easyJet (Baa2 S, BBB P) 1H (6m ending March) Earnings Call

Equities are weaker, moves being attributed to 4Q guidance on airline revenue/seat (RPS) that is "load factor ahead with yield slightly up YoY" vs. trading update in mid-April that was a more optimistic "RPS remains well ahead YoY". A edit to morning note, we don't expect supply this year for refi with it reiterating today that the new €850m 31s has prefunded the €500m 25s. As we've mentioned many times 28s don't screen value (can rotate into equal rated staples for spread-pick up). No firm view on longer 7Y/31s but worth noting curve is flatter than IG network carriers & capex as it invests into fleet will adjust its BS in coming years. Some credit asides from earnings call below.

• Its highlighted gross capex plans of £1.3b in FY24 & FY25 (each), £1.9b in FY26 & £2.4b in FY27 on the increase in scheduled aircraft deliveries. It plans to take FY24/25 deliveries into direct ownership. Currently fleet owned is 53%, neo model ownership at 77% with deliveries taking that to 81% in FY25. Notes FY26/27 net capex may differ on sale & leasebacks (i.e. % it takes into ownership).
• Sources of funding for ramp up in capex is left broad, says call on 20th June for more on financing (we don't see any scheduled events).
• It noted growing holiday business has positive impact on WC inflows (unearned revenues up +10%yoy); deposit is at time of booking, the balance prior to departure while payment to to the hotel after customer stay.
• Dividend currently 10% of Net Income expected to increase to 20% pay-out in FY24 (already expected by Moodys).