Ryanair has had no air accidents with casualties till date. However, the airlines employ the smallest number of people to meet the least regulatory requirement stipulated in the aviation sector (Malighetti et al. 14 over the three years and where as in case of Ryanair, this ratio has improved from 0. 3 billion in the year 2012. To ensure low cost maintenance of aircrafts it is essential that EasyJet and Ryanair adopt latest technologies. 2006). Equity ratio for EasyJet has marginally increased in 2012 compared to the previous year and similarly for Ryanair in 2013. 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. Other airline companies, such as Ryanair, also discovered similar opportunities by leveraging their competitive advantage through the adoption of a low-cost strategy. Natural calamities and also human events like flight accidents and terrorist attacks can drastically reduce flight demand as mode of travel. 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). 2006). In case of potential new entrant in the low fare segment, the strategy adopted by EasyJet and Ryanair thwarts competitions and renders entry of new companies financially unviable. The primary goal of Ryanair is to achieve the status of being the biggest scheduled passenger airline in Europe. This specially affects aviation industry as people tend to spend on traveling more. They have caught the fancy of those people (in the low-to-middle income bracket) who have found air travel through these low fare airlines as an alternative to other modes of travel road and railways. This way, it became profitable in an overcrowded industry. 97-102). WebRyanair in comparison charges 115 if its done online, and a whopping 160 if you only There are various political factors that can affect the performance of the company and are needed to be assessed before making any expansion plans. Gearing ratio assesses the companys financial position in the long run. But EasyJet does not compromise on airport facilities and uses the expensive services of primary airports. This in turn helps them to keep the fare down and become competitive. 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. easyJet However, to get a correct understanding of this assessment, this paper demonstrates how both companies create value for their shareholders and reveals the strategic choices pursued by both organisations. In this regard, both companies have gained the reputation of being the biggest low-cost airlines in Europe (Wallach 2015). easyJet 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. Comparative Financial Analysis of Easyjet & Ryanair - GraduateWay ensure the integrity of our platform while keeping your private information safe. Pharapreising and interpretation due to major educational standards released by a particular educational institution as well as tailored to your educational institution if different; Political Since Ryanair has its base in both European Union (EU) and Ireland, it is regulated by authorities both in the Ireland and the EU e. . Ryanair's operating profit grew by 40% to EUR1,460 million, and revenue increased by 16% to EUR6,536 million. The increased seating leaves very little leg room for a relaxed travel. Both EasyJet and Ryanair have shown a reducing trend from 2010 to 2012. Choose skilled expert on your subject and get original paper with free plagiarism 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). Of importance, experts say the European low-cost airline sector is more brutal for low-cost airline companies than the American market because both markets have different structures (CAPA 2014). 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). It is a key matter for EasyJet. This makes EasyJet second best low fare airline in Europe after Ryanair in terms of cost. April 1, 2022. However, in absolute terms the net worth has grown from Euro 2. Meanwhile, easyJet's aforementioned free bag dimensions yield a volume of 32.4 liters, representing over 60% more capacity. Over the last four quarters, easyJet's revenue has decreased by 48.8%. 59% for years 2010, 2011 and 2012. O. P. of Ryanair has increased by 70% between the same period 2010 to 2012, and N. P. has increased by 84%. 18 February. Ryanair, EasyJet Make Progress on Pandemic Recovery Expansion Ryanair Even with these adjustments, the company has still increased its passenger numbers and remained profitable for a long time. This is because globalization has enhanced alliance between nations for trade, technology, labor etc. While easyJet was a profitable business prior to the pandemic, it hasnt been profitable since. Ryanairs working capital needs as a percentage of total assets has been consistently around the 15% mark whereas for EasyJet it has been 5. It contains thousands of paper examples on a wide variety of topics, all donated by helpful students. Customers have appreciated this strategy by increasing ticket sales (Kew & Stredwick 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. For a long time, Easyjet has branded itself as a committed airline that strives to optimise customer experience, always. 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. Freire, A. EasyJet cabin staff in Portugal plan early April strike over pay : More Must read. The fuel, administrative and engine maintenance costs are declined. 3.10 Peer 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. Since the company has succeeded by adopting this strategy, it has proved that a differentiated market strategy is still vulnerable to competition. A low working capital means, less amount of non-current liabilities are utilized to finance the current assets. 76%. While this brings in new people who can afford to fly, the low fare airlines tends to lose travelers to full fare airlines whose preferences shift to experience greater comfort while flying. The paper will explain the summary of the company including its business activities, along with the management accounting information that helps managers of business. Comparing the 5 elements of Balance sheet of both the airlines, it can be observed that asset management has been good in both the companies. WebEasyjet's operating profit margins declined sharply, reaching only 3.85% from 10.16% The unstable political scenario in the Middle East is in a perpetual war like condition. (2023) 'Ryanair Corporate Strategy Vs. easyJet: Competitive Strategy Analysis (Compare & Contrast Essay)'. 126 the perceived close relationship between total - Course Hero "Ryanair Corporate Strategy Vs. easyJet: Competitive Strategy Analysis (Compare & Contrast Essay)." Easyjet flies to Charles de Gaulle Airport and Orly Airport (two main airports in the city) (Thompson 2005). This compare & contrast essay on Ryanair Corporate Strategy Vs. easyJet: Competitive Strategy Analysis (Compare & Contrast Essay) was written and submitted by your fellow to help you write a unique paper. 22%, 10. However, both companies have unique internal strategies that differentiate their services beyond the low-cost model. (2023, February 18). Such competitions set limitations to EasyJets pricing policies on less revenue routes. 40, loc. All these along with various functional problems presented immense challenge to the performance level of EasyJet. The net worth as a percentage of total assets for the years 2010, 2011 and 2012 have been 37. Governments can also put restrictions on mergers and acquisitions. You may use it as a guide or sample for Price-Earnings ratio Price-Earnings ratio is an important analysis for investors because it shows how much investors are willing to pay for each unit of profit of the company. In line with this low-cost strategy is a simplified pricing structure. Within this space, Ryanair and Easyjet are the two biggest low-cost airlines in the region (Elderman 2014; Dowling 2010). Ryanair also severely lacks in customer service since one cannot contact the airline through phone or e-mail except for booking purposes. Moreover, governments are also planning to restrict expansion of aviation industry in order to protect the environment. (2006), the relative success, or failure, of low-cost airlines lies in two factors cost leadership and differentiation. requirements? WebEasyJet 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. EasyJet and Ryanair Financial Analysis | SpeedyPaper.com Their endeavor to cut costs also result in doing way with personal one-to-one interface with customers. As far as information technology goes Ryanair operates a multi-featured website for selling flight tickets.