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date: 22 July 2018

Shareholder news

easyJet AGM - 2017

easyJet AGM - 2017

easyGroup as a shareholder in easyJet has asked the following questions at today’s easyJet AGM:

In the full year report dated 15 November 2016 the company stated:

"We are planning to enter into a sale and

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leaseback arrangement for 10 aircraft which is expected to take place in early December 2016. Due to the age of the selected aircraft at the time of this transaction and maintenance provision accounting, easyJet expects to incur a one-off, non-cash charge of approximately £20 million."

In the first quarter 2017 trading statement dated 24 January 2017 the company stated:

"We entered into a sale and leaseback arrangement for 10 A319 aircraft, which took place in early December 2016 and generated $144 million in cash. Due to the age of the selected aircraft at the time of this transaction and related maintenance provision, easyJet incurred a one-off, non-cash charge of £16 million."

In this regard we would therefore be grateful if you would provide the following details:

  1. The specific aircraft registration numbers that were involved in this transaction and their age;
  2. The lessor or lessors involved in the transaction; and
  3. The term of these new leases (in other words how many years will easyJet have to lease these aircraft for?)
  4. The overall value of the liability of all the future lease payments and maintenance reserves.
  5. Can you confirm that the average sale price for each of these aircraft was USD 14.4 million? In your opinion is that the market value of the aircraft in a straight sale (without a leaseback) between a willing buyer and a willing seller? If not is the open market value above or below that?
  6. Did easyJet invite bids from buyers who were not asking for a lease back? If yes what prices were offered?
  7. You have disclosed this non-cash charge of £16m, say USD 20 million or USD 2 million per aircraft. Is that correct? Why was the estimate a couple of months earlier £20m higher? What changed? Is the lease rate higher now?
  8. Does this mean that the average book value of each aircraft on the balance sheet of easyJet including capitalised maintenance was USD 16.4m before the transaction?
  9. Two further questions arise from the above:
    1. Are the directors satisfied that the depreciation policy and the maintenance capitalisation policy of the company are correct?
    2. Why were the aircraft not sold on an outright basis? What is the real objective of the leaseback component of this transaction?

easyJet's answers and results of shareholder voting can be seen below:
easyJet AGM Voting
Response to questions from easyGroup

Media Coverage

09/02/2017 - The Daily Telegraph
10/02/2017 - cityam.com

easyJet AGM Voting

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