Comparative Financial Analysis of Easyjet & Ryanair

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Comparative Financial Analysis
of
Ryanair & EasyJet
for financial years ending
2010, 2011 and 2012.

Submitted by
Muhammad Sufyan Sadiq

CONTENTS
Chapter No.TopicsPage No.
1Executive Summary ---------------------------------------------------------------------- --------------3
2Introduction -------------------------------------------------------------------------------6 3PESTEL Analysis ------------------------------------------------------------------------9
3.1EasyJet --------------------------------------------------------------------------9
3.2Ryanair -------------------------------------------------------------------------12
3.3Comparative Analysis --------------------------------------------------------15 4Porter's Five Forces Analysis -----------------------------------------------------------17
4.1EasyJet --------------------------------------------------------------------------17
4.2Ryanair -------------------------------------------------------------------------19
4.3Comparative Analysis --------------------------------------------------------21 5Strengths and Weaknesses --------------------------------------------------------------22
5.1EasyJet -------------------------------------------------------------------------22
5.2Ryanair -------------------------------------------------------------------------23
5.3Comparative Analysis --------------------------------------------------------24 6Financial Comparisons ------------------------------------------------------------------25
6.1Profitability Ratio -------------------------------------------------------------25
6.2Efficiency Ratio ---------------------------------------------------------------26
6.3Liquidity & Current Ratio ---------------------------------------------------26
6.4Gearing & Interest Cover Ratio ---------------------------------------------26
6.5Price-Earnings Ratio ----------------------------------------------------------27
6.6Horizontal Analysis -----------------------------------------------------------27
6.7Vertical Analysis --------------------------------------------------------------29 7Conclusion ---------------------------------------------------------------------------------30 8Recommendation -------------------------------------------------------------------------32 9References ---------------------------------------------------------------------------------34 10Appendix -----------------------------------------------------------------------------------35 1. Executive Summary

EasyJet and Ryanair Airlines
Ryanair and EasyJet are both low fare airlines with operations concentrated in mainland Europe. Both these airlines ever since they have come into existence in 1984 (Ryanair) and 1995 (EasyJet) have proliferated all over Europe mainly due to conducive economic conditions and environment, made possible owing to the formation of European Union which allowed airlines from member states to operate within the union without hindrance. Ever since, these two airlines have survived all odds and thrived to grow, changing the way people travelled. The success of these two airlines is primarily owing to innovative approach to business as against the age old practices and conventions of their older full fare rivals. This paper attempts to financially analyze and compare the two airlines. In the first part, PESTEL analysis has been done along with comparisons of both the airlines. Aviation industry is largely ruled by political, economical, environmental and technological frameworks. While all airlines have similar characteristics and make similar responses to situations, yet each airline has some distinctive features and characteristics in order to maintain competitiveness in the aviation industry. Since EasyJet and Ryanair both are low fare airlines they focus more on cost saving strategies thereby...
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