So when the industry was slammed by COVID-19, government was responsive to pleas for help. easyJet has a cost advantage over its major competitors on the primary network that it operates. The same figure for Ryanair was 2.25 pennies, while it was about 5 for British Airways and 5.37 for Air France and KLM. Reducing the cost, managing the cash burn, and getting access to liquidity, Lundgren told CNBC inNovember. Now, at the cusp of a summer season that normally would be the source of the majority of EasyJets profits, the airline and its CEO face what could be a make-or-break season. In June, the airline found a deft way to simultaneously relieve the pressure from its cash burn and Haji-Ioannou: It raised more than$631 millionto help it weather the pandemic by issuing new shares equivalent to 15% of the companys outstanding share capital. S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. EasyJet was able to operate at only 18% of its 2019 capacity. Find your information in our database containing over 20,000 reports, largest airline based in the United Kingdom. In a vast hangar on the outskirts of Gatwick Airport, one of EasyJets big hubs, sit a row of five space-age pods, painted in EasyJets trademark orange-and-white colors. This is critical for EasyJet having analysed the competitive rivalry position in the industry. EasyJet announced it had lost more than $1 billion in the 12 months through September 2020. Therefore, demand led with proprietary yield management system. Advantages of Choosing In-House. Lundgren says he likes the site because it keeps airlines honest: When customers can see that their inbound aircraft hasnt even taken off from its previous destination yet, theres no point in feeding them the bad news with an eyedropper, as airlines traditionally had done, gradually announcing slightly longer delays. Lundgren and the board were frustrated. Lundgren wasnt completely despondent: Where bookings were allowed and quarantine rules not restrictive, passengers were coming back. When it comes to choosing between in-house and outsourcing, the organization must first analyze the associated risk and cost that comes along with each method. Some wondered if Lundgren, who has a reputation for being a nice guy, had the stomach for the kind of aggressive cost cutting thatrunning a budget airline, especially during a pandemic, demanded. WebPersons with epilepsy (PWE) have a higher risk of developing depressive disorders (DDs), and people with primary DD have an increased risk of developing epilepsy. Are you interested in testing our business solutions? We are seeing significant benefits already from operational resilience processes and predictive maintenance. It renegotiated contracts with ground handling firms at several airports helping to lower costs. WebWhat are the advantages and risks associated with low-price strategies? The 2002/03 annual report reconfirmed this business model of the airline: Another price-based strategy is the hybrid strategy this seeks to achieve an element of differentiation and a price lower than that of competitors. While it is often lumped into the same European budget airline category as Dublin-based Ryanair and upstart Hungarian carrier Wizz Air, there are some key differences between EasyJet and those other airlines. EasyJet, on the other hand, flies fewer routes but operates from many more primary airports, with a heavier focus on Western Europe. Webcomputing risks Let us look at five different types of risks and how they apply or vary by cloud deployment models. However, by year 2000 it has not only managed to survive but also increased its market shares and assets of aircrafts to 74 and servicing 105 routes and carrying over 20 million passengers a year. Now, more than a year later, with the pandemic still raging, and with many countries, including the U.K., having toughened travel restrictions in response to new strains of the virus, the airline industrys hopes for an early recovery are descending faster than an Airbus A320 on final approach to EasyJets home base at Luton Airport. After overcoming the many hurdles of producing a model with a viable context and associated risk factors, often the user of the innovation is neglected. Web1) Economic Risks. This analysis outlines for EasyJets management how individual activities may be altered to reduce costs of operation or improve the value offered to customers. This section we will investigate EasyJets resources as a means of assessing the organisations strategic capability. Those changes will ensure that EasyJet sustains its current market share and position and also increase margin. Strategic risk is a category of risk; alongside operational, financial, regulatory and other business risks, it forms part of the umbrella of risks your organization faces. In fact, Haji-Ioannou continued to press his allegations that corruption underpinned the Airbus contract, raising the matter at EasyJets general meetings in July and December. Hopes for an early summer 2020 recovery were dashed when the U.K. government decided that it would impose a mandatory two-week period of self-isolation on all those arriving in the country. FORTUNE may receive compensation for some links to products and services on this website. In 2020, sales cratered more than 50% to $4.2 billion, and the airline recorded its first ever annual loss: a jumbo jetliner-size blast of red ink totaling nearly $1.8 billion before tax. Strategical moves like this have enabled it to reduce cost and improve the convenience for the customers. These large airline groups are so big and so important for so many economies that the national governments will do whatever they can to keep them alive, saysDirk-Maarten Molenaar, atravel and tourismindustry consultant at Boston Consulting Group. In mid-May 2020, the company revealed it had been hacked. The price of EasyJets tickets various as a function of the number of seats remaining, the time until the flight, and historical trends. As previously mentioned manual processes can increase the chances of fraud, but they can also result in other unnecessary risks. 6. Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKEssays.com. EasyJet appears to have developed competences in supporting much higher levels of business from the same asset base than other rival airlines. Still, it wasnt spared from the industrys general carnage. Market Development. easyJet is delivering its strategy through four strategic priorities, which define the areas of focus to achieve their ambition. The greatest dangers, however, may be the market leaders need to manage its evolving Taken together, those restrictions mean that summer 2021 is looking increasingly in doubt. Thats better, but still a big burden on, say, a family of four. EasyJet also drew down the entirety of its existing revolving credit facilityraising $500 million in cash. It can restore the reputation of a brand. Copyright 2003 - 2023 - UKEssays is a trading name of Business Bliss Consultants FZE, a company registered in United Arab Emirates. Focusing on improving the control and decision making across operations. This also reduces the marginal cost of incremental growth; increasing scale brings valuable economies (Johnson, G., Scholes, K., Whittington, R., (2005). The type of childcare had little impact on infection risks. Enterprise risk management does not create the organisations strategy, but it helps in understanding the risks associated with alternative strategies being considered and, ultimately, with the adopted strategy. Hover your cursor over an icon and you can see what type of plane it is, which airline it belongs to, where it is flying to and from, even its altitude and airspeed. major banks and insurance companies relocation call centres in Asia. Diversification. Potential negative outcomes include bad publicity and a We will start by looking at strengths: EasyJet serves diverse ranges of European routes with principle activities in both Leisure and business markets, offering 60 key European routes. It is about a man who faces challenge after challenge but he keeps his mood and rises up again, Lundgren told the newspaper. Strategic risk management is the process of identifying, quantifying, and mitigating any risk that affects or is inherent in a companys business strategy, strategic objectives, and strategy execution. Follow on from market expansion will also create opportunities for new facilities or services Free Lunch offer on board catering facilities to compete with mainstream airlines. These moves enabled EasyJet to reduce its operating costs, excluding fuel, by about 31% in the year through Sept. 30, 2020. Appendices 1. Lundgrencomplainsthat the British governments travel rules remain too onerous. The pace of recovery will be determined by vaccination rates, Alton Aviations Ryan says.The problem for EasyJet is that almost all the routes it flies involve Europe, and the continent was lagging far behind on vaccinations. Get in touch with us. In 2020, it transported a Still, Lundgren could not have been happy with the Flightradar24 map on a Tuesday morning in late April. The world economy is however, now on the up post September 11th. The primary outcomes were anxiety (GAD-7), depression (PHQ-9), risk perception towards COVID-19, interprofessional teamwork attitude, and coping strategies during the Coronavirus disease-19 pandemic. EasyJet appears to have internal strengths in terms of brand awareness, cash flows, and operational efficiencies. But in the past, he says, most budget airlines have fallen down on execution, unable to make package holidays a profit-driver. In an interview with LondonsEvening Standard newspaper in January, Lundgren sounded down, admitting he missed frequent trips to the Spanish island of Majorca, where he owns a house and where he and a friend also own a recording studio. The federal government recently made cloud-adoption a central tenet of its IT modernization strategy.An organization that adopts cloud technologies and/or chooses cloud service providers (CSP)s and services or applications without EasyJets first generic strategy is to achieve an overall cost leadership in the low cost airline industry. Therefore, it is vital for EasyJet to have a thorough comprehension of their costs and cost drivers. EasyJet is forever trying to attain a cost level that is low relative to its competitors. These are set out below: easyJet has a strong network of leading number one and number two positions in primary airports, which has proven to be amongst the highest yielding in the market. The first is to reduce the bottom line costs of operation (low cost strategy) and the second is to increase the value of the organisation and its reputation to customers, so that they will demand more or pay more for what they receive (differentiation strategy) (ACCA Paper 3.5 (2001)). easyJet is building a network of key cities, broadening their presence across Europe. easyJet seek to strengthen their position in key markets as the competitive landscape evolves. The CEO told theFinancial Timesthat Haji-Ioannous campaign was highly undesirable, unhelpful, and a distraction. EasyJet pointed out that the contract contained noforce majeureclause. There is national pride, not to mention jobs and pension payments, resting on their wings. This report will provide a detailed analysis of EasyJets current corporate appraisal or SWOT analysis. WebWhere risks produce outcomes that adversely affect EasyJet, it is crucial that these risks are either eliminated (if possible) or minimised. Given the fact that the company offers With Ryanair maintaining high margins despite reducing yields through strict cost management. This form of strategy combines a low price, low perceived service benefits (no free lunch) and a focus on a price-sensitive highly competitive market segment. Strategic risk represents one type of risk that businesses face, along with risks like operational, financial, and regulatory, to name a few. Yield management is a form of risk management and therefore, adds value. Of popular holiday destinations, only Portugal and Gibraltar were put on the initial green list, with no requirement to self-isolate upon return. Ryanair and Wizz Air cater almost exclusively to leisure travelers. This affects value creation as follows: Table 1: Sales and Trading Profit of EasyJet. This will identify its strength, weaknesses, opportunities and threats. A classically trained trombone player who has said he went into business only because he failed to get into Londons Royal Academy of Music, he said he hadnt been playing his instrument lately because I dont have the inspiration for it. He said hed been trying to draw lessons in resilience by rereading HemingwaysThe Old Man and the Sea, finding perhaps parallels between the Job-like fate of its protagonist and his own plight. Therefore, capability is strongly related to the way that resources are used and controlled. Thats the day the U.K. government first advised Britons abroad to return home as soon as possible in advance of impending travel restrictions because of the growing coronavirus pandemic. Where normally there would be the roar of engines and the trundling rumble of buses and baggage carts, the whistling wind is often the only sound. All of those (political, economic, social, technical, legal and environmental) factors will to some extent apply to the airline industry. But with new, more infectious variants of COVID-19 spreading rapidly in Europe, in October renewed lockdowns were imposed across many parts of the U.K. and from Helsinki to Tel Aviv. Haji-Ioannou said the result was rigged, arguing that the fund companies with Airbus pension business should have been ineligible to vote. He offered a $7 million reward to any whistleblower who could provide him useful information leading to the cancellation of the Airbus contract. But nothing has been normal for EasyJet since March 23, 2020. The website features a map of the world that displays a small airplane icon for every flight in the air, based on radar and transponder data. Front and center was the existential risk of the coronavirus. Analysis of financial resources in order to understand the strategic capability of EasyJet will need examination of financial capability and performance. Our academic experts are ready and waiting to assist with any writing project you may have. The primary outcomes were anxiety (GAD-7), depression (PHQ-9), risk perception towards COVID-19, interprofessional teamwork attitude, and coping strategies during the Coronavirus disease-19 pandemic. The airline had become Europes equivalent of Southwest in the U.S. Healthcare workers were exposed to this highly infectious virus during the pandemic and suffered several social and psychological consequences, such as anxiety, psychological distress, and burnout. Improving CSAT across the whole customer journey. But EasyJets contract required it to pay the aircraft maker at least $6 billion through 2023a sum considerably greater than the airlines entire current market 1 or No. The company benefits from being one of just four airlines globally thatcurrentlyhave an investment-gradecreditrating, according to Gerald Khoo,a transportation analystwith brokerage firm Liberum. We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. Furthermore, a lifetime history of D Brand Awareness is another strength that is attributable to the company In November 1999, selected as a business super brand by the Super Brand Council, recognising EasyJet as an outstanding brand name. In the May showdown vote, the disgruntled founders effort was roundly defeated, with 99% of the shares not held by the entrepreneur and his family casting ballots against removingthe directors. Another benefit of Internet technology is lower transaction costs at multiple levels in value chain activities. Still, the connection was critical for airlines. But it was not the same as canceling its contract, and unsurprisingly, Haji-Ioannou was not satisfied. The companys Online booking facility in October 1999 aided Internet sales to pass the one million mark. The business has also enjoyed an increase turnover and trading profits resulting in continuous substantial growth in underlying profitability over the last 7 years (see table 1). All Rights Reserved. The next quarter was not much better: A U.K.-wide national lockdown was imposed in November and, after a brief easing of restrictions in the run-up to Christmas, again in late December. In 2020, those months were grim. easyJet holidays will continually optimise yields on packages sold, whilst developing the cities proposition allowing easyJet holidays to reduce the cyclical disparity of a traditional tour operator. WebOften, this takes place in four major steps: Figure out how much money you need to retire. The management of the element of working capital. EasyJets new holiday division launched in December 2019, just months before the pandemic took hold. Threats are also in terms of legislative environmental laws regarding pollution and use of more environmentally friendly fuel, which are at premium prices. Table below provides an analysis of EasyJets sales revenue and profitability ratio since 1998. These are flight simulators that recreate the exact cockpit of an Airbus A320 aircraft. The airline has differentiated itself from other budget carriers by serving top-tier European airports. Due to a recession, fewer business tourists are travelling to downfall the quantity of sending amount. The airline resumed flying on June 15, 2020, with limited routes within the U.K. and to France. WebEasyJets first generic strategy is to achieve an overall cost leadership in the low cost airline industry. They have focused on expanding into new markets in Eastern Europe. Overall the analysis will highlight the inherent threats and weaknesses suffered throughout the industry, and also the importance of innovation to maintain low cost advantage, alliances and size to success. Low price/low added 100 per cent direct selling of fares; over 90 per cent of sales are online. We're here to answer any questions you have about our services. The minute consumers start to make a choice based on this, and I think they will, an emphasis on sustainability will pay off, says BCG consultant Molenaar, and EasyJet has been out front in preparing for this.. But these savings barely stanched the arterial bleed of cash gushing from the companys coffers:In 2019, the airlines operations had generated more than $1 billion in cash. Here you can choose which regional hub you wish to view, providing you with the most relevant information we have for your specific region. SOCIAL changes in consumer taste and lifestyle represent both opportunities and threats for the industry. As both employees and customers are put under increased stresses, the potential for heated exchanges becomes a risk. The company carries out It was enough to make any airline CEO play the blues. Whats more, it included maintenance and avionics support for EasyJets existing fleet. Potential threats in terms of changing social trends like holidays outside Europe (many now want to experience the eastern cultures and travel to holiday destinations like China and Japan) and also travelling via the EuroStar to Paris etc. quick order processing). Technological Factors. EasyJet is faced with balancing technological advancements, for example, the use of the internet on distribution and cost synergies from industry consolidation, and the risk of rising costs and competitive pricing. The carriers were expected to pare their loses to about$38 billionthis year, as vaccines are rolled out across the world. Transfer the risk. 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what are the risks associated with easyjet's strategy