ANNUAL REPORT AND ACCOUNTS 2017 PURPOSEFUL AND DISCIPLINED Annual report and accounts 2017 and accounts Annual report GROWTH 2017 at 2017 has been a year of purposeful and disciplined growth to develop our market positions at slot-constrained airports. We have grown our share in a number of key airports, with our fleet up-gauging process also allowing us to add capacity where our competitors cannot. Our sustained focus on cost control and lean initiatives is supported by our fleet development and increased use of digital to improve our customers’ experience. We moved quickly in response to the UK’s referendum vote to leave the European Union by establishing a new airline, easyJet Europe, in Austria. easyJet Europe is now operational and will enable easyJet to continue to operate flights both across and domestically within all European countries after the UK has left the EU, regardless of the outcome of talks on a future UK-EU aviation agreement. We continue investing in innovation, which has already revolutionised our customer offer and we expect to continue to harness technology to deliver cost and reliability benefits as well as exciting improvements in customer experiences that will keep easyJet a structural winner at the forefront of the aviation industry. easyJet’s customer proposition continues its positive development and, backed by a strong balance sheet, will deliver long-term shareholder value. STRATEGIC REPORT Investment case 2 Gatwick North Chairman’s letter 3 easyJet at a glance 4 Terminal Our business model 8 Chief Executive’s review 10 programme Overview 10 Market environment 11 Strategic progress 11 Outlook 17 Our markets 18 Our strategy 19 Our strategy in action 22 Key performance indicators 24 Financial review 26 Going concern 31 Viability statement 31 See case study on p22 Key statistics 32 Risk 33 Corporate responsibility 41 GOVERNANCE Chairman’s statement 47 Technological on corporate governance Board of Directors 48 advances Executive Management Team 50 Corporate governance report 52 Directors’ remuneration report 65 Directors’ report 85 Statement of Directors’ 88 responsibilities Independent auditors’ report 89 to the members of easyJet plc ACCOUNTS Consolidated accounts 94 Notes to the accounts 99 Company accounts 126 See case study on p23 Notes to the Company accounts 129 OTHER INFORMATION Five-year summary 131 Glossary 132 VISIT OUR WEBSITE FOR OTHER INVESTOR INFORMATION http://corporate.easyJet.com/investors Investment case Investing in our strengths We continue to UNPARALLELED NETWORK invest in what We have an increasing presence in the key markets, with frequencies and slots at slot-constrained primary airports that deliver choice and flexibility to our customers. differentiates us, strengthening our long-term % proposition. 97.6PERCENTAGE OF EASYJET CAPACITY THAT TOUCHES AN AIRPORT WHERE 862routes operated (1) EASYJET HAS A NUMBER ONE OR NUMBER TWO POSITION(1) DISCIPLINED USE OF LOW-COST MODEL CAPITAL We are driven by our strong focus on cost control, with a commitment to maintaining easyJet’s structural We have a clear capital structure framework and a cost advantage against its major competitors in each strategy intended to maximise shareholder returns. of its markets. % 50DIVIDEND PAYOUT RATIO FLATTARGET FOR COST PER SEAT EXCLUDING FUEL AT CONSTANT CURRENCY(2) WELL-KNOWN STRONG BALANCE SHEET BRAND We maintain a strong balance sheet to facilitate low funding costs and operational flexibility, and to provide insulation from external shocks. We are respected for delivering a safe, reliable and great-value service to top destinations across £ £ Europe and beyond. m m LIQUIDITY3.6 PER 100 SEATS(1) NET357 CASH(1) AIRLINE1 OR BRAND IN THE 2 UK, DRIVING REVENUE GROWTH FRANCE AND We have a clear focus on building strong relationships (1) SWITZERLAND with customers to create more sustainable, long-term revenues leveraging quality, innovation and digital. m 23.0APP DOWNLOADS TO 30 SEPTEMBER 2017 (1) As at 30 September 2017 (2) Before the impact of acquisitions, at constant currency, performance from 2015 financial year compared to 2019 financial year at normal levels of disruption 2 easyJet plc Annual report and accounts 2017 Chairman’s letter Delivering long-term value and we invested in increased resilience which will deliver STRATEGIC REPORT long-term benefits to easyJet and its customers. We also continue to ensure that we have a strong and flexible balance sheet to underpin our plans for the future. RESULTS As a result of this strategy we have been able to deliver a robust performance this year. Our passenger growth was healthy, increasing by 9.7% to 80.2 million, and revenue increased to £5,047 million, an increase of 8.1%. Headline profit before tax was £408 million, despite the impact of £101 million from adverse foreign exchange rates. Reported profit after tax was £305 million. We have achieved a headline return on capital employed of 11.9% as we start to take deliveries of our new fleet order, JOHN BARTON including our first A320neo aircraft. Chairman We are confident in our ability to deliver sustainable returns to shareholders and in our dividend policy. As a result we are recommending a dividend of 40.9 pence per share based on easyJet delivered a robust our payout policy of 50% of headline profit after tax. BOARD financial performance In July Carolyn McCall resigned to become CEO of ITV plc. this year, with record After joining in 2010, Carolyn built and led the management team that transformed easyJet’s performance in every passenger numbers respect. She put easyJet’s passengers and people at the heart of the business, having first built a solid operational and revenues growing performance. This has seen both the number and loyalty of easyJet’s passengers grow as a result and has led to sustained to more than £5 billion. and continuing financial success, which has been shared with shareholders with a more than trebling of easyJet’s share price We continue to invest and the payment of £1.2 billion in dividends. On 10 November for the future in order 2017 the Board announced the appointment of Johan Lundgren as its new Chief Executive. Johan was previously to deliver sustainable Group Deputy Chief Executive Officer of TUI Group. He will be joining the Company on 1 December 2017, with Carolyn long-term value for stepping down on 30 November. shareholders. This year we welcomed Moya Greene to the Board as a Non-Executive Director. Moya brings significant transport and logistics expertise as well as her experience as a FTSE 100 Chief Executive. At the same time François Rubichon decided to step down after three years on the Board. Keith Hamill also 50% indicated that he would retire, but kindly agreed to remain on the Board whilst we found a successor to Carolyn McCall. DIVIDEND PAYOUT RATIO François and Keith leave easyJet with our gratitude and best wishes. PEOPLE Once again I would like to thank all of our people, in particular those on the front line as they represent easyJet at its best in 80.2m sometimes challenging situations. We continue to invest in our RECORD PASSENGER NUMBERS pilots and crew to deliver excellent service and as we continue IN THE YEAR ENDING to grow. In addition, I would also like to thank those in support 30 SEPTEMBER 2017 functions who have participated in the organisational review during the year, which creates a better platform for the future. With both of these communities I believe that easyJet is building a strong and sustainable advantage for the long term. DELIVERING OUR STRATEGY Last year we reported our intention to continue to implement our purposeful growth strategy, which will deliver long-term returns to shareholders. As a result, easyJet grew capacity by 8.5% this year, focusing on reaching strong number one JOHN BARTON positions in Europe’s primary airports. Cost control was robust Non-Executive Chairman www.easyJet.com 3 At a glance ICELAND ICELAND ESTONIA ESTONIA SWEDEN SWEDEN PURPOSEFUL K K UK UK GROWTH DENMAR DENMAR Our network strategy provides passengers with NETHERLANDSNETHERLANDS a primary airport network and schedule that no POLAND POLAND other airline can replicate. Our returns are driven BELGIUM BELGIUM by strong network positions at primary airports GERMANYGERMANY and we are building and strengthening our CZECH REPUBLICZECHC REPUBLIC number one and number two positions at key airports, where returns are highest. FRANCE FRANCE SWITZERLANDSWITZERLAND AUSTRIA AUSTRIA HUNGARYHUNGARY WE ARE GROWING AHEAD OF THE MARKET SLOVENIA SLOVENIA IN MOST OF OUR COUNTRIES OF OPERATION CROATIA CROATIA 12.8 SERBIA SERBIA 10.7 10.6 9.1 SPAIN SPAIN ITALY ITALY 8.4 PORTUGALPORTUGAL 7.8 7.3 7.0 6.9 BULGARIABULGARIA 5.5 5.2 MONTENEGROMONTENEGROOVO OVO KOS KOS 4.0 4.0 4.0 UK France Switzerland Spain Italy Germany Greece TURKEY TURKEY GREECE GREECE easyJet growth (%) Market growth (%) PONTA DELGADAPONTA DELGADA Growth figures from OAG (2017) MOROCCOMOROCCO ISRAEL ISRAEL EGYPT EGYPT 4 easyJet plc Annual report and accounts 2017 Bases Network airports Countries with bases ICELAND Destination countries STRATEGIC REPORT ESTONIA SWEDEN K UK DENMAR NETHERLANDS POLAND BELGIUM GERMANY CZECH REPUBLIC FRANCE SWITZERLAND AUSTRIA HUNGARY SLOVENIA CROATIA SERBIA SPAIN PORTUGAL ITALY BULGARIA MONTENEGRO OVO KOS TURKEY GREECE PONTA DELGADA MOROCCO ISRAEL EGYPT www.easyJet.com At a glance / continued THROUGH A DISCIPLINED APPROACH Our investment strategy is focused on our long- term sustainability. The up-gauging of our fleet through the addition of A320 and A321neos to