Ryanair and easyJet Case Study

It is important to examine Easyjet’s strategy due to the changing financial climate in the UK and Europe such as the 2008/9 recession and Brexit.

This report illustrates an in-depth look of easyJet and will also discuss an analytic research that was made to demonstrate aspects of the history of the airline, along with the marketing strategy and brand strategy used and implemented by the low-budget airline. The strengths, weaknesses, opportunities and threats, known as SWOT analysis, will also be illustrated along with the external environment better known as PEST analysis which consists of the political, environmental, social/cultural and technology factors of easyJet. In addition an analysis of the competitive market environment of easyJet will be shown, which includes an overview of easyJet’s main competitors and the nature of business in which they operate

Ryanair was established in the year 1985 by the RYAN family and has grown from a small airline flying a short hop from Waterford to London, into one of the Europe’s largest carriers. The company expanded and within 4 years it had 350 employees, 14 aircraft, and carried 600,000 passengers a year. It is currently serving to 26 European Countries with 148 destinations. It operates on 794 different routes daily serving by more than 1050 flights in a day. It has totally 169 aircrafts running for different routes with 5986number of employees working in it However, Ryanair’s costs rose drastically and it recorded losses of £20 Million sover four years despite its growth. Although consumers were continuing to fly Ryanair

Financial statements paint a picture of financial health of an organization. Important aspects of the financial statement of a health care organization are ratios. Analysis of ratios show how two numbers relate or compare to one another. Ratios are a way for organizations to make comparison. These comparisons not only encompass what is happening presently but can also be used to make comparisons about numbers and ratios over time. Ratios are a way for organizations to compare themselves with competitors and the industry. (Finkler, Kovner, and Jones, 2007). There are four major ratios that financial statements analyze 1) liquidity 2) activity 3) leverage and 4) profitability. The financial statement for Mayo Health System

Ratio analysis is a very useful tool when it comes to understanding the performance of the company. It highlights the strengths and the weaknesses of the company and pinpoints to the mangers and their subordinates as to which area of the company requires their attention be it prompt or gradual. The return on shareholder’s fund gives an estimate of the amount of profit available to be shared amongst the ordinary shareholders; where as the return on capital employed measures an organization 's profitability and the productivity with which its capital is utilized. Return on total assets is a profitability ratio that measures the net income created by total assets amid a period.

The essay will firstly introduce the organisation easyJet. Secondly the essay will explain about how easyJet uses its operation strategies and its competitive priorities. Finally the essay will discuss the most important operation decision and explain it further in detail. easyJet is a well known low-cost airline which operates in several European countries and has been founded by serial entrepreneur Sir Stelios Haji-Ioannou in 1995. easyJet undertook intensive research of a United States owned low-cost airline ‘Southwest Airline’. Most of the concepts for easyJet were adopted from Southwest airline; however easyJet added its own touch which reduced operating costs even further. EasyJet was strategically located at London's Luton airport.

Loth, R. (2014, January 1). Financial Ratio Tutorial. Retrieved February 15, 2014, from Investopedia: http://www.investo

Investors are risk averse and want to be sure that they will get back value for their money from a company. The ratio analyses the business’s ability to pay interest expense i.e. how many times the company’s earnings can cover interest costs. The higher the ratio, the better the company’s liquidity. Use of financial leverage has been known to lead to bankruptcy of companies hence the need to ensure that a business can pay back financing costs before making an investment.

Ratios describe the various relationships among accounts in the balance sheet and income statement. Financial ratios are important and helpful gauges of how an organization is functioning. An organization’s financial health, potential revenue, and even possible bankruptcy can be garnered from financial ratios. Information derived from financial statements is used to calculate most ratios and make projections. “Ratios help investors and lenders determine the risk associated with lending or investing funds in an organization” (GE Financial Healthcare Services, 2003, para 1). According to Finkler and Ward (2006), “the key to interpretation of ratios is benchmarks. Without a basis for comparison, it is

Ryanair is one of the largest airlines in terms of passenger numbers (REF) and has continuously grown in size and value over time as shown above. The extent of such an expanding firm is conveyed over the last eight years as Ryanair’s profits have more than quadrupled. However, there have been drops in profits in 2004 and 2008. In 2004, the airline was hugely affected by the conflicts in Iraq, the renewed threat of terrorism and endless increasing oil prices. However, in this same period, Ryanair managed to launch new bases in Rome and Barcelona, launch 73 new routes, takeover their competitor Buzz for a knock-down price and carry more passengers than BA in the European market. The reason for the decrease in profits in 2008 was due to increases in fuel prices and significantly increased airport charges, particularly at their largest bases at Stansted and Dublin.

When looking at the financial performance of a company, it is important to examine the financial ratios. There are several different classifications of financial ratios. Profitability ratios show the profitability of the company. Liquidity ratios deal with the current assets and current liabilities of the company, and they determine how the company is performing with their liquid finances. Leverage ratios deal with the company’s debt, and how they affect performance. Activity ratios deal with a company’s inventory and collection period, determining how well a company is able to turn over inventory and collect debts. The other important measures of financial performance include information on dividends, common stock, and cash flows (**Use

Review of Ryanair’s and British Airway’s current financial situation ........................................................ 2 Liquidity ..................................................................................................................................................... 2 Performance and earning .......................................................................................................................... 3 Solvency..................................................................................................................................................... 3

A pioneer in European discount air travel, Ryanair Holdings offers low-fare, no-frills air transportation via its main subsidiary, Ryanair. The carrier flies to about 160 destinations, including more than two dozen in Ireland and the UK; overall, it serves more than 25 countries throughout Europe, plus Morocco. Ryanair specializes in short-haul routes between secondary and regional airports. It operates from more than 40 bases, including airports in Belgium, France, Germany, Italy, Spain, and Sweden, as well as in Ireland and the UK. The carrier maintains a fleet of about 270 Boeing 737-800s. Ryanair holds a 29% stake in Aer Lingus and has launched several unsuccessful bids

Easyjet’s main competitors in the market are legacy carriers: Air France KLM, IAG, Alitalia, Lufthansa Group and Air Berlin. The main structural advantages of the company against legacies are: seat density, load factors, fleet, point to point vs. feeder, pensions/ crew costs and overheads. As opposed to Easyjet, the legacy has to charge the double amount of Easyjet fare to get same revenue for the aircraft. The cost advantage and the ability to offer affordable fares to the customers helps Easyjet to grow further taking shares from the legacies and generate higher levels of profits. During one year, to September 30, 2014 the number of European short haul seats was increased by 4.3% and by 3% on Easyjet markets. Besides, Easyjet was ahead in the market by seat growth of 5.1% in the 2014 financial year, which was a result of short-haul European fleets and GDP growth. The advantages of Easyjet against lower-cost competitors is important to mention the strength of the network, including market presence and Pan-European network, strong balance sheet, scale and purchasing power, easyjet.com

Almost three decades ago, in July 1985, three brothers, Catlan, Declan, and Shane Ryan founded Ryanair airlines in the southeast of Ireland. Little did they know, it would become one of the most successful low- cost airlines in the whole industry. It started with just one leased fifteen seater plane that flew from Ireland to London’s Gatwick airport of which their father, Tony Ryan was the chairman. After the government deregulated air traffic to England, Ryanair got the license to operate from Dublin to London. At the end of that year, the airline had flown 5,000 passengers already. By the following year, it quickly started expanding with the purchase of two bigger but older planes. Since the very beginning the company maintained a low-cost strategy. They managed to provide fares that were 20% lower than what its main competitors were offering.