easyjet vs ryanair financial analysispiercing shop name ideas

Complementing its direct sales strategy is the paperless booking model. 8-9). While all airlines have similar characteristics and make similar responses to situations, yet each airline has some distinctive features and characteristics in order to maintain competitiveness in the aviation industry. Easyjet flies to Charles de Gaulle Airport and Orly Airport (two main airports in the city) (Thompson 2005). Copyright 2023 service.graduateway.com. The constant threat of a Middle East (Iran) war can adversely affect the oil price. April 1, 2022. 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. Then there are also problems of cancellations for delayed flights, for which compensations and reimbursements can become a major expense for Ryanair. Automobiles, bus services and railways can act as substitutes but where time saving is important, there can be no substitute to airlines. Over the last four quarters, easyJet's revenue has decreased by 48.8%. easyJet plc operates as a low-cost airline carrier in Europe. 3. Selecting air routes, strategic flight scheduling are some elements that can allow EasyJet to maintain competitiveness. 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, in spite of all the givings and primarily the shortcomings compared to the legacy full service/full fare airlines, the low fare airlines has transformed the way people travelled. Through this strategy, Ryanair became less concerned about existing competition because it was operating in a unique market segment that other airlines had not used before (Ryans 2009). 3 Easyjet non-current assets 2021 Fig. The profit was declared after making all tax payments in 2010 financial year that amounted to Euro 305. Ryanair has also used the same strategy to meet the same goals (Mayer 2008). Ryanair has had no air accidents with casualties till date. EasyJet cabin staff in Portugal plan early April strike over pay : More Must read. However, EasyJet does not compete with high fare airlines whose customers are mostly business or elite passengers who prefer added comforts and services during flight. WebFor Easyjet Group, it is worth a lot more than Ryanair, both in terms of assets owned 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. Similar to other low-cost carriers, the airline also had no in-flight meals and a rapid turnaround. Not sure if you can write a paper on Managing Corporate Reputation the Case of Ryanair by yourself? Even with these adjustments, the company has still increased its passenger numbers and remained profitable for a long time. EASYJET PLC : Forcasts, revenue, earnings, analysts expectations, ratios for EASYJET PLC Stock | EZJ | GB00B7KR2P84 . Thomson, N. & Baden-Fuller, C. 2010, Basic Strategy in Context: European text and cases, John Wiley & Sons, London. 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. We will write a custom Essay on Ryanair Corporate Strategy Vs. easyJet: Competitive Strategy Analysis (Compare & Contrast Essay) specifically for you for only 11.00 9.35/page. Ryanairs market strategy has focused on cost leadership because it strives to become the best company in the low-cost market segment (Mayer 2008; Thomson & Baden-Fuller 2010). Technology Airline industry is one sector that is highly dependent on technologies. Nearly three times as many of its flights were cancelled at the last minute as with Ryanair and Jet2. This approach was a cost-saving strategy. This is IvyPanda's free database of academic paper samples. 81%, 7. The companies have also strived to support their leadership positions and create value for their shareholders by maintaining operation efficiencies. We use cookies to give you the best experience possible. 59% of the total revenues as operating profits for the same three years. The total liabilities have grown by 21% between 2010 and 2012 (non-current liabilities by 23% and current liabilities by 17%). EasyJet and Ryanair lag behind high fare airlines regarding customer comfort during flights because of their cost saving strategies. easyJet, along with Ryanair, is concerned about the impact of the French air traffic strike but has reason to believe in a high-demand future. Regular review is done by management to monitor demand of flights (Ryanair: Annual reports and financial statements 2010, pp. Its strategy was to steal customers from dominant players in the airline industry by offering lower ticket prices compared to its rivals. Although these strategies do help in keeping the costs down, they also deter those customers who prefer being served while flying. JP Morgan's analyst Harry Gowers upgraded the rating on the company from Sell to Neutral. Retrieved from https://ivypanda.com/essays/ryanair-vs-easyjet-corporate-and-competitive-strategy-analysis/. The pervasive risk of terrorism means airlines like EasyJet have to emphasize on strict security measures which will warrant higher costs. On average, easyJet achieved a punctuality level of 91.6% from February to June 2021. 2006). 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. With more purchasing power people will tend to travel by flight, but also people become more quality conscious and hence prefer high fare airlines for better customer service. Also, there are speculations that oil supply all over the world will decline as oil production will reach optimum level and there will be need for new sources of oil. Supplemental understanding of the topic including revealing main issues described in the particular theme; Lastly, in Europe, too much competition in the low-cost airline sector offers minimal profit margins for existing players in the industry. Need a custom essay sample written specially to meet your 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). However, this factor plays low for EasyJet as it uses primary airports like Schiphol, Copenhagen etc. Financial Analysis According to the NPV analysis, if the predicted cash flow is correct, opening the sixth restaurant could bring limited profit to the company. 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. WebThe gross margin of EasyJet is 8.00%, and 7.80%, while that of Ryanair is 11.16%, and 11.52%, for years 2017 and 2018 respectively. To maintain competitiveness in the market, EasyJet needs to keep an eye on the technological upgrades with regard to aircraft manufacturing. Ryanairs fuel expenses are 45% of its total operational expenses, and so any rise in fuel price will affect Ryanairs decision regarding no-fuel surcharge policy to earn profit (Muller, 2011, p. 38). 2006). 9 billion during 2011 and to Euro 3. This kind of differentiation has created an advantage over competitors. Need a custom Compare & Contrast Essay sample written from scratch by Pharapreising and interpretation due to major educational standards released by a particular educational institution as well as tailored to your educational institution if different; Dont resulting in high fees for airports. . writing your own paper, but remember to However in the measure of Return on Assets, EasyJet consistently outperforms Ryanair over the study period of three years (2010, 2011 and 2012). Financial summary Headline loss before tax of 178 million (2021: 1,136 If the oil price increases then it will be difficult for EasyJet to maintain its policy of providing air services at low costs. Economic The growing rate of employment increases the spending capacity of people with more money at disposal. 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). Technological innovations like videoconferencing is actually another form of substitute since it enables business people to do meetings online thereby flights become unnecessary for face-to-face meetings. With rising employment, the purchasing power of people also improves. For example, in 2014, both organisations reported increased passenger numbers (Wallach 2015). EasyJet has a wider customer base since it targets both leisure and business customers while Ryanair targets only leisure customers. Figure One: Position of Easyjet and Ryanair in the global low-cost airline market (Source: Elderman 2014). You are free to use it for research and reference purposes in order to write your own paper; however, you In case of EasyJet, the Gross Income ratio has improved from 0. 0 millions to Euro 2,988. Equity ratio for EasyJet has marginally increased in 2012 compared to the EasyJets activities comply with the regulations imposed by government regarding global warming like low carbon emissions, operating aircrafts that consume less oil and make less noise. Companys headquarter was moved to Geneva which became the first base outside UK. The overall management of both these airlines has been good and so much so that these have emerged to be the two top low fare airlines in the European market in spite of all competitions, adverse economic conditions and environmental adversities. 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. 22%, 10. Secondly, there still exist problems like unwillingness to use credit cards over phone or via internet among the French and German customers which cause problems in online booking facilities. 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%. All these along with various functional problems presented immense challenge to the performance level of EasyJet. OConnell, J. Retrieved from https://graduateway.com/comparative-financial-analysis-of-easyjet-ryanair/, EasyJet emarketing strategies and its implementation Analysis, Competitive strategy that Easyjet have utilised Analysis, The Low Fares Airline Ryanair And The Five Forces Analysis Business, Ryanair Strategic Analysis And Recommendations For The Future. While Ryanair does not provide any free refreshments irrespective of distance or duration travelled, EasyJet on the other hand provides free refreshments and meals for all flights of more than 2 hours duration. easyJet CEO Johan Lundgren concerned about reliability . A business enterprise before its establishment needs to study the forces that will impact its profitability, and a tool for such assessment is Porters 5 forces analysis, which includes bargaining power of customers, bargaining power of suppliers, threat of new entrants, threat of substitutes and competitive rivalry. 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. 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. Finally, the government has imposed higher taxes on flights which add to the cost thereby resulting in increasing air fares. This is because people tend to lose confidence over low fare airlines regarding their security system. They cut down staff costs to the bare minimum necessity and as such do not provide for staffs at the reception or ticketing. https://www.easyjet.com. Ryanair mainly flies to secondary airports, while Easyjet flies to primary airports. O. P. of Ryanair has increased by 70% between the same period 2010 to 2012, and N. P. has increased by 84%. In this regard, both companies have gained the reputation of being the biggest low-cost airlines in Europe (Wallach 2015). Any air disaster even if with other airlines can affect Ryanair since people will start believing low fare airlines compromise on safety measures in order to cut costs (Sorenson, 2005, pp. Thus, it is apparent EasyJet generates more value for the shareholders. Another key aspect of its strategic competence was high aircraft use (Thompson 2005). Therefore, the risk of overcapacity in the industry is real. Competitive rivalry Because of increased competition in the European aviation industry, rivalry between airlines has increased. EasyJet and Ryanair have differences within their strategies. Ryanair also emphasizes on providing the most efficient customer service compared to other rival airlines. 84-85). assume youre on board with our, Financial Analysis on Galaxy Entertainment Group, https://graduateway.com/comparative-financial-analysis-of-easyjet-ryanair/. Higher the gearing, higher is the risk to investor. Copyright 2023 - IvyPanda is operated by, Ryanair Corporate Strategy Vs. easyJet: Competitive Strategy Analysis (Compare & Contrast Essay), EasyJet: more aircraft come in as more cash to shareholders goes out, Alliance Supermarket' Point-of-Sale System, Caterpillar Company Analysis Using Porters 5 Forces Model, An Investment Analysis of EasyJet on Behalf of a Pension Fund, EasyJet Company: Strategic Management and Business Policy, Operations and Process Management of EasyJet, Ryanair and easyJet Competitive Positions, Ryanair and easyJet Value for Shareholders, Macbeth & Frankenstein: Compare & Contrast, Nationalism Versus Capitalism: Compare & Contrast, Organisational Design and Performance Management. Thirdly, there is a growing threat of terrorist attacks across Europe. To expand its customer base, the company tried to please all their customers by trying to meet the customer needs of every type of market in the industry (Malighetti et al. This can be an important factor for Ryanair as aircrafts cannot be substituted. The highest 12-month target stood at 900p while the lowest was 460p per share. This included legal expenses for its no compensation policy. Furthermore, a comparison between Ryanair and other major low-cost model airlines such as easy Jet revealed better corporate reputation and perception of easy Jet, which impacts negatively on Ryanairs competitiveness. 17-18). Ryanair has a higher gross margin than EasyJet. (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. 32% and 12. The database is updated daily, so anyone can easily find a relevant essay example. 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.

Butter Substitute For Kidney Disease, Jackson County Altus, Ok Arrests, Articles E