First of all, thank you very much for coming here today, and good morning to everyone, and to our half year 2019 results update. I'm here together with Andrew Findlay, our CFO, as well as members of the airline management board who sit here. Also, take the opportunity if you want to speak to any of them after the presentation, I'm sure they will be more than happy to have a discussion with you on anything that you'd like to ask about within the company. I'm pleased to say that we have delivered the first half that was in line with our previous expectations, whilst recognizing that we have incurred a significant loss in the first period. Revenue reflected a number of headwinds, such as the impact of new accounting standards and the shift of Easter into the second half. However, underlying revenue per seat was positive.
We have responded by bringing more focus on delivery of our plans in the second half, accelerating and increasing a number of customer revenue operations and cost initiatives, which now underpin our outlook for the rest of the year. The progress on the operational resilience program that we initiated last year is extremely encouraging, and it's on track to ensure that we deliver our improved cost target for the year, including major cost improvement in the second half, despite a worsening ATC environment. In the meantime, we are continuing to invest to deliver our strategy, focused around our plan, which through targeted sustainable growth, will drive higher profit per seat, returns, and cash. Our three strategic initiatives are going well, and I will highlight the holidays proposition later in the presentation.
These are all underpinned by our investment in data, which has continued to drive significant benefits, and you will see that as we go through the presentation. As a result, our outlook remains unchanged and in line with current market expectations. With that, I will pass you on to Andrew to go through the numbers.
Thank you, Johan. Good morning, everyone. Starting off with some key stats. In the half, our capacity growth, capacity grew broadly in line with plan at 14.5%. Passenger numbers reached 41.6 million, up 13.3%. This resulted in a load factor of 90.1%, down 1% in the first half of FY 2018, which reflects the lower load factor we reported in the first quarter. On a reported basis, first half revenue per seat was down 6.3%, while at constant currency, RPS decreased by 7.4% in line with guidance. Our headline cost per seat increased by 3.9% in the half, while increasing by 2.5% at constant currency. Our constant currency headline cost per seat ex fuel was up 1.3% for the half, which is in line with expectations. Moving on to the income statement.
To be helpful, we have included the impact of IFRS 15 and IFRS 16 accounting standards, which are mainly phasing impacts highlighted by the gray shaded cells. I will give you more details of the IFRS adjustments later. Total reported revenue increased by GBP 160 million for the half, which reflects a combination of our capacity growth and a strengthening EUR. Total headline costs, excluding fuel, increased by GBP 276 million, which was mainly driven by our 14.5% capacity increase in the half. I will provide more details on our cost per seat drivers in a moment. Fuel costs were up GBP 141 million in the half, which reflects the impact of an increasing fuel price and weaker sterling through the period, which drove a 25% increase in the effective post-hedge fuel price to GBP 493 per metric ton. As a result, easyJet has delivered a headline loss before tax of GBP 275 million.
In terms of non-headline costs, we invested GBP 4 million in ensuring we are well prepared for any Brexit outcome. The accounting entries associated with the sale and leaseback of 10 A319 aircraft in the period delivered a GBP 2 million profit, which is slightly better than we highlighted at our pre-close on the 1st of April. Moving on to the detail of our revenue per seat performance. Total revenue per seat decreased by 7.4% at constant currency in line with expectations. This overall outcome is built up as follows. The movement of Easter into April impacted RPS by GBP 0.96 or 1.8% on a per seat basis. The one-off benefits we reported last year from the bankruptcy of Monarch and the Ryanair winter schedule cancellations combined to have a 2.8% negative impact on RPS in the half.
As expected, significant year-on-year capacity growth in the first half in Berlin Tegel has been RPS dilutive. We reached our first anniversary in January, and the schedule is still being optimized. In total, this had a negative 2.3 percentage point impact on RPS for half, but will improve as we go through the summer period. As a result, underlying revenue per seat increased by 1.8% due to a strong focus on revenue maximization, as well as the continued growth in ancillary revenue per seat through the better bag and allocated seat pricing and sales. The introduction of IFRS 15 negatively impacted half one revenue per seat by 2.3% as booking and admin fees are now accounted for when flown, not when the booking is made. Finally, when including the positive impact of FX, easyJet's reported revenue per seat for the half decreased by 6.3%.
Moving on to cost per seat. In summary, headline cost per seat increased by 2.5% at constant currency. This was driven by a 1.3% increase in cost per seat ex fuel, the components of which are shown on the graph. Starting from the left-hand side, there was a net GBP 0.14 increase in airports and ground handling costs, primarily driven by annualized increases in charges at regulated airports and the mix effect of Tegel. These were partially offset by lower than expected de-icing costs and continued airport procurements activity. The increase in crew costs of GBP 0.43 reflects inflation-linked crew pay deals, investment in resilience ahead of a busy summer period, and significantly better crew retention rates than expected, which impacted productivity. Higher depreciation charges due to the new aircraft in the fleet, plus the net impact of the introduction of IFRS 16, drove ownership costs up by around GBP 1.15.
The first green column highlights a GBP 0.67 decrease in overheads and other costs per seat. This saving includes a year-on-year reduction in wet leasing costs at Tegel Airport, lower disruption costs despite the Gatwick drone incident, as well as compensation payments from Airbus due to aircraft delivery delays. The decrease in Eurocontrol fees results in a GBP 0.30 reduction in navigation charges, and despite an underlying uplift in heavy maintenance costs due to the age of some of our aircraft, overall maintenance costs were down GBP 0.21 due to the impact of IFRS 16 and movement of costs into depreciation. The full impact of IFRS 15 and 16 on the income statement is provided in the next slide. Finally, an increasing oil price and weaker sterling drove increasing cost per seat of GBP 0.81 and GBP 0.78 respectively.
This slide runs through the details of the impact of both IFRS 15 and 16 had on the income statement in the first half. There are a number of allowable methods to adopt these new standards. easyJet has adopted IFRS 15, 16, and 9 on a prospective basis, and as such, the prior year income statement has not been restated. IFRS 15 has had a net GBP 51 million adverse impact on half one revenue reporting, primarily due to the timing of revenue recognition from certain revenue streams, principally admin and change fees now being recognized on the date of flight rather than the date of booking. In addition, we are now required to offset part of the EU 261 compensation against revenue first, which is a movement from the cost line and has no profit impact.
Moving down the slide, the adoption of IFRS 16 means we recognize leased aircraft now as assets on the balance sheet with an associated lease liability. This has seen a movement of expense items mainly from leasing and maintenance to ownership in the form of depreciation, but overall, this has had no material impact on net profit. The total P&L impact from these changes to accounting standards during the first half has been GBP 51 million. As a reminder, all guidance incorporates the anticipated impact of these changes. Now for more detail on the impact of fuel prices, currency, and hedging. The average market price for jet fuel for the half was $650 per metric ton. After taking into account our commodity and currency hedging, the sterling cost of fuel per metric ton was GBP 493, which is GBP 100 or 25% increase compared to half one last year.
Despite the increased fuel price, we expect to continue to be advantaged compared to a lot of our competitors over the next 12 months based on our current hedge position. Moving on to foreign exchange. The euro rate fluctuated between EUR 1.10 and EUR 1.17 during the half. Net-net, there was a headline EUR 9 million negative impact from currency movements, which includes those within revenue, fuel, and cost lines. easyJet continues to generate strong, sustainable cash flows with operating cash flow reaching GBP 581 million, which funded the return of GBP 233 million to shareholders through the payment of the 2018 ordinary dividend. Our investing and financing activities include the generation of GBP 121 million by the sale and leaseback of 10 A319 aircraft. This contributed towards GBP 465 million of capital investment in the half, primarily on new aircraft.
Our liquidity is supported by two revolving credit facilities, one $500 million and one GBP 250 million facility. Both have no covenants or draw stops. As a reminder, an innovative policy has been written with Munich Re to provide business interruption insurance of GBP 150 million to cover large short-term shock events, which also supports our liquidity buffer. Pricing is competitive with other sources of funding and frees up cash for use in the business. As at the 31st of March, our liquidity position was GBP 3.7 million per 100 seats versus our minimum liquidity target of GBP 2.6 million per 100 seats. At Baa1 and BBB+, we continue to have one of the strongest balance sheets in aviation, which provides resilience, flexibility, and access to cheaper unsecured debt. Supporting this strength is our fleet, and at the end of the period, 221 aircraft were unencumbered, which is 69% of the total fleet.
Primarily as a result of the introduction of IFRS 16, the shape of the balance sheet has changed. As highlighted earlier, we now recognize operating leased aircraft as assets on the balance sheet with an associated lease liability. Previously, this liability would have been reflected in our adjusted net debt calculation, which have included a seven times multiple of annual lease costs. IFRS 16 requires a more accurate calculation based on a discounted operating lease cash flows and is now reflected on the balance sheet. This impacts our calculation of return on capital employed, which is now shown in the appendix on slide 38. It is worth also mentioning at this point that the economics and cash flows have not changed, and our rating agencies have been taken through the changes.
As I described earlier, the P&L impact is that these now have an associated depreciation charge and an element goes through the interest line with no overall impact on income or PBT or cost per seat. The increase in unearned revenue reflects the timing of Easter, the deferral of admin fee revenue into the second half of the year under IFRS 15, and seat capacity growth. This slide summarizes our forward jet and currency hedge positions. Recent increases in fuel price will impact us in the short term, based on the hedging disclosures of our competitors, we expect to be advantaged over the next 12 months as a result of our current hedge position. Moving on to fleet. Since the last time we provided this information, there have been some changes, mainly driven by Airbus delivery delays.
As you can see, we have retained a significant flexibility in our plan, which allows us to manage any market conditions, more recently adapting to short-term opportunities while continuing to plan for the longer term. You have seen this with our strategic growth over the last couple of years in airports like Berlin, Amsterdam, Basel, Lyon, Luton and Manchester, which all fit clearly within our strategic framework for establishing and maintaining number 1 and number 2 positions in primary airports. We constantly maintain strong capital discipline and are always looking to maximize our returns, profitability and cash generation, whilst ensuring we have the ability to target growth as and when we need to. This chart summarizes our gross CapEx over the next four years and reflects our current fleet plan. Just to note, this graph now includes the impact of IFRS 16.
As you can see in gray, the elements of the graph, which now reflects what would have previously been recognized as lease payments. Our policy is to begin hedging aircraft purchases once they become committed. We are currently hedged for circa 88% of the financial year 2019 aircraft delivery payments. Moving on to forward bookings for the remainder of 2019. 72% of our Q3 seats have now been booked, which is three percentage points less than the same time last year, and 34% of our seats in Q4, which is in line with last year. This slide shows the expected capacity growth across the European short-haul network through the summer. As you can see, total short-haul capacity is expected to grow by around 2.4% in the half, with easyJet growing around 7%. In terms of competitors in our markets, we are expecting a 3.6% increase in capacity.
In addition to the previous slide, I've added this chart, which gives a breakdown of the 7% easyJet growth for the summer. Starting from the left, 2.3% of growth reflects the annualization of route capacity from financial year 2018. The continued investment in building our number 1 and number 2 positions at primary airports, which Johan will talk about later, as well as expanding our network to airports and routes that deliver margin-accretive returns. Upgauging represents 1.3% uplift. Finally, the strategic investments in Manchester, where we are consolidating a strong position following the demise of Monarch, in Nantes, where we've just recently opened a base to further secure our strong position in regional France, and finally, Tegel, where last summer we were still ramping up our operations and is therefore annualizing out. We are also in the process of finalizing our schedules for the winter.
Based on the high levels of winter growth of almost 25% for the last two years, we are planning to use the fleet flexibility I highlighted earlier to grow in financial year 2020 at a rate that is the lower end of historic growth rates. This ensures that we continue to concentrate on maximizing profitability whilst continuing to enhance our strong positions in primary airports across Europe. Moving on to the more detailed line-by-line outlook slide. Before I get into the details, I'd first like to point out that FY 2019 PBT expectations haven't changed from where we last updated the market, and are in line with the consensus of the market from those analysts who have recently updated. 2019 capacity for the full year is expected to increase by circa 10%, which is no change from previous guidance.
Regarding Half 2 revenue per seat, the soft yield environment has continued, and we now expect RPS to be slightly down. As Johan will discuss, we have been delivering initiatives that are helping offset this softness and will continue to do so through the summer. Some of the initiatives we are delivering are part of our operational resilience program, have delivered savings that have led to an update to our cost guidance. Full year headline cost per seat, excluding fuel in a constant currency, is now expected to be down, subject to normal levels of summer disruption. Moving on to FX and fuel. Based on the hedging rates highlighted, we expect a headline GBP 10 million year-on-year positive impact for the full year. Full year unit fuel costs are expected to be GBP 25 million-GBP 60 million year-on-year adverse, with an expected total fuel cost of GBP 1.4 billion.
Please note that this includes the impact of ETS carbon scheme prices, which continue to remain high with a current price of circa EUR 25. I'll now hand you back to Johan.
Good. Thank you very much for that. Based on the update that Andy just provided, I thought it would be a good opportunity to start off by highlighting the initiatives that the team are currently delivering that are helping us in the short term, but also will provide longer term structural improvements. These initiatives are improving our customer, revenue, operational and cost performance. For our customers, we have now rolled out Auto Bag Drop to another 5 airports around Europe, making 17 airports in total and representing over 34 million of our passengers, which is 36% of our annual passengers, and we are seeing customer satisfaction scores in those airports outperforming the network average. We have implemented a new contactless payment system on board that improves transaction times and available inventory on board, which will drive increased sales and an improved customer experience.
We have invested significantly in our call center, where the maximum call wait time this Easter was 4 and a half minutes, which was a very big improvement compared to Easter last year. We're also processing claims significantly quicker than in the past. For example, over the peak Easter period, we were processing claims in just 2 days. We're also driving higher customer satisfaction on board, where the customer satisfaction with the crew is at an all-time high, but also shorter queuing times and strong recent brand scores across all the markets where we are operating. In revenue, our programs have improved the revenue management system algorithms and ancillary offers. We have increased the number of allocated seating bands to increase the customer choice. As a result, we have seen some late yield benefits in April, and ancillary revenues continues to perform well.
We will continue to launch programs through the rest of the year, such as the new business bundle and adding further bands to the allocated seating offer. And finally, our operation resilience program is going very well so far, despite a worsening air traffic environment. Using data to analyze and improve our schedules, airport and route assumption, and crew deployment, as well as doubling the standby aircraft availability, we have with that delivered one of our best Easter weekends ever, with an average on-time performance of 86%, despite flying a schedule of over 1,800 flights a day. That compares very much to one of our busiest days of last summers. These are all the things that are already delivering benefits this year but will continue to deliver in the long term. Despite the tougher current trading environment, it's important to note that structural demand for travel is resilient.
On the one hand, talking to our customers recently, we have heard that over 30% of them were being influenced in the travel plans by concerns over Brexit, and consumer confidence remains muted across Europe. The same survey said that demand for leisure travel was important, and we have seen this reflected also in other studies, such as the annual HSBC Consumer Study. 63% of customers indicated that travel for leisure was a major priority for them, an increase of four percentage points compared to 2017. In a cyclical market, underlying demand remains high, and easyJet is well-placed to be the go-to airline for our customers when they do book their flights. This is clearly demonstrated by the 13% customer growth in the first half.
In the markets we operate, Europeans say we are their first-choice airline more than any other airline, and they also say we offer an experience worth more than the price paid at any other airline. Of course, we are well-established as the number one low-cost carriers in the U.K., France, and Switzerland. Again, this was validated in a recent consumer study by UBS, where easyJet's rankings against other low-cost carriers had widened while also scoring very well compared to legacy airlines. I'll now take you through some of the initiatives that we expect will underpin the outlook for the remainder of the year. We continue to invest in the business to drive value and have delivered across all parts of our plans in the first half. Our investment in the network means that we are now number one in Berlin.
We opened a new base in Nantes recently, and we now have 27 airports with a number one position, up nine from 2017. 54% of our capacity is now flown from a number one slot-constrained airport, an increase of six percentage points from full year 2017. From a customer perspective, we are the number one airline in Europe for value, and our customers' loyalty remains high at 76%, which represents an increase of 7.5 million customers to 71 million on a rolling 12-months basis. We also won the award for best business airline, beating airlines like Singapore Airlines, Lufthansa, and Etihad. We have delivered cost savings of GBP 45 million so far this year through our strategic cost program and expect to save GBP 100 million in total this year.
The investment in resilience had already seen a 54% fewer cancellations in H1 compared to 2018, despite a 43% increase in air traffic delay minutes and the impact of the drones in Gatwick in December. This means that around 250,000 fewer customers were impacted compared to last year. As I mentioned earlier, Easter on-time performance was 86%, one of our best ever despite flying the most sectors ever. Our people remain well engaged with easyJet's outstanding crew, driving our best ever customer feedback and satisfaction, and pilot and crew retention are high at around 5.5%. Finally, our data team is developing well with nearly 40 team members working on projects across the business, and we will now bring this team together with the IT team to drive greater scale and product development speed.
Our network of strong positions in primary airport is our biggest asset, in particularly where there are slot-constrained, We have continued to invest in this during the period. We have ramped up our operations in Berlin, having only started operations there on the 5th of January last year, Have now established ourselves as the number one airline in Europe's second biggest city. We have grown by over 50% in the first six months, We now have over 40% market share. Like in the rest of Europe, we are focused on delivering a great customer experience, which is shown in the good brand scores. Awareness of our brand has driven saliency up five percentage points year on year, As customers increasingly get to love easyJet and our brand, that affinity with the brand has grown three points compared to H1 2018.
Overall, our rate of financial improvements in Berlin is in line with other large-scale investments that we've made in the past, such as slot purchases in Gatwick and organic growth at Schiphol. Elsewhere, we have invested in regional France, recently opening our new base in Nantes, We are now the number one airline in Lyon, Nice, Bordeaux, Nantes, Grenoble, and Nimes, as well as number two in Paris and Toulouse. As stated earlier, we also continue to consolidate our positions around the rest of the network where our market-leading positions gives us the opportunity to strengthen our positions at primary airports, while at the same time driving profitability. With 54% of our capacity, which is over 50 million seats in slot-constrained airports, this helps to drive our long-term increase in returns, which have increased by 20% over the last five years.
Winning our customers loyalty is an area of continuous investment for easyJet, which is highlighted by the 76% returning customers that we saw in H1 this year. Today, easyJet has a great offer and a great brand that drive customer loyalty, Loyal customers are much more valuable to us with returning customers buying twice as many flights per years as first timers. They are attracted by the network of over 1,000 routes, great value fares compared to our competitors in those primary airports. Continual innovation in our offers, such as the rollout of the bag drop and the new bag sizer on the app, Our great customer service delivered by an amazing group of people. You see this in our brand scores that show that we are rated the best low-cost airline across our key markets in Europe with a number of awards this year that reflects this.
Over two-thirds of consumers within key European markets state that they would seriously consider flying easyJet over any other airline. While serious consideration in the U.K. market was at an all-time high in Q2. We will continue to invest in evolving the customer experience and leveraging our brand in strong markets with the aim of retaining and growing our customer base and increasing spend per passenger. We'll continue to build on the strong foundations of our core business, leverage our existing customer base, Build on our strong brand with the investments in holiday, business, and loyalty. As I said at our full-year results in November, this gives us a huge opportunity to drive significant returns over the next five years. We'll come back to you in November with news on business and loyalty. For now, I would like to give you an update on easyJet Holidays.
As I previously said, our objective is to become a major player in the European holidays market. Firstly, let me remind you of the opportunity that we have. The total European package holidays market is worth about GBP 60 billion per year, this is growing by 6% each year. The U.K. alone is a GBP 15 billion market. As we said previously, around 20 million customers fly with easyJet on our top 29 routes by capacity, but only around 500,000 of those book accommodation with us. In fact, our total network will have flown over 100 million seats this year, giving us the scale and the network that differentiates us from all other holiday providers. As these customers are already flying with us, it's now our job to get them to book their entire holiday with easyJet.
Our feedback says that over 90% of our customers would consider buying a holiday from us. With our holidays business now being in-house, we will be able to build and price holidays using easyJet seats and direct contracts with Europe's most loved hotels, powered by the best-in-class travel technology and through a brand new easyJet Holidays website. Customers will be able to personally customize each of the elements of their holiday with a proposition that is built around our network and with great value. Progress has been very strong. Garry Wilson, our CEO of easyJet Holidays, has pulled together a highly experienced management team, including external and internal appointments. I think it says something very powerful about the fact that we're getting very high-profile, experienced people to come and join us for this opportunity that we have at easyJet, leaving very established players.
Relationships with some of Europe's most desirable hotels are building well, we're expecting to have 500 direct relationships established for summer 2020. We have also appointed Atcore as our holidays technology provider, giving us the capability as we have started to build, sell, and yield managed holidays through the new easyJet Holidays website. Atcore's advanced competencies around pricing, contracting, and search will ensure that we're building an industry-leading website on top of the Atcore platform, whilst also giving us the scale we need to grow the holiday business over the coming years. Our current easyjet.com website provider, Valtech, has also been appointed as our holidays website provider, building on their expertise as our partner over many years. In terms of a launch date, we expect to have the summer 2020 for holidays available by the end of this calendar year. Our next priority is value by efficiency.
Our strategic cost savings programs and operational efficiency program continue to drive both short-term efficiencies and longer-term structural cost savings across all areas of the business, leveraging our scale and helping to ensure that the cost advantage versus our main competitors remains. The cost program has been able to deliver large and sustainable savings, GBP 45 million saved in the first half with an expectation of saving over GBP 100 million for the full year. GBP 545 million of saving has been achieved since 2011. Our operational resilience program sees easyJet continue to invest in systems and processes that drive operational excellence, supporting reliable decision-making, reducing complexity, using data to make better decisions faster. I will go into more detail regarding our operational efficiency program in the next slide.
In addition, we are also investing in highly efficient next-generation aircraft that will deliver future incremental margin improvements, specifically through upgrades and benefits of around 1% cost per seat per year, flying our customers more efficiently than legacy carriers. 15% fuel savings compared to prior generation aircraft and 50% less noise. easyJet's ambition is to become one of Europe's most sustainable and fuel-efficient airlines, which our business model of high load factors and new generation aircraft will help us to achieve. Our effort to reduce CO2 emissions and reduce noise is recognized by a number of airports and rewarded by our customers. Our current emissions levels of 78.46 grams per passenger kilometer puts us significantly ahead against most European airlines, and in particular, the legacy carriers. As a reminder, our Operation Resilience program is focused on three strategies: to build, to execute, and to recover.
Build being to invest intelligently in our schedule, aircraft, and crew to deliver a more resilient operation. Execute focus on delivering a robust operation through a combination of data-driven predictive tools, including automation and optimization. Recover focus on improving the customer experience during disruption, minimizing impact, and preserving the customer satisfaction. The initiatives we have been investing in so far include modifying schedules to improve overall resilience, including adding firebreaks during the day and changing schedules to avoid late flights into curfew airports. Proactively splitting the crew pairings to ensure standby crew are in the right place at the right time. Doubling the number of standby aircraft compared to last summer, while strategically deploying them throughout the network to ensure best impact. Introducing a tactical flight planning team to update schedule operations for near-term factors. Focusing on the first way to minimize delay minutes as the day progresses.
We built eight automation and data tools to drive decision-making across all areas of operations, including an on-time performance simulator and an ATC Slot Predictor. The result that the implementation of these initiatives have delivered already are very encouraging. For example, winter disruption event volumes were down 33% compared to the same period last year. Year to date, summer disruption costs are down 30%. Despite having the busiest Easter ever we have ever had, the operation performed very well with 86% on-time performance and no cancellation despite schedules that are our busiest ever. The Operational Resilience program is designed to deliver an improved customer experience as well as reducing cost with an expectation that disruption cost through the summer will be coming down. Moving on to our people. We are investing significantly in people to make sure we have the right people to take the business forward.
In a recent update to our employee listening tool, Peakon, our employee net promoter score was 25, which is a strong result and which is also reflected in the high customer satisfaction scores that we have on board our aircraft. Our 4.2 star Glassdoor rating puts easyJet in the top 50 places to work in the U.K. as voted by our own people and the best airline. We have great employee retention at 6% turnover for the whole business and only 5% and 7% turnover of cabin crew and pilots respectively, and this compares very well to other airlines. When it comes to recruiting, we're successfully targeting and attracting key skills that we need to take the business forward, such as we have talked about in Holidays data as well across the rest of the business. Having the right people is critical to achieve our plan.
Finally, the priority that underpins everything that I've been talking to you about so far is innovating with data. We are putting data at the heart of every area of the business. On one hand, it is supporting the customer innovation and revenue initiatives such as in-flight product availability, development of fare bundles, and driving ancillary revenue opportunities. On the other hand, it is core to many of the operational resilient projects from schedule building, crew rostering, to pre-tactical planning and the on-the-day delivery. This has delivered revenue benefits in form of underlying positive passenger and ancillary revenue as well as recent late yields improvements in April. It has also delivered cost benefits from the lower disruption cost and better management of the operations in a worsening external air traffic environment.
We continue to recruit into the team and have now decided to bring IT and data together to increase the total resource available and accelerate the delivery of data projects and their customer revenue, operational, and cost benefits. To summarize, we're responding to the short-term challenges and the acceleration of our initiatives is underpinning our outlook for the rest of the year, which remains unchanged. At the same time, we are confident that the work we are doing through our plan will deliver sustainable shareholder value. Our network is unrivaled across Europe's main markets and through innovation and crew engagement, we are winning our customers' loyalty. We remain incredibly focused on cost, and we are creating value by efficiency. We got great people in this business where we have new skills needed.
We are attracting talented and experienced people to come and work for easyJet, and we continue to invest in data, which as I said will drive enormous benefits across the airline. Bringing these together will enable us to drive profit per seat, returns, and cash for our shareholders. With that, thank you very much for listening today. Now we will take questions.
Thanks.
Good morning, all. It's James Hollins from Exane. Three questions, please. First one's probably for Robert or if the German head is here. It's on Tegel. I'm just wondering if you could perhaps in some detail run through what operational issues you faced and perhaps more importantly, what you think there's still to do going forward in terms of having the right gates, route network, all those sorts of things. A bit more detail would be very useful. Specifically, whether you think you'll still make losses in full year 2020.
I was wondering if you, probably Johan, have had any interest in Thomas Cook, whether it be the U.K. operations, German operations, or just your thoughts on that. The third one, obviously better cost per seat performance guided today for this year. If we assume capacity's only up about 3%-4% next year, full year 2020, I know that's an extraordinarily long-term outlook for an airline, but do you think you can do cost per seat ex-fuel down next year as well? Thanks.
Robert, do you want to talk about Tegel in Berlin?
Sure. Good morning. On Tegel specifically, I think, as we've spoken about before, we're very happy with the development of how Tegel's been coming along. From an operational perspective, we continue to have very strong operational performance, customer satisfaction, and customer uptake with our product and reception in the market seems to be very strong. I think, as we've discussed before, it's been a very competitive environment for the last year on the one hand, and as well, I think, some of our network improvements have been slightly slower than maybe we initially anticipated coming in. That said, it is, as Johan mentioned earlier, developing exactly in line with typical progression we see for a large-scale new base opening, very much in line with what we've historically seen with any one of our bases, Amsterdam, or even large-scale acquisitions in Gatwick. I think it's progressing very well.
We're very excited to have three new overnight parking positions that we've really used this summer to re-optimize our product for the local Berlin passenger. We expect continued performance to come from there.
I think on the question on Thomas Cook, there's nothing really specifically to comment on that. We wouldn't comment on it in any situation when it comes to companies on that. I think we have a very strong model, which we're very confident about, with the positions we have at the primary airports, the all-time high satisfaction we have with our crew, the ability we have also to now to go into Holidays. I think it's actually a great opportunity that this provides us to do with the network and the competitive advantage we have, and also with the team we have in place. I think it's a good opportunity for us to do something in that market.
Yeah. On cost, you're absolutely right. Our long-term guidance on capacity has been between 3% and 8%, based on this guidance, we'll be at the lower end of that range. I think it's early doors on giving cost guidance for the outer years. At this point in time, we're very focused on this financial year. We want to land this financial year, and the drives of that will be operational resilience and disruption management. We've got a number of other cost initiatives this year to land, and we'll give guidance at the appropriate time for next year.
Damian Burrell, please.
You can hear me?
Yes. Lauren.
Yeah. Thanks, Damian. Yes, our relationship with Airbus is good, very flexible. As you know, as a result of some of the Airbus delivery delays last year, we negotiated an even more favorable, almost reset the flexibility in our contract. It's fair to say that we have almost rolling monthly deferral rights on a fair proportion of our fleet. I think on slide 14 shows the flexibility we have. The majority of that flexibility is a result of those deferral rights, the fact we can extend leases or not as the case may be. I think for the purposes of guidance we've given on CapEx, the uplift that you've seen based on previous guidance has been as a result of the IFRS 16 adjustment.
If you take that away, I think it's fair to say that there's quite a fair proportion of that CapEx that's still to be determined. I think this is a best guess or best estimate of what we think we're going to do based on our latest plan. As I say that we look at this regularly as a board, and we adjust accordingly based on those deferral rights that we've got. I think it's fair to say that off the back of the two years of growth that we've seen for the two years of winter periods, cumulative 25% growth, we definitely won't be seeing anything like that, unless something else changes in the market, but we've got no plans on that either. I think from the point of view of CapEx, this is our best estimate as we stand.
We'll finalize nearer the end of the year exactly what our CapEx will be for the following year and so on, we'll carry on reviewing that as we go forward.
It's Jarrod Castle from UBS, three as well. Can you just talk a bit about the forward bookings and just, I guess in the current quarter, there's a deterioration, and you've obviously had Easter, so if you could give a bit of color there. It does look like going into summer, the booking profile is in line with last year. Just coming back a bit to pricing. Can you give a bit of color in terms of near-term pricing versus the early bookings pricing? If you're seeing any improvement year-over-year in terms of the later bookings.
Lastly, obviously, the share has been under a lot of pressure. I guess because of the ownership rules, you can't really do that much, is there any consideration for potential buybacks or the likes?
In terms of the forward bookings, you see in the Q3 that we're behind some 3% on the load factor, we're flat in the Q4, 2% behind on the half 2. I think we got to remember also that at the time last year in Q3, we still had the effects of the situation with Monarch Airlines had gone bankrupt in the fall of 2017. We had Ryanair cancellations as well, so I think that in the winter. That had a spillover effect, I think, on the bookings that we saw then in the Q3. You're right to point out, if you're looking at the Easter, which has then moved in between the Q2 and Q3, you could have said, "Well, that should have an uptick on the load factor." Load factor, as you know, is one part of how we manage this.
We're looking to try to get the most out of both the yield and the load factor.
I think that the work we're doing now, particularly within the initiatives within the trading and yield team, we are really trying to optimize that as much as possible. Going forward into the later part of the season, we've actually, for the summer, we booked 3% more passengers than we had versus last year. It is tougher environment out there when you're looking at the pricing. There's no doubt about that. Like I said, we do a mix between the yield and the load factor to try to optimize the results on that. When you're looking at the near-term bookings versus the long-term pricing, I think that the initiatives that we have launched, that we're driving through, sit at this moment quite focused on the near-term pricing.
They are also in there to help improve the performance as we go through the remainder of the year. We have guided today that we look at RPS to be slightly down for the year, and I think that is a reflection of the overall environment.
Yep. Now we've got a very clear cash return policy via dividend. As you know that we've got a target to get to that 50% EU ownership. We're at 49.6%. We're off the cusp of doing that. We're very clear and we've reviewed exactly what we want to do from the point of view of the returns for shareholders, and we're very comfortable with the return policy that we've got.
Hey, it's Daniel from Bernstein. Morning. Three for main. Number 1, on the fleet flexibility, again, maybe slightly different angle. What conditions in the market would prompt you to decide to go for the minimum
level? I think you already commented on the achievability, so it's probably a mix of leases and deferrals.
Yep
in that way. Number 2, on your number 1 airport position, castle and moats strategy. This, of course, seems to be implying better yields in those airports where you have a number 1 position. Could you discuss a little bit or comment on it, whether it's your position or the overall constrainedness of that individual airport that actually drives yield position? Where you're seeing that, did any of the additional markets you've added to the number 1 positions, do you actually see a yield uplift happening? Lastly, a little bit off topic. On the emissions, more on the cost side of it, could you comment on basically your view on the ETS cost for, let's say, the next couple of years? Thinking about your allowances and the cap and trade mechanism, what would you expect ETS cost to do to your fuel bill?
Maybe just a short comment on.
the risk and opportunity balance for easyJet on the back of the discussions for a fuel tax. How do you see that?
Yes. I'll talk about three. In our planning, what we do is very clear. We're balancing cash flow, profit seats, and returns and growth and opportunities that we have. That's effectively the fundamental, as you know, of any kind of good planning. From our perspective, we have triggered some deferrals in the past, as you know. We've used that. We've flexed those back in November last year, off the back of the deferrals. We got a good deal out of Airbus for doing that. It's an ongoing process. For us, it's all about maximizing those returns, making sure we have the flexibility to go into those airports where we can get those returns, balancing off the growth and growing in the appropriate way.
If you look at this financial year, although we've grown significantly, the growth that we've put in place have been very, very specific. We've talked about Manchester, getting in after Monarch exited to really solidify our position there. We've talked about France. We're now number one in a large number of those French regional airports. Post the half year, we went into Nantes. That kind of nicely rounds off our domestic proposition. A result of that, you've seen the news from Air France. I think for us, it really is around making sure that we've got that flexibility both on the up and the down. When it comes to what we would have to see to get to that minimum, we haven't got a specific number or a specific target or a specific trigger.
We're constantly reviewing as we go along to see exactly what's the best use of our asset. Things change, as you know, in what is a changing environment and changing capacity environment and changing competitor environment. The number of airlines that have gone under recently is significant. We've got to make sure we keep that flexibility, and it's important to us. It's one of the things that we work on with Robert and the strategy team and the fleet team very closely to balance those things out. It's all about maximizing those returns, making sure we're fleet of foot. With Tegel and what we did there, that proves that we've got the ability to both flex our dry leases, get wet leases, and flex owned aircraft at the same time to land that proposition.
I think just on that point of the position versus the slot constraint, you're absolutely right. You've got to take these two things into consideration. We are very targeted in the growth. I think that's important when you're looking through the growth that we had in the winter, the growth that we're now having in the summer, going forward. It is very much allocated into those positions where we think that, one, we can get into that number one and number two position, where mostly and often, most of the time, that gives the desire to create the efficiency in the model. Our model doesn't work really that well when we are number four or number five sometimes in there. One is getting into that efficiency with the scale that that number one or number two position often gives. The other point is about the slot-constrained airport.
It's really about making sure that we are there in those primary airports when things tighten up, because we know that there is a big time delay before some of these airports will then expand their structures, and we want to basically be there. That is some positive characteristics around that as well. We're looking at both these things, but it's very targeted on how we're actually allocating our aircraft coming in based on where we can get into those position, and also what is slot constraint.
With respect to ETS, it's very clear that it has been volatile. We hedge our ETS exposure, as you'd expect. Given the new global regime on carbon management and carbon credits that's coming in in 2020, which isn't clear yet exactly what that's going to look like, we're effectively lobbying and keeping a close eye with the environment agencies now, obviously the DfT, et cetera, to ensure that we have clear visibility of what that will look like. Good news is that we are effectively pretty much Brexit-ready, so we've made the switch to operate our airline as though we are in a Brexit scenario, and we've managed to secure the ETS credits in those two ASC jurisdictions. From that perspective, it's a good place.
As you say, there's a lot of discussion around ETS and carbon, and we are having those conversations, as you'd expect we would do. I don't know if, Johan, you want to add anything on?
No.
Yeah.
I think that all the work we did, I think it was pretty clear that we were preparing earlier than most other airlines and more in-depth into the details. By 11:00 P.M. on the 29th of March, we were ready for that no-deal Brexit because we knew that they had moved the protection of the traffic rights were legislated within the European Commission that was reciprocated by the U.K., albeit on, I think, just a week before. We're today flying with the, really as there was a no-deal Brexit. I think that the only exemption is that today we can use the different airlines to cover up in terms of if we have disruption to move aircraft and crew around, which we clearly, what it looks like in the new world post-Brexit, will not be able to do.
That's why we have moved all of our aircraft and pilot licenses and cabin crew attestations to the appropriate airlines within the group.
Morning. Jaime Rowbotham from Deutsche Bank. Just one on cost in the context of you guiding costs per seat x fuel down this year. On the operational resilience, I wanted to explore the year-to-date summer disruption costs down 30%. Obviously, I'm conscious it's early in the summer, conscious that there were strikes in France last week. Is that at all to do with there having actually been a bit less disruption? Is it all thanks to your initiatives? Perhaps there's other stats you could give us, like year-to-date summer delay minutes or something like that. Thanks.
Yeah. No, I'm pleased to say that there's a lot of those initiatives that have delivered those savings. The air traffic management disruption itself was 44% worse during Easter. This is clear that the external environment is getting worse. I think Eurocontrol predicts it to be 15% worse for the summer. Eurocontrol is also doing, I think, what it can in terms of rerouting some of the flights to avoid the hotspots of Karlsruhe and Maastricht, as an example. The work we started on in last summer has been really focused on getting this in place for the summer. I completely agree with you. This is early on. What is good about Easter is that Easter almost is replicating what summer is.
The difference will be that coming into the summer, you're going to have the bigger tour operators who's loading on more capacity and putting more strain on that external environment. It also has given us that opportunity to try and test this. You take the ATC Slot Predictor, which is an algorithm that we developed ourself, which basically collects ATC slot data, identifying constraints that have been put on flights historically. We can use that to identify the hotspots within the network. When we choose our route planning, the flight planning, we can take that into consideration as we would take fuel burn and navigation charges as well.
The on-time performance simulator works really well when we're looking at this from a first wave point of view to simulate on actually what are the changes we should do depending on the performance of the first wave at the late departure date. We take the firebreaks that we put into the schedule. We've done 54,000 changes to our summer program. It's actually not so much increasing the amounts of firebreak, it's actually where you put them. We've had them in the program, but now we have allocated them out through using the data into where it matters.
If you're looking at our summer performance now, and we're getting reports of this per day that everyone in the team is looking at, whereas previously you could see that, okay, if you were off in the first wave, your chances of recovering throughout the day, they were slim. Now you can see that if you're having something that happens from an air traffic control point of view in the first wave, you can actually hold on and actually pick up at the remainder of the day. It doesn't drive inefficiencies in the program. It's just a much, much smarter way of allocating those firebreaks. Of course, the standby aircraft helps. Once again, it's the way we have decided where to allocate them, making sure we're splitting up the crew duties so we get people available also to fly them.
At the one hand, it is early on, but we said we're going to put in this as the biggest focus from our operation point of view for our customers' sake and also to drive down cost. So far, it's delivering for us.
Hi, it's Andrew Lobb from HSBC. I think Daniel asked about the potential taxation of fuel that's out there. Equally, we've got the Dutch government who are planning their own aviation tax and pushing for a pan-European aviation tax. Equally, in the U.K., we've got a proposed tax to cover bankruptcies. How are you guys thinking about that impacting your business or lobbying against it? Can I ask on the easyJet Holidays side, obviously, you don't want to talk about guidance for profitability for next year, but how should we be thinking about, because we've got costs this year, but not a material uptick in revenue. Next year, we should have a running, functioning business, which is going to be gloriously profitable. How big an inflection should we be anticipating in that context? Just the last one, if I can be greedy.
Staying in Berlin, how are you thinking about your planning as potentially you don't want to get overly optimistic, but maybe they're going to open that damn airport? You've been given a terminal. How's that impacting your planning in terms of your network and your operations and your customer proposition, which is not optimal, I think, at Tegel, but it's presumably quite hard to invest in if they're about to close it.
Right. On the cost, we are of the view, which we are engaging with local authorities and governments on this as well to say that first of all, taxation has not proven to do anything for the environment. Whether you have called that APD or whatever you called it in this environment, it's been a revenue income for the government. We keep reminding people also that aviation is one of the few means of transport that actually pays for its own infrastructure. The fact is that this doesn't shy away from the fact that sustainability is extraordinarily important and the industry needs to take that serious. We are taking that serious by the investments we're doing within our fleet. We're taking it serious in the investments we're doing with the technology, our business model.
I think that what needs to happen from both airports and governments, that they are also starting to recognize who are the companies here who does and invest in something that has less impact or drives less carbon efficiency. I have no enthusiasm to go out there and defend the industry as a whole when I'm competing against carriers who runs 20, 22-year-old aircraft with 65%, 70% load factor. It's a choice they've done. We've done a different choice. I don't want aviation to be caught up that everybody is the same because we're not. That's a debate that we are having, and I'm having personally with people from the governments. I think that there's a recognition for that, but I like to see that there are incentives for those companies who have chosen to take those decisions.
Longer term, I do think that aviation needs to reinvent itself. I do think that whether that is through like we have in relationship where we're exploring the opportunities around electric and hybrid technology, that is something that will be intensified, and rightly should it. I think from our point of view, clearly, people will have choices in their means on how they're transporting themselves, and so should they. I completely understand and accept that. If people are flying, they're going to fly easyJet. That's the approach that we're taking. We got to do what we can to make sure that we continue to be efficient in terms of this. Taxation in its own right, I haven't seen any evidence that this will work.
I only see damages when this has been brought into the picture, but I'd like to see more targeted ways for companies such as us get incentivized for the decisions we take. Holidays. The cost is not significant. It's mainly about people that we're doing this year. We have chosen the providers for the systems. We're not buying or building any system, which was part of the alternatives we had. We had also the opportunity to buy companies. We said that this is the route we want to go down to. So we got the technology now. We are starting to build up the team. We are not going to give any specific targets on this. We say that we will be a major player in this market, and we know we can be that because we have the network.
We fly to more leisure destinations than any other airline, both on beach and on city, we do it with a fantastic cost base. The biggest hurdle for many companies to succeed in this place is actually get their flying sorted out, which I think you've seen recent examples of here in the past weeks. That is something that we already have, and that's something that we're going to build on. We're looking to make a launch out of this later in the calendar year, we'll come back and continue to update you on the progress in there. Berlin. On the Berlin, look, this remains and is a great opportunity for ourself. I think we talked about before that the optimization of the schedules that we've had, I think it's fair to say that we're somewhere about 50% done in what we can do.
As Robert mentioned earlier, I think it's fair to say that we have been a little bit slower in the process, but you know what? We've been focusing on getting ourself Brexit ready. We've been focusing on the operation resilience piece to make sure that we can set ourself up for a good summer. I think that that has, to some extent, we used the same resources that we have available to focus on those things. We know we can improve the performance in there, and there's nothing that says that this won't deliver in line with the other big-scale investments that we've done in our network. In terms of the airport when it's going to open, you were in Berlin a few weeks ago.
Yeah. As you'd expect, they are very confident. We've got a working team. Thomas is sponsoring it, we've got a working team working very closely with them. As you can see, allocation of terminals being confirmed. We pretty much know exactly where we're going to be in that terminal and what our offer looks like, we're absolutely on it. It's something that we know how to do well, we've got a good working relationship with the FBB team out there to get it landed in a very smooth way when the terminal opens.
Last question.
Thank you. Two questions, please. Actually, just for clarification on the cost per seat outlook being slightly down. In terms of the disruption, are you saying if Eurocontrol is right and there's a 15% worsening over the summer, that you're going to be able to achieve that target because of your firebreaks? Or you need the market disruption to be the same level as last year or lower than last year? Secondly, just on the revenue per seat. Obviously, we've seen a slight deterioration in the last six or seven weeks relative to your expectations of the trading in April. How has that changed over the period? It's just steadily undershot what you were looking for? Has it worsened more recently? Why would you be confident that it's not going to change further? Thank you.
I think on the cost per seat and also the operational resilience, we have assumed that the environment will get worse, about 15%, but we are targeting to be slightly below the disruption costs that we had last year. That's what is in the numbers.
I think when we say normal, when you have big adverse one-off events.
Yeah
That's when it's more complex. We've assumed a general worsening of that 15%.
Of the?
Revenue per seat expectation.
Yeah. Look, it's one of the things that we see that the Revenue per seat in the market is tougher out there. It has an effect. Whether that is Brexit or uncertainty because of macroeconomic factors that sits in there or a combination or if it's a delay pattern or if it is just all of these together, it is tougher out there. We're optimizing it the way we can. It's interesting when you're looking at the initiatives that we're driving, the algorithms that we're working on for the late, they do have an effect. In the scheme of things of the overall environment, it is something that makes it more challenging this summer. That's what others have seen, and that's what we have seen. We feel very comfortable about the initiatives that we're driving, and we still have many more things to do.
If you think about it, our value for money proposition, that people regard us more than any other airline of delivering value and worth. That gives us also the opportunity to probably do more in terms of how we're optimizing our pricing on the products and offers we have. We've delivered now improved algorithms for our ancillaries on our bag pricing, as an example, that we're working with the pricing in a much more dynamic way. There's a number of things we can do in there. It's appropriate at the moment that we have guided in here to take that revenue per seat down slightly from where it was.
Cool. Thanks very much. We'll all be outside for the next 15, 20.
Thank you.