easyJet celebrates its 20th birthday with another record profit and 22% return on capital employed

Just after celebrating its 20th birthday, easyJet reported another record profit. From FY2010, when Carolyn McCall became CEO, to FY2015, revenue grew by nearly 60% and pre-tax profit more than quadrupled. In FY2015, it generated an industry leading 22% return on capital employed.

EasyJet has a strong pan-European network, a successful digital strategy and a very competitive cost base compared with the legacy carriers with which it mainly competes. Buoyed by its profitable growth record, easyJet has added 36 aircraft to its orders and will grow its fleet from 241 in FY2015 to 347 in FY2022. It now plans average seat growth over this period of 7.5% pa, up from 6% previously.

Nevertheless, two indicators are deteriorating. One is on time performance, which has been sliding since peaking at 88% in FY2012, although it remains healthy at 80%. The other is unit cost, which only fell in FY2015 due to currency movements and lower fuel prices. Excluding these factors, cost per seat increased by 3.5% and is expected to rise again in FY2016. With load factor above 91% and unit revenue growth harder to achieve, unit cost will be a priority for new CFO Andrew Findlay.