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. Through its no-frills strategy, Ryanair discovered that it could be profitable by working 24 hours a day and keeping its aeroplanes in the air often (Dobruszkes 2006). Its high seat density arrangements on board allow optimum use of aircrafts. Focus on low-fare operations was initiated in the early 1990s by a new team of directors in the board. EASYJET PLC : Forcasts, revenue, earnings, analysts expectations, ratios for EASYJET PLC Stock | EZJ | GB00B7KR2P84 . By continuing well In doing so, the company saves upon expensive sources of capital to finance low earning current assets. IvyPanda. We will write a custom Case Study on Ryanair and EasyJet Firms Strategies specifically for you. Its strategy was to steal customers from dominant players in the airline industry by offering lower ticket prices compared to its rivals. Secondly, trade unions are creating problems all over Europe with their increasing demands. Complementing its direct sales strategy is the paperless booking model. "Ryanair Corporate Strategy Vs. easyJet: Competitive Strategy Analysis (Compare & Contrast Essay)." The fuel, administrative and engine maintenance costs are declined. A low working capital means, less amount of non-current liabilities are utilized to finance the current assets. 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. Half of its seating capacity is in such facilities. easyJet financial profile is strong, leaving capacity for taking on further debt, it has a strong working capital, and an attractive current ratio 169. Nonetheless, Ryanair commands a stronger market share than Easyjet does. WebeasyJet's revenue is the ranked 7th among it's top 10 competitors. Ryanair is not much affected by buyers bargaining power since airline customers are scattered throughout Europe and no single customer makes bulk purchase of airline tickets. Financial Analysis Ryanair, EasyJet Make Progress on Pandemic Recovery Expansion 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. Dobruszkes, F. 2006, An analysis of European low-cost airlines and their networks, Journal of Transport Geography, vol. Web1617 Words7 Pages. match. Ryanair is currently looking at operating 5% more flights this December than it did in 2019, though this may still change. (2023, February 18). 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. This makes EasyJet second best low fare airline in Europe after Ryanair. Figure One: Position of Easyjet and Ryanair in the global low-cost airline market (Source: Elderman 2014). EasyJet cabin staff in Portugal plan early April strike over pay : More Must read. Headquarter of the company is situated at Dublin Airport. These operational strategies have created immense benefits for the two airlines, including optimizing airline use and increasing airline turnaround frequencies. Elderman, H. 2014, EasyJet Vs. Ryanair: The Curious Case Of 2 Budget Airlines. Its strength lies in reducing cost of activities on board. 1%, 7. Need a custom Compare & Contrast Essay sample written from scratch by , Department of Transport, the Irish Aviation Association, the European Commission and the European Aviation Safety Agency. easyJet Ryanair vs The purpose is to build a low-carbon European economy (Mayer, 2007, pp. The policy of no refunds also irks customers who miss flights for genuine reasons. 2006). But EasyJet does not compromise on airport facilities and uses the expensive services of primary airports. Management Accounting Practices of the easyJet plc. CAPA 2014, EasyJet: more aircraft come in as more cash to shareholders goes out. It also realised that its low-cost pricing strategy could not sustain its business because the margins made from such a strategy were low (Malighetti et al. 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. To cope with these challenges, both airlines have one dominant strategy that hinges on three factors low costs of operations, low fares, and low frills. EASYJET EasyJet keeps constantly looking out for opportunities that help increase its operations, lower its cost and improve profitability in European short-haul aviation. In their 2021 fiscal year, EasyJet's revenue continued to decline, Ryanair However, the company changed this strategy after realising it needed a differentiation strategy that would set it apart from its competitors. Therefore, both airlines strive to minimise their operating costs by cutting expenses such as salaries and fuel costs. 500 Edward Russell. Ryanair V.S. Easyjet: Strategy Analysis and Competition This is because people tend to lose confidence over low fare airlines regarding their security system. Easyjet is Ryanairs main rival. Because of its brand name, Ryanair also acts as barrier for new entrants in the European aviation industry. 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). 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. (Doc) Financial Analysis for Ryanair and Easyjet easyJet PLC has a consensus rating of Hold with an average target price of 12.42. Both airlines have perfected this strategy by introducing new price reduction measures, such as paperless booking. The rate of unemployment in Europe is very high which means a major portion of European population cannot afford to travel by air. 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). Economic The growing rate of employment increases the spending capacity of people with more money at disposal. For example, Easyjet has maximised its productivity by operating in airports where it enjoys market leadership (CAPA 2014). EasyJet and Ryanair have differences within their strategies. 40, loc. easyJet CEO Johan Lundgren concerned about reliability . 79% and 8. 53-54,58). This is because globalization has enhanced alliance between nations for trade, technology, labor etc. Aviation industry is largely ruled by political, economical, environmental and technological frameworks. April 1, 2022. EasyJets net profit (after tax) has been 6. ensure the integrity of our platform while keeping your private information safe. Ryanair is alert to any technological development and strives to embrace new processes to enhance service efficiency. Need a custom essay sample written specially to meet your EasyJet and Ryanair Financial Analysis | SpeedyPaper.com 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. easyJet vs Ryanair vs 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. 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). WebFor Easyjet Group, it is worth a lot more than Ryanair, both in terms of assets owned These destinations spread across 29 different countries in the region. Since the company has succeeded by adopting this strategy, it has proved that a differentiated market strategy is still vulnerable to competition. This makes EasyJet the second best low fare airline in Europe, second to Ryanair. Comparative Financial Analysis of Easyjet & Ryanair - GraduateWay 84-85). It provides a common size comparison between different organizations with regard to their respective individual performances. The paper will explain the summary of the company including its business activities, along with the management accounting information that helps managers of business. Analysis of the financial results reported by both airlines shows that Researchers say when the airline adopted this strategy, it succeeded because it was a blue ocean strategy no other airline had adopted this strategy before (Ryans 2009). 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. Wallach, B. 1 PESTEL Analysis for EasyJet Ltd. By managing and controlling competition in the sector, both Ryanair and Easyjet have generated superior values for their investors. (Sorenson, 2005, p. 56) Threat of substitutes Unlike other industries, this factor is less applicable in aviation industry. On the liabilities side, the non-current liabilities have fallen by 14% over 2010 levels and where as the current liabilities have registered a growth of 19% during the similar period. 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. According to Malighetti et al. Easy entry of new airlines and restriction of monopolization of airports can pose stiff competition for EasyJet and Ryanair. However, because it could not protect this strategic approach from duplication by other airline companies, it lost a significant market share to other companies, such as Easyjet. Sull, D. 1999, Case Study: easyJets $500 Million Gamble, European Management Journal, vol. Although this is a strategy for keeping fares low by cutting cost, people are denied extra service value and this may affect the demand pattern of Ryanair flights. 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. 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). With rising employment, the purchasing power of people also improves. To maintain competitiveness in the market, EasyJet needs to keep an eye on the technological upgrades with regard to aircraft manufacturing. Ryanair Corporate Strategy Vs. easyJet: Competitive However, a closer scrutiny of the working capital level of the two airlines reveal a different a scenario as opposed to the popular belief of Ryanair being the better managed airline of the two. Ryanairs operating expenses have increased by 43% from 2010 to 2012 and EasyJets by 27%. In this regard, both companies have gained the reputation of being the biggest low-cost airlines in Europe (Wallach 2015). Short distance routes are also limited to low-cost airlines because European Union (EU) policies favour train services as opposed to airline services (Air France 2011). February 18, 2023. https://ivypanda.com/essays/ryanair-vs-easyjet-corporate-and-competitive-strategy-analysis/. Ryanair After realising these strategic weaknesses, the company decided to introduce an outside perspective on its business model by creating superior value for its customers. Web. Evidence of this fact emerges in Paris as a common destination for both airlines. 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 first ever flight of this company had its route from Luton to Edinburgh and Glasgow. In this measure, EasyJet is less geared as compared to Ryanair. Customers have appreciated this strategy by increasing ticket sales (Kew & Stredwick 2005). According to the diagram above, other low-cost airlines command only 29% of the market, while Ryanair and Easyjet dominate the rest of the market. "Ryanair Corporate Strategy Vs. easyJet: Competitive Strategy Analysis (Compare & Contrast Essay)." EASYJET to help you write a unique paper. In doing so, a company tends to improve its earnings per share (EPS).
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