Editing EasyJet plc (section)

== Financials ==
'''Half year performance''' 

The 6-month half-year update ending 31 march 2023 indicated a good positive trajectory. The strong growth in revenue can be primarily contributed to the easing of the travel restrictions put in place during the covid-19 pandemic leading to an impressive 80% growth in revenue compared to the previous year. 

However, the EBITDAR, continue to remain negative. This may be due to high fuel or crew costs but is expected to be positive moving towards the end of fiscal year 2023 with the coming of the summer holidays and the total removal of any travel restriction.

The operating loss for this half year is also negative at -395 million GBp mainly stemming from the very large 325 million GBp net depreciation expense. However, large depreciation expenses are expected for airline companies due to the high cost and low lifetime of commercial aircraft. Unfortunately, this indicates that the total operating result for EasyJet towards the end of fiscal year 2023 will be negative. This may required EasyJet to take out more capital increasing the already large amount of debt accrued.

Finally net profit before tax continues to be lower than the operating profit. This is driven by the large interest repayments costs of which total to 20 million GBp. 
{| class="wikitable"
!'''Income statement'''
!'''H1 2023'''
!'''H1 2022'''
!'''% change'''
|-
|Revenue (£m)
|2690
|1498
|79.57%
|-
|EBITDAR (£m)
| -70
| -208
| -66.35%
|-
|Operating Result (£m)
| -395
| -486
| -18.72%
|-
|Net income before tax (£m)
| -415
| -545
| -23.85%
|}
'''Most Recent Quarter'''
 
The most recent quarter (ending 31 June 2023) saw EasyJets revenue continue to increase at good pace (35%) compared to Q3 2022. This is encouraging news and indicates that the demand for air travel has not been affected by the weak economy. Additionally, Europe being hit by heatwaves had also not deterred holiday makers. 

The EBITDAR has also turned positive with a net earnings of 372 million GBp. Much of this change (compared to the 1st half year of 2023) is due to the fact that the crew shortage (of pilots and cabin crew) had calmed down leading to a decrease in the number of cancellations issued. Additionally, the fall of oil prices steadily across the year decreased fuel costs (per distance travelled) further increasign the EBITDAR.

Operating profit has also increased dramatically, from a loss of 47 million GBp last year to 201 million GBp this quarter. This should also dramatically balance out the operating loss from the previous half year (ending 31st march 2023). This large increase from the previous year quarter was primarily driven by the surge in revenue (compared to Q3 2022). Compared to the previous half year (H1 2023), the operating profit has soared because of the large reduction in the depreciation expense (from 395 million to 171 million). 
These effects led to EasyJet's strong net profit before tax income of 203 million GBp.   
{| class="wikitable"
!'''Income statement'''
!'''Q3 2023'''
!'''Q3 2022'''
!'''% change'''
|-
|Revenue (£m)
|2360
|1755
|34.47%
|-
|EBITDAR (£m)
|372
|103
|261.17%
|-
|Operating Result (£m)
|201
| -47
| -527.66%
|-
|Net Result before tax (£m)
|203
| -114
| -278.07%
|}
'''Last 5 years<ref name=":3">https://corporate.easyjet.com/investors/results-centre</ref>'''
{| class="wikitable"
!'''Income statement'''
!'''FY-22'''
!'''FY-21'''
!'''FY-20'''
!'''FY-19'''
!'''FY-18'''
!'''FY-17'''
|-
|Revenue (£m)
|5769
|1458
|3009
|6385
|5898
|5047
|-
|Gross profit (£m)
|1365
| -183
|236
|1549
|1436
|1116
|-
|Gross margin (£m)
|23.70%
| -12.21%
|7.88%
|24.34%
|27.09%
|24.17%
|-
|EBITDAR
|539
| -425
| -358
|970
|836
|709
|-
|Operating Result (£m)
| -9
| -1006
| -747
| 466
|589
|466
|-
|Net Profit (£m) 
| -169
| -858
| -1079
|349
|358
|305
|}
{| class="wikitable"
!'''Balance sheet''' 
!'''FY-22'''
!'''FY-21'''
!'''FY-20'''
!'''FY-19'''
!'''FY-18'''
!'''FY-17'''
|-
|Total asset (£m)
|10454
|9773
|8473
|8163
|6995
|5971
|-
|Total liabilities (£m)
| -7921
| -7134
| -6574
| -5198
| -3736
| -3169
|-
|Net assets (£m)
|2533
|2639
|1899
|2965
|3259
|2802
|}

In fiscal year (FY) 2022, there was a great improvement in the revenue and gross profit, with revenue being up by 296% from FY-2021, bringing the level of revenue close to that of FY-2019 (pre Covid-19 pandemic) at around 6 billion GBp. This was mainly driven by the removal of travel restrictions and the easing of airline crew strikes leading to a decrease in cancellations and a decrease in customer refunds. This lead to FY-2022 having a positive gross of 1.4 billion GBp again putting the gross profit roughly in line with FY- 2019. 

However, the same can't be said for the EBITDAR, operating result and net profit in which FY-2022 was much lower than FY-2019 and FY-2018. This was primarily driven by a larger cost of productions (COGS) compared to FY-2018 leading to a net loss of 169 million GBp in FY-2022. However, this is expected to break back into positive profit region as the airline crew strikes end and flight cancellations end. 

Other challenges include the high interest payments EasyJet may have to make as a result of the 7.9 billion GBp in liabilities the company has compared to FY-2018. Additionally, Russia's invasion of Ukraine has caused airspace restricts across many parts Ukraine and Russia, while this doesn't impact EasyJet's primarily European based routes it will impact flight routes by increasing the fuel costs of routes to non-European destinations as well as increasing the price of oil leading to an increase in kerosene (fuel) prices.<ref>[https://www.itf-oecd.org/war-ukraine-impacts-aviation#:~:text=War-related%20airspace%20closures%20force,aviation%27s%20recovery%20from%20the%20pandemic. https://www.itf-oecd.org/war-ukraine-impacts-aviation#:~:text=War-related%20airspace%20closures%20force,aviation%27s%20recovery%20from%20the%20pandemic.]</ref>

'''Financial Forecast'''
{| class="wikitable"
|'''Income Statement'''
|'''FY-23'''
|'''FY-24'''
|'''FY-25'''
|'''FY-26'''
|'''FY-27'''
|-
|Revenue (£m)
|8,192.00
|9,175.00
|9,726.00
|10,212.00
|11,029.00
|-
|gross profit (£m)
|1,949.00
|2,182.00
|2,313.00
|2,429.00
|2,623.00
|-
|gross margin (£m)
|23.79%
|23.78%
|23.78%
|23.79%
|23.78%
|-
|EBITDAR  (£m)
|1,193.00
|1,336.00
|1,416.00
|1,487.00
|1,606.00
|-
|Operating profit (£m)
|880.00
|986.00
|1,045.00
|1,097.00
|1,185.00
|-
|Net profit (£m)
|491.52
|550.50
|583.56
|612.72
|661.74
|}
The financial forecast looks good for fiscal years 2023-2028 with most the growth happening between FY-2022 and FY-2023 (at around 42% revenue growth). Furthermore, the half year and Q3 revenue performance seem to mirror the forecast for FY-2023. Most of this high growth is driven by the resolution of problems earlier on in FY-22 such as the covid-19 pandemic travel restrictions, the airline crew strikes and the high fuel prices. We then estimate that the perpetual growth rate is around 6% year on year until FY-2027.

Gross profit is predicted to grow with revenue hence a stable gross margin throughout FY-23 to FY-27 of 23.8%. This assumes that oil prices are stable and along side other unpredictable factors (like the absence of any travel restrictions for any reasons). If oil prices were to decrease at the rate they have for the past year, the gross margin for EasyJet and other airlines may increase<ref>https://oilprice.com</ref>. However, economists predict oil prices to be stable for the remainder of 2023, beyond this time-frame the price of oil will be heavily dictated by the war in Ukraine.

EBITDAR and Operating profit are also predicted to grow with revenue, this assumes that the selling and marketing expenses and depreciation costs respectively stay the same as a proportion of revenue. There are very few foreseeable factors that would affect this proportion. 

Net Income also is predicted to grow with revenue, although this is dependant on the tax rates in the UK which may change if a labour government were in power. Additionally, the forecasted increase in net income may indicate that dividends payments may resume.