J99866

TITLE OF WORK: ANALYSING THE FINANCIAL AND NON-FINANCIAL

PERFORMANCE OF EASY JET PLC

MODULE TITLE: STRATEGIC FINANCIAL MANAGEMENT

MODULE CODE: BU7006

MODULE LEADER: DR MUHAMMAD SANUSI

ASSESSMENT NO: J99866

WORD COUNT: FIVE THOUSAND AND NINTY WORDS

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TABLE OF CONTENTS

Title Page I

Table of Content II

Abstract III

1. Introduction 1

2. Ratio Analysis 2

2.1 Profitability Ratios 2-4

2.2 Liquidity Ratios 5-6

2.3 Efficiency Ratios 6-8

2.4 Investor Ratios 8-9

3. Pestel Analysis 10-12

4. SWOT Analysis 12-13

5. Competitive Analysis 14-15

6. Conclusion and Recommendation 16-17

References

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Abstract
The report analyzed the financial and non-financial performance of Easy Jet Plc over a five-
year period (2017 – 2021) using Porter’s five Forces model, qualitative analysis tools like
PESTEL, SWOT analysis and ratios to measure the performance of the company. The
methods of analysis to be used would further address the challenges while identifying
potential viable opportunities that could be advantageous to the company on a larger scale.

Easy Jet, within the last five years, recorded increases in its revenue and net income with
between 2017 and 2019. However, these increases were short-lived by the impact of COVID-
19 which generally affected the airline industry thereby depleting the overall financial
performance of the company as seen in the ratios computed for the years 2020 and 2021
with losses being recorded. The company kept its liquidity position favorable to at least,
meet its obligation in 2021 after the ease of the COVID-19 protocols but its investors were
unable to get anything on their investments after 2019

Despite Easy Jet’s performance, the company’s PESTEL, SWOT and External environment was
well positioned and identifiable by many strengths and opportunities to grow as well as
weaknesses and threats that the company needs better strategy to address.

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1. INTRODUCTION

The Airline industry is seen as a vital industry in the world today. The industry is
characterized as the biggest player in the business of connecting countries, harmonizing
global trade, facilitating economic development as well as social development. However,
globalization has influenced the profitability of the airline industry in Europe and world at
large.

Airline industry is a large and tremendously flourishing industry across the globe.
Globalization on the other hand is described as the incorporation world’s economies,
culture and societies brought about by the flow technology and exchange of goods and
services. Globalization impacts economic development, global investment as well as world
trade which are driven as well by aviation industry advancement.

Easy Jet, located in London Luton airport, UK is a British airline company that operates both
domestic and international routes. Easy Jet was founded in 1995 and overtime has
established presence in over 30 countries worldwide through its partners such as Easy Jet
Switzerland and Easy Jet Europe.

Information as at September 2019 reported that Easy Jet operated over a thousand routes,
with a fleet of more than 331 Airbus aircraft, 159 airports and 96 million clients across 34
countries. The airline is as of today the second-largest budget airline in the whole of Europe
based on passenger headcount and the seventh-largest airline in the world. The company
has fifteen thousand (15,000) employees as per early 2020 records from across seven
countries in Europe on local contracts (Easy Jet annual report 2019).

Worthy of mention is the COVID-19 pandemic which resulted in an unplanned crisis thereby
negatively impacting the airline industry in 2019-2020(Dunn, 2020a). During the pandemic,
governments of various countries compulsorily placed a ban on all travels, initiated a
lockdown that would go on for several months resulting in a shutdown of several business
activities to enforce social distancing. This was to prevent the further spread of the virus
which plagued the entire world and to mostly safeguard the national healthcare system.

The travel and hospitality industry in general and airlines in particular, are in dire straits:
more than 60 percent of the world's commercial aircraft have been grounded (Hollinger,
2020).

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This report aims to critically assess the financial and non-financial performance of Easy Jet
Plc over the last five years, using financial ratios, PESTLE model/analysis and SWOT
model/analysis to measure how Easy Jet Plc has performed over the years under review and
how this result will assist Easy Jet in assessing its growth strategies which will invariably
expand the company.

2. RATIO ANALYSIS

2.1 Profitability Ratios

This assesses the capability of companies to generate earnings from equity, sales/operations
and the utilization of the company’s assets. (Atrill and McLaney, 2019).

Key profitability ratios have been computed below to aid this analysis;

Ratio 2021’m 2020’m 2019’m 2018’m 2017’m

Gross Profit Margin

Gross Profit £( 183) £ 236 £ 1549 £ 1436 £ 733

∗100 ∗100=−13 % ∗100=8 % ∗100=24 % ∗100=24 % ∗100=15 %
Revenue £ 1,458 £ 3,009 £ 6,385 £ 5,898 £ 5,047

Operating Profit Margin

Operating Profit
∗100
Revenue
£( 910) £( 899) £ 466 £ 463 £ 404
∗100=−62 % ∗100=−30 % ∗100=7 % ∗100=7.8 % ∗100=8 %
£ 1,458 £ 3,009 £ 6,385 £ 5,898 £ 5047

Return on Capital
Employed
£ (1036) £ (1273) £ 430 £ 495 £ 385
∗ 100=−13 % ∗100=−27 % ∗100=7 % ∗100=9 % ∗ 100=8 %
£ 7906 £ 4,647 £ 5,495 £ 5,261 £ 4,301
PBIT (i)
∗100
Capital employed (ii)

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Return on Equity
£( 858) £ (1079) £ 349 £ 358 £ 305
Profit after Tax ∗100=−32.5 % ∗100=−56.8 %∗100=11.7 % ∗100=11.7 % ∗100=10.6 %
∗ 100 £ 2,639 £ 1,899 £ 2,985 £ 3,233 £ 2802
Equity

2.1.1 Gross Profit Margin

This measure of profitability considers revenue from sales of goods or services rendered
taking into account the costs incurred in earning that revenue. (Atrill and McLaney, 2019).

Easy Jet Plc averages a margin of 58% for the five year review which depicts management of
the cost of sales along with revenue. Although, the gross profit margin has been fluctuating
over the years until it reached a negative 13% as a result of the loss recorded in 2021. This
was also recorded by one of the company’s major competitors, Ryanair Holdings which
recorded a 51% loss in the same year while the industry averaged a 23.96% gross margin
through the 5years under consideration although a fluctuating margin was experienced as
well. Furthermore, Easy Jet Plc’s revenue dropped by 71% through the course of the years
under consideration while its operating expenses only dropped by 62%, a drop witnessed by
Ryanair Holdings as well.

2.1.2 Operating Profit Margin

A measure of how much an entity makes on its sales after deducting interests and tax
(corporate finance institute, 2022a).

Easy Jet Plc profit before interest and tax margin reduced to 62% loss in 2021 from 8% in
2017. A decline in the margin was evident in the last five years. The decrease in the ratio
denotes an inefficient management and signifies that the management of the company
failed to utilize the funds in an optimum way (Manish, 2016).

2.1.3 Return on Capital Employed

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This ratio shows the efficiency of businesses in generating profit from the use of their
resources (equity and non-current liabilities) it controls. (Dyson and Franklin, 2017).

Easy Jet Plc (ROCE) witnessed a major reduction from 8% in 2017 to a 13% loss in 2021 on its
total investment in the business. This decline is because the capital employed by Easy Jet Plc
has significantly increased by 83% between 2017 and 2021 while it recorded a loss of 369%
over the 5 years under consideration from its operations. Also, revenue generated from the
capital employed has significantly declined up to a loss of £1,273million in 2020 and £1,036
million in 2021 which results to making less profit in comparison with the increased in
capital employed.

This trend was also seen in Ryan Air Holdings with a 2% reduction in capital employed
coupled with a 175% reduction in profit over the years. The resultant effect of the pandemic
is a major factor evident in the Airline industry drastically reducing the operational capacity
of the industry which led to a significant decline in revenue.

2.1.4 Return on Equity

The rate of return on money invested by shareholders into an entity. (Atrill and McLaney,
2019). ROE depleted from 10.6% in 2017 to a 32.5% loss in 2021. The company as seen in
the computation above tried to increase the ROE in 2018 to 11.7% and maintained the same
in 2019 but the advent of the pandemic in 2020 crushed its efforts as ROE was forced down
to 56.8% (loss). RyanAir holdings also increased the ROE to 32.4% in 2018 from 29.75% in
2017 but were able to even though with a decline, maintain a minimal return on its equity
(16.97% and 13.3% in 2019 and 2020 respectively). However, the loss recorded in 2021
created a downfall in its returns such that a loss of 21.84% was witnessed. This was
inevitable for both companies as a huge decline (loss) was recorded in the industry over the
5 years to the tune of 101.1%.

2.2 Liquidity Ratios

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The ratio shows the extent to which a business is able to pay its current financial obligations.
(Atrill and McLaney, 2019). It studies the bulk of cash businesses hold and how quickly it
can meet short-term obligations (Dyson and Franklin, 2017).

Ratio 2021’m 2020’m 2019’m 2018’m 2017’m

Current Ratio
£ 4,165 £ 2,563 £ 2,119 £ 2,001 £ 1,734
£ 2,667 £ 3,826 £ 2,668 £ 2,060 £ 1,670
Current Assets
Current Liabilities
¿ 1.56:1 ¿ 0.67 : 1 ¿ 0.79 :1 ¿ 0.97 : 1 ¿ 1.04 : 1

Cash Ratio £ 1,025 £ 711

£ 3,536 £ 2,284 £ 1,285 £ 2,060 £ 1,670
£ 2,667 £ 3,826 £ 2,668
Cash+ Cash Equivalents ¿ 1.33 ¿ 0.60 ¿ 0.50
Current Liabilities ¿ 0.5 0 ¿ 0.4

2.2.1 Current Ratio

The ratio depicts the capability of businesses to settle its short-term debts at the agreed
date. (Dyson and Franklin, 2017).

Easy Jet Plc liquidity has been declining through the years from 1.04 in 2017 to 0.67 in 2020
which shows a weak position of the company as the current ratio is less than 1 which is a
sign that meeting short-term obligations could pose a challenge (Bensoussan et al 2012)
through the years 2018 and 2020 (0.97 to 0.67) than it was in 2017 with 1.04:1 which was
because of increase in the company’s total current liabilities and borrowings over the years
at a higher rate than current assets. However, the company was able to cut back its
increasing current liabilities in 2021 from £3,826 million in 2020 to £2,667 million and a
substantial raise in cash and cash equivalents in 2021, and this raised the current ratio to
1.56. Hence, an efficient working capital management is evident (Brealey, Myers & Allen,
2008).

RyanAir Holdings on the other hand witnessed a downfall all through the years under
consideration from 1.56:1 in 2017 to 0.98:1 in 2021. This could be due to its fluctuating cash

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and cash equivalent which it couldn’t keep stable throughout the years considered while its
current liabilities increased in 2020 and 2021.

2.2.3 Cash Ratio

The Cash ratio indicates the ease with which a business can clear its current liabilities with
its cash and cash equivalents (corporate finance institute, 2022b).

Easy Jet Plc has a good standing through the years regarding paying up its current
obligations as at when due by increasing its cash ratio from 0.4 in 2017 to 1.33 in 2021
which was a result of its increasing cash and cash equivalents reported through the years.

Its competitor, RyanAir Holdings also witnessed the same increase although not as much as
Easy Jet Plc from 0.41 in 2017 to 0.75 in 2021. The same cause can be witnessed in the
company’s financial statement for the five years. The industry average also stood at 0.7
which is also the case seen from the companies in comparison.

2.3 Efficiency Ratios

A measure of how successfully the assets of a business are being managed in terms of
efficiency (Atrill and McLaney, 2019).

Ratio 2021’m 2020’m 2019’m 2018’m 2017’m

Receivables
Turnover Period
£ 44 £ 18 £ 79 £ 111 £ 95
∗365 ∗365 ∗365 ∗365 ∗ 365
£ 1,458 £ 3,009 £ 6,385 £ 5,898 £ 5,047
Trade Receivables
∗ 365
Revenue
¿ 11 Days ¿ 2 Days ¿ 5 Days ¿ 7 Days ¿ 7 Days

Payables Turnover
Period
£ 217 £ 323 £ 339 £ 329 £ 201
∗365=40 Days ∗365=36 Days ∗ 365=23 Days ∗365=24 Days ∗365=17
£ 1,961 £ 3,305 £ 5,444 £ 5,000 £ 4314
Trade Payables
∗365
Cost of Sales
Asset Turnover
£ 1,458 £ 3,009 £ 6,385 £ 5,898 £ 5,047
Revenue =0.44׿ =0.94׿ =1.75׿ =1.64׿ =1.59׿
£ 3,287 £ 3,168 £ 3,641 £ 3,593 £ 3,167
Capital Employed

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2.3.1 Receivables Turnover Period

The receivable turnover period measures the length of days it takes creditors to liquidate
their debts to the business (Atrill and McLaney, 2019).

The debtor’s turnover period for Easy Jet Plc was stable between 2017 and 2018 with 7
days. This depicts an efficient credit control policy. However, periods from 2019 to 2021
witnessed fluctuating turnover periods of 5 days in 2019, 3 days in 2020, and 11 days in
2021, which does not necessarily mean an inefficient credit policy. A drastic reduction in
total revenue witnessed in those periods could be a factor most especially Covid-19 which
affected its operations in 2020 reducing the company’s receivables to £18 million from £79
million. The opposite was the case for Ryan Air Holdings which increased its receivables
through the years from £54.3 million in 2017 to £67.5 million in 2020 before witnessing a
significant downturn to £18.6 million in 2021 with an average turnover period of 3 days
depicting an efficient credit policy.

2.3.2 Payables Turnover Period

It measures on average, the days it takes a business to pay off creditors for raw materials
sourced. (Atrill and McLaney, 2019).

The payables turnover period moved variably from 17 days in 2017 to 24 days in 2018, to 23
days in 2019, to 36 days in 2020, and 40 days in 2021.

2.3.3 Asset Turnover

Asset turnover measures how effectively a business can generate revenue from the
utilization of the assets it owns (Wood and Sangster, 2012).

The asset turnover of Easy Jet Plc’s total assets has declined from 1.2 times in 2017 to 0.2
times in 2021. This is largely as a result of increased capital employed growth by 84% and a

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246% revenue reduction. Easy Jet Plc came across a decline in the amount of revenue
generated from the use of its assets.

2.4 Investor Ratios

This indicates the performance of the share price of a company (Wood and Sangster, 2012).

Ratio 2021’m 2020’m 2019’m 2018’m 2017’m

Dividend Yield

Dividend Per Share £0 £0 £ 43.9 £ 58.6 £ 40.90

∗ 100 ∗100=0 % ∗100=0 % ∗ 100=4.5 % ∗100=5.7 % ∗100=
Market Price Per Share £ 703.8 £ 422.64 £ 978.3 £ 1053.65 £ 1061.23

Dividend Payout
Ratio

0p 0p 43.9 p 58.6 p 40.90 p

∗100=0 % ∗100=0 % ∗100=59% ∗100=59 % ∗100=5
Dividend Per Share
∗100−166.9 p −149.7 p 74.68 p 99.60 p 69.46 p
Earnings Per Share

Earnings Per Share

£ 349 £ 358 £ 305
£ (858) £ (1079) 397 397 397
=−1.13 p =−2.36 p
Profit After Tax 758 457
¿ 0.88 p ¿ 0. 90 p ¿ 0. 77 p
No of Ord . Shares∈issue
Price/Earnings Ratio
£ 703.8 £ 422.64 £ 978.30 £ 1053.65 £ 1061.23
Market Price Per Share £ −166.9 =− 4.22 £ −149.7 =− 2.82 £ 74.68 =13.1 £ 99.60 =10.58 £ 69.46 =15.3
Earnings Per Share
2.4.1 Dividend Yield

Dividend yield measures the percentage of the market share that is being paid to
shareholders as dividends within the same period. (Wood and Sangster, 2012).

Easy Jet Plc’s yield keeps fluctuating between 2017 and 2019. Also, a zero yield was noticed
in 2020 and 2021 because the company made losses for both years such that no dividend
was paid in those years.

2.4.2 Dividend Payout Ratio

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This examines the portion of an entity’s profit that is paid out to shareholders as dividends
sometime. (Atrill and McLaney, 2019).

Easy Jet Plc’s DPR for the years considered show that it has a policy of paying a 59% of its
earnings per share as a dividend between 2017 and 2019, this was not the case in 2020 and
2021 because it couldn’t pay dividend because of the losses made in both years.

2.4.3 Earnings per Share

The EPS indicate the portion of net earnings generated by the business over a period that
can be attributed to each ordinary share of the business (Wood and Sangster, 2012).

The shares of Easy Jet Plc remained static from 2017 to 2019 but its earnings per share
variably moved during the period which was largely caused by variations in earnings in those
period. Profit after tax increased in 2018 and fell in the following year. This further
worsened as it eventually fell to a loss in both 2020 and 2021.

2.4.4 Price/Earnings Ratio

The PE ratio of Easy Jet Plc has fluctuated over the years as well moving up and down in
2018 and 2019 respectively and kept dropping until its negative in both 2020 and 2021.

3. Easy Jet PLC PESTEL ANALYSIS

Political Factors that Impact Easy Jet Plc

The stability and strength of a country’s politics is a significant factor that affects the
positivity or otherwise of any business entity. Several political factors are seen to affect Easy
Jet’s business operations. Many business including Easy Jet Plc, suffered from the departure
of the UK from the European Union.

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In the case of Easy Jet, UK is a major shareholder and which has to be fixed and the better
part of it has to be included in the European Union to keep its business running smoothly. A
contingency plan existed however. in the EU to keep it viable as a business. They had a
contingency plan for this situation.

In France, a major strike action embarked upon by the people affected airline businesses like
Easy Jet resulting from the attempted rationalization of the pension policy by President
Macron in 2019.

Economic Factors that Impact Easy Jet Plc

Easy Jet’s business performance has been affected by some economic activities. Profit
margin tends to increase as the price of jet fuel which is an integral part of the aviation
industry operations drops globally (Flattou et al 2015). Easy Jet benefited from reduced
prices like others in the industry and profitability is affected so far the cost of fuel keeps
fluctuating from time to time.

Social Factors that Impact Easy Jet Plc

The budget airline has been assisted and largely supported by “generation Jones” for a
while. However, over recent years, social changes are being witnessed. The Millennial is
gradually owning the low-cost carries and are currently becoming the largest consumers.
The growth recorded by the low-cost carriers globally can be attributed to increasing in
millennial travelers (Boston Consulting Group, 2015). This means that soon, Easy Jet’s main
customers will be millennials, and the company needs to be prepared to meet their need.

Technological Factors that Impact Easy Jet Plc

In 2019, a feature on its mobile app was introduced to the market by Easy jet. The feature
was particularly included was believed to encourage inclusion and widen the range of users
on its mobile app. The target audience this time around was for visually impaired people to
enable them witness ease with booking flights.

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All that was needed by the feature was the voice of its user ordering it to book a flight to
whatever destination desired. It is also notable that the user-friendly app garnered awards
for how convenient the mobile app.

The use of drones enables the company to manage the time taken to carry out the
inspection of its fleet as well as the accuracy of the process.

A virtual reality technology for remote areas where the required technicians might not be
available to handle complex problems is being developed. This will facilitate the
transmission of real-time data.

Environmental Factors that Impact Easy Jet Plc

Easy Jet was one of the company that used the paperless aircraft with the installation of
Panasonic Toughpads as a substitute for laptops and implemented the e-paper technology
developed by Sony which decreased their paper consumption.

The collaboration with Wright Electric in October 2020 in achieving their goal of de-
carbonization of aviation led to the development of the carbon-free aircraft which helped
fulfill their vision (Easy Jet annual report 2020).

On CSR Hub, the company has made it a major strategy to invest heavily in limiting the
effects of its operations on the environment, especially with the climate change issue taking
the front stage at global conferences.

Legal Factors that Impact Easy Jet Plc

The company exposed its customer’s data and personal details which should be ordinarily
be secured. This was compromised by the cyber-attack in 2020 where a lot of their
customer’s credit card numbers and information such as addresses, landing times and
departure times got leaked.

The company created a not-so-good image for itself in 2020 when news got to the public
about the accusation against the top management being involved in bribery from one of its
suppliers.

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The company in 2018 lost a suit from its claim over the use of similar trademark and logo by
another entity with similar name, “EasyFly”. However, the operations of the entity are in
another continent and market is entirely different from that of Easy Jet.

4. SWOT ANALYSIS

The SWOT Analysis for Easy Jet Plc is given below

4.1. Internal Analysis

Strengths

 Relative low price of services. Companies in the Airline industry charges their
customers different prices for travels of same distance and destination. Easy Jet as
low-cost airline has focused on conveying their customers to their respective
destination at a relatively low price compared to other companies in the industry.
The fact that Easy Jet charge low prices compared to it’s competitors has resulted to
increase in profitability year on year.

 Financial buoyancy. Easy jet has a large market share in the Airline industry in United
Kingdom. It’s a public listed entity with an amazing revenue flow, the business can
easily secure loans and finance debt. The business can as well generate finances
through its quoted stocks.

 Innovative and flexible organization. Easy Jet as one of the top companies in the
Airline industry has strategic plans on how to react to changes in the business
environment. During the Covid-19 period most Airline businesses where shutdown
due to the lockdown but through the innovative ideas and flexible work environment
of Easy Jet, the business was able to continue operation after the lockdown.

 Strong e-business. Easy Jet has standard online platforms where customers can
request for their services, make payments and lodge complaints.

Weaknesses

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 No customer retention policy. Easy Jet has little or no structure on retaining

customers compared to other competitors in the industry that charges high prices
for their services.

 Little or no scope outside of Europe. Easy jet only has presence in the Europe
compared to British Airways which has presence in Europe, Africa and other part of
the world.

 Lack of service, flexibility and business focus (such as frequent flyer programs e.g.)
make the low-cost model unappealing for most business travelers.

 The two drivers of growth, the focus on price and the focus on convenience
(frequent flights, few connections, more nearby airports e.g.) are reaching their
natural limits.

4.2 External Analysis

Opportunities

 Easy Jet has great opportunity for expansion and growth in the coming years.

 The recent global economic situation from the aftermath of the Covid-19 pandemic
is advantageous to businesses that are cost-conscious.

 Competitors may exit the market leaving for the low-cost businesses to find greener
pastures.

Threats

 The scarcity of new routes poses a challenge to the aviation market thereby limiting
the chances of expansion.

 Competition is expected to increase, given the optimality of the market and the
limited options. For example, the Etihad and TUI group collectively introduced their
new low-cost carrier to the European market in April 2017 (Haines, 2016).

 Increased competition is expected to result into bigger bottlenecks in requesting

incentives from society

5. COMPETITIVE ANALYSIS (PETER'S FIVE-FORCE MODEL)

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The threat of substitutes

Aviation business always have time and cost advantage as well as comfortability when
compared to other transport substitutes such as cars, trains, ships e.t.c as it gives little or no
room for them to be considered close substitute. The speed and convenience compared to
the aviation business is unrivalled.

There are no alternatives for distances on global transport systems. The aviation business
would always be the most preferred option in terms of distance

The threat of new entrants

Huge capital investment mitigates threat to some extent as Easy Jet began operations with a
loan of £5 million, 2 leased aircraft, but still required a £50 million investment raised by debt
and equity in year two to further boost expansion and purchase 4 new planes (Mayer,
2003). The capital requirement to enter the aviation industry is huge and this naturally
reduces the avenue for intending competitors to thrive. This is an industry that has a very
high cost for new entrants and as such seems discouraging for easy walk ins for prospective
players in the market. Easy Jet is positioned quite well in the UK market as the biggest
operator.

It is difficult for new entrants to find airports as a result of unavailability of run-way of

airlines. As this proves difficult for new carriers to find a very suitable airport due to this
limiting factor

The low-cost market requires a loss leader.

The power of suppliers

Fuel prices are directly influenced by oil price, Easy Jet Plc have no control over the costs of
oil (Hansman, et al., 2014).

Airplane manufacturers are concentrated in the aviation industry, with Boeing and Airbus
being the largest providers of commercial planes and with Easy Jet’s usage of a specific
aircraft type until it decided to change.

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Easy Jet’s deal with airbus definitely shows that favorable agreements are within reach. The
utmost reliance and dependence on alternative parts from one supplier could result in
operational risk and thereby resulting further into a business

Expansion gives more power over suppliers to Easy Jet. The more Easy Jet expands the more
power it will possess over its suppliers

The power of buyers

The strength of the buyer power within the low-cost aviation industry cannot be over-
emphasized as there are avenues for customers to opt for the company’s competitor
because of price comparison. Therefore, Easy Jet Plc is expected to keep tabs on prices
within the industry. A market survey would ordinarily be in place to identify price variations
within the industry and as such

Rivalry among existing firms

Among the major competitors in the same market segment that could or have already stood
in the chance of Easy Jet Plc’s future expansion plans, Ryan air is the only successful one to
achieve that.

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6. CONCLUSION

Strategic issues facing the airline industry

With the gradual advancement of the aviation industry in enabling globalization which could
speed up the airline industry reorganization towards development

Industry experts believe that there is limited space for the numerous carriers around the
world and these numerous airlines would be reduced to majorly three or four airlines, the
others would be restructured or possibly franchised to focus more on different aspect of the
market. This would present a business opportunity for other market players to gain market
share. To achieve this, an inside out review of the industry’s regulatory system would be

The “no-frills” market is under-developed in Europe when put in comparison to the United
States.

This niche accounts majorly for around five-percent of capacity within Europe, despite the
share being higher in the United Kingdom local market and on services between the United
States and the United Kingdom & Europe, closer to 20%. Improvement and development is
envisaged in the next two to three years as market options with respect to business
operations are widening and new destinations are being included to pre-existing routes and
networks. It is worthy to note that as the United Kingdom market becomes full, the
respective carriers affected would most likely explore other options at continental spaces.
(UK Essays,2018).

7. RECOMMENDATION

Easy Jet should develop a strategic pricing models by carrying out thorough market surveys
to ascertain the capacity and what it costs its competitors in the industry to operate at full
capacity, to determine cheaper and faster routes, and develop a mechanism that could
frustrate entrants into the already competitive market as a way to maintain its position in
the industry.

Newcomer’s objectives is also important to the company as understanding those could give
company competitive advantage over others by creating a system around the information
obtained and tailoring such to the strengths and opportunities available to them. Likewise,

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enabling a system that caters for the needs of diverse customers is also a great idea to be
considered by Easy Jet. (UK Essays,2018).

Easy Jet should continue to focus on expansion opportunities, its low-cost strategy but
endeavor to keep its operating cost in check so that profits are not eroded by the reduced
pricing strategy and try to improve its coverage beyond what it currently has by engaging in
providing its services directly to the targeted customers.

REFERENCES

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Atrill, P., & McLaney, E. J. (2019). Accounting and finance for non-specialists. 11th edn.
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BBC News (2021). Impact of Brexit on economy ‘worse than Covid’. Available at:
https://www.bbc.com/news/business-59070020.amp (Accessed: 11 June 2022)

BBC News (2020). Coronavirus: Easy Jet grounds entire fleet of Planes due to Virus. Available
at: https://www.bbc.com/news/business-50284003.amp (Accessed: 6 Nov 2022)

BBC News (2019). Macron Pension Reform: Why are French workers on Strike? Available at:
https://www.bbc.com/news/world-europe-50670613.amp (Accessed: 6 Nov 2022)

Bensoussan, B., & Fleisher, C, S. (2012). Analysis without Paralysis: 12 Tools to Make Better
Strategic Decisions. FT press

Boston Consulting Group (2013). Traveling with Millennial. BCG

Brealey, R.A., Myers, S.C. (2002). Corporate Finance: Capital Investment and Valuation. New
York: McGraw-Hill.

Corporate finance institute (2022a). Operating Profit Margin. (2022, November). Retrieved
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