FINANCIAL ANALYSIS: RYANAIR V EASYJET

Financial Analysis: Ryanair V Easyjet

Financial Analysis: Ryanair V Easyjet

Executive Summary

This paper attempts to compare and contrast the financial performance of Ryanair and Easyjet. This paper will prepare an analysis of the financial performance and position of Easyjet plc in comparison with that of Ryanair plc. Basically, this is an strategic performance appraisal using CORE analysis. This paper will end up with certain recommendations to both Ryanair and Easyjet.

Introduction

EasyJet has seen rapid expansion since its establishment in 1995, having grown through a combination of acquisitions and base openings fuelled by consumer demand for low-cost air travel. The airline, along with franchise airline EasyJet Switzerland, now operates over 180 aircraft, mostly Airbus A319. It has 20 bases across Europe, the most important one being London-Gatwick. In 2009, EasyJet carried 45.2 million passengers and is the second-largest low-cost carrier in Europe, behind Ryanair.

Analysis

Context

Ryanair now has a number of low-cost competitors. In 2004, approximately 60 new low-cost airlines were formed. Although traditionally a full-service airline, Aer Lingus moved to a low-fares strategy from 2002, leading to a much more intense competition with Ryanair on Irish routes.

In September 2004, Ryanair's biggest competitor, EasyJet, announced routes to the Republic of Ireland for the first time, beginning with the Cork to London Gatwick route. Until then, easyJet had never competed directly with Ryanair on its home ground. Easyjet announced in July 2006, that it was withdrawing its Gatwick-Cork, Gatwick-Shannon and Gatwick-Knock services; within two weeks, Ryanair also announced it would withdraw its own service on the Gatwick-Knock and Luton-Shannon routes.

EasyJet has seen rapid expansion since its establishment in 1995, having grown through a combination of acquisitions and base openings fuelled by consumer demand for low-cost air travel. The airline, along with franchise airline EasyJet Switzerland, now operates over 180 aircraft, mostly Airbus A319. It has 20 bases across Europe, the most important one being London-Gatwick. In 2009, EasyJet carried 45.2 million passengers and is the second-largest low-cost carrier in Europe, behind Ryanair.

 Overview

Ryanair is an Irish low cost airline with its head office at Dublin Airport, Ireland, and with primary operational bases at Dublin Airport and London Stansted Airport. Ryanair operates over 230 Boeing 737-800 aircraft on over 1,100 routes across Europe and Morocco from over 41 bases. The airline has been characterised by rapid expansion, a result of the deregulation of the air industry in Europe in 1997 and the success of its low cost business model. Ryanair is Europe's largest low-cost carrier, the 3rd largest airline in Europe in terms of passenger numbers and the largest in the world in terms of international passenger numbers.

EasyJet Airline Company Limited is a British airline headquartered at London Luton Airport. It carries more passengers than any other United Kingdom-based airline, operating domestic and international scheduled services on 500 routes between 118 European, North African, and West Asian airports. The parent company, EasyJet plc, is listed on the London Stock Exchange (LSE: EZJ) and is a constituent of the FTSE 250 ...