easyjet vs ryanair financial analysis

Oct 21, 2023

Ryanair Ryanair by virtue of its scale of operations, fleet size and leverage consistently earns operating revenues at a margin of more than 10% of total revenues while in case of EasyJet it has been always below 10% for the last three years. I.INTRODUCTIONThis report outlines the analysis of two low-cost airlines performance in Europe, namely easyJet PLC and Ryanair Hldgs during their financial year between 2006 and 2008. These strategies although have helped them in keeping the costs low, but they certainly are a cause of inconvenience to the discerning customers. The profit was declared after making all tax payments in 2010 financial year that amounted to Euro 305. Therefore, a differentiated strategy is not exclusive. Low fare airlines have the problem of working with primary airports because of the expensive aerobridges and elaborate check-in-services of these airports. Other social factors like proportion of old age population must also be taken into consideration as old people tend towards alternate modes of travel due to airsickness or other problems. The websites they have need to be updated regularly so that customer experience is enhanced and need of travel agents get reduced to save costs. These operational strategies have created immense benefits for the two airlines, including optimizing airline use and increasing airline turnaround frequencies. On average, easyJet achieved a punctuality level of 91.6% from February to June 2021. Ryanairs net worth as a percentage of total assets for years 2010, 2011 and 2012 has been 38%, 34% and 37% respectively. 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. Managing Corporate Reputation the Case Easyjet relies on the low-cost strategy because it believes that it cannot successfully compete with large aircraft carriers because they would use their economies of scale to crash the competition. The increased seating leaves very little leg room for a relaxed travel. WebOn the basis of financial fundamentals, Ryanair is stronger than EasyJet in terms of (Sorenson, 2005, p. 56) Threat of substitutes Unlike other industries, this factor is less applicable in aviation industry. Companys headquarter was moved to Geneva which became the first base outside UK. Mayer, S. 2008, Ryanair and Its Low Cost Flights in Europe, Books on Demand, New York. Dont 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. 1, pp. 3 billion in the year 2012. Since it is not profitable for airports to differentiate their services, Ryanair opts for secondary and regional airports. The need is to always stay technologically up to date in regard to aircrafts so that the aircrafts are fuel efficient to deal to mitigate the risk arising out of rise in oil price in the international markets. The sustained economic recession with the European Union with no signs of it abating in the near future induces business travelers to reduce their travel expenses. Ryanair does not take the services of primary airports to avoid high airport charges and opts for regional airports. EasyJets net profit (after tax) has been 6. The two airlines are also the most popular low-cost airlines in Europe. WebFar more of you flew with easyJet than any other carrier. 3. Then there are strict regulations from the EU regarding reduction of carbon emissions. Italy is Ryanairs leading country market with almost 15,000 flights planned in December. To do so, the company uses a simplified airline network. Observers have also said that its fleet of new aircrafts is another strategic competency that boosts the airlines efficiency in the airline industry (Dobruszkes 2006; Kew & Stredwick 2005). 49%, 38. 1, pp. In line with this strategy, the company also introduced value-added services to its core strategy. They have earned more incomes and have flown more people than ever before. Therefore, both airlines strive to minimise their operating costs by cutting expenses such as salaries and fuel costs. 1%, 7. 46%, 13. Moreover, governments are also planning to restrict expansion of aviation industry in order to protect the environment. Freire, A. Higher the ratio means higher the perceived value of the company and vice versa. 126 the perceived close relationship between total - Course Hero 18 February. This can end up with the new entrant leaving the industry. 2006). Elderman, H. 2014, EasyJet Vs. Ryanair: The Curious Case Of 2 Budget Airlines. They create user-friendly websites which encourages people to book tickets online thereby eliminating the need of travel agents. 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). In this regard, both companies have gained the reputation of being the biggest low-cost airlines in Europe (Wallach 2015). | April 27, 2023 EasyJet in comparison to other low fare airlines provides quality service at low price, internet booking facilities and other ancillary services. The company conveys these advantages to its customers by operating in secondary airports where long queues and complicated security rules rarely inconvenience customers (OConnell & Williams 2012). 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. OConnell, J. Financial Analysis Similar to Ryanair, Easyjets strategic direction came from years of studying the success Southwest Airline (Sull 1999). This in turn helps them to keep the fare down and become competitive. Economic The growing rate of employment increases the spending capacity of people with more money at disposal. This is because the strategy of these airlines to keep their cost low suffers and this affects the demand patterns since they are forced to raise fares to meet rising expenses. 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). An incident like air accident can lead the customers to rethink about the compromises adopted in aircraft maintenance. In later sections of the study, this paper shows the operational areas where the organisational strategies of both organisations converge and diverge. Ryanair. 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. Based on these competencies, Ryanair has always argued that its success does not only depend on its low-cost strategy because its innovative on-time record and its value-added services also support its growth (OConnell & Williams 2012). Easyjet Financial Ratios for Analysis 2014-2023 | EJTTF Also the regions being slightly rural can act as deterrent for some customers. While Ryanair was better hedged its fuel expenses raised 560% versus Registered address: Gabriela Narutowicza Street, No. 14, no. Customers have appreciated this strategy by increasing ticket sales (Kew & Stredwick 2005). However, both companies have unique internal strategies that differentiate their services beyond the low-cost model. PESTEL analysis provides different reports depending on whether the analysis is done in domestic or international arenas. 79% and 8. IvyPanda, 18 Feb. 2023, ivypanda.com/essays/ryanair-vs-easyjet-corporate-and-competitive-strategy-analysis/. 8-9). EASYJET Meanwhile, easyJet's aforementioned free bag dimensions yield a volume of 32.4 liters, representing over 60% more capacity. easyJet Ryanair, EasyJet Make Progress on Pandemic Recovery Expansion 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. 81%, 7. Dowling, T. 2010, Ryanair v easyJet. Ryanair and easyJet Case Study Ryanair is currently looking at operating 5% more flights this December than it did in 2019, though this may still change. -PDF- For example, in 2014, both organisations reported increased passenger numbers (Wallach 2015). Key To meet the demand, management focuses on maintaining enough flights every day. Finally, EasyJet must convince people that it is the safest mode of air travel at lowest cost. Analysis of the financial results reported by both airlines shows that However, in 2013 and 2014, EasyJet posted a 5.94% and 3.39% reduction Customer satisfaction is another element that this company keeps track of by measuring it online or by passenger surveys. Ryanairs operating expenses have increased by 43% from 2010 to 2012 and EasyJets by 27%. Another key aspect of its strategic competence was high aircraft use (Thompson 2005). Ryanair Corporate Strategy Vs. easyJet: Competitive Strategy Analysis (Compare & Contrast Essay). Figure 38 days sales uncollected development an - Course Hero Of importance, the company lacked a service advantage that would back up its cost advantage (Thompson 2005). easyJet 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. In March 1998, EasyJet acquired 40% of Swiss charter operation, TEA Basel AG after which EasyJet was renamed as EasyJet Switzerland. -7). While easyJet was a profitable business prior to the pandemic, it hasnt been profitable since. 58 to 6. Very typically, these companies also tend to suffer when economies are in a high employment phase. One common economic factor that affects a low fare airline like Ryanair is overbooking by customers and their compensation later on. The sale of the aircraft will generate 206m ($255m) of liquidity to strengthen easyJet's financial position. 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.