EasyJet - statistics & facts | Statista These destinations spread across 29 different countries in the region. This makes EasyJet the second best low fare airline in Europe, second to Ryanair. Freire, A. 1 millions allowed the company to make an unprecedented profit on regular functions. Ryanair Bargaining power of suppliers Bargaining power of suppliers can be strong if they are concentrated i. e. there are few suppliers and many buyers. Open Document. By conducting a spend analysis the controller can consolidate purchases in order to increase buying volume with a smaller number of preferred suppliers. The top 10 competitors average 11.6B. (Appendix, Table 4) While the stability in the Gross Income margin does convey about the ability of both the companies to maintain a stable rate of earnings, it also showcases that the low fare air travel market is stagnating and the capacity to increase earnings in spite of increased revenues is almost negligible. EasyJets routes within the EU boundaries face stiff competition from other low fare airlines like Jet2, BMI Baby, Ryanair. & Williams, G. 2012, Air Transport in the 21st Century: Key Strategic Developments, Ashgate Publishing, Ltd., New York. The first ever flight of this company had its route from Luton to Edinburgh and Glasgow. The return on shareholders funds also is seen closely identical ranging between 0. In actual numbers the costs remained constant at GBP 103 m, also due to the new policy of Web. WebAn Analysis and Assessment of easyJets Strategy and Options 45 3.5.3 Leasing Costs Leasing costs are an important profitability driver for airlines 128.Over the review period, easyJet decreased its leasing costs from 3.4% of total revenues in 2010 to 2.7% in 2016. The policy of no refunds also irks customers who miss flights for genuine reasons. This shows that Ryanair can make reasonable profits from its sales. This kind of differentiation has created an advantage over competitors. The growing rate of employment can have both positive and adverse effects on EasyJet and Ryanair. Profitability ratio In both the cases i. e. EasyJet & Ryanair, the Gross Income ratio has increased from 2010 to 2012 and remained more or less stable. Their no frills strategy has been a core tenet of their low-cost strategy because both airlines do not accommodate passenger meals, pre-arranged sitting arrangements, or paper-based ticketing services (Malighetti et al. It was established in the year 1995 by Sir Stelios Haji-loannou with the purpose of providing scheduled air services at low costs. Competitive rivalry Air fare is the driving factor for competitive rivalry in aviation industry. WebeasyJet's revenue is the ranked 7th among it's top 10 competitors. Ryanair EasyJet and Ryanair have the first movers advantage in the industry over new entrants owing to their flexibility to lower their fare prices more easily compared to the full fare airlines. Thus, EasyJet must design its strategy for a broader customer base. Get original paper in 3 hours and nail the task. It is almost 50% bigger than the Spanish market and over 60% bigger than the third-ranked UK market. Financial Summary Headline loss before tax of 1,136 million (2020: 835 million loss) ahead of consensus. Analysis of the financial results reported by both airlines shows that It has destinations in many principal cities across Europe. This indicates that EasyJet has overall managed its assets and liabilities efficiently without compromising in profitability; the net profit during the same period has grown by 57%. 1, 90-135 d, Poland This clearly establishes that EasyJets funds management vis-a-vis trade, credit and cash cycle is far superior to Ryanairs. Ryanairs operating expenses have increased by 43% from 2010 to 2012 and EasyJets by 27%. Ryanairs dependence on regional airports gives it a situational disadvantage while EasyJet compromises on low fare by using the facilities of primary airports. Relative to this development, Ryanair has also adopted a red ocean strategy where it steals customers from other market segments (predominantly the customers of major airlines) (Thomson & Baden-Fuller 2010). 3. EasyJet Other segments of its working model appear below. Then there are also problems of cancellations for delayed flights, for which compensations and reimbursements can become a major expense for Ryanair. The commitment and dedication towards work that stimulates the employees of EasyJet kept its workforce going and provide uninterrupted world class service. Both airlines also have similar marketing strategies because besides marketing themselves as low-cost airlines, both companies do not use agents to reach their customers. This specially affects aviation industry as people tend to spend on traveling more. From 67 operational bases, Ryanair makes more than 1,600 flights daily. 58 to 6. Since EasyJet and Ryanair both are low fare airlines they focus more on cost saving strategies thereby compromising on comfort levels during flights and other customer services. EasyJet in comparison to other low fare airlines provides quality service at low price, internet booking facilities and other ancillary services. With the help of this analysis companies design strategies to reduce risks attached to development and expansions beyond the borders of the country of origin. The interest cover ratio for EasyJet has improved from 13. The one weakness of Ryanair that is quite apparent in its no-frills approach by which they do not serve any free refreshments to customers on flight. Not sure if you can write a paper on Managing Corporate Reputation the Case of Ryanair by yourself? Gearing ratio assesses the companys financial position in the long run. WebAn Analysis and Assessment of easyJets Strategy and Options 60 despite of its efficient operations rather low EBIT and EBITDA margins, returns on equity and on invested capital as compared to its peers. The low fare strategy intertwines with the low-cost strategy because through lower costs, the company is able to offer low fares to its customers. To meet the demand, management focuses on maintaining enough flights every day. One positive factor is globalization which can increase flight demand in the long run. Since fuel prices can become very high, people often prefer air travel to automobiles for distance more than 400 km (Sorenson, 2005, pp. , Department of Transport, the Irish Aviation Association, the European Commission and the European Aviation Safety Agency. To do so, both airlines use the single fleet type of operation and optimize flight crew productivity (Air France 2011). In this regard, both airlines have reported increased asset values and increased growth figures. 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. Evidence of this fact emerges in Paris as a common destination for both airlines. Easyjet flies to Charles de Gaulle Airport and Orly Airport (two main airports in the city) (Thompson 2005). Although Easyjet borrowed its strategic focus from Southwest Airline, its market strategy differed from Southwest because instead of relying on sales agents to make sales, the Airline relies on a direct sales strategy (Sull 1999). Comprehensively, the two organisations share almost similar strategies. Another program that is used by Ryanair is frequent-flyer program which means customers are given a free flight after they complete a specific number of flights in a given period with Ryanair. We can help you Horizontal analysis Comparing the sales, operating profit (O. P) and net profit (N. P) of EasyJet and Ryanair it can be seen that all the three elements have witnessed substantive growth between fiscal year 2009-2010 to fiscal year 2011-2012. "Ryanair Corporate Strategy Vs. easyJet: Competitive Strategy Analysis (Compare & Contrast Essay)." But it's not worth paying a load more than Ryanair for in my opinion. The European airline industry is also distinct because charter planes play a greater role in the industry, compared to other markets (Air France 2011). EasyJets aircrafts have distinctive features that make them distinguishable from aircrafts of rival airlines. The fuel, administrative and engine maintenance costs are declined. Comparatively, Ryanair commands 40% of the market (Air France 2011). Comparative analysis based on PESTEL Ryanair and EasyJet both being the top European low fare airlines face some common advantages and disadvantages. Registration number: 7252303643 Given the above background, this report will attempt to analyze the two companies i. e. , Ryanair and EasyJet viz. easyJet plc operates as a low-cost airline carrier in Europe. In the year 2010 there was a reduction in the costs of fuel from Euro 1,257 million o Euro 893. In order to become a competitive low fare airline, it is important that costs be economized or minimized. easyJet Ryanair We will write a custom Case Study on Ryanair and EasyJet Firms Strategies specifically for you. Ryanair has put the increase in overall assets and liabilities to good use, it has managed to almost double the growth in net profits from Euro 305 million to Euro 560 million translating to an increase of 84% over 2010 levels. The two airlines are also the most popular low-cost airlines in Europe. 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. For example, Easyjet has maximised its productivity by operating in airports where it enjoys market leadership (CAPA 2014). Ryanair Corporate Strategy Vs. easyJet: Competitive Strategy Analysis (Compare & Contrast Essay). Thats almost 10 pp better than the EMA average and 11.7 pp better than the global average. Employees are not engaged in any one particular activity, they do various jobs thus reducing the need of multiple personnel. The profit was declared after making all tax payments in 2010 financial year that amounted to Euro 305. Moreover, governments are also planning to restrict expansion of aviation industry in order to protect the environment. Complementing its direct sales strategy is the paperless booking model. This factor is more applicable on EasyJet since it is a low fare airline and availability of other low fare airlines on same route can be a threat to EasyJet. Ryanairs net worth as a percentage of total assets for years 2010, 2011 and 2012 has been 38%, 34% and 37% respectively. Ryanair and EasyJet have concentrated their corporate strategies on the cost leadership model because they both strive to become the best companies in the low-cost market segment. Financial Analysis The aviation industry also gets influenced by volatilities in international currency markets. Another key aspect of its strategic competence was high aircraft use (Thompson 2005). professional specifically for you? Management Accounting Practices of the easyJet plc. Indeed, it would not be able to match the same level of customer service that most customers of long-haul carriers would enjoy if they used the larger airports. Wallach, B. Their performance will mainly depend on their ability to sustain their operational models. IvyPanda. In line with this low-cost strategy is a simplified pricing structure. One principal weakness of EasyJet is that it strives to keep fares low as well as focus on consumer satisfaction, and keeping balance between the two becomes difficult. JP Morgan's analyst Harry Gowers upgraded the rating on the company from Sell to Neutral. To ensure low cost maintenance of aircrafts it is essential that EasyJet and Ryanair adopt latest technologies. Ryanair and Easyjet have always strived to support their market dominance by increasing passenger traffic through cost containment (Mayer 2008). The companies have also strived to support their leadership positions and create value for their shareholders by maintaining operation efficiencies. Raccomandazioni degli analisti su EASYJET PLC: 27/04: easyJet plc: JPMorgan cambia rotta e passa a un giudizio Neutral Chief Financial Officer & Director: Stephen Alan Michael Hester 4 601: SINGAPORE AIRLINES LIMITED: 5.06%: 28 092: AIR CHINA LIMITED: 0.86%: 21 445: DELTA AIR LINES, INC.-0.33%: 21 317: RYANAIR Ryanair does not take the services of primary airports to avoid high airport charges and opts for regional airports. Key A low ratio is an indicator that an organization can duly pay all its dues. Gearing ratio and Interest Cover ratio This ratio indicates how efficiently (multiple) the capital of the company has been leveraged, meaning for every unit of capital employed how many units of loan is raised. The total revenue for Ryanair has grown by 21% and 47% over 2010 levels for years 2011 and 2012, while for EasyJet the total revenues have grown by 16% and 30% over 2010 for years 2011 and 2012. The average easyJet stock price forecast from analysts was set at 734.5p per share resulting in a potential 34% gain from its last closing price of 546.20 (as of 1 March) if that target is hit. Albeit these factors show areas of strategic convergence, both airlines are rivals in the low-cost airline market. Their performance will mainly depend on their ability to sustain their operational models. Airfrance 2011, Low-cost carriers. Web. CAPA 2014, EasyJet: more aircraft come in as more cash to shareholders goes out. Last updated: 25th April 2023. easyJet (LON:EZJ) is a British low-cost EasyJet uses reward policies to motivate its employees by giving an annual performance-driven bonus and grants of performance shares to eligible employees. Very typically, these companies also tend to suffer when economies are in a high employment phase. Its high seat density arrangements on board allow optimum use of aircrafts. The success of this strategy has always depended on the control and management of the four facets of cost management in the aviation sector employee management, equipment and maintenance, customer service costs, and airport handling costs (Thomson & Baden-Fuller 2010, p. 26). The constant threat of a Middle East (Iran) war can adversely affect the oil price. They have earned more incomes and have flown more people than ever before. Figure One: Position of Easyjet and Ryanair in the global low-cost airline market (Source: Elderman 2014). For example, Easyjet has managed to do so by using the companys profits to increase its fleet size and expand into new routes (Mennen 2005). Compared to other leading airlines in the short-haul market segment, the two airlines are among the top ten aviation companies with the highest passenger numbers in Europe. The pervasive risk of terrorism means airlines like EasyJet have to emphasize on strict security measures which will warrant higher costs. In the instance of EasyJet, while the non-current assets have registered a net increase of 19% in two years (2012) over 2010 levels as base, the current assets have seen at net fall of 12% during the same period. Since EasyJets mission is to provide air services at low costs, high fuel price can adversely affect the economic viability and structure of the company. Ryanair has also used the same strategy to meet the same goals (Mayer 2008). Both these airlines ever since they have come into existence in 1984 (Ryanair) and 1995 (EasyJet) have proliferated all over Europe mainly due to conducive economic conditions and environment, made possible owing to the formation of European Union which allowed airlines from member states to operate within the union without hindrance. It created a huge demand for the airlines services because it attracted price-conscious customers who would have chosen alternative modes of travel, or failed to travel at all, because of the high costs of air tickets. 8-9). EasyJet keeps its focus on environmental awareness programs while making any future strategies. Moreover, national airlines like Ryanair get additional benefits from governments during periods of huge losses. Italy is Ryanairs leading country market with almost 15,000 flights planned in December. easyJet Stringent laws regarding safety and air traffic rights put financial pressure on low-fare airlines like EasyJet. Web1617 Words7 Pages. This can be an important factor for Ryanair as aircrafts cannot be substituted. 2023. easyJet While the total revenues for Ryanair has grown at a steady and faster pace than EasyJet, the passenger revenue as a percentage of EasyJet is far higher than that of Ryanair. EasyJet has broadened its customer base by targeting both business and leisure travelers which is an advantage over Ryanair. Web. assume youre on board with our, Financial Analysis on Galaxy Entertainment Group, https://graduateway.com/comparative-financial-analysis-of-easyjet-ryanair/. The proceeds of this transaction will go towards the 500-650m ($616-802m) target that easyJet drafted in May. As far as information technology goes Ryanair operates a multi-featured website for selling flight tickets. To do so, the company uses a simplified airline network. 2006). Since the company has succeeded by adopting this strategy, it has proved that a differentiated market strategy is still vulnerable to competition. Specifically, in Q1 2022's revenue was $910M; in Q2 2022, it was $2.1B; in Q3 2022, it was $2.2B; in Q4 2022, easyJet's revenue was $1.8B. Low fare airlines have the problem of working with primary airports because of the expensive aerobridges and elaborate check-in-services of these airports. It also engages in the sale of holiday packages; aircraft trading and leasing; development of building projects; financing and insurance business; and tour operator activities. In Europe, major airline companies, such as Flybe, Wizz Air and Aer Lingus, dominate this space (Dobruszkes 2006). These operational strategies have created immense benefits for the two airlines, including optimizing airline use and increasing airline turnaround frequencies. WebOn the basis of financial fundamentals, Ryanair is stronger than EasyJet in terms of This can end up with the new entrant leaving the industry. Comparatively, customers who fly with major airlines have to contend with these inconveniences, thereby making them less efficient and punctual compared to short-haul flight carriers. Nearly three times as many of its flights were cancelled at the last minute as with Ryanair and Jet2. 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. Therefore, the risk of overcapacity in the industry is real. Ryanair also focuses on faster pre-flight preparation; this minimizes the grounded time of aircraft (Hoffman, 2007, p. 6). Your privacy is extremely important to us. Managing Corporate Reputation the Case This program cannot be afforded by new entrants because it has the added burden of agent incentives which means Ryanair can give huge incentives to agents to make them prefer Ryanair (Sorenson, 2005, p. 52). (PDF) Ryanair V.S. Easyjet: Strategy Analysis and Competition The same for EasyJet has been 37%, 38% and 42%. match. As of September 30, 2022, it operated 320 aircrafts, 988 routes, and 153 airports. At first By managing and controlling competition in the sector, both Ryanair and Easyjet have generated superior values for their investors. EasyJet has a wider customer base since it targets both leisure and business customers while Ryanair targets only leisure customers. Ryanair Ryanair is considered as the top low fare airline in Europe. According to Dobruszkes (2006), the relative success, or failure, of low-cost airlines lies in two factors cost leadership and differentiation. Although Ryanair was not immune from an industry downturn following the financial crisis in 2008-2009, the company rebounded to solid profitability in fiscal 2010. This is the biggest market share in the European low-cost airline sector. Based on the strategies adopted by Ryanair and Easyjet, it is important to point out that competition determines the success or failure of the strategic approaches adopted by low-cost airlines. In this study it has been found that Ryanair bases its competitiveness by using secondary and regional airports in order to avoid congestion, keep airport charges at minimum and afford a fast and efficient turnaround time for its aircrafts. 500 16 over the same period. 3 Easyjet non-current assets 2021 Fig. There are many low-cost airlines in the world. Increasing oil prices can have severe impact especially on a low fare airline like Ryanair, and to off-set this they use high density seating arrangements on board; that way fuel price per passenger is reduced. The target price is lowered from GBX 370 to GBX 350. February 18, 2023. https://ivypanda.com/essays/ryanair-vs-easyjet-corporate-and-competitive-strategy-analysis/. WebRyanair in comparison charges 115 if its done online, and a whopping 160 if you only At this stage it is noteworthy that the total revenues for EasyJet have consistently grown year upon year by 16% and 30% over 2010 base year. Such competitions set limitations to EasyJets pricing policies on less revenue routes. The following table shows this fact. Financial Analysis WebeasyJet is currently c.55% hedged for fuel in the financial year ending on 30 September 2022 at c.US$498 per metric tonne with the spot price as at 29 November 2021 being US$658. This strategy emerged after learning that many flag carriers use large airports, such as Heathrow, thereby limiting its competitiveness on this platform. IvyPanda. However, both companies have unique internal strategies that differentiate their services beyond the low-cost model. For more visit Lions Lions Financial Neil Sorahan Directeur financier de Ryanair 2014.10 - aujourd'hui Wizz Air et EasyJet, RyanAir dessert prs de 4 fois le nombre de passagers que chacun de ces concurrents. However, easyJet, in a financial report, says that 99.8% of flights are operated regardless. This approach was a cost-saving strategy. easyJet vs Ryanair vs This way, shareholders in both airlines get value for their investments through structured competition and increased productivity.
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