EasyJet EasyJets strength lies in its strategically low fare air service. In line with this strategy, the company also introduced value-added services to its core strategy. EasyJets net profit (after tax) has been 6. requirements? Today, the airline still reaps the benefit of being among the first airline companies, in Europe, to adopt the low-cost airline strategy. Thirdly, there is a growing threat of terrorist attacks across Europe. Ryanair also focuses on faster pre-flight preparation; this minimizes the grounded time of aircraft (Hoffman, 2007, p. 6). Ever since, these two airlines have survived all odds and thrived to grow, changing the way people travelled. Comparatively, Ryanair commands 40% of the market (Air France 2011). 2006). In the last three financial years both these airlines Ryanair and EasyJet have shown good performances financially and otherwise. 2005, Business Environment: Managing in a Strategic Context Chartered Institute of Personnel and Development, CIPD Publishing, New York. After the terrorist attacks in America people have become anxious regarding traveling by air, and such threats of terrorist attacks can further influence flight demands of European airlines including EasyJet. WebFinancial Analysis Profitability & Shareholder Returns Ryanair, perhaps Europes best-known low-cost airline, has also consistently been among the continents most profitable. There are many low-cost airlines in the world. In this regard, both airlines have reported increased asset values and increased growth figures. Ryanair: The lowest cost airline The highest 12-month target stood at 900p while the lowest was 460p per share. Efficiency ratio has increased in 2012 for both EasyJet and Ryanair which means they can make all payments because of greater profitability and higher sales volumes. Here too it is noteworthy that the base i. e. the total revenue of Ryanair has also grown by 21% during 2011 and by 47% during 2012 over 2010 base year. EasyJet - statistics & facts | Statista Such passengers prefer to choose airlines with minimum traveling expenses or may opt for not traveling at all. Low fare airlines also face the problems of overbooking and cancellations which add to their compensation expenses. Porters 5 forces analysis of EasyJet Threat of new entrants The deregulation policy encourages new airlines to emerge, but since initial capital investment is too high it becomes difficult for new entrants to compete with well established airlines like EasyJet. writing your own paper, but remember to Ryanair and Easyjet have always strived to support their market dominance by increasing passenger traffic through cost containment (Mayer 2008). Comparing the 5 elements of Balance sheet of both the airlines, it can be observed that asset management has been good in both the companies. For example, it has focused on improving its performance in many routes where Easyjet does not service (Easyjet operates in 702 routes, while Ryanair operates in 1,600 routes) (CAPA 2014). The diagram below shows the current market shares of Ryanair and Easyjet in the European low-cost market. In line with this low-cost strategy is a simplified pricing structure. The target price is lowered from GBX 370 to GBX 350. (Appendix, Table 5 and Table 9). easyJet Other segments of its working model appear below. In actual numbers the costs remained constant at GBP 103 m, also due to the new policy of The market differences are profound because profitable routes in Europe already have large airline companies that serve them. Social Airline profits are highly dependent on the behavioral and demand patterns of customers. This is because new airlines emerge with more market demand, and lower operational and labor costs by 30-40% as they start their business with inexpensive second-hand aircrafts (Sorenson, 2005, p. 37). Ryanair and EasyJet are targeting markets Borrowing from the Southwest low-cost model, EasyJet operated using one type of aircraft and a point-to-point short-haul travel (Kew & Stredwick 2005). However, this factor plays low for EasyJet as it uses primary airports like Schiphol, Copenhagen etc. easyJet (1995) is a low-cost airline carrier operating only in Europe. Therefore, a differentiated strategy is not exclusive. For instance, in 2004, Ryanair put aviation industrys first paperless pilot training program into practice (Muller, 2011, p. 39). easyJet -PDF- The sustained current global economic recession has had an adverse impact on many airlines including Ryanair because high unemployment rates and rising fuel costs almost led to bankruptcy. IvyPanda. However, to get a correct understanding of this assessment, this paper demonstrates how both companies create value for their shareholders and reveals the strategic choices pursued by both organisations. Financial summary Headline loss before tax of 178 million (2021: 1,136 Of importance, the company lacked a service advantage that would back up its cost advantage (Thompson 2005). The pervasive risk of terrorism means airlines like EasyJet have to emphasize on strict security measures which will warrant higher costs. 56% respectively. Albeit these factors show areas of strategic convergence, both airlines are rivals in the low-cost airline market. To meet the demand, management focuses on maintaining enough flights every day. In line with its low-cost strategy, the company also adopted a no-frill strategy, like Ryanair, by eliminating in-flight meals and reducing the number of aircraft attendants. However at the end, EasyJet with low working capital and yet maintaining a growth trend in profitability, lower gearing/leverage as opposed to Ryanair, consistent positive growth in net worth and, the fact that it remains competitive in spite of utilizing full service airports and providing free refreshment for long haul flights, EasyJet emerges a better buy for long term growth and potential. On average, easyJet achieved a punctuality level of 91.6% from February to June 2021. Comparative Financial Analysis of Easyjet & Ryanair - GraduateWay 2006). (2006), the relative success, or failure, of low-cost airlines lies in two factors cost leadership and differentiation. Last updated: 25th April 2023. easyJet (LON:EZJ) is a British low-cost airline operating out of the UK, and is the second-largest budget airline behind Ryanair in Europe by number of passengers carried. 79% and 8. These destinations spread across 29 different countries in the region. Natural calamities and also human events like flight accidents and terrorist attacks can drastically reduce flight demand as mode of travel. EasyJets Net Current Assets to Sales i. e. , Working Capital to Sales ratio suggests that the company manages its debtors and creditors very efficiently. Thomson, N. & Baden-Fuller, C. 2010, Basic Strategy in Context: European text and cases, John Wiley & Sons, London. Web. PESTEL analysis helps to assess the prospects of expansion and the risks involved. easyJet Shares | Latest easyJet Stock News and Analysis 2023 EasyJet and Ryanair lag behind high fare airlines regarding customer comfort during flights because of their cost saving strategies. 3 millions. Other airline companies, such as Ryanair, also discovered similar opportunities by leveraging their competitive advantage through the adoption of a low-cost strategy. Easyjet and Ryanair have similar strategies to the extent that they both share the low-cost business model. The European airline industry is also distinct because charter planes play a greater role in the industry, compared to other markets (Air France 2011). WebFor Easyjet Group, it is worth a lot more than Ryanair, both in terms of assets owned Ryanair Ryanairs net worth as a percentage of total assets for years 2010, 2011 and 2012 has been 38%, 34% and 37% respectively. In their effort to standardize all activities and primarily maintenance of aircrafts, RyanAir and EasyJet like all other low fare airlines buy standard configuration identical aircrafts with a high density seating. From 67 operational bases, Ryanair makes more than 1,600 flights daily. Ryanairs dependence on regional airports gives it a situational disadvantage while EasyJet compromises on low fare by using the facilities of primary airports. The general public responses swell towards cheap flights however it adds to their grievance if promotions in newspapers promise flights at a particular rate when in reality they cost much higher (Mayer, 2007, p. 16). This specially affects aviation industry as people tend to spend on traveling more. This view affirms the opinions of researchers who say price leadership is pivotal to creating market dominance, compared to cost leadership advantages (Mayer 2008). EASYJET In case of potential new entrant in the low fare segment, the strategy adopted by EasyJet and Ryanair thwarts competitions and renders entry of new companies financially unviable. EasyJet is in a better financial position than Ryanair. & Williams, G. 2012, Air Transport in the 21st Century: Key Strategic Developments, Ashgate Publishing, Ltd., New York. easyJet is slightly smaller than Ryanair but also packs a punch in the low-cost market. Catering to a slightly different market, the carrier was founded in March 1995. This makes the airline 24 years old. easyJet operates aircraft from the A320 family, with an average fleet age of around seven years. On the other hand, EasyJet has been earning at a modest rate of 5. As such EasyJet has the advantage of providing low fare which will be difficult for new entrants to offer, and also EasyJet has a goodwill attached to its name which is something a new entrant will take years to replicate. EASYJET While Easyjet flies to Leonardo da VinciFiumicino Airport, which is close to the city, Ryanair flies to CiampinoG. The net worth of Ryanair has been more or less remained same as a percentage of total assets 38%, 34% and 37% for years 2010, 2011 and 2012. Bargaining power of buyers Usually a number of aircrafts from various airlines fly on the same air route thus increasing the bargaining power of buyers because of availability of alternatives.

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