value estimates for aircraft are based on independent aircraft valuations. The valuations are based on an assessment of the
current and future state of the global marketplace for specific aircraft assets. Should the marketplace for an asset class deteriorate
unpredictably, there could be a risk that the recoverable amount for some aircraft assets would fall below their current carrying value or
that residual values are subject to downward adjustment. If the market expectation of residual value of the easyJet aircraft varied by +/-
10% this would result in an approximate +/- £6 million impact on annual depreciation rates.
Owned and leased aircraft asset recoverable amounts are included in the Airline CGU and are therefore subject to review for impairment
annually or when there is an indication of impairment within the Airline CGU. Further details of the impairment testing applied are
included in note 10.
Aircraft maintenance provisions - £636 million (2021: £550 million) (note 19)
easyJet incurs liabilities for maintenance costs arising during the lease term of leased aircraft. These costs arise from legal and
constructive contractual obligations relating to the condition of the aircraft when it is returned to the lessor. To discharge these
obligations, it is usual for easyJet to carry out at least one heavy maintenance check on each of the engines and the airframe of the
aircraft during the lease term. A material provision representing the estimated cost of this obligation is built up over the course of the
lease.
The estimates and assumptions used in the calculation of the provision are reviewed at least annually, and when information becomes
available that is capable of causing a material change to an estimate, such as renegotiation of end of lease return conditions, increased
or decreased aircraft utilisation, or changes in the cost of heavy maintenance services and expected uplift in future prices. Given the
uncertainty in forecasting future maintenance requirements, and the associated judgemental nature of the assumptions applied in
determining the maintenance provision, management believe that a reasonable combination of changes to these estimates could result
in a material movement to the carrying value of the provision. The most critical estimates in the calculation of the provision are
considered to be the future utilisation of the aircraft and the expected increase in the cost of the heavy maintenance checks. Should
inflation rates be c.2% higher than the currently estimated rates in all periods for which they are not yet contractually fixed or currently
under negotiation, this would increase the provision by c.£6 million.
The rates used to discount the provision to arrive at a present value are based on observable market rates and are therefore at less risk
of management estimation.
Goodwill and landing rights - £523 million (2021: £533 million) (note 10)
It is management’s judgement that there are two separate cash generating units which generate largely independent cash flows, these
being easyJet’s airline route network and its holidays business. The recoverable amount of goodwill and landing rights has been
determined based on value in use calculations for the airline route network cash generating unit. The value in use is determined by
discounting future cash flows to their present value. When applying this method, easyJet relies on a number of key estimates including
the ability to meet its strategic plans, future fuel prices and exchange rates, long-term economic growth rates for the principal countries
in which it operates, and its pre-tax weighted average cost of capital. Strategic plans include assessments of the future impact of climate
change on easyJet to the extent these can be estimated. This includes, for example the future estimated price of ETS permits, the
phasing out of the free ETS permits from 2024, the expected price and quantity required of Sustainable Aviation Fuel usage and fleet
renewals. The impact of longer-term climate change risks that are not part of the strategic plans have been considered as part of the
stress testing and plausible scenarios modelled.
Fuel price and exchange rates continue to be volatile in nature and the ability to pass these changes on to the customer is a critical
judgement that requires estimation. The assumptions used are sensitive to significant changes in these rates. In addition, assumptions
over customer demand levels could have a significant effect on the impairment assessment performed. Any future events that would
lead to extended travel restrictions or fleet grounding may impact future impairment or useful economic life assessments. The stress
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F I N A N C I A L S T A T E M E N T S
testing considered as part of the overall impairment assessment takes into account different assumptions for these key estimates, see
note 10 for details.
Recoverability of deferred tax assets - £443 million (2021: £425 million) (note 6)
The deferred tax asset balances include £443 million (2021: £425 million) arising on full recognition of the UK trading tax losses accumulated
at the statement of financial position date. The Group has concluded that these deferred tax assets will be fully recoverable against the
unwind of taxable temporary differences and future taxable income based on the long term strategic plans of the Group. Where applicable
the financial projections used in assessing future taxable income are consistent with those used elsewhere across the business, for example
in the assessment of the carrying value of goodwill. These assessments include the expected impact of climate change on easyJet, and the
future financial impact within cash flow projections, including the future estimated price of ETS permits, the phasing out of the free ETS
permits from 2024, the expected price and quantity required of Sustainable Aviation Fuel usage and fleet renewals.
The tax losses for which a deferred tax asset has been recognised are expected to be utilised within the next eight years, assessed by
probable forecast future taxable income. Probable forecast future taxable income includes an incremental and increasing risk weighting
to represent higher levels of uncertainty in future periods.
The period over which the loss is utilised has been stress tested by assessing probable future taxable income for the next three years,
based on the same risk weightings to those applied above, but assuming no profit growth from the end of a three year forecast period.
The resultant reduction in forecast taxable profit calculated on this basis would extend the tax loss utilisation period by one year.
The tax losses can be carried forward indefinitely and have no expiry date.
Other payables - Liability for contract with customers - £158 million (2021: £277 million) (note 16)
Other contract liabilities include amounts transferred from unearned revenue to other payables due to the cancellation of flights. This
liability includes customer vouchers outstanding and amounts where customers have not yet requested a refund, voucher, or flight
transfer. These liabilities are judged to be contract liabilities as they arise from performance obligations where payment has been
received from the customer but the performance obligation has not been met. The judgement applied to the voucher liability is
described under critical accounting judgements. For balances where customers have not yet requested a refund, voucher or flight
transfer, management has judged that sufficient time has passed to assess the element of this liability where the likelihood of the
contractual right being exercised is considered to be remote. This has been estimated to apply to balances aged over 24 months and of
low value, and these liabilities have been taken to the consolidated income statement as revenue. A 5% increase in this breakage would
result in an additional £1 million of revenue being recognised.
Defined benefit pension assumptions - £140 million gross obligation (2021: £152 million gross obligation)
(note 20)
The Swiss pension scheme meets the requirements under IAS 19 to be recognised as a defined benefit pension scheme and the net
pension obligation is recognised on the consolidated statement of financial position. The measurement of scheme assets and obligations
are calculated by an independent actuary in line with IAS 19. The financial and demographic assumptions used in the calculation are
determined by management following consultation with the independent actuary with consideration of external market movements
and inputs. The calculation is most sensitive to movements in the discount rate applied, which has been subject to significant volatility.
A sensitivity analysis is included in note 20.
Provisions for customer claims - £80 million (2021: £21 million) (note 19)
easyJet incurs liabilities for amounts payable to customers who make claims in respect of flight delays and cancellations, performance, quality
issues, and personal injury and illness experienced whilst on holiday and refunds of air passenger duty or similar charges, for which claims could
be made up to six years after the event. The key estimation in the provision is the passenger claim rates, in particular during periods of
disrupted flying. The estimation carries a level of uncertainty as it is based on customer behaviour. The basis of all estimates included in the
provision are reviewed at least annually and when information becomes available that may result in a material change to the estimate. Should
customer claims for disruption events be 5% higher than estimated this would result in an addition to the year end provision of £5 million.
2. Net finance charges
Interest receivable and other financing income
Interest income
Hedge discontinuation and ineffectiveness1
Interest payable and other financing charges
Hedge discontinuation and ineffectiveness1
Interest payable on bank and other borrowings
Interest payable on lease liabilities
Other interest payable
Net exchange loss/(gains) on monetary assets and liabilities2
Net finance charges
2022
£ million
2021
£ million
(21)
(5)
(26)
–
98
43
2
143
64
181
1
(74)
(73)
92
75
42
–
209
(10)
126
1. See note 26 for details.
2. Included within net exchange loss/(gains) on monetary assets and liabilities is a £127 million gain (2021: £15 million loss) relating to the fair value gain on US dollar
foreign exchange derivatives designated as fair value through profit or loss.
3. Loss before tax
The following have been included in arriving at loss before tax:
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FINANCIAL STATEMENTS
Notes to the financial statements (CONTINUED)
Depreciation of property, plant and equipment
Owned assets
Right of use assets
Loss on disposal of landing rights
Loss on disposal of property, plant and equipment
Release of airport accruals
Movement in trade receivables provision
Sale and leaseback loss/(gain)
2022
£ million
2021
£ million
264
275
10
7
18
7
21
234
222
–
30
4
(3)
(65)
Auditors’ remuneration
During the year easyJet incurred fees of £0.1 million (2021: £0.1 million) for the audit of the Company's financial statements and fees of
£1.0 million (2021: £1.0 million) for the audit of the subsidiary financial statements by easyJet’s auditors and their associates (including
foreign partners). In addition, easyJet incurred audit-related non-audit services fees of £0.4 million (2021: £0.2 million) from its auditors.
This includes the fee of £0.1 million (2021: £0.1 million) in respect of the half year review performed. During the year other assurance
related non-audit services fees totalling £0.3 million (2021: £1.2 million) were also incurred, primarily in relation to working capital
procedures associated with a Class 1 transaction (2021: work associated with the rights issue).
4. Employees
The average monthly number of people employed by easyJet was:
Flight and ground operations
Sales, marketing and administration
2022
Number
12,906
1,045
13,951
2021
Restated*
Number
12,800
889
13,689
* Employee numbers were previously disclosed on a full-time equivalent basis. The disclosure is now reporting average headcount numbers and the prior year has
been restated.
Employee costs for easyJet were:
Wages and salaries
Social security costs
Pension costs
Share-based payments
2022
£ million
745
100
77
26
948
2021
£ million
472
69
67
15
623
Included in the pension costs is £7 million (2021: £7 million) related to pension schemes treated as a defined benefit scheme under IAS 19.
Included in employee costs is a net impact of £nil million (2021: £61 million) from restructuring costs. The impact of the restructuring
provision created in the year in relation to the downsizing of operations in Berlin has been offset by the reduction of separate
restructuring provisions from earlier years. Refer to note 5 for further details.
The amounts received under government 'Furlough' schemes are offset against the employee costs in the income statement. Refer to
note 28 for further details.
Key management compensation was:
Short-term employee benefits
Share-based payments
2022
£ million
7
3
10
2021
£ million
6
2
8
The Directors of easyJet plc and the other members of the Airline Management Board are easyJet's key management as they have
collective authority and responsibility for planning, directing and controlling the business.
During the year, an agreement was made with a member of the Airline Management Board to receive compensation for loss of office.
The amount is not material for disclosure.
Emoluments paid or payable to the Directors of easyJet plc were:
Remuneration
2022
£ million
3
3
2021
£ million
3
3
Details of Directors' remuneration are disclosed in the Directors' remuneration report on pages 113 to 121.
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5. Non-headline items
An analysis of the amounts presented as non-headline is given below:
Sale and leaseback loss/(gain)
Restructuring release
Loss on disposal of landing rights
Fair value adjustment and hedge discontinuation (credit)/charge
Total non-headline charge/(credit) before tax
Tax (credit)/charge on non-headline items
Total non-headline charge/(credit) after tax
F I N A N C I A L S T A T E M E N T S
Year ended
30 September
2022
Year ended
30 September
2021
£ million
21
–
10
(1)
30
(8)
22
£ million
(65)
(61)
–
26
(100)
58
(42)
Sale and leaseback loss/(gain)
During the year, easyJet completed the sale and leaseback of 10 A319 aircraft (2021: 7), nil A320 (2021: 24), nil A321 (2021: 4) and nil
engines (2021: 2). The income statement impact of the sale and leaseback of the 10 aircraft was a £21 million loss recognised in other
costs (2021: £79 million gain recognised in other income offset by £14 million loss recognised in other costs.)
Restructuring
The restructuring processes initiated during the pandemic are largely complete, which has resulted in the majority of the remaining
provision held for these programmes being remeasured, mainly in light of employee transfers resulting in reduced severance payments,
and a credit of £10 million (2021: £61 million credit) being recognised during the year. The release was recognised as non-headline within
other costs where the initial expense was recognised. Whilst these processes were brought to completion, during the year new plans
were announced to reduce the level of activity at our base at Berlin Brandenburg airport, and as a result of this downsizing a
restructuring provision of £10 million has been recognised as non-headline within other costs, resulting in a net £nil movement in the non-
headline restructuring provision. As at 30 September 2022 there were unpaid amounts of £15 million (2021: £18 million) for all
consultations which have not been finalised and settled.
In addition, the downsizing of activity and restructuring at the Berlin Brandenburg base has resulted in easyJet returning a number of the
landing right ‘‘slots’’ held at this airport. Landing rights at Tegel airport were acquired as part of the acquisition of Air Berlin’s operations at
the airport in October 2017, and subsequently transferred to the new Berlin airport. The landing rights have been held at cost on the
statement of financial position as an intangible asset. A number of slots ceased to be operated during the pandemic but were not
disposed of at that point due to the suspension of slot utilisation rules during that time. On emergence from the pandemic the slots were
not re-started, and utilisation of the landing rights has further reduced with the downsizing of easyJet’s activity at the base. These landing
rights have been returned to the Berlin slot regulator in the financial year. All slots held at the airport were acquired together through a
separate acquisition of an intangible asset, and therefore an allocation of the purchase price to the surrendered slots has been estimated.
As no consideration was received in return for giving back the slots the reduction constitutes a loss on disposal of an intangible asset.
Hedge discontinuation
Hedge discontinuation relates to hedge accounting ineffectiveness for items currently held in fair value and cash flow hedge
relationships, and the cumulative fair value of financial derivatives at the time of being discontinued from a previous hedge accounting
relationship.
In accordance with IFRS 9, hedge effectiveness testing is performed on a regular, periodic basis. For cash flow hedges this includes an
assessment of highly probable future cash exposures with the amount compared to the notional value of derivatives held in a hedge
relationship. Due to the reduced level of commercial flying over the pandemic, easyJet had been in an over-hedged position from both a
jet fuel and FX perspective. Where forecast exposures were no longer expected to occur, these previously hedged amounts no longer
qualified for hedge accounting. This resulted in a £1 million net credit (2021: £25 million charge) related to these discontinued derivatives
held in other comprehensive income being immediately recorded in the income statement. Additionally, in the prior year fair value
adjustments of £1 million charge were recorded related to hedge ineffectiveness on hedges of foreign currency denominated borrowings.
Tax on non-headline items
After the necessary tax adjustments which principally relate to the sale and leaseback transactions in both the current and comparative
periods, the tax adjusted non-headline items amount to a loss of £22 million (2021: gain of £42 million) which results in a tax credit of
£8 million (2021: £58 million charge) for the year.
easyJet.com 153
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153
FINANCIAL STATEMENTS
Notes to the financial statements (CONTINUED)
6. Tax credit
Tax on loss on ordinary activities
Current tax
Adjustments in respect of prior years
Foreign tax
Total current tax charge
Deferred tax
Temporary differences relating to property, plant and equipment
Other temporary differences
Adjustments in respect of prior years
Remeasurement of opening balances due to change in tax rates
Total deferred tax credit
Total tax credit
Effective tax rate
2022
£ million
2021
£ million
–
7
7
(50)
(2)
2
4
(46)
(39)
5
4
9
(36)
(189)
7
31
(187)
(178)
18.7%
17.2%
Reconciliation of the total tax credit
The tax for the year is lower than (2021: lower than) the standard rate of corporation tax in the UK as set out below:
Loss before tax
Tax credit at 19.0% (2021: 19.0%)
Income not chargeable for tax purposes:
Expenses not deductible for tax purposes
Share-based payments
Adjustments in respect of prior years - current tax
Adjustments in respect of prior years - deferred tax
Difference in applicable rates for current and deferred tax
Attributable to rates other than standard UK rate
Change in substantively enacted tax rate
Movement in provisions
IFRS 16 restricted gain
Total tax credit
2022
£ million
(208)
2021
£ million
(1,036)
(40)
5
2
–
2
(12)
1
4
(1)
–
(39)
(197)
2
2
5
7
(54)
2
31
(1)
25
(178)
Current tax payable at 30 September 2022 amounted to £5 million (2021: £2 million payable). £4 million of this is in relation to an
amendment to the tax return for easyJet Airline Company Ltd for the year ended 30 September 2019 with the balance primarily related
to tax payable in other European jurisdictions.
During the year ended 30 September 2022 net cash tax paid amounted to £4 million (2021: £1 million net cash tax received).
The Finance Act 2021 confirmed an increase of UK corporation tax rate from 19% to 25% with effect from 1 April 2023 and this was
substantively enacted by the statement of financial position date and therefore included in these financial statements. Temporary
differences have been remeasured using the enacted tax rates that are expected to apply when the liability is settled or the asset realised.
Tax on items recognised directly in other comprehensive income/(loss) or shareholders' equity:
Charge/(credit) to other comprehensive income/(loss)
Deferred tax on change in fair value of cash flow hedges
Deferred tax on post-employment benefit
2022
£ million
2021
£ million
(13)
(10)
(93)
(4)
154 easyJet plc Annual Report and Accounts 2022
154 easyJet plc Annual Report and Accounts 2022
F I N A N C I A L S T A T E M E N T S
Deferred tax
The net deferred tax (asset)/liability in the statement of financial position is as follows:
At 1 October 2021
Charged/(credited) to income statement
Charged to other comprehensive loss
At 30 September 2022
Accelerated
capital
allowances
Short-term
timing
differences
£ million
373
(32)
–
341
£ million
(26)
–
–
(26)
Fair value
(gains)/
losses
£ million
51
4
13
68
Share-
based
payments
£ million
(3)
2
–
(1)
Post-
employment
benefit
obligation
£ million
(9)
(2)
10
(1)
Trading loss
£ million
(425)
(18)
–
(443)
Total
£ million
(39)
(46)
23
(62)
Deferred tax assets/liabilities expected to be settled:
Current
Non-current
At 30 September 2022
£ million
–
(62)
(62)
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and it is the intention to settle these on a net basis.
At 1 October 2020
Charged/ (credited) to income statement
Charged to other comprehensive income
At 30 September 2021
Accelerated
capital
allowances
Short-term
timing
differences
£ million
386
(13)
–
373
£ million
(7)
(19)
–
(26)
Fair value
(gains)/
losses
£ million
(43)
1
93
51
Share-based
payments
Post-
employment
benefit
obligation
£ million
(2)
(1)
–
(3)
£ million
(8)
(5)
4
(9)
Trading loss
£ million
(275)
(150)
–
(425)
Total
£ million
51
(187)
97
(39)
7. Loss per share
Basic loss per share has been calculated by dividing the total loss for the year by the weighted average number of shares in issue during
the year after adjusting for shares held in employee benefit trusts.
To calculate diluted loss per share, the weighted average number of ordinary shares in issue has been adjusted to assume conversion of
all dilutive potential shares. Share options granted to employees where the exercise price is less than the average market price of the
Company’s ordinary shares during the year are considered to be antidilutive potential shares. Where share options are exercisable based
on performance criteria and those performance criteria have been met during the year, these options are included in the calculation of
dilutive potential shares. The calculation of diluted loss per share does not assume conversion, exercise, or other issue of potential
ordinary shares that would have an antidilutive effect on earnings per share.
Headline basic and diluted loss per share are also presented, based on headline loss for the year.
Loss per share is based on:
Headline loss for the year
Total loss for the year
Weighted average number of ordinary shares used to calculate basic loss per share
Weighted average number of ordinary shares used to calculate diluted loss per share
Loss per share
Basic
Diluted
Headline loss per share
Basic
Diluted
2022
£ million
(147)
(169)
2022
million
753
753
2022
pence
(22.4)
(22.4)
2022
pence
(19.6)
(19.6)
2021
£ million
(900)
(858)
2021
million
539
539
2021
pence
(159.0)
(159.0)
2021
pence
(166.9)
(166.9)
easyJet.com 155
easyJet.com
155
FINANCIAL STATEMENTS
Notes to the financial statements (CONTINUED)
8. Segmental and geographical revenue reporting
Segmental Analysis:
Passenger revenue
Ancillary revenue
Total revenue
Operating costs excl fuel
Fuel
Balance sheet FX revaluation
Ownership costs
Headline (loss)/profit before tax
Non-headline items
Total (loss)/profit before tax
Passenger revenue
Ancillary revenue
Total revenue
Operating costs excl fuel
Fuel
Balance sheet FX revaluation
Ownership costs
Headline loss before tax
Non-headline items
Total loss before tax
Year ended 30 September 2022
Holidays
£ million
–
495
Intergroup
transactions
£ million
–
(127)
495
(452)
–
(1)
(4)
38
–
38
(127)
127
–
–
–
–
–
–
Year ended 30 September 2021
Holidays
£ million
–
41
41
(50)
–
–
(3)
(12)
–
(12)
Intergroup
transactions
£ million
–
(7)
(7)
7
–
–
–
–
–
–
Airline
£ million
3,816
1,585
5,401
(3,596)
(1,279)
(63)
(679)
(216)
(30)
(246)
Airline
£ million
1,000
424
1,424
(1,595)
(371)
10
(592)
(1,124)
100
(1,024)
Group
£ million
3,816
1,953
5,769
(3,921)
(1,279)
(64)
(683)
(178)
(30)
(208)
Group
£ million
1,000
458
1,458
(1,638)
(371)
10
(595)
(1,136)
100
(1,036)
The presentation of this note has been expanded to include further detail on revenue and the cost impact of balance sheet foreign
exchange revaluations. This reflects the increased granularity of the internal reporting to the Chief Operating Decision Maker and plc
Board.
As described in note 1, airline revenue is recognised at a point in time (when the flight takes place). The holidays revenue detailed in this
note includes flight revenue which is also recognised at the time the flight takes place with the accommodation element of the revenue
recognised over time, aligned to the duration of the holiday.
The intergroup transactions column represents revenue and cost transactions between Airline and Holidays for the flight element of
holiday packages. These intercompany transactions are eliminated on consolidation; note that in the annual report, holidays sales and
costs are stated net of this intergroup consolidation adjustment.
Individual cost lines are not reported separately as these are not key metrics reported to the Chief Operating Decision Maker (CODM).
Assets and liabilities are not allocated to individual segments and are not separately reported to or reviewed by the CODM, and therefore
have not been disclosed. Interest income and expenditure are not allocated to segments as this activity is driven by the central treasury
function which manages the cash position of the Group.
Geographical revenue:
United Kingdom
Southern Europe
Northern Europe
Other
2022
£ million
2,845
1,669
1,163
92
5,769
2021
£ million
413
619
411
15
1,458
Geographical revenue is allocated according to the location of the first departure airport on each booking.
Southern Europe comprises countries lying wholly or mainly south of the border between Italy and Switzerland, plus France.
easyJet holiday’s revenue is generated wholly from the United Kingdom.
easyJet’s non-current assets principally comprise its fleet of 181 (2021: 183) owned and 139 (2021: 125) leased aircraft, giving a total fleet of
320 at 30 September 2022 (2021: 308). In addition to this easyJet was storing 3 aircraft under power by the hour agreements (2021: 12).
27 aircraft (2021: 27) are registered in Switzerland, 132 (2021: 110) are registered in Austria, 4 (2021: 13) are registered in the Cayman
Islands, and the remaining 160 (2021: 170) are registered in the United Kingdom.
9. Dividends
No dividend was paid in the year ending 30 September 2022 or 30 September 2021.
156 easyJet plc Annual Report and Accounts 2022
156 easyJet plc Annual Report and Accounts 2022
10. Goodwill and other intangible assets
Cost
At 1 October 2021
Additions
Disposals
At 30 September 2022
Amortisation
At 1 October 2021
Charge for the year
At 30 September 2022
Net book value
At 30 September 2022
At 1 October 2021
Cost
At 1 October 2020
Additions
Disposals
At 30 September 2021
Amortisation
At 1 October 2020
Charge for the year
Disposals
At 30 September 2021
Net book value
At 30 September 2021
At 1 October 2020
F I N A N C I A L S T A T E M E N T S
Goodwill
£ million
Other intangible assets
Landing
rights
£ million
Computer
software
£ million
Total
£ million
365
–
–
365
–
–
–
365
365
168
–
(10)
158
–
–
–
158
168
100
35
–
135
51
25
76
59
49
268
35
(10)
293
51
25
76
217
217
Goodwill
£ million
Other intangible assets
Landing
rights
£ million
Computer
software
£ million
Total
£ million
365
–
–
365
–
–
–
–
365
365
168
–
–
168
–
–
–
–
168
168
96
9
(5)
100
32
24
(5)
51
49
64
264
9
(5)
268
32
24
(5)
51
217
232
Included within computer software, are internally generated intangible assets of £25 million (2021: £8 million), and work in progress of
£25 million (2021: £11 million).
Value in use calculation
The recoverable amount of goodwill and other assets with indefinite expected useful lives has been determined based on value in use
calculations for the airline route network cash generating unit, which holds these assets.
Pre-tax cash flow projections have been derived from the strategic plan presented to the Board for the period up to 2027, using the
following key assumptions:
Pre-tax discount rate (derived from weighted average cost of capital, WACC)
Fuel price (US dollars per metric tonne)
Long-term economic growth rate
Exchange rates:
US dollar
Euro
2022
12.2%
1,010
2021
11.3%
696
2.0%
2.0%
1.11
1.14
1.35
1.16
The discount rate has been calculated based on the capital asset pricing model using external inputs where relevant, and the current
cost of debt for the Group. The change in the discount rate year on year reflects the current market conditions. Both fuel price and
exchange rates are volatile in nature. Exchange rates and fuel price are based on spot rates as at 30 September 2022. The increase year
on year of the fuel price shown in the table above reflects the change in underlying fuel prices, however in preparing its assessment
management has assumed that fuel uplifts from a 2019 baseline can be recovered, with any increase in costs being passed on to
customers. Operating margins are sensitive to significant changes in the timing and the ability of increases to be passed through to the
customer.
Cash flow projections beyond the forecast period have been extrapolated using an estimated average of long-term economic growth
rates for the principal countries in which easyJet operates. The future impact of climate change on the business has been incorporated
into strategic plans, including the estimated financial impact within the base case cash flow projections of the future estimated price of
ETS permits, the phasing out of the free ETS permits from 2024, the expected price and quantity required of Sustainable Aviation Fuel
(SAF) usage and fleet renewals.
easyJet.com 157
easyJet.com
157
FINANCIAL STATEMENTS
Notes to the financial statements (CONTINUED)
10. Goodwill and other intangible assets (continued)
The headroom of the value in use calculation over the carrying value of the relevant assets has increased compared to 30 September
2021. This is primarily due to the strategic initiatives which the Group has already taken, and which are now embedded in the base case
cash flow forecast.
Stress testing has been performed on key inputs to the value in use calculation, including the assumptions listed above and the strategic
plan used as the base for the calculation. The impairment model is sensitive to a sustained significant adverse movement in foreign
currency exchange rates (other than movements that are included in the fuel pass-through assumption) and forecast operating profits
to the extent that no other compensating action is taken. It has been assumed that any significant future fuel price increase would be
recovered through revenue pass through. Individual scenarios that have been deemed reasonably probable in particular in relation to the
current macro-economic environment do not give rise to an impairment. These scenarios include +/-10% on euro and US dollar rates,
+100 bps increase in WACC, reduced capacity of 5%, increased operating costs (excluding fuel) of 2% and a reduced growth rate of 1%.
Additional risks associated with climate change have also been stress tested, including sensitivities of SAF usage and ETS costs,
additional legal and technology costs, reduced demand and increased cost of maintenance and replacement aircraft. These scenarios,
both individually and in reasonably probable combinations, do not give rise to an impairment.
Current intangible assets
Carbon offsetting VER
EU ETS, CH ETS and UK ETS carbon allowances
30 September
2022
30 September
2021
£ million
14
481
495
£ million
15
125
140
ETS credits are required to offset the carbon emitted by flights. The scheme is settled on an annual basis. The credits required for annual
settlement are held as current intangible assets, with the associated liability included within accruals in trade and other payables (note 15).
11. Property, plant and equipment
Cost
1 October 2021
Additions
Transfers2
Aircraft sold and leased back
Disposals
At 30 September 2022
Accumulated depreciation
At 1 October 2021
Charge for the year
Aircraft sold and leased back
Disposals
At 30 September 2022
Net book value
At 30 September 2022
At 1 October 2021
Owned assets
Right of use assets
Aircraft and
spares
£ million
Land and
Buildings
£ million
Other
£ million
Aircraft and
spares
Other
£ million
£ million
Total
£ million
4,802
414
–
(216)
(12)
4,988
1,243
255
(102)
(6)
1,390
3,598
3,559
44
–
–
–
–
44
–
–
–
–
–
44
44
55
28
(14)
–
(1)
68
19
9
–
–
28
40
36
2,335
120
–
25
(64)
2,416
1,255
269
–
(45)
1,479
937
1,080
45
–
–
–
–
45
29
6
–
–
35
10
16
7,281
562
(14)
(191)
(77)
7,561
2,546
539
(102)
(51)
2,932
4,629
4,735
158 easyJet plc Annual Report and Accounts 2022
158 easyJet plc Annual Report and Accounts 2022
F I N A N C I A L S T A T E M E N T S
Owned assets
Right of use assets
Aircraft and
spares
£ million
Land and
Buildings
£ million
Other
£ million
Aircraft and
spares
£ million
Other
£ million
Total
£ million
5,520
112
64
(828)
(66)
4,802
1,187
227
23
(153)
(41)
1,243
3,559
4,333
44
–
–
–
–
44
–
–
–
–
–
–
44
44
44
28
–
(15)
(2)
55
12
7
–
–
–
19
36
32
1,692
148
(64)
559
–
2,335
1,062
216
(23)
–
–
1,255
1,080
630
37
8
–
–
–
45
23
6
–
–
–
29
16
14
7,337
296
–
(284)
(68)
7,281
2,284
456
–
(153)
(41)
2,546
4,735
5,053
Cost
At 1 October 2020
Additions
Transfers
Aircraft sold and leased back*
Disposals*
At 30 September 2021
Accumulated depreciation
At 1 October 2020
Charge for the year
Transfers
Aircraft sold and leased back*
Disposals*
At 30 September 2021
Net book value
At 30 September 2021
At 1 October 2020
The net book value of aircraft includes £297 million (2021: £132 million) relating to advance payments for future deliveries. This amount is
not depreciated.
The net book value of aircraft spares is £81 million (2021: £67 million).
As at 30 September 2022, easyJet was contractually committed to the acquisition of four LEAP engines (2021: 0) and 168 (2021: 101)
Airbus 320 family aircraft, with a total estimated list price1 of US$ 21.9 billion (2021: US$ 12.3 billion) before escalations and discounts for
delivery in financial years 2023 (7 aircraft), 2024 (21 aircraft), 2025 (23 aircraft) and 2026 to 2029 (117 aircraft).
* £33 million of cost and £33 million of accumulated depreciation from components disposed of in the year ended 30 September 2021 were identified which were
previously included as disposals, which have now been presented in Aircraft sold and leased back, reflecting the aircraft with which they were associated.
The ‘Other’ categories are comprised of leasehold improvements, computer hardware, leasehold property, fixtures, fittings and equipment, and
work in progress in respect of tangible projects. The work in progress as at 30 September 2022 was £20 million (2021: £10 million).
Assets of £908 million (2021: £934 million) are pledged as security for the drawn portion of the UKEF backed facility.
1. Airbus no longer publishes list prices. The estimated list price is based on the last available list price published in January 2018 and escalated by Airbus’ standard
escalation from January 2018 to January 2022 of 11.2% (or 2.7% CAGR).
2. Transfers are from work in progress on other owned assets to computer software intangible assets, which are reflected in the additions line in note 10.
12. Other non-current assets
Lessor maintenance contributions
Deposits held by aircraft lessors
2022
£ million
64
27
91
2021
£ million
75
60
135
Lessor maintenance contribution assets arise to compensate easyJet for the delivery of a mid-life aircraft, where a lessor has agreed to
make a contribution to easyJet’s maintenance costs to reflect the cycles already flown by the aircraft at the point it is delivered to
easyJet. Depending on the contract terms, payment will be made either at the maintenance event date or at the lease return date, the
timing of which determines the current and non-current split. The recoverability of this asset has been assessed by management, and the
asset is assessed as being fully recoverable.
13. Trade and other receivables
Trade receivables
Less provision for loss allowance
Prepayments
Accrued income
Other receivables
2022
£ million
85
(8)
77
124
19
147
367
2021
£ million
45
(1)
44
93
5
149
291
Within the provision for loss allowance, £7 million (2021: £4 million) has been charged to the income statement, with £nil million
(2021: £1 million) being utilised in the 2022 financial year.
Information about the impairment of trade receivables and the Group’s exposure to credit risk can be found in note 26.
Other receivables comprises lessor contributions, prepaid maintenance costs, VAT and trade deposits.
easyJet.com 159
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159
FINANCIAL STATEMENTS
Notes to the financial statements (CONTINUED)
14. Cash and money market deposits
Cash and cash equivalents (original maturity less than three months)
Money market deposits (original maturity more than three months)
Current restricted cash
Non-current restricted cash
2022
£ million
3,514
126
4
3
3,647
Interest rates on money market deposits and restricted cash are repriced based on the prevailing market rates of interest.
Restricted cash comprises:
Amount held in escrow accounts for legal cases
ATOL Licence non-pooled account
Cash held as bank guarantee collateral
15. Trade and other payables
Trade payables
Accruals
Taxes and social security
Other payables
2022
£ million
4
–
3
7
2022
£ million
431
983
38
233
1,685
16. Liabilities relating to contracts with customers
Opening contract liabilities
Revenue deferred during the year
Revenue recognised during the year
Additional contract liability during the year
Reduction in contract liability during the year
FX impact during the year
Closing contract liabilities
2022
2021
Unearned
revenue
£ million
846
6,613
(6,416)
–
–
–
1,043
Other
£ million
277
–
(25)
161
(258)
3
158
Unearned
revenue
£ million
614
1,641
(1,409)
–
–
–
846
2021
£ million
3,536
–
13
1
3,550
2021
£ million
4
9
1
14
2021
£ million
217
556
25
330
1,128
Other
£ million
397
–
–
361
(475)
(6)
277
Revenue deferred and recognised during the year is inclusive of airline passenger duty (APD) and other charges, but net of intercompany
eliminations.
Revenue recognised that was included in the contract liability balance at the
beginning of the year
2022
Unearned
revenue
£ million
Other
£ million
2021
Unearned
revenue
£ million
Other
£ million
773
25
230
11
Other customer contract liabilities consist of amounts transferred from unearned revenue to other payables due to the cancellation of
flights. This liability includes customer vouchers outstanding and amounts where customers have not yet requested a refund, voucher or
flight transfer. The movements in additional contract liability and reduction in contract liability arise as flights are cancelled and as
vouchers are awarded or exercised and as customers advise on the exercise of their options following flight cancellations. The breakage
applied to the contract liability in the year (for customers who had not advised on the exercise of their options), is included in revenue
recognised during the year.
160 easyJet plc Annual Report and Accounts 2022
160 easyJet plc Annual Report and Accounts 2022
17. Borrowings
At 30 September 2022
Eurobonds
Term loan (UK Export Finance backed facility)
At 30 September 2021
Eurobonds
Commercial Paper (Covid Corporate Financing Facility)
Term loan (UK Export Finance backed facility)
F I N A N C I A L S T A T E M E N T S
Current
Non-current
£ million
£ million
Total
£ million
437
–
437
1,919
841
2,760
2,356
841
3,197
Current
£ million
Non-current
£ million
Total
£ million
–
300
–
300
2,303
–
764
3,067
2,303
300
764
3,367
Amounts above are shown net of issue costs or discounted amounts which are amortised at the effective interest rate over the life of
the debt instruments.
The remaining Covid Corporate Financing Facility (CCFF) of £300 million was repaid in November 2021. See note 26 for further
information on borrowings.
18. Leases
easyJet holds aircraft under leasing arrangements that are recognised as right of use assets and lease liabilities, with remaining lease
terms ranging up to 10 years. easyJet is contractually obliged to carry out maintenance on these aircraft, and the cost of this is provided
based on the number of flying hours, days and cycles operated and the estimated cost of the maintenance events. Further details are
given in note 1.
Information in respect of right of use assets, including the carrying amount, additions and depreciation, are set out in note 11. Information
in respect of the carrying value and interest arising on lease liabilities is set out in note 25 and note 2 respectively. A maturity analysis of
lease liabilities is set out below.
Amounts recognised in the statement of cash flows
Capital payments
Interest payments
Lease liabilities
Maturity analysis - contractual undiscounted cash flows
Less than one year
One to five years
More than five years
Lease liabilities included in the statement of financial position
Current
Non-current
Total
Year ending
30 September
2022
Year ending
30 September
2021
£ million
(206)
(43)
£ million
(261)
(41)
30 September
2022
30 September
2021
£ million
£ million
(297)
(723)
(258)
(1,278)
(251)
(730)
(316)
(1,297)
30 September
2022
30 September
2021
£ million
(247)
(866)
(1,113)
£ million
(189)
(890)
(1,079)
easyJet also enters into short-term leases and low-value leases which are not recognised as right of use assets and lease liabilities. The
expense recognised in the year in relation to these leases is disclosed below.
Amounts recognised in income statement
Interest on lease liabilities
Expenses relating to low-value leases
Expenses relating to short-term wet leases
Year ending
30 September
2022
Year ending
30 September
2021
£ million
43
4
53
100
£ million
42
5
(14)
33
The £14 million credit in the prior year recognised as expenses relating to short-term wet leases relates to the release of an accrual which
was no longer required.
easyJet.com 161
easyJet.com
161
FINANCIAL STATEMENTS
Notes to the financial statements (CONTINUED)
19. Provisions for liabilities and charges
At 1 October 2021
Exchange adjustments
Release of provisions
Additional provisions recognised
Related to aircraft sold and leased back
Updated discount rates net of unwind of discount
Utilised
At 30 September 2022
Maintenance
provisions
Provisions for
customer
claims
Restructuring
Other
provisions
Total
provisions
£ million
550
93
–
141
6
(71)
(83)
636
£ million
21
3
(15)
236
–
–
(165)
80
£ million
18
–
(10)
10
–
–
(3)
15
£ million
14
–
(1)
21
–
–
–
34
£ million
603
96
(26)
408
6
(71)
(251)
765
The maintenance provisions provide for maintenance costs arising from legal and constructive obligations relating to the condition of the
aircraft when returned to the lessor. Provisions for customer claims comprise amounts payable to customers who make claims in respect
of flight delays and cancellations, performance, quality issues, and personal injury and illness experienced whilst on holiday, and refunds of
air passenger duty or similar charges. Restructuring and other provisions include amounts in respect of potential liabilities for employee-
related matters and litigation which arose in the normal course of business.
Current
Non-current
2022
£ million
176
589
765
2021
£ million
183
420
603
The split of the current/non-current maintenance provision is based on the expected maintenance event timings. If actual aircraft usage
varies from expectation the timing of the utilisation of the maintenance provision could result in a material change in the classification
between current and non-current. Maintenance provisions are expected to be utilised within nine years.
Within other provisions are provisions for litigation matters. The split of these provisions between current/non-current is based on the
dates of expected court judgements. Provisions for customer claims and restructuring provisions could be fully utilised within one year
from 30 September 2022 and therefore are classified as current.
20. Pensions
Total pension costs of £77 million (2021: £67 million) recognised in employee costs (note 4), comprise £70 million (2021: £60 million)
related to defined contribution plans and £7 million (2021: £7 million) related to defined benefit plans, including administration expenses
of £nil (2021: £nil).
The contributions payable to the relevant plans by the Group are at the rates specified in the rules of the plans. The assets of the plans
are held separately from those of the Group in funds under the control of the trustees. Where there are employees who leave the plans
before vesting fully in the contributions, the ancillary contributions payable may be reduced by the amount of forfeited contributions.
Due to the minimum guarantees in place under Swiss law, the Swiss pension plan meets IAS 19 requirements to be treated as a defined
benefit plan under IAS 19 despite the scheme having many attributes akin to a defined contribution scheme. The Swiss Federal Council
requires that a guaranteed minimum interest rate must be achieved (currently 1%), plus a guaranteed minimum conversion rate to be
applied to accumulated pension on retirement (currently 6.8%). These guarantees mean that the scheme is accounted for as a defined
benefit scheme under IAS 19. The scheme remains open to new employees.
The easyJet portion of the current service costs and the net interest cost are charged to the consolidated income statement to the year
in which they relate. Net interest is determined by multiplying the net defined benefit liability by the discount rate at the start of the
annual reporting period, adjusted for any contributions and benefit payments in the period. Actuarial gains and losses are recognised in
the consolidated statement of comprehensive income and the consolidated balance reflects the net surplus or deficit at the statement
of financial position date.
The defined benefit obligation is calculated using the projected unit credit method. This reflects service rendered by employees to the
dates of valuation and incorporates actuarial assumptions including discount rates used in determining the present value of benefits,
projected rates of remuneration growth and mortality rates. The present value of the defined benefit obligation is determined by
discounting the estimated future cash outflows using yields of high-quality corporate bonds. Management base the discount rate on the
bond yield in the Swiss bond market over 10 to 20 years, reflecting the currency in which the benefits will be paid, and maturity terms
approximating to the terms of the related pension obligation.
The key financial assumptions used to calculate the Swiss scheme liabilities under IAS 19 as at 30 September were:
Discount rate
Salary increase
Demographic assumptions
2022
2.25%*
1.00%
BVG 2020 GT
2021
0.35%
1.00%
BVG 2020 GT
* The discount rate is based on the bond yield in the Swiss bond market over 10 to 20 years as at the reporting date.
Demographic assumptions
The demographic assumptions, including mortality assumptions used for the liability calculation, are based on the most recent BVG 2020
tables (2021: BVG 2020 tables). These tables are based on the experience during the period 2015 to 2019 of 14 of the largest
autonomous Swiss pension plans, and management consider these to be the best estimate available.
162 easyJet plc Annual Report and Accounts 2022
162 easyJet plc Annual Report and Accounts 2022
F I N A N C I A L S T A T E M E N T S
Sensitivities
The scheme asset values are sensitive to market conditions. The scheme liabilities are sensitive to actuarial assumptions used to
determine the scheme obligations. Significant changes in these assumptions could potentially have a material impact on the consolidated
statement of financial position. The main assumptions are the discount rate, the rate of salary increase and the life expectancy rate.
The following table provides an estimate of the potential impact on the pension scheme of changing these assumptions. The sensitivity
analysis was performed by recalculating the defined benefit obligation with the following parameters (all other parameters were not
modified):
Discount rate
Salary increase
Life expectancy
Increase/(decrease) in defined
benefit obligation
2022
(5.4%)
+6.1%
+1.0%
(0.9%)
0.5%
(0.5%)
2021
(6.6%)
+7.6%
+1.0%
(0.9%)
0.5%
(0.6%)
+0.5%
-0.5%
+0.5%
-0.5%
+ 1 year
- 1 year
easyJet has an affiliation contract with Swiss Life Collective BVG Foundation. The assets of all affiliated companies are pooled which
diversifies the associated risk, and the scheme assets represent the share in this Foundation. The Collective controls the asset
management, is exposed to the risk, and guarantees the savings capitals under the contract in place. The Board of Trustees with the
elected employees’ and employers’ representatives decide the investment strategy. The current agreement is ‘‘fully insured’’ by Swiss Life,
which means that all underfunding, investment and longevity risks are transferred from easyJet to Swiss Life over the term of the policy
that is over the term of the policy when members retire, all payments are the liability of the pension scheme.
The amounts recognised in the consolidated income statement are as follows:
Current service costs defined benefit
Interest cost on net defined benefit obligation
Interest income on defined benefit asset
Past service costs (plan amendment)
Net defined benefit cost recognised in the income statement
Amounts recognised in other comprehensive income/(loss):
Actuarial gain
Return on plan assets
Recognised in the statement of other comprehensive income/(loss)
Movement in net deficit in the year:
Net deficit of the plan at 1 October
Net defined benefit cost recognised in the income statement
Net defined benefit gain recognised in other comprehensive income
Company contributions
Foreign exchange
Statement of financial position net deficit as at 30 September
2022
£ million
8
1
(1)
(1)
7
2022
£ million
(40)
(1)
(41)
2022
£ million
37
7
(41)
(8)
6
1
2021
£ million
8
–
–
(1)
7
2021
£ million
(3)
(2)
(5)
2021
£ million
45
7
(5)
(7)
(3)
37
A prepayment representing cash paid over to Swiss Life in advance and not yet utilised in the pension scheme is offset against the net
deficit; this amount is consistent year on year.
Expected employer cash contribution from the Company in the 2022 financial year is expected to be CHF 9 million (2021: CHF 8 million).
easyJet.com 163
easyJet.com
163
FINANCIAL STATEMENTS
Notes to the financial statements (CONTINUED)
20. Pensions (continued)
Changes in the present value of the defined benefit obligation are as follows:
Present value of obligation at 1 October
Current service cost
Contributions paid by employees
Interest costs on defined benefit obligation
Contributions paid by plan participants
Benefit payments from scheme assets
Past service cost
Actuarial gain arising from changes in financial assumptions
Actuarial (gain)/loss arising from experience adjustments
Actuarial gain arising from changes in demographic assumptions
Foreign exchange
Present value of obligation at 30 September
Changes in the fair value of the scheme assets are as follows:
Fair value of the scheme asset as at 1 October
Interest income on the defined benefit plan assets
Contributions paid by Company
Contributions paid by employees
Contributions paid by plan participants
Benefit payments from scheme assets
Return on plan assets
Foreign exchange
Fair value of the pension assets as at 30 September
Number of active participants
Average age of active insured members in years
Average time remaining before active employees reach final age in years
Average active life expectancy in years
Average years of service in years
2022
£ million
152
8
5
1
3
(6)
(1)
(24)
(16)
–
18
140
2022
£ million
115
1
8
5
3
(6)
1
12
139
2022
1,004
40
9
52
10
2021
£ million
153
8
4
–
4
(4)
(1)
(4)
6
(5)
(9)
152
2021
£ million
108
–
7
4
4
(4)
2
(6)
115
2021
987
40
9
53
9
The assets held do not have a quoted market price as they are within the affiliation contract with Swiss Life Collective BVG Foundation.
All assets are within the one class which takes the form of an insurance contract.
The weighted average duration of the defined benefit obligation of the Swiss pension scheme is 12 years (2021: 15 years).
Maturity profile of defined benefit obligation
Expected benefit payments during fiscal year ending 30 September:
1 year
2 years
3 years
4 years
5 years
6 up to 10 years
21. Share capital
Allotted, called up and fully paid
At 30 September
Ordinary shares of par 27 2/7 pence each
2022
£ million
10
12
12
15
15
65
2021
£ million
8
11
11
11
13
53
Number
Nominal value
2022
million
2021
million
2022
£ million
2021
£ million
758
758
207
207
No new ordinary shares were issued during the 2022 financial year.
easyJet’s employee benefit trusts hold the following shares. The cost of these has been deducted from retained earnings:
Number of shares (million)
Cost (£ million)
Market value at year end (£ million)
164 easyJet plc Annual Report and Accounts 2022
164 easyJet plc Annual Report and Accounts 2022
2022
3
24
9
2021
2
18
11
F I N A N C I A L S T A T E M E N T S
22. Share incentive schemes
easyJet operates the following share incentive schemes, all of which are equity settled. The change in the number of awards outstanding,
weighted average exercise prices during the year, and the number exercisable at each year end were as follows:
Grant date
Long Term Incentive Plan
19 December 2018
19 December 2019
29 December 2020
Restricted Stock Unit
29 December 2020 - 2 year
29 December 2020 - 3 year
20 December 2021 - 2 year
20 December 2021 - 3 year
Restricted Share Plan
16 February 2022
Save As You Earn scheme *
14 June 2018
14 June 2019
23 July 2020
20 July 2021
19 July 2022
Share Incentive Plans
Grant date
Long Term Incentive Plan
19 December 2016
19 December 2017
19 December 2018
19 December 2019
29 December 2020
29 December 2020 - 2 year
29 December 2020 - 3 year
Save As You Earn scheme *
1 July 2017
14 June 2018
14 June 2019
23 July 2020
20 July 2021
Share Incentive Plans
1 October 2021
Granted
Rights issue
Forfeited/
cancellations
million
million
million
million
Exercised
million
30 September
2022
million
0.8
0.7
0.5
0.3
1.1
–
–
–
0.2
2.0
5.3
3.4
–
4.3
18.6
–
–
–
–
–
0.6
0.7
0.6
–
–
–
–
12.3
–
14.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(0.8)
–
(0.1)
–
–
–
–
(0.1)
(0.2)
(0.9)
(3.5)
(2.2)
(0.1)
(0.1)
(8.0)
–
–
–
–
–
–
–
–
–
–
–
–
–
(0.9)
(0.9)
–
0.7
0.4
0.3
1.1
0.6
0.7
0.5
–
1.1
1.8
1.2
12.2
3.3
23.9
1 October
2020
million
Granted
Rights issue
Forfeited/
cancellations
million
million
million
Exercised
million
30 September
2021
million
0.1
0.6
1.0
0.8
–
–
–
0.8
0.2
2.3
4.9
–
4.8
15.5
–
–
–
–
0.5
0.3
1.0
–
–
–
–
2.9
–
4.7
–
–
0.2
0.1
–
–
0.1
–
–
0.3
0.8
0.5
0.7
2.7
(0.1)
(0.6)
(0.3)
(0.2)
–
–
–
(0.8)
–
(0.6)
(0.4)
–
(0.6)
(3.6)
–
–
(0.1)
–
–
–
–
–
–
–
–
–
(0.6)
(0.7)
–
–
0.8
0.7
0.5
0.3
1.1
–
0.2
2.0
5.3
3.4
4.3
18.6
* Dates have been amended to align to grant date.
The comparative table and opening position in FY22 have been restated to correct for minor errors, including rounding.
Long Term Incentive Plan
The plan is open, by invitation, to Executive Directors and senior management, and provides for annual awards of Performance Shares
worth up to 250% of salary each year. The vesting of these shares is dependent on return on capital employed (ROCE), earnings per
share (EPS) and/or total shareholder return (TSR) targets compared to FTSE-ranked companies at the start of the performance period.
All awards have a three-year vesting period. Awards made in December 2020 are assessed on performance conditions measured over
the three financial years ended 30 September 2023.
Restricted Stock Unit
The plan was awarded to the Airline Management Board, senior managers and some middle management, and provided annual awards
of Performance Shares worth up to 75% of salary each year. All awards have either a two- or three-year vesting period of which the
vesting conditions are continued employment.
easyJet.com 165
easyJet.com
165
FINANCIAL STATEMENTS
Notes to the financial statements (CONTINUED)
22. Share incentive schemes (continued)
Save As You Earn scheme
The scheme is open to all employees on the UK payroll. Participants may elect to save up to £500 per month under a three-year savings
contract. An option is granted by the Company to buy shares at a discount of 20% from the market price at the time of the grant,
however the 2022 scheme was granted at a discount of 10% from the market price. At the end of the savings period, the option
becomes exercisable for a period of six months. Employees who are not paid through the UK payroll may participate in the scheme
under similar terms and conditions, albeit without the same tax benefits.
Restricted Share Plan
The plan is open, by invitation, to Executive Directors, the Airline Management Board and senior and middle management, and provides
for annual awards of Performance Shares worth from 20% to 125% of salary, depending on role. All awards have either a two- or three-
year vesting period. For the Executive Directors a three-year performance period plus two-year post vesting holding period will apply.
The vesting of these shares is dependent on continued employment and assessment against performance underpins as outlined in the
Directors Remuneration Report measured over the vesting period.
Weighted average exercise prices are as follows:
Save As You Earn scheme *
1 October 2021
Granted
Forfeited
Exercised
£
6.16
£
3.99
£
6.14
£
11.74
30 September
2022
£
4.54
* The exercise prices used to calculate the weighted average price are post rights issue, so will differ to that stated in fair values table as fair values will not change.
The exercise price of all awards except those disclosed in the above table is £nil.
The number of awards exercisable at each year end and their weighted average exercise price is as follows:
Long Term Incentive Plan
Restricted Stock Unit
Restricted Share Plan
Save As You Earn scheme
Price
£
2022
–
–
–
6.76
2021
–
–
–
11.39
Number
million
2022
0.1
–
–
1.1
1.2
The weighted average remaining contractual life for each class of share award at 30 September 2022 is as follows:
Long Term Incentive Plan
Restricted Stock Unit
Restricted Share Plan
Save As You Earn scheme
Years
2022
7.4
8.7
9.4
2.9
2021
0.1
–
–
0.2
0.3
2021
8.5
9.3
–
2.5
Share Incentive Plan
The plan is open to all employees on the UK payroll. Participants may invest up to £1,800 of their pre-tax salary each year to purchase
Partnership Shares in easyJet. For each Partnership Share acquired, easyJet purchases a matching share up to a maximum value of
£1,500 per annum. Employees must remain with easyJet for three years from the date of purchase of each Partnership Share in order to
qualify for the Matching Share, and for five years for the shares to be transferred to them tax free. The employee is entitled to dividends
on shares purchased, and to vote at shareholder meetings. With effect from 1 April 2020, easyJet ceased contributing a Matching Share
to the scheme as a result of the financial performance of the business.
Subject to Company performance, easyJet also issues free shares to UK employees under an approved share incentive plan of up to
£3,000 per annum in value. There is a similar unapproved free shares scheme for international employees.
The fair value of grants under the Save As You Earn scheme are calculated by applying the Binomial Lattice option pricing model. The
fair value of grants under the TSR based Long Term Incentive Plan is estimated under the Stochastic model (also known as the Monte
Carlo model). The fair value of grants under all other schemes is the share price on the date of grant. The following assumptions are used:
Grant date
Long Term Incentive Plan
19 December 2018 - EPS
19 December 2018 - TSR
19 December 2019 - EPS
19 December 2019 - TSR
19 December 2020 - TSR
Restricted Stock Unit
19 December 2020 - RSU
20 December 2021 - RSU
Restricted Share Plan
16 February 2022
166 easyJet plc Annual Report and Accounts 2022
166 easyJet plc Annual Report and Accounts 2022
Share price
Exercise price
£
£
Expected
volatility
%
Option life
years
10.78
10.78
14.29
14.29
8.63
8.63
5.08
7.15
–
–
–
–
–
–
–
–
0%
47%
0%
53%
61%
0%
0%
0%
–
3.00
–
3.00
3.00
–
–
–
Risk-free
interest rate
%
0%
1%
0%
1%
0%
0%
0%
0%
Fair value
£
10.78
5.39
14.29
7.15
4.32
8.63
5.08
7.15
F I N A N C I A L S T A T E M E N T S
Grant date
Save As You Earn scheme
14 June 2018
14 June 2019
23 July 2020
20 July 2021
19 July 2022
Share price
£
17.43
10.03
6.65
9.53
4.43
Exercise
price
£
13.94
8.02
6.65
7.62
3.99
Expected
volatility
Option life
Risk-free
interest rate
%
years
30%
33%
49%
59%
62%
3.50
3.50
3.50
3.50
3.50
%
1%
1%
0%
1%
2%
Fair value
£
4.41
2.70
1.95
3.96
1.84
Share price for LTIPs is the closing share price from the last working day prior to the date of grant.
Exercise price for the Save As You Earn scheme is set at a 10% (2021: 20%) discount from the share price at grant date.
Expected volatility is based on historical volatility over a period comparable to the expected life of each type of option.
Levels of early exercises and forfeitures are estimated using historical averages unless this is deemed unreasonable, in which case
judgement is used.
The weighted average fair value of Matching Shares granted under the Share Incentive Plan during the year was £nil (2021: £nil).
For grants under the Save As You Earn scheme, the dividend yield assumption is calculated based on the actual yield at the date of
grant. For the options granted in 2022, the dividend yield assumption was 3.0% (2021: 3.0%, 2020: 2.5%, 2019: 4.5%, 2018: 3.2%).
The total share-based payment expense recognised for the year was £26 million (2021: £16 million). The share-based payment liability,
representing the national insurance payments due, as at 2022 was £nil (2021 : £1 million).
23. Reconciliation of operating loss to cash generated from/(used in) operations
Operating loss
Adjustments for non-cash items:
Depreciation
Loss on disposal of property, plant and equipment
Loss/(gain) on sale and leaseback
Amortisation of intangible assets
Share-based payments
Loss on disposal of landing rights
Changes in working capital and other items of an operating nature:
Increase in trade and other receivables
Increase in current intangible assets
Increase/(decrease) in trade and other payables
Increase in unearned revenue
Post employment benefit contributions
Decrease in provisions
Decrease in other non-current assets
(Decrease)/increase in derivative financial instruments
Decrease in non-current deferred income
Cash generated from/(used in) operations
2022
£ million
(27)
2021
£ million
(910)
539
7
21
25
26
10
(151)
(43)
258
197
(1)
(7)
64
(26)
–
892
456
30
(65)
24
16
–
(8)
(74)
(187)
232
(7)
(294)
24
9
(1)
(755)
24. Reconciliation of net cash flow to movement in net debt
Cash and cash equivalents
Money market deposits
1 October 2021
£ million
3,536
–
3,536
Foreign
exchange
£ million
303
–
303
New debt
raised in the
year
£ million
–
–
–
Other loan
issue costs
Net
cash flow
30 September
2022
£ million
–
–
–
£ million
(325)
126
(199)
£ million
3,514
126
3,640
Eurobond
Commercial Paper (Covid Corporate Financing
Facility)
Term loan (UK Export Finance backed facility)
Lease liabilities
Net debt
(2,303)
(48)
(300)
(764)
(1,079)
(4,446)
–
(150)
(197)
(395)
(910)
(92)
–
–
–
(53)
(53)
(53)
(5)
–
(4)
10
1
1
–
(2,356)
300
77
206
583
384
–
(841)
(1,113)
(4,310)
(670)
easyJet.com 167
easyJet.com
167
FINANCIAL STATEMENTS
Notes to the financial statements (CONTINUED)
25. Financial instruments
The fair values of financial assets and liabilities, together with the carrying value at each reporting date, are as follows:
At 30 September 2022
Other non-current assets
Trade and other receivables
Trade and other payables
Derivative financial instruments
Restricted cash
Money market deposits
Cash and cash equivalents
Eurobonds2
Other borrowings2
Lease liabilities
Equity investment3
At 30 September 2021
Other non-current assets
Trade and other receivables
Trade and other payables**
Derivative financial instruments
Restricted cash
Money market deposits
Cash and cash equivalents
Eurobonds2
Other borrowings2
Lease liabilities
Equity investment3
Amortised cost
Held at fair value
Financial
assets
Financial
liabilities
Fair value
hedge
Cash flow
hedge
Other
financial
instruments
£ million
91
230
–
–
7
126
2,528
–
–
–
–
£ million
–
–
(1,399)
–
–
–
–
(2,356)
(841)
(1,113)
–
£ million
–
–
–
58
–
–
–
–
–
–
–
£ million
–
–
–
264
–
–
–
–
–
–
–
£ million
–
–
–
120
–
–
986
–
–
–
31
Amortised cost
Held at fair value
Financial
assets
£ million
135
178
–
–
14
–
1,932
–
–
–
–
Financial
liabilities
Fair value
hedge
Cash flow
hedge
Other
financial
instruments
£ million
–
–
(766)
–
–
–
–
(2,303)
(1,064)
(1,079)
–
£ million
–
–
–
53
–
–
–
–
–
–
–
£ million
–
–
–
153
–
–
–
–
–
–
–
£ million
–
–
–
(3)
–
–
1,604
–
–
–
30
Other1
£ million
–
137
(286)
–
–
–
–
–
–
–
–
Other1
£ million
–
113
(362)
–
–
–
–
–
–
–
–
Carrying
value
£ million
91
367
(1,685)
442
7
126
3,514
(2,356)
(841)
(1,113)
31
Carrying
value
£ million
135
291
(1,128)
203
14
–
3,536
(2,303)
(1,064)
(1,079)
30
Fair
value
£ million
91
367
(1,685)
442
7
126
3,514
(2,081)
(841)
N/A*
31
Fair
value
£ million
135
291
(1,128)
203
14
–
3,536
(2,380)
(1,064)
N/A
30
* N/A - lease liabilities are valued in accordance with IFRS 16 and a fair value determination is not applicable.
** Liabilities relating to contracts with customers of £60 million in prior year has been reclassified from financial liabilities to contract liabilities, based on its nature, and
therefore disclosed within other.
1. Amounts disclosed in the 'Other' column are items that do not meet the definition of a financial instrument. They are disclosed to facilitate reconciliation of the
carrying values of financial instruments to line items presented in the statement of financial position.
2. For further information see Capital, financing and interest risk management section below in note 26.
3. The equity investment of £31 million (2021: £30 million) represents a 13.2% shareholding in a non-listed entity, The Airline Group Limited. Valuation movements are
designated as being fair valued through other comprehensive income due to the nature of the investment being held for strategic purposes. No dividend was
received during the year (2021: £nil).
Fair value calculation methodology
Where available the fair values of financial instruments have been determined by reference to observable market prices where the
instruments are traded. Where market prices are not available, the fair value has been estimated by discounting expected future cash
flows at prevailing interest rates and by applying year end exchange rates (excluding The Airline Group Limited equity investment).
The fair values of the four Eurobonds are classified as level 1 of the IFRS 13 ‘Fair Value Measurement’ fair value hierarchy (valuations taken
as the closing market trade price for each respective Eurobond as on 30 September 2022). Apart from the equity investment, the
remaining financial instruments for which fair value is disclosed in the table above, and derivative financial instruments, are classified as
level 2.
The fair values of derivatives are calculated using observable market forward curves (e.g. forward foreign exchange rates, forward
interest rates or forward jet fuel prices) and discounted to present value using risk free rates. The impacts of counterparty credit, cross-
currency basis and market volatility are also included where appropriate as part of the fair valuation.
The equity investment is classified as level 3 due to the use of forecast dividends which are discounted to present value. Though there
are other level 2 inputs to the valuation, the discounted cash flow is a significant input which is not based on observable market data. The
fair value is assessed at each reporting date based on the discounted cash flows and two other valuations calculated using a market
approach and level 2 inputs. The fair value of £31 million was determined on this basis by an external valuation firm as at 30 September
2022 (2021: £30 million), representing an increase of £1 million from the prior year which was recognised in other comprehensive income.
If the level 3 forecast cash flows were 10% higher or lower the fair value would not increase/decrease by a material amount.
168 easyJet plc Annual Report and Accounts 2022
168 easyJet plc Annual Report and Accounts 2022
F I N A N C I A L S T A T E M E N T S
The fair value measurement hierarchy levels have been defined as follows:
• Level 1, fair value of financial instruments based on quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2, fair value of financial instruments in an active market (for example, over the counter derivatives) which are determined using valuation
techniques which maximise the use of observable market data and rely as little as possible on entity specific estimates.
• Level 3, fair value of financial instruments that are not based on observable market data (i.e. unobservable inputs).
Fair value of derivative financial instruments
At 30 September 2022
Designated as cash flow hedges
US dollar
Euro
Swiss franc
Jet fuel
Cross-currency interest rate swaps
Designated as fair value hedges
Cross-currency interest rate swaps
Designated as fair value through profit or loss
US dollar
Euro
At 30 September 2021
Designated as cash flow hedges
US dollar
Euro
Swiss franc
Jet fuel
Cross-currency interest rate swaps
Designated as fair value hedges
Cross-currency interest rate swaps
Designated as fair value through profit or loss
US dollar
Euro
Quantity
million
Non-current
assets
£ million
Current
assets
£ million
Current
Non-current
liabilities
£ million
liabilities
£ million
Total
£ million
1,721
675
185
1
1,230
379
755
285
18
–
–
–
42
–
67
–
127
170
2
–
139
–
58
45
9
423
–
(12)
(9)
(65)
–
–
–
–
(86)
–
(3)
(2)
(17)
–
–
–
–
(22)
188
(13)
(11)
57
42
58
112
9
442
Quantity
million
Non-current
assets
£ million
Current
assets
£ million
Current
liabilities
£ million
Non-current
liabilities
£ million
Total
£ million
804
442
56
1
888
379
762
79
1
–
–
25
–
53
7
–
86
7
3
1
172
–
–
2
–
185
(10)
(12)
–
–
–
–
(8)
(1)
(31)
(1)
–
–
–
(33)
–
(3)
–
(37)
(3)
(9)
1
197
(33)
53
(2)
(1)
203
For foreign currency forward exchange contracts, quantity represents the absolute gross nominal value of currency contracts held,
disclosed in the contract foreign currency. The cross-currency interest rate swap contracts are presented at the sterling notional amount.
For jet fuel derivative contracts, the quantity represents absolute contracted metric tonnes.
The majority of foreign exchange and jet fuel transactions designated as a cash flow hedge are expected to occur within the next 18
months. Accumulated gains and losses resulting from these transactions are deferred in the hedging reserve. The gains and losses willl be
recognised in the income statement in the periods that the hedged transactions impact the income statement. Where the gain or loss is
included in the initial amount recognised following the purchase of an aircraft, recognition in the income statement is over a period of up
to 23 years in the form of depreciation of the purchased asset.
Amounts related to US dollar and euro foreign exchange derivatives held at fair value through profit and loss (for example not held in a
hedge accounting relationship) form part of the Group’s statement of financial position retranslation risk management strategy. Fair
valuation movements on these derivatives are recognised in the income statement and offset foreign exchange movements on the
corresponding notional amount of the statement of financial position monetary liabilities held in US dollar and euro. These trades are all
expected to occur within the next 36 months.
The Group maintains cross-currency interest rate swap contracts on a proportion of fixed rate debt issuance as part of the approach to
currency and interest rate risk management. The cross-currency interest rate swap contracts are designated and qualify as either fair
value or cash flow hedges to minimise volatility in the income statement.
The following derivative financial instruments are subject to offsetting, enforceable master netting arrangements.
easyJet.com 169
easyJet.com
169
FINANCIAL STATEMENTS
Notes to the financial statements (CONTINUED)
25. Financial instruments (continued)
At 30 September 2022
Derivative financial instruments
Assets
Liabilities
At 30 September 2021
Derivative financial instruments
Assets
Liabilities
Gross
amount
£ million
Amount
not set off
£ million
Net
amount
£ million
550
(108)
442
(108)
108
–
Gross
amount
£ million
Amount
not set off
£ million
271
(68)
203
(52)
52
–
442
–
442
Net
amount
£ million
219
(16)
203
All financial assets and liabilities are presented gross on the face of the statement of financial position as the conditions for netting
specified in IAS 32 'Financial Instruments Presentation' are not met.
26. Financial risk and capital management
easyJet is exposed to financial risks including fluctuations in exchange rates, jet fuel prices and interest rates. Financial risk management
aims to limit these market risks with selected derivative hedging instruments being used for this purpose. easyJet's policy is not to
speculatively trade derivatives but use the instruments to hedge anticipated exposure and gain cash flow certainty. easyJet reduces its
exposure to market risk by using derivatives as any gains and losses arising are offset by the outcome of the underlying exposure being
hedged.
The Board is responsible for setting financial risk and capital management policies and objectives which are implemented by the treasury
function on a day-to-day basis. The policy outlines the approach to risk management and also states the instruments and time periods
which the treasury function is authorised to use in managing financial risks. The policy is regularly reviewed to ensure best practice.
Capital employed comprises shareholders' equity, borrowings (including amounts related to IFRS 16 lease liability), cash and money
market deposits (excluding restricted cash).
In addition, easyJet also maintains committed access to capital through its undrawn credit facilities. This amounted to £1.1 billion at 30
September 2022 and contributed to easyJet’s total liquidity.
Consequently, the capital employed at the end of the current and prior year and the return earned during those years were as follows:
Shareholders' equity
Borrowings
Lease liabilities
Cash and money market deposits (excluding
restricted cash)
Capital employed
Reported operating (loss)/profit
Tax rate
Adjusted operating (loss)/profit after tax
Return on capital employed
2022
Headline
Non-headline
£ million
2,533
3,197
1,113
(3,640)
3,203
3
2
0.1%
£ million
–
–
–
–
–
(30)
(24)
Total
£ million
2,533
3,197
1,113
(3,640)
3,203
(27)
19%
(22)
(0.6)%
2021
Headline
Non-headline
£ million
2,639
3,367
1,079
(3,536)
3,549
(1,036)
(839)
(25.5)%
£ million
–
–
–
–
–
126
102
Total
£ million
2,639
3,367
1,079
(3,536)
3,549
(910)
19%
(737)
(22.4)%
Return on capital employed is calculated by dividing the adjusted operating (loss)/profit after tax by the average of the opening and
closing capital employed.
170 easyJet plc Annual Report and Accounts 2022
170 easyJet plc Annual Report and Accounts 2022
F I N A N C I A L S T A T E M E N T S
Liquidity risk management
The objective of easyJet's liquidity risk management is to ensure sufficient cash is available to meet future liabilities as they fall due and
ensure access to cost effective funding in various markets.
easyJet’s policy has consistently been to hold significant liquidity to mitigate the impact of potential business disruption events.
Liquidity raised in the year was primarily from sale and leaseback transactions, which were conducted on 10 aircraft generating gross
cash proceeds of £88 million. Repayments in the year included the £300 million repayment of the CCFF in November 2021 and a partial
$100 million repayment of the UKEF facility in in April 2022, reducing the overall UKEF facility size from $1,870 million to $1,770 million.
The Group continues to monitor liquidity to ensure it maintains adequate levels of cash. easyJet continues to have access to various
funding markets and a large fleet of unencumbered aircraft assets as sources of raising additional liquidity if required.
In the year easyJet moved its target minimum liquidity requirement to cover unearned revenue plus £500 million (previous policy was
£2.6 million per 100 seats in the fleet). In assessing this liquidity metric any undrawn credit facilities need to be taken into consideration.
Total cash (excluding restricted cash) and money market deposits at 30 September 2022 was £3,640 million (30 September 2021:
£3,536 million) with total liquidity at £4,735 million. Surplus funds are invested in high quality short-term liquid instruments, mainly money
market funds, bank deposits and tri-party repos.
The maturity profile of financial liabilities and derivatives based on undiscounted cash flows and contractual maturities is as follows:
At 30 September 2022
Borrowings principal and interest
Trade and other payables
Lease liabilities
FX & jet derivative contracts - receipts
FX & jet derivative contracts - payments
Cross-currency swap contracts - receipts
Cross-currency swap contracts - payments
At 30 September 2021
Borrowings principal and interest
Trade and other payables
Lease liabilities
FX & jet derivative contracts - receipts
FX & jet derivative contracts - payments
Cross-currency swap contracts - receipts
Cross-currency swap contracts - payments
Within 1 year
1-2 years
2-5 years
Over 5 years
£ million
523
1,685
297
(2,723)
2,271
(463)
420
£ million
566
–
443
(582)
503
(455)
471
£ million
1,368
–
280
(186)
162
(463)
484
£ million
1,075
–
258
–
–
(358)
346
Within 1 year
1-2 years
2-5 years
Over 5 years
£ million
358
1,128
251
(1,354)
1,230
(16)
30
£ million
488
–
239
(313)
291
(446)
405
£ million
1,762
–
491
(159)
155
(872)
914
£ million
1,070
–
317
–
–
–
–
The maturity profile has been calculated based on spot rates for the US dollar, euro, Swiss franc and jet fuel at close of business on 30
September each year.
Credit risk management
easyJet is exposed to credit risk arising from cash and money market deposits, derivative financial instruments and trade and other
receivables. Credit risk management aims to reduce the risk of default by setting limits on credit exposure to counterparties based on
their respective credit ratings. Credit ratings also determine the maximum period of investment when placing funds on deposit. The
maximum exposure to credit risk at the reporting date is equal to the carrying value of its financial assets, excluding tri-party repos, which
are securitised by high quality, investment grade financial assets.
Counterparties for cash investments and derivatives contracts are required to have a long-term credit rating of A- or better at contract
inception from either Moody’s, Standard & Poor’s or Fitch (except where there is a specific regulatory, contractual requirement or a bank
guarantee from an A- rated entity). Exposures to these counterparties are regularly reviewed and, if the long-term credit rating falls
below A-, management will make a decision on remedial action to be taken.
The credit ratings of counterparties that easyJet holds financial assets with are as follows:
At 30 September 2022
Financial assets
Trade receivables
Other non-current assets
Derivative financial instruments
Restricted cash
Money market deposits
Cash and cash equivalents
Total
A- and above
£ million
Below A-
£ million
Unrated/
Other
£ million
–
–
442
7
126
3,511
4,086
–
–
–
–
–
3
3
367
91
–
–
–
–
458
£ million
367
91
442
7
126
3,514
4,547
easyJet.com 171
easyJet.com
171
FINANCIAL STATEMENTS
Notes to the financial statements (CONTINUED)
26. Financial risk and capital management (continued)
At 30 September 2021
Financial assets
Trade receivables
Other non-current assets
Derivative financial instruments
Restricted cash
Cash and cash equivalents
Total
A- and above
£ million
Below A-
£ million
–
–
219
14
3,534
3,767
–
–
–
–
2
2
Unrated/
Other
£ million
291
135
–
–
–
426
£ million
291
135
219
14
3,536
4,195
At the end of each reporting date easyJet recognises a loss allowance for expected credit losses on financial assets measured at
amortised cost. In establishing the appropriate amount of loss allowance to be recognised, easyJet applies either the general approach or
the simplified approach, depending on the nature of the underlying group of financial assets.
The general approach is applied to the impairment assessment of refundable lease deposits and other refundable lease contributions,
restricted cash, money market deposits and cash and cash equivalents (excluding money market funds held at fair value through profit
or loss). Under the general approach easyJet recognises a loss allowance for a financial asset at an amount equal to the 12-month
expected credit losses, unless the credit risk on the financial asset has increased significantly since initial recognition, in which case a loss
allowance is recognised at an amount equal to the lifetime expected credit losses. At 30 September 2022 this was considered
immaterial. This is due to easyJet’s strict policy of investing only with counterparties who hold a high, investment grade credit standing
(except in specific circumstances) as detailed in the tables above.
The simplified approach is applied to the impairment assessment of trade and other receivables. Under the simplified approach easyJet
always recognises a loss allowance for a financial asset at an amount equal to the lifetime expected credit losses using the historical loss
methodology to calculate an impairment provision.
At 30 September 2022 trade receivables had a total loss allowance of £8 million (2021: £1 million). The exposure to individual customer’s
credit risk is reduced as no individual customer accounts for a substantial amount of the total revenue and most payments for flight
tickets are collected in advance of the service being provided.
Foreign currency risk management
The majority of easyJet's exposure to currency arises from fluctuations in the US dollar, euro and Swiss franc exchange rates which can
significantly impact easyJet's financial results and cash flows. The aim of the foreign currency risk management is to reduce the impact
of these exchange rate fluctuations.
easyJet has maintained hedging in line with policy, with the exception of revenue hedging (Swiss franc and euro income) and easyJet
holidays hedging (euro cost), where hedging was paused during the pandemic and has since recommenced and is being built back up to
policy levels.
Significant currency exposures in the income statement are managed through the use of currency forward contracts entered into cash
flow hedge relationships in line with the Board approved policy. In the year easyJet moved to an 18 month hedging policy with the aim of
maintaining average cover of circa 60% over a rolling 12 month period.
Following the launch of easyJet holidays the Group separately manages foreign exchange risk related to forecast cash out flows on
package holiday costs.
Significant currency exposures relating to the acquisition cost or sale proceeds of aircraft are also managed through the use of FX
forward contracts where up to 90% of the next 18 months’ forecast requirement may be hedged.
Significant currency exposures relating to foreign currency denominated Eurobond issuances are managed through the use of cross-
currency interest rate swap contracts where deemed appropriate. These hedges are designated as either fair value hedges or cash flow
hedges.
easyJet has substantial borrowings and other monetary liabilities denominated in US dollars and euro, which are largely offset by holding
US dollar and euro cash and money market deposits. FX forward contracts are also used to manage foreign exchange translation risk.
These are classified as fair value through profit or loss (e.g. not designated in a hedge relationship). During the year easyJet used euro
lease liabilities to hedge a proportion of its euro revenue receipts in a cash flow hedge relationship. Revaluations of these euro liabilities
are held in reserves and released on a straight-line basis over the term of the lease agreement through profit or loss.
Management may take action to hedge other currency exposures as deemed appropriate.
The gross notional of transactions in a hedge relationship that occurred during the financial year to manage the foreign currency risk and
the resulting gains and losses were as follows:
USD
EUR
CHF
Notional value reflects the sterling contractual leg amount.
172 easyJet plc Annual Report and Accounts 2022
172 easyJet plc Annual Report and Accounts 2022
FY22
Notional
1,371
580
55
Gain/(loss)
108
(7)
1
F I N A N C I A L S T A T E M E N T S
Capital financing and interest rate risk management
The objective of capital management is to ensure that easyJet is able to continue as a going concern whilst delivering shareholder
expectations of a strong capital base as well as returning benefits for other stakeholders.
On 30 September 2022, easyJet held long-term corporate credit ratings from both Standard & Poor's (BBB-) and Moody's (Baa3).
easyJet plc established a £3,000 million Euro Medium Term Note (EMTN) Programme on 7 January 2016. Subsequently easyJet plc has
issued three bonds under this programme and easyJet FinCo B.V. has issued one bond. All four bonds under this scheme are guaranteed
by easyJet Airline Company Limited, easyJet plc and easyJet FinCo B.V.
On 11 February 2022 the EMTN programme increased in size to £4,000 million.
In February 2016, easyJet plc issued a €500 million bond under the £3,000 million Euro Medium Term Note programme guaranteed by
easyJet Airline Company Limited. The Eurobond pays an annual fixed coupon of 1.750%. At the same time the Group entered into three
cross-currency interest rate swaps to convert the entire €500 million fixed rate Eurobond to a sterling floating rate exposure. All three
swaps pay floating interest (ISDA fallback protocol rate of SONIA compounded plus a margin) quarterly, receive fixed interest annually,
and have maturities matching the Eurobond. The Group designated all three cross-currency interest rate swaps as a fair value hedge of
the interest rate and currency risks on the €500 million Eurobond. The swaps are measured at fair value through profit or loss with any
gains or losses being taken immediately to the income statement (except where related to timing differences related to cross-currency
basis amortisation). The carrying value of the Eurobond is adjusted for changes in fair value attributable to the risks being hedged. This
net carrying value differs to the swap’s fair value depending on movements in the Group's credit risk and cross-currency basis. The
carrying value of the fixed rate Eurobond net of the cross-currency interest rate swap at 30 September 2022 was £379 million. This value
does not include capitalised set-up costs incurred in the issuing of the bond. The lifetime fair value adjustment to the bond hedging
instrument in the statement of financial position was £(58) million. During the year fair value adjustments totalled £5 million which were
offset by materially equal and opposite movements on the hedging instruments.
In October 2016 easyJet plc issued a €500 million bond under the £3,000 million Euro Medium Term Note programme guaranteed by
easyJet Airline Company Limited. The Eurobond pays an annual fixed coupon of 1.125%. Shortly after the issuance of the €500 million
bond the Group entered into three cross-currency interest rate swaps to convert the entire €500 million fixed rate Eurobond to a sterling
fixed rate exposure. The cross-currency interest rate swaps were executed on 8 November 2016 with settlement and notional exchange
occurring on 14 November 2016. All three swaps pay fixed interest semi-annually, receive fixed interest annually, and have maturities
matching the Eurobond. The Group designated all three cross-currency interest rate swaps as a cash flow hedge of the currency risk on
the €500 million Eurobond. The cross-currency interest rate swaps are measured at fair value with the effective portion taken through
the statement of comprehensive income. The element of the fair value generated by the change in the spot rate is recycled to the
income statement from the statement of comprehensive income to offset the revaluation of the Eurobond. The carrying value of the
fixed rate Eurobond net of the cross-currency interest rate swap at 30 September 2022 was £438 million. This value does not include
capitalised set-up costs incurred in the issuing of the bond.
In June 2019 easyJet plc issued a €500 million bond under the £3,000 million Euro Medium Term Note programme guaranteed by
easyJet Airline Company Limited. The Eurobond pays an annual fixed coupon of 0.875%. At the same time the Group entered into three
cross-currency interest rate swaps to convert the entire €500 million fixed rate Eurobond to a sterling fixed rate exposure. All three
swaps pay fixed interest semi-annually, receive fixed interest annually, and have maturities matching the Eurobond. The Group
designated all three cross-currency interest rate swaps as a cash flow hedge of the currency risk on the €500 million Eurobond. The
cross-currency interest rate swaps are measured at fair value with the effective portion taken through the statement of comprehensive
income. The element of the fair value generated by the change in the spot rate is recycled to the income statement from the statement
of comprehensive income to offset the revaluation of the Eurobond. The carrying value of the fixed rate Eurobond net of the cross-
currency interest rate swap at 30 September 2022 was £428 million. This value does not include capitalised set-up costs incurred in the
issuing of the bond.
In March 2021 easyJet FinCo B.V. issued a €1,200 million bond under the £3,000 million Euro Medium Term Note programme
guaranteed by easyJet Airline Company Limited and easyJet plc. The Eurobond pays an annual fixed coupon of 1.875%. In May and June
2022 easyJet entered into two cross-currency interest rate swap to convert €400 million of the €1,200 million fixed rate Eurobond into a
sterling fixed rate exposure. Both swaps pay fixed interest semi-annually, receive fixed interest annually, and have maturities matching the
Eurobond. The Group designated both cross-currency interest rate swaps as a cash flow hedge of the currency risk on the €1,200 million
Eurobond. The cross-currency interest rate swaps are measured at fair value with the effective portion taken through the statement of
comprehensive income. The element of the fair value generated by the change in the spot rate is recycled to the income statement
from the statement of comprehensive income to offset the revaluation of the Eurobond in the Group financial statements. The carrying
value of the hedged element of the fixed rate Eurobond net of the cross-currency interest rate swap at 30 September 2022 was £324
million. This value does not include capitalised set-up costs incurred in the issuing of the bond.
The weighted average sterling interest rate hedged for the four bonds was 2.30% with a weighted average GBP/EUR foreign exchange
hedge rate of 1.18.
Interest rate cash flow risk arises on floating rate borrowings and cash investments.
Interest rate risk management policy aims to provide certainty in a proportion of financing while retaining the opportunity to benefit from
interest rate reductions. Borrowings are issued at either fixed or floating interest rates repricing every three to six months. A significant
proportion of the US dollar debt liabilities are matched with US dollar cash assets by value. Operating leases are a mix of fixed and
floating rates. Of the 142 aircraft operating leases in place at 30 September 2022 (2021: 137), 95% were based on fixed interest rates and
5% were based on floating interest rates (2021: 95% fixed, 5% floating).
easyJet.com 173
easyJet.com
173
FINANCIAL STATEMENTS
Notes to the financial statements (CONTINUED)
26. Financial risk and capital management (continued)
Commodity price risk management
The Group is exposed to commodity risk in the form of jet fuel requirements and Carbon Emissions Trading schemes (EU-ETS, CH-ETS &
UK-ETS) price risk. easyJet has maintained risk management activities throughout the year in line with policy.
The objective of the fuel price risk management policy is to provide protection against sudden and significant increases in jet fuel prices,
thus mitigating volatility in the income statement in the short term. In the year easyJet moved to an 18-month hedging policy with the
aim of maintaining average cover of circa 60% over a rolling 12 month period. Jet fuel derivatives are entered into a cash flow hedge
relationship against the future forecasted jet fuel usage. Treasury strategies and actions will be driven by the need to meet treasury,
financial and corporate objectives.
The volume of effective hedge transactions that occurred during the financial year to manage the jet commodity price risk was 1.6 million
metric tonnes. This resulted in a £581 million gain (2021: £39 million loss) in the fuel line within the Income statement.
The Group has a regulatory requirement to comply with EU-ETS, CH-ETS & UK-ETS requirements on an annual basis to the relevant
environmental agencies. In addition to being in receipt of free allowances, easyJet is required to purchase carbon allowances on the open
market to fulfil this requirement and is exposed to price movements that can introduce cash flow volatility. To mitigate this exposure
easyJet purchases its requirements on a spot or forward basis up to 24 months in advance. easyJet holds allowances for 100% of all ETS
obligations for calendar year 2022.
Contracts maturing in the year were not classified as financial instruments as they fell within the own use provision under IFRS 9.
Market risk sensitivity analysis
Financial assets and liabilities affected by market risk include borrowings, deposits, trade and other receivables, trade and other payables
and derivative financial instruments. The following analysis illustrates the sensitivity of changes in relevant foreign exchange rates, interest
rates and fuel prices. It should be noted that the analysis reflects the impact on profit or loss after tax for the year and other
comprehensive income on financial instruments in a cash flow hedge relationship held at the reporting date. The sensitivities are
calculated based on all other variables remaining constant. The analysis is considered representative of easyJet's exposure over the next
12 month period.
The sensitivity analysis is based on easyJet's financial assets and liabilities and financial instruments held as at 30 September 2022.
The currency exchange rate analysis assumes a +/-10% change in both US dollar and euro exchange rates.
The interest rate analysis assumes a 1% increase in interest rates over the next 12 months.
The fuel price analysis assumes a 10% increase in fuel price over the next 12 months.
At 30 September 2022
Income statement impact: gain/(loss)
Impact on other comprehensive
income: increase/(decrease)
At 30 September 2021
Income statement impact: gain/(loss)
Impact on other comprehensive
income: increase/(decrease)
1. GBP weakened
2. GBP strengthened
Currency rates
US dollar
+10%1
£ million
(18)
US dollar
-10%2
£ million
14
Euro
+10%1
£ million
33
Euro
-10%2
£ million
(27)
Interest rates
1% increase
Fuel price
10% increase
£ million
19
£ million
–
145
(119)
(39)
32
–
113
Currency rates
US dollar
+10%1
£ million
(43)
US dollar
-10%2
£ million
35
Euro
+10%1
£ million
42
Euro
-10%2
£ million
(34)
Interest rates
1% increase
Fuel price
10% increase
£ million
28
£ million
–
75
(61)
5
(4)
–
57
The Market risk sensitivity analysis has been calculated on spot rates for the US dollar, euro and jet fuel at close of business on 30
September each year.
Impact on the financial statements during the period ended 30 September 2022
Details of major hedging arrangements at the reporting date are set out below broken down by the notional maturity of hedge
instruments and average rates.
Hedge instrument (notional in millions)
Jet fuel hedged notional
Average hedge rate
USD foreign exchange hedged notional
Average hedge rate
EUR foreign exchange hedged notional
Average hedge rate
CHF foreign exchange hedged notional
Average hedge rate
Notional expressed in the sterling contractual leg for currencies and metric tonnes for jet fuel.
174 easyJet plc Annual Report and Accounts 2022
174 easyJet plc Annual Report and Accounts 2022
Within one
year
1
846
1,035
1.27
687
1.16
111
1.15
Greater than
one year
1
937
118
1.20
126
1.14
50
1.13
F I N A N C I A L S T A T E M E N T S
Hedge discontinuation and ineffectiveness
Hedge effectiveness testing on all relationships is performed at each reporting date. Whilst the critical terms matching of the Group’s
hedge relationships means that any ineffectiveness should be minimal it can be driven by factors such as material changes in credit risk,
price fixing basis (in the case of jet fuel) or changes in the timings of the hedged cash flows.
In the year ended 30 September 2022 easyJet became minimally over-hedged on both jet fuel and foreign exchange exposures for a
short part of the year. Where the forecasted future exposure was no longer expected to occur, the hedge relationship was discontinued,
and all gains or losses related to the hedge instrument transferred immediately to the income statement. These amounts totalled a net
£4 million gain in the year.
All hedge relationships where the underlying exposure is still anticipated to occur continue to exhibit a strong economic hedge
relationship as the changes in fair value of hypothetical hedged items is materially offset by the changes in the fair value of hedging
instruments.
Additionally, fair value adjustments of £1 million gain (2021: £1 million loss) were recorded during the period related to hedge
ineffectiveness on hedges of foreign currency denominated borrowings that continue to be effective hedge relationships.
27. Contingent liabilities and commitments
Contingent liabilities
easyJet is involved in a number of disputes and litigation cases which arose in the normal course of business. The potential outcome of
these disputes and litigations can cover a range of scenarios, and in complex cases reliable estimates of any potential obligation may not
be possible.
On 19 May 2020, easyJet announced that it had been the target of a cyber-attack from a highly sophisticated source. The email
addresses and travel details of approximately nine million customers were accessed and for a very small subset of customers (2,208),
credit card details were accessed.
The cyber-attack continues to be under investigation by the Information Commissioner's Office (ICO). As the cyber-attack took place
before the United Kingdom left the European Union, the Group expects the ICO to be investigating on behalf of all EU data protection
authorities as lead supervisory authority under the GDPR. Any penalty or enforcement action will need to be reviewed and approved by
the other EU data protection authorities under the GDPR's cooperation process. In addition, in May 2020, a class action claim was filed in
the UK High Court by a law firm representing a class of affected customers and claims have also been commenced or threatened in
certain other courts and jurisdictions.
The merit, likely outcome, and potential impact on the Group of the continued investigation by the ICO, group action and other claims
are still subject to a number of significant uncertainties and therefore the Group is unable to assess the likely outcome or quantum of the
claims as at the date of these financial statements.
Additionally, there is a possibility of a claim being made by a third party supplier, for what would be a material recovery. Management
have assessed the likelihood of a case being brought, easyJet’s response and likelihood of a successful defence and at this stage do not
consider it appropriate to provide for such a possibility.
Contingent commitments
At 30 September 2022 easyJet had outstanding letters of credit and performance bonds totalling £43 million (2021: £72 million), of
which £10 million (2021: £43 million) expires within one year. The fair value of these instruments at each year end was negligible.
No amount is recognised on the statement of financial position in respect of any of these financial instruments as it is not probable that
there will be an outflow of resources and the fair value has been assessed to be £nil.
As part of the commitment to voluntary carbon offsetting, easyJet currently has contractual commitments to purchase Verified Emission
Reductions worth £4 million (2021: £11 million) in total until December 2022.
Following approval of the resolution, at the general meeting on 21 July 2022, a firm commitment has been agreed with Airbus to
substantially complete the 2013 Airbus Agreement. The commitment includes:
• The conversion of six purchase options and 50 purchase rights to a firm order of 56 A320neo family aircraft with deliveries scheduled between
FY26 and Q1 FY29.
• The conversion of previous firm orders of 18 A320neo aircraft planned for delivery between FY24 and FY27 to 18 A321neo aircraft deliveries.
The purchase firms up easyJet’s order book with Airbus to calendar year 2028, continuing the Company’s fleet refresh, as the 156 seat
A319s and older A320s (180 and 186 seat) leave the business and new A320 (186 seat) and A321neo (235 seat) aircraft enter providing
up-gauging, cost, and sustainability enhancements to the business. Additionally, easyJet has a commitment with CFM to purchase four
LEAP engines over the next two years.
On 26 September 2022, easyJet announced its pathway to net zero. This roadmap references several partnerships with other
commercial companies to explore certain technologies which may assist with the overall goal to decarbonise the aviation industry. The
majority of these partnerships are in fact agreements to work together on the areas identified and do not involve a financial commitment
from easyJet other than the time and effort involved in the collaboration over an agreed period. Where there may be areas requiring a
financial commitment from easyJet in the future, these are still subject to negotiation and there is no binding commitment on easyJet at
the date of publication of these financial statements.
easyJet.com 175
easyJet.com
175
FINANCIAL STATEMENTS
Notes to the financial statements (CONTINUED)
28. Government grants and assistance
During the year ended 30 September 2021 easyJet Airline Company Limited continued to utilised the Coronavirus Job Retention Scheme
implemented by the UK government, where those employees designated as being 'furloughed workers' were eligible to have 80 per cent
of their wage costs paid up to a maximum amount of £2,500 per month. In the same period, easyJet companies utilised similar schemes
provided by governments in Portugal, Germany, Netherlands, France, Italy and Switzerland. This continued into the year ended 30
September 2022 for Germany, France and Switzerland. The total amount of such relief received by the Group in the year ended 30
September 2022 amounted to £8 million (2021: £134 million) and is offset within employee costs in the income statement. There are no
unfulfilled conditions or contingencies relating to these schemes.
In November 2021 easyJet repaid the remaining £300 million of the Covid Corporate Finance Facility (CCFF).
On 8 January 2021 easyJet Airline Company Limited signed a five-year term loan facility of $1.87 billion (with easyJet plc as a Guarantor),
underwritten by a syndicate of banks and supported by a partial guarantee from UK Export Finance under their Export Development
Guarantee scheme. The Export Development Guarantee scheme for commercial loans is available to qualifying UK companies, does not
carry preferential rates or require state aid approval, but does contain some restrictive covenants including dividend payments. However,
these restrictive covenants are compatible with easyJet's existing policies. In April 2022 easyJet repaid $100 million of this facility
reducing the overall UKEF facility size from $1.87 billion to $1.77 billion.
29. Related party transactions
The Company licenses the easyJet brand from easyGroup Limited (‘easyGroup’), a wholly owned subsidiary of easyGroup Holdings
Limited, an entity in which easyJet’s founder, Sir Stelios Haji-Ioannou, holds a beneficial controlling interest. The Haji-Ioannou family
concert party shareholding (being easyGroup Holdings Limited and Polys Holding Limited) holds, in total, approximately 15.27% of the
issued share capital of easyJet plc as at 30 September 2022.
Under the Amended Brand Licence signed in October 2010 and approved by the shareholders of easyJet plc in December 2010, an
annual royalty of 0.25% of total revenue is payable by easyJet to easyGroup. The full term of the agreement is 50 years.
easyJet and easyGroup established a fund to meet the annual costs of protecting the ‘easy’ (and related marks) and the ‘easyJet’ brands.
easyJet contributes up to £1 million per annum to this fund and easyGroup contributes £100,000 per annum. If easyJet contributes more
than £1 million per annum, easyGroup will match its contribution in the ratio of 1:10 up to a limit of £5 million contributed by easyJet and
£500,000 contributed by easyGroup.
Three side letters have been entered into: (i) a letter dated 29 September 2016 in which easyGroup consented to easyJet acquiring a
portion of the equity share capital in Founders Factory Limited; (ii) a letter dated 26 June 2017 in which easyJet’s permitted usage of the
brand was slightly extended; and (iii) a letter dated 2 February 2018 in which easyGroup agreed that certain affiliates of easyJet have the
right to use the brand.
The amounts included in the income statement, within other costs, for these items were as follows:
Annual royalty
Brand protection (legal fees paid through easyGroup to third parties)
2022
£ million
14
2
16
2021
£ million
4
1
5
At 30 September 2022, £11.1 million (2021: £0.1 million) of the above aggregate amount was included in trade and other payables.
At 30 September 2022 £nil million (2021: £5.3 million) is due from related parties and is included within trade and other receivables.
30. Events after the statement of financial position date
On 25 November 2022 the plc Board approved;
• six aircraft sale & leaseback transactions to take place in the first half of the year ending 30 September 2023; and
• the acceleration of three Airbus A320neo deliveries from FY25 to FY24; this is a change to the commitments profile stated in note 11 of the
consolidated financial statements.
176 easyJet plc Annual Report and Accounts 2022
176 easyJet plc Annual Report and Accounts 2022
Company statement of financial position
Non-current assets
Investments in subsidiary undertakings
Amounts due from subsidiary undertakings1
Derivative financial instruments with subsidiary undertakings1
Deferred tax asset
Current assets
Other receivables
Amounts due from subsidiary undertakings1
Derivative financial instruments with subsidiary undertakings1
Current liabilities
Amounts due to subsidiary undertakings
Borrowings
Other payables
Net current assets
Non-current liabilities
Borrowings
Deferred tax liabilities
Derivative financial instruments with subsidiary undertakings
Net assets
Shareholders' equity
Share capital
Share premium
Hedging reserve2
Cost of hedging reserve2
Retained earnings
Total equity
F I N A N C I A L S T A T E M E N T S
As at
30 September
2022
As at
30 September
2021
(restated)
Notes
£ million
£ million
c
f
f
d
d
1,025
2,976
14
–
4,015
–
448
58
506
–
(437)
(11)
(448)
999
3,283
53
2
4,337
91
311
–
402
(9)
(300)
(37)
(346)
58
56
(874)
(5)
–
(879)
3,194
207
2,166
13
3
805
3,194
(1,285)
–
(33)
(1,318)
3,075
207
2,166
(9)
4
707
3,075
1. Amounts due from subsidiary undertakings and derivative financial instruments with subsidiary undertakings have been reclassified in the prior year where
appropriate from current assets to non-current assets, refer to note a) for full details.
2. In order to be consistent with the statement of changes in equity the hedging reserve and cost of hedging reserve have been re-presented as separate line items in
the statement of financial position as a prior year change in presentation, refer to note a) for full details.
The financial statements on pages 177 to 182 were approved by the Board of Directors and authorised for issue on 29 November 2022
and signed on behalf of the Board.
In accordance with Section 408 of the Companies Act 2006, the Company is exempt from the requirement to present its own income
statement and statement of comprehensive income. The Company’s profit for the year was £72 million (2021: £37 million). Included in
this amount are dividends received of £35 million (2021: £30 million), which are recognised when the right to receive payment is
established.
Johan Lundgren
Director
Kenton Jarvis
Director
easyJet.com 177
easyJet.com
177
FINANCIAL STATEMENTS
Company statement of changes in equity
At 1 October 2021
Profit for the year
Other comprehensive income
Total comprehensive income
Share incentive schemes
Movement in reserves for employee share
schemes
At 30 September 2022
At 1 October 2020
Profit for the year
Other comprehensive loss
Total comprehensive income
Share incentive schemes
Net proceeds from rights issue
Movement in reserves for employee share
schemes
At 30 September 2021
Share capital
£ million
207
–
–
–
–
207
Share capital
£ million
125
–
–
–
82
–
207
Share
premium
£ million
2,166
–
–
–
–
2,166
Share
premium
£ million
1,051
–
–
–
1,115
–
2,166
Hedging
reserve
£ million
(9)
–
22
22
–
13
Hedging
reserve
£ million
(19)
–
10
10
–
–
(9)
Cost of
hedging
£ million
4
–
(1)
(1)
Retained
earnings
£ million
707
72
–
72
Total
£ million
3,075
72
21
93
–
3
26
805
26
3,194
Cost of
hedging
£ million
4
–
–
–
–
–
4
Retained
earnings
£ million
654
37
–
37
–
16
707
Total
£ million
1,815
37
10
47
1,197
16
3,075
On 9 September 2021 the Company invited its shareholders to subscribe to a rights issue of 301,260,394 ordinary shares at an issue price
of 410 pence per share on the basis of 31 shares for every 47 fully paid ordinary shares held, with such shares issued on 28 September
2021.
The rights issue resulted in £1,235 million of gross proceeds. Shares totalling 280.2 million were taken up by existing shareholders (93%)
with the remaining rump of 21.0 million shares being underwritten. As at 30 September 2021, there were £91 million of proceeds
outstanding, which were subsequently received in October 2021. All proceeds have been received, and therefore are fully paid up as at
30 September 2022. Costs of £38 million were incurred on the rights issue.
No ordinary dividend in respect of the year ended 30 September 2022 is to be proposed.
The disclosures required in respect of share capital are shown in note 21 to the consolidated financial statements.
178 easyJet plc Annual Report and Accounts 2022
178 easyJet plc Annual Report and Accounts 2022
F I N A N C I A L S T A T E M E N T S
Notes to the company financial statements
a) Significant accounting policies
Statement of compliance
The financial statements of easyJet plc (the ‘Company’) have been prepared in accordance with Financial Reporting Standard 101,
‘Reduced Disclosure Framework’ (FRS 101) and the applicable legal requirements of the Companies Act 2006. The financial statements
are prepared based on the historical cost convention except for certain financial assets and liabilities, including derivative financial
instruments, financial guarantees, equity investments and certain contingent liabilities and commitments, which are measured at fair
value.
The Company transitioned from preparing the accounts under international accounting standard to FRS 101 as at 1 October 2021. There is
no material impact to the financial statements and all the disclosure exemptions adopted have been applied for all periods presented. In
transitioning from IFRS, there are no significant changes to previous policies because, in accordance with FRS 100, IFRS 1 has not been
re-applied.
easyJet plc is a holding company for a group of companies engaged in providing low-cost flights and package holidays, principally in
Europe. The Company is a public limited company (company number 03959649), incorporated and domiciled in the United Kingdom,
whose shares are listed on the London Stock Exchange under the ticker symbol EZJ. The address of its registered office is Hangar 89,
London Luton Airport, Luton, Bedfordshire, LU2 9PF.
Statement of preparation
The financial statements have been prepared on a going concern basis; details of the going concern assessment are provided on pages
70 to 71.
The following exemptions from the requirements of IFRS have been applied in the preparation of these financial statements, in
accordance with FRS 101:
• IFRS 7, Financial instruments: Disclosures.
• The requirements of paragraphs 45(b) and 46–52 of IFRS 2, Share-based payment.
• The requirement in paragraph 38 of IAS 1 Presentation of Financial Statements to present comparative information in respect of: paragraph
79(a)(iv) of IAS 1.
• The requirements of paragraphs 10(f), 40A, 40B, 40C, 40D, of IAS 1 Presentation of Financial Statements.
• The following paragraphs of IAS 1, Presentation of financial statements:
– 10(d) (statement of cash flows);
– 16 (statement of compliance with all IFRS);
– 38A (requirement for minimum of two primary statements, including cash flow statements);
– 38B-D (additional comparative information);
– 111 (statement of cash flows information); and
– 134-136 (capital management disclosures).
• IAS 7, Statement of cash flows and related notes.
• Paragraphs 91 to 99 of IFRS 13, Fair value measurement (disclosure of valuation techniques and inputs used for fair value measurement of
assets and liabilities).
• Paragraphs 30 and 31 of IAS 8, Accounting policies, changes in accounting estimates and errors (requirement for the disclosure of information
when an entity has not applied a new IFRS that has been issued but is not yet effective).
• Paragraph 17 of IAS 24, Related party disclosures (key management compensation).
• The requirements in IAS 24, Related party disclosures, to disclose related party transactions entered into between two or more members of a
group.
Prior year restatement
A prior year restatement has been made to the amounts due from subsidiary undertakings and derivative financial instruments with
subsidiary undertakings to reclassify the appropriate portion of the balances to non-current assets. The classification of the amounts due
from subsidiary undertakings has been considered in relation to not only the terms of the agreements with the subsidiaries, but also the
Company's intention to realise the assets. The Company would have expected in the prior year that the intercompany loan associated
with the Covid Corporate Financing Facility (CCFF) and the annual interest on the intercompany loans associated with the Eurobond
issuance would be settled within the next 12 months and as such were correctly reported as a current asset. However, the remainder of
the amounts due from subsidiary undertakings were non-trading balances and would have not been expected to be settled within 12
months and so have been reclassified as non-current assets. The derivative financial instruments with subsidiary undertakings have also
been reclassified as non-current in the prior year as these items relate to intercompany cross currency interest swaps used to manage
non-current borrowings. The overall impact of this restatement on the statement of financial position as at 30 September 2021 has
resulted in £3,336 million being reclassified from current assets to non-current assets (see column a in the table below). There was no
impact on brought forward net assets in either the current or the prior year.
easyJet.com 179
easyJet.com
179
FINANCIAL STATEMENTS
Notes to the COMPANY financial statements (CONTINUED)
In the prior year the hedging reserve and cost of hedging reserve were reported as one single combined line item in the statement of
financial position called hedging reserve. In order to be consistent with the statement of changes in equity these have been re-presented
as separate line items in the statement of financial position (see column b in table below).
Non-current assets
Investments in subsidiary undertakings
Amounts due from subsidiary undertakings
Derivative financial instruments with subsidiary undertakings
Deferred tax asset
Current assets
Other receivables
Amounts due from subsidiary undertakings
Derivative financial instruments with subsidiary undertakings
Current liabilities
Amounts due to subsidiary undertakings
Borrowings
Other payables
Net current assets
Non-current liabilities
Borrowings
Derivative financial instruments with subsidiary undertakings
Net assets
Shareholders' equity
Share capital
Share premium
Hedging reserve
Cost of hedging reserve
Retained earnings
Total equity
As at 30
September
2021
(reported)
£ million
a. Restated
current/
non-current
balances
£ million
b. Split out of
hedging
reserve
£ million
As at 30
September
2021
(restated)
£ million
999
–
–
2
1,001
91
3,594
53
3,738
(9)
(300)
(37)
(346)
3,392
(1,285)
(33)
(1,318)
3,075
207
2,166
(5)
–
707
3,075
–
3,283
53
–
3,336
–
(3,283)
(53)
(3,336)
–
–
–
–
(3,336)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(4)
4
–
–
999
3,283
53
2
4,337
91
311
–
402
(9)
(300)
(37)
(346)
56
(1,285)
(33)
(1,318)
3,075
207
2,166
(9)
4
707
3,075
The significant accounting policies applied in the preparation of these Company financial statements are the same as those set out in
note 1 to the consolidated financial statements with the addition of the following.
Investments
Investments in subsidiaries are stated at cost, less any provision for impairment. Where subsidiary undertakings incur charges for share-
based payments in respect of share options and awards granted by the Company (see note 22 of the Group financial statements), a
capital contribution for the same amount is recognised as an investment in subsidiary undertakings with a corresponding credit to
shareholders’ equity.
The recoverable amount of the investment balance and associated amounts due from the subsidiaries have been assessed for
impairment. This assessment represents a critical accounting estimate for the Company. The cash flow projections, assumptions and
stress testing are based on those disclosed in note 10 to the consolidated financial statements. Individual risks in reasonably probable
combinations, including those associated with climate change and the current macro-economic environment, do not give rise to an
impairment.
Amounts due from/to subsidiary undertakings
Amounts due from/to subsidiary undertakings are recognised initially at fair value, and subsequently at amortised cost using the effective
interest rate method.
At each reporting date the Company recognises a loss allowance for expected credit losses on amounts due from subsidiaries using the
simplified approach. Under the simplified approach the Company recognises a loss allowance at an amount equal to the lifetime
expected credit losses.
180 easyJet plc Annual Report and Accounts 2022
180 easyJet plc Annual Report and Accounts 2022
F I N A N C I A L S T A T E M E N T S
a) Significant accounting policies (continued)
Dividend income
Dividends received from investments in subsidiaries are recognised in the income statement when the right to receive payment is
established.
Derivative financial instruments with subsidiary undertakings
easyJet plc uses cross-currency interest rate swaps with subsidiary undertakings to hedge currency and interest rate risk on borrowings.
b) Income statement and statement of total comprehensive income
In accordance with Section 408 of the Companies Act 2006, the Company is exempt from the requirement to present its own income
statement and statement of comprehensive income. The Company’s profit for the year was £72 million (2021: £37 million). Included in
this amount are dividends received of £35 million (2021: £30 million), which are recognised when the right to receive payment is
established.
The nine Non-Executive Directors of easyJet plc (2021: eight) are paid for their services by easyJet Airline Company Limited. The
Executive Directors of easyJet plc are employed and paid by easyJet Airline Company Limited. Details of Directors' remuneration are
disclosed in note 4 to the consolidated financial statements and in the Directors' Remuneration Report on pages 113 to 121.
c) Investments in subsidiary undertakings
Investments in subsidiary undertakings were as follows:
At 1 October
Capital contributions to subsidiaries
At 30 September
2022
£ million
999
26
1,025
2021
£ million
983
16
999
During the year £26 million (2021: £16 million) capital contributions of share awards (as explained in note a) above) were provided to
Group companies. No other contributions were made during the year (2021: £nil).
The recoverable amount of the investment balance and associated amounts due from the subsidiaries have been assessed for
impairment. The cash flow projections, assumptions and stress testing used in this exercise are based on those disclosed in Note 10 to
the consolidated financial statements. Individual risks, and risks in reasonably probable combinations, including those associated with
climate change and the current macro-economic environment, do not give rise to an impairment.
A full list of Group companies is detailed below.
easyJet Airline Company Limited1
easyJet Switzerland S.A.3
easyJet Sterling Limited2, 4
easyJet Leasing Limited2, 4
easyJet UK Limited1
easyJet Europe Airline GmbH6
easyJet FinCo B.V.5
easyJet MT Limited8
easyJet HQ Holdings Limited1, 7
easyJet HQ Limited1, 7
easyJet HQ Development Limited1, 7
easyJet Holidays Holdings Limited1
easyJet Holidays Limited1
easyJet Holidays Transport Limited1
Country of incorporation
England and Wales
Switzerland
Cayman Islands
Cayman Islands
England and Wales
Austria
Netherlands
Malta
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
Principal activity
Airline operator
Airline operator
Aircraft trading and leasing
Aircraft trading and leasing
Airline operator
Airline operator
Financing company
Insurance
Holding company
Development of building projects
Development of building projects
Holding company
Tour operator
Air transport
Percentage of
ordinary shares held
100
49*
100
100
100
100
100
100
100
100
100
100
100
100
1. Hangar 89, London Luton Airport, Luton, Bedfordshire, LU2 9PF.
2. Although these companies are Cayman Islands incorporated they have always been, and continue to be, UK tax resident.
3. 5 Route de l’Aeroport, Meyrin, CH-1215 Geneve 15, Switzerland.
4. Governor’s Square, West Bay Road, Lime Tree Bay Road, UNIT # 2-105 , PO Box 1982, Grand Cayman KY1-1104, Cayman Islands.
5. Westerdoksdijk 423, 1013BX Amsterdam, Netherlands.
6. Wagramer Stasse 19, 11.Stock IZD Tower, 1220 Wien, Austria.
7. The following UK entities, all of which are 100% owned by the Group, are exempt from the requirement to prepare individual financial statements by virtue of s394A
of the Companies Act 2006 relating to the individual financial statements of dormant subsidiaries: easyJet HQ Limited, (12367394), easyJet HQ Development
Limited (12367361 ) and easyJet HQ Holdings Limited (12366723).
8. 188, 21st September Avenue, Naxxar, NXR 1012, Malta.
* The Company has a 49% interest in easyJet Switzerland S.A. with an option to acquire the remaining 51%. The option is automatically extended for a further year on
a rolling basis, unless the option is terminated by written agreement prior to the automatic renewal date. easyJet Switzerland S.A. is a subsidiary on the basis that the
Company exercises a dominant influence over the undertaking. A non-controlling interest has not been reflected in the consolidated financial statements on the
basis that holders of the remaining 51% of the shares have no entitlement to any dividends from that holding and the Company has an option to acquire those
shares for a predetermined minimal consideration. The Company has 100% of voting rights for all other subsidiaries.
There have been no changes to the percentage of ordinary shares held during the year.
easyJet.com 181
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181
FINANCIAL STATEMENTS
Notes to the COMPANY financial statements (CONTINUED)
d) Borrowings
At 30 September 2022
Eurobond
At 30 September 2021
Eurobond
Commercial Paper (Covid Corporate Financing Facility)
Current
£ million
Non-current
£ million
Total
£ million
437
437
874
874
Current
£ million
Non-current
£ million
–
300
300
1,285
–
1,285
1,311
1,311
Total
£ million
1,285
300
1,585
For full details on the borrowings and financial instruments see note 17 and 25 respectively of the consolidated financial statements.
e) Guarantees and contingent liabilities
The Company has given formal undertakings to the Civil Aviation Authority to guarantee the payment and discharge of all liabilities of
easyJet Airline Company Limited, a subsidiary of the Company. The guarantees are required for that company to maintain its operating
licence under Regulation 3 of the Licensing of Air Carriers Regulations 1992, and to maintain its ATOL licence under The Civil Aviation (Air
Travel Organisers’ Licensing) Regulations 2012.
The Company has issued a guarantee in favour of easyJet Airline Company Limited, a subsidiary undertaking, in relation to the processing
of credit card transactions, and also in respect of hedging transactions carried out in accordance with treasury policy.
The Company has guaranteed the contractual obligations of easyJet Airline Company Limited in respect of its contractual obligations to
Airbus SAS in respect of the supply of Airbus 320 family aircraft.
The Company has guaranteed jointly and severally the contractual obligations with easyJet Airline Company Limited, a subsidiary
undertaking, in respect of a $400 million Revolving Credit Facility. The Revolving Credit Facility was agreed on 9 September 2021, for a
minimum of four and a maximum of six years.
On 8 January 2021 easyJet Airline Company Limited signed a five-year term loan facility of $1.87 billion (with easyJet plc as a Guarantor),
underwritten by a syndicate of banks and supported by a partial guarantee from UK Export Finance under their Export Development
Guarantee scheme. The Export Development Guarantee scheme for commercial loans is available to qualifying UK companies, does not
carry preferential rates or require state aid approval, but does contain some restrictive covenants including dividend payments. However,
these restrictive covenants are compatible with easyJet's existing policies. In April 2022 easyJet repaid $100 million of this facility
reducing the overall UKEF facility size from $1.87 billion to $1.77 billion.
The Company has guaranteed the repayment of borrowings that financed the acquisition of aircraft by subsidiary undertakings. This
includes $950 million that was drawn from the UKEF facility by easyJet Airline Company Limited and the €1.2 billion bond that was issued
by easyJet FinCo B.V. The Company has also guaranteed the payment obligations for the lease of aircraft by subsidiary undertakings.
On 3 March 2021 the Company guaranteed the contractual obligations of easyJet FinCo B.V, a subsidiary undertaking, in respect of a
€1.2 billion bond issuance under the Euro Medium Term Note (EMTN) Programme. The bond has a coupon of 1.875% and matures in
March 2028.
easyJet plc has given a formal undertaking to the Civil Aviation Authority to guarantee the payment and discharge of all liabilities of
easyJet Holidays Limited and easyJet Holidays Transport Limited. The guarantees are required for easyJet Holidays Limited and easyJet
Holidays Transport Limited to maintain ATOL licences under The Civil Aviation (Air Travel Organisers’ Licensing) Regulations 2012. easyJet
plc has also issued guarantees in favour of easyJet Holdings Limited relating to processing of credit card transactions and brand licence
agreement with easyGroup Limited.
The Company has guaranteed certain letters of credit issued on behalf of subsidiary undertakings.
No amount is recognised on the Company statement of financial position with respect to any of these guarantees as it is not probable
that there will be an outflow of resources, hence the fair value is deemed to be £nil. The calculated loss allowance on these financial
guarantee contracts is immaterial.
f) Related party transactions
Transactions with subsidiary undertakings, which principally relate to the provision of funding within the Group, are carried out on an
arm's length basis. Apart from those relating to loans associated with the issuance of the Eurobonds the outstanding balances are placed
on intercompany accounts with no specified credit period, are unsecured, and bear market rates of interest. It is expected that balances
will be settled when the associated funding is repaid or via distribution of a dividend. The portion of the amounts due from subsidiary
undertakings balance that is expected to be settled within 12 months is classified as current.
The intercompany loan agreements associated with the issuance of the Eurobonds in February 2016, October 2016 and June 2019 are on
the same terms as the bonds themselves (see note 26 in the consolidated financial statements).
For full details of the Company’s relationships with easyGroup Holdings Limited, see note 29 of the consolidated financial statements.
g) Events after the statement of financial position date
There were no events to report after the statement of financial position date.
182 easyJet plc Annual Report and Accounts 2022
182 easyJet plc Annual Report and Accounts 2022
Five-year summary
Income statement
Revenue
Total EBITDAR
Headline EBITDAR
Total operating (loss)/profit
Headline operating profit/(loss)
Total (loss)/profit before tax
Headline (loss)/profit before tax
Total (loss)/profit after tax
Headline (loss)/profit after tax
Basic total (loss)/earnings per share - pence
Basic headline (loss)/earnings per share - pence
Diluted total (loss)/earnings per share - pence
Diluted headline (loss)/earnings per share - pence
Ordinary dividend per share - pence
Statement of financial position
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets
Other performance indicators
Headline return on capital employed
Net (debt)/cash (£m)
Airline total (loss)/profit before tax per seat (£)
Airline headline (loss)/profit before tax per seat (£)
Airline revenue per seat (£)
Airline total cost per seat (£)
Airline headline cost per seat (£)
Airline total cost per seat excluding fuel (£)
Airline headline cost per seat excluding fuel (£)
Seats flown (millions)
2022
2021
2020
2019
2018
(as reported)
(as reported)
(restated)
(as reported)
£ million
£ million
£ million
£ million
£ million
5,769
539
569
(27)
3
(208)
(178)
(169)
(147)
(22.4)
(19.6)
(22.4)
(19.6)
–
5,525
4,949
(3,678)
(4,243)
2,533
0.1%
(670)
(3.01)
(2.65)
66.23
(69.24)
(68.88)
(53.56)
(53.20)
81.5
1,458
(425)
(551)
(910)
(1,036)
(1,036)
(1,136)
(858)
(900)
(159.0)
(166.9)
(159.0)
(166.9)
–
5,608
4,165
(2,677)
(4,457)
2,639
(25.5)%
(910)
(36.33)
(39.87)
50.54
(86.87)
(90.41)
(73.72)
(77.25)
28.2
3,009
(358)
(273)
(899)
(777)
(1,273)
(835)
(1,079)
(725)
(222.9)
(149.7)
(222.9)
(149.7)
–
5,910
2,563
(3,826)
(2,748)
1,899
(19.9)%
(1,125)
(22.66)
(14.68)
54.35
(77.01)
(69.03)
(63.92)
(55.94)
55.1
6,385
970
970
466
466
430
427
349
349
88.6
88.7
87.8
87.8
43.9
6,044
2,119
(2,668)
(2,510)
2,985
11.4%
(326)
4.10
4.07
60.81
(56.71)
(56.74)
(43.23)
(43.26)
105.0
5,898
839
961
463
595
445
578
358
466
90.9
118.3
90.2
117.4
58.6
4,994
1,999
(2,060)
(1,700)
3,233
14.6%
396
4.68
6.07
61.94
(57.26)
(55.87)
(44.82)
(43.43)
95.2
183 easyJet plc Annual Report and Accounts 2022
easyJet.com
183
FINANCIAL STATEMENTS
Glossary – Alternative performance measures (APMs)
Non-headline items
Headline loss before tax
Non-headline items are those where, in management’s opinion, their separate reporting provides an additional
understanding to users of the financial statements of easyJet’s underlying trading performance, and which are
significant by virtue of their size/nature (See note 5).
A measure of underlying performance which is not impacted by non-headline items.
F I N A N C I A L S T A T E M E N T S
Statutory loss before tax
Total non-headline charge/(credit) before tax (see note 5)
Headline loss before tax
Year ended
30 September
2022
Year ended
30 September
2021
£ million
(208)
30
(178)
£ million
(1,036)
(100)
(1,136)
EBITDAR
Headline EBITDAR
Earnings before interest, taxes, depreciation, amortisation, and aircraft rental
Earnings before non-headline items, interest, taxes, depreciation, amortisation, and aircraft rental.
Statutory operating loss
Add back;
Aircraft dry leasing
Depreciation
Amortisation of intangible assets
EBITDAR
Non-headline credit/(charge) within operating profit (see note 5)
Headline EBITDAR
Year ended
30 September
2022
Year ended
30 September
2021
£ million
(27)
£ million
(910)
2
539
25
539
30
569
5
456
24
(425)
(126)
(551)
Net debt
Total cash less borrowings and lease liabilities; cash includes money market deposits but excludes restricted
cash.
Borrowings
Lease Liabilities
Cash and money market deposits (excluding restricted cash)
Net Debt
Year ended
30 September
2022
Year ended
30 September
2021
£ million
3,197
1,113
(3,640)
£ million
3,367
1,079
(3,536)
670
910
184 easyJet plc Annual Report and Accounts 2022
easyJet.com 184
F I N A N C I A L S T A T E M E N T S
Return on capital employed
(ROCE)
Headline return on capital
employed (ROCE)
Operating profit, less tax at the prevailing UK corporation tax rate at the end of the financial year, divided by
average capital employed (shareholder equity plus net debt).
Operating profit less non-headline items, less tax at the prevailing UK corporation tax rate at the end of the
financial year, divided by average capital employed (shareholder equity plus net debt).
Shareholders' equity
Net debt
Capital employed
Reported operating loss
Tax Rate
Adjusted operating profit after tax
Return on capital employed
Reported operating loss
Non-headline charge/(credit) within operating profit (see note 5)
Headline Reported operating profit/(loss)
Tax rate
Adjusted headline operating profit/(loss) after tax
Headline returned on capital employed
Year ended
30 September
2022
Year ended
30 September
2021
£ million
2,533
670
£ million
2,639
910
3,203
3,549
(27)
19%
(22)
(910)
19%
(737)
(0.6%)
(22.4%)
(27)
30
3
19%
2
(910)
(126)
(1,036)
19%
(839)
0.1%
(25.5%)
Basic headline (loss)/earnings per
share – pence
Diluted headline (loss)/earnings
per share - pence
Total headline loss for the year divided by the weighted average number of shares in issue during the year
after adjusting for shares held in employee benefit trusts.
Total headline loss for the year divided by the weighted average number of ordinary shares in issue
adjusted to assume conversion of all dilutive potential shares.
Total loss after tax for the year
Total non-headline charge/(credit) before tax (see note 5)
Tax impact of non-headline items
Headline loss after tax
Weighted average number of ordinary shares used to calculate basic loss per share
Weighted average number of ordinary shares used to calculate diluted loss per share
Headline loss per share
Basic
Diluted
Constant currency measures
Year ended
30 September
2022
Year ended
30 September
2021
£ million
(169)
30
(8)
£ million
(858)
(100)
58
(147)
(900)
753
753
539
539
(19.6)
(19.6)
(166.9)
(166.9)
These performance measures are calculated by translating the year ended 30 September 2022 income
statement at the financial period average exchange rate for year ended 30 September 2021, excluding
any income statement impact in either financial period from foreign currency exchange gains and
losses arising from the revaluation of the statement of financial position. The purpose of this APM is to
provide a like for like comparison of underlying operating performance by excluding the impact of
exchange rate movements.
easyJet.com 185
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185
FINANCIAL STATEMENTS
F I N A N C I A L S T A T E M E N T S
Glossary – OTHER
Aircraft dry/wet leasing
Aircraft owned/leased at end
of year
Available seat kilometres
(ASK)
Average adjusted
capital employed
Block hours
Capital employed
Cash collateralisation
Cost per ASK
Cost per seat
Cost per seat, excluding fuel
CSAT (Customer Satisfaction
Score)
Gearing
Load factor
Normalised operating profit
after tax
Operating costs excl fuel
Ownership costs
Other costs
Other income
Passengers
Profit before tax per seat
Revenue
Revenue passenger
kilometres (RPK)
Revenue per ASK
Revenue per seat
Seats flown
Sector
Dry leasing arrangements relate solely to the provision of an aircraft. Wet leasing arrangements relate to the
provision of aircraft, crew, maintenance and insurance.
Number of aircraft owned or on lease arrangements of over one month’s duration at the end of the period. This
excludes operating leased aircraft which have been acquired for future operations. These are held at zero rent
and are excluded from the fleet numbers.
Seats flown multiplied by the number of kilometres flown.
The average of opening and closing capital employed.
Hours of service for aircraft, measured from the time that the aircraft leaves the terminal at the departure
airport to the time that it arrives at the terminal at the destination airport.
Shareholders’ equity less net debt.
The process of pledging cash to serve as a lender’s protection against a borrower’s default.
Revenue less profit before tax, divided by available seat kilometres.
Revenue less profit before tax, divided by seats flown.
Revenue, less profit before tax, adding back fuel costs, divided by seats flown.
A weighted average of responses of surveys sent to customers who experienced either an on-time, delayed,
severely delayed or cancelled flight.
Net debt divided by the sum of shareholders’ equity and adjusted net cash/debt.
Number of passengers as a percentage of number of seats flown. The load factor is not weighted for the effect
of varying sector lengths.
Reported operating profit, less tax at the prevailing UK corporation tax rate at the end of the financial year.
Includes costs relating to airports and ground handling, crew, navigation, maintenance, selling and marketing
and other costs/income.
Includes depreciation, amortisation, net finance charges and the impact of foreign exchange gain/losses from
the revaluation of the statement of financial position.
Administrative and operational costs not reported elsewhere, including disruption costs, IT costs, costs of 3rd
party providers, some employee costs, wet lease costs and insurance. Additionally, some non-headline costs,
such as loss on sale and leaseback transactions, and restructuring costs, are included other costs.
Includes insurance receipts, supplier compensation payments, rental income and gains on sale and leaseback
transactions.
Number of earned seats flown. Earned seats comprises seats sold to passengers (including no-shows), seats
provided for promotional purposes and seats provided to staff for business travel.
Profit before tax divided by seats flown.
The sum of passenger revenue and ancillary revenue, including package holiday revenue.
Number of passengers multiplied by the number of kilometres those passengers were flown.
Revenue divided by available seat kilometres.
Revenue divided by seats flown.
Seats available for passengers.
A one-way revenue flight.
186 easyJet plc Annual Report and Accounts 2022
easyJet.com 186
Shareholder Information
Share gift
Shareholders who only have a small
number of shares whose valuation makes it
uneconomic to sell them may wish to
consider donating them to charity through
ShareGift, the independent charity share
donation scheme (registered charity no.
1052686). Further information may be
obtained from ShareGift on 020 7930 3737
or at sharegift.org.
Shareholder fraud
Fraud is on the increase and many
shareholders are targeted every year. If you
have any reason to believe that you may
have been the target of a fraud, or
attempted fraud in relation to your
shareholding, please contact Equiniti
immediately.
Website
You can access the corporate website at
https://corporate.easyjet.com. The
corporate website provides useful
information including annual reports, results
announcements and share price data, as
well as background information about the
Company and current issues. Shareholders
are encouraged to sign up to receive email
notification of results and press
announcements as they are released by
registering on the website.
Managing your shares and
shareholder communications
The Company’s share register is maintained
by our registrar, Equiniti. Shareholders with
queries relating to their shareholding should
contact Equiniti directly using one of the
methods listed below:
• Online: help.shareview.co.uk
• By telephone: 0371 384 2577 (or +44 121
415 7047 if outside the UK). Lines are
open Monday to Friday 8.30am to
5.30pm, excluding public holidays in
England and Wales.
• By post: Equiniti Limited, Aspect House,
Spencer Road, Lancing, West Sussex
BN99 6DA
Shareholders can manage their holdings
online or elect to receive shareholder
communications in electronic form by
registering for a Shareview portfolio at
www.shareview.co.uk.
Registering for Shareview is free and
provides the following benefits:
• Update your details online, including your
address and dividend payment
instructions.
• Submit your voting instructions for
shareholder meetings.
• Add a range of shareholdings and
investments you have (including those
with other registrars) to monitor their
value all in one place.
• Buy and sell shares easily.
Shareholders who have elected to receive
electronic communication but require a
paper copy of any of the Company’s
shareholder documentation, or wish to
change their instructions, should contact
Equiniti directly using one of the methods
listed above.
Annual General Meeting
The Board currently intends to hold
the AGM on 9 February 2023. The
arrangements for the Company’s 2023
AGM and details of the resolutions to be
proposed, together with explanatory notes,
will be set out in the Notice of AGM to be
published on the Company’s website.
Dividends
Should the Company pay any dividends,
they can be paid quickly and securely
directly into your bank account instead of
being dispatched to you by cheque. You
may also choose to have your dividends
reinvested in further shares of the
Company through our Dividend
Reinvestment Plan (DRIP) (terms and
conditions apply). To arrange either of
these options, you can manage your
dividend payment choices through
Shareview at www.shareview.co.uk.
Independent Auditor
PricewaterhouseCoopers LLP
40 Clarendon Road
Watford, Hertfordshire
WD17 1JJ
Registered office
Hangar 89
London Luton Airport
Luton
Bedfordshire
LU2 9PF
Telephone: 01582 525019
Registered in England & Wales under
number 03959649
Share Price Information
Details of our share price data and
other share price tools are available at
https://corporate.easyjet.com/investors
easyJet.com
187
FINANCIAL STATEMENTS Printed by Park Communications
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Thank you
We’d like to thank everyone who
has helped to produce this report:
Jane Ashton, Tasneem Baiyat, Sruti Bajoria, Adam Baker, Michael Barker, Deborah Benady,
Maxwell Bruce, Barbara Cant, Phil Chastell, Daniel Collison, Claire Combes, Sam Cottrell, Lou Darley,
Jonathan Diec, Ian Dodd, Alice Fellows, Omar Firfray, James Fisher, Cathy Gifford, Sarah Haynes,
Andy Hearse, Kenton Jarvis, Skye John, Chloe Jones, Hayden Jones, Akshay Katyal,
Menara Khatun, Anna Knowles, Matt Landsman, Alex Larkin, Shane Lord, Sa’ada Mai-Bornu,
Ben Matthews, Briony McKinn, Mansur Miah, Julie Morris, Adam Mould, Ryan Mynard, Karunyah
Nadarajah, Simon Nicholson, Anthony Pallant, Liz Perry, Megan Quiddington, Lahiru Ranasinghe,
Paul Robbins, Kelly Robinson, Fahim Sattar, Raminder Shergill, Amanda Simpson, Chris Sominka,
Ben Souter, Holly Steadman, Adrian Talbot, Tim Taylor, Lisa Tsavalos, Andrew Wood,
Chris Woodthorpe, and all of our employees across the network.
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Hangar 89
London Luton Airport
Luton
Bedfordshire
LU2 9PF
easyJet.com