FINANCIAL ANALYSIS

Ratio Analysis and Comparison of Ryan Air and Easy Jet from 2007-2011



Ratio Analysis and Comparison of Ryan Air and Easy Jet from 2007-2011

Introduction

This paper presents a financial comparison of Ryan Air and Easy Jet Plc for the five years period. Both companies have gone through major financial changes based on the changes in the market structure and consumer preferences. This report presents a financial analysis of both companies using financial information of past five years.

Easy Jet - Company Overview

Easy Jet Airlines was formed in 2000 as a private airline company of United Kingdom. The three core businesses of Easy Jet Airlines are passenger transport, cargo transport and aircraft maintenance services. Passenger transport is the group's main business, accounting for 77.5% of total sales in the fiscal 2009-10 year. The two carriers operate independently from hubs in Luton, United Kingdom, but draw on existing synergies from their combined operations both as sister companies and as members of the marketing and code-sharing alliance. Easy Jet Plus was formed in 2000, and currently has 10 member airlines and three associate airlines offering flights to 885 destinations in 169 countries. It is the world's second-largest alliance, behind Star Alliance (Data Monitor, 2012a).

Passenger transport is the main revenue generator for Easy Jet, decreasing slightly from 79.2% of sales in 2004-05. The slower growth in passenger revenue is mostly due to an increase in fees and charges such as excess baggage and cancellation fees. Cargo constituted 11.6% of company revenue during 2009-10, followed by maintenance at 4.6%. Cargo sales have declined significantly from 13.1% of revenue in 2004-05, mainly because of a drop in demand since 2008 (Data Monitor, 2012a).

Ryan Air - Company Overview

The Irish company, Ryanair, is a low-fare airline company in Europe. Started in 1985, Ryanair went public in 1997 with an Initial Public Offering (IPO) when it floated Ryanair Holdings, PLC on the Dublin and on the New York (NASDAQ) Stock exchanges. In 1997, executives stated goals were for the Ryanair to become Europe's largest airline by 2005, eight years from the IPO. Ryanair currently operates 950 routes across 11 European countries and in the North African country of Morrocco. The company offers daily services on routes in these countries (Data Monitor, 2012b).

Over the past ten years, Ryanair has increased its annual traffic from under 700,000 to over 15 million passengers. In accomplishing this passenger traffic growth, Ryanair changed the face of air travel, broke higher fare cartels, rocked airport monopolies and made it possible for millions to travel at deeply discounted prices (Data Monitor, 2012b). Ryanair provide unique services with low price. Like Southwest Airlines, Ryanair uses a version of open seating, where in when seats are not booked, customers may sit in any open seat in the cabin. However, like Southwest Airlines. Ryan air's in-flight services are strictly limited. For example, customers have to for drinks or food (Data Monitor, 2012b).

The 2009 calendar year was the first full year of combined revenue and has seen a very ...