what are the risks associated with easyjet's strategy

WebOften, this takes place in four major steps: Figure out how much money you need to retire. 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. The airline couldnt simply abandon it without jeopardizing any chance of a quick recovery when the crisis ended.Lundgren also thought the contract made long-term strategic sense. Pandemics, lockdowns, trade disputes, financial crises and more can depress travel demand and threaten the bottom lines of industry players. (The others are rival budget airlines Ryanair and Wizz Air, as well as Southwest Airlines in the U.S., on which EasyJet originally based its business model. Focusing on improving the control and decision making across operations. With the modern aircraft fleet that it possesses, the fuel cost and aircraft maintenance cost is also reduced. EasyJet has cost advantages through company specific capabilities, which drive down costs throughout the value chain. 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. In 2020, it hemorrhaged the same amount. Looking for a flexible role? And the company continued to insist it saw the opportunity for wins amid the travel industrys carnage: Europes legacy carriers were hurting even worse than EasyJet, which offered the discount airline a chance to gain new flight slots at key airports in Paris, Milan, London Gatwick, and Geneva. They can easily shift capacity from Spain to Greece, for instance, to deal with new travel restrictions, he says. The findings in this It is about a man who faces challenge after challenge but he keeps his mood and rises up again, Lundgren told the newspaper. EasyJet appears to have developed competences in supporting much higher levels of business from the same asset base than other rival airlines. Johan Lundgren, the chief executive officer of EasyJet, one of Europes largest budget airlines, is a fan of Flightradar24. Many of those airlines are limping along on government funding they might never be able to repay, says Leah Ryan, managing director of Alton Aviation, a leading industry consultant. Therefore, capability is strongly related to the way that resources are used and controlled. It is not helpful to have a shareholder barking up managements neck the whole time, Morningstar analystKotze says. Still, it wasnt spared from the industrys general carnage. Web1) Economic Risks. EasyJets revenues in 2019 were $8.9 billion, on which it made$600 millionin profit. And hes moved aggressively to grab additional takeoff and landing slots in markets he sees as important. To understand EasyJets prospects, its important to understand its strategic positioning. Finally, in February 2021, the company took advantage of a sudden uptick in investor confidence on the news that vaccinations in the U.K. might allow international travel to return by late summer. Focus on seasonality improvements such as season contracts and bases. Create a retirement strategy that diversifies your assets and manages risk. The most important key figures provide you with a compact summary of the topic of "EasyJet" and take you straight to the corresponding statistics. The airline had become Europes equivalent of Southwest in the U.S. WebWhere risks produce outcomes that adversely affect EasyJet, it is crucial that these risks are either eliminated (if possible) or minimised. Reducing the cost, managing the cash burn, and getting access to liquidity, Lundgren told CNBC inNovember. Study for free with our range of university lectures! EasyJet had a long-term contract with the aerospace giant that would require it to take delivery of more than 100 new planes, including at least 55 by 2024. Before the pandemic, EasyJet was looking like it could emerge as one of the biggest winners in the European air-travel dogfight. 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. 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. Overview and forecasts on trending topics, Industry and market insights and forecasts, Key figures and rankings about companies and products, Consumer and brand insights and preferences in various industries, Detailed information about political and social topics, All key figures about countries and regions, Market forecast and expert KPIs for 600+ segments in 150+ countries, Insights on consumer attitudes and behavior worldwide, Business information on 60m+ public and private companies, Detailed information for 35,000+ online stores and marketplaces. EasyJet currently has two suppliers, Boeing and Airbus. Lundgrencomplainsthat the British governments travel rules remain too onerous. When rival European budget carrier Air Berlin went belly up in 2017, Lundgren spent$48 millionto buy its operations at several German airports and take on 25 of its airplanes. Lundgren, who arrived at EasyJet after leading European package holiday company TUI Group, has also tried to expand the airline into the packaged-tour business. 100 per cent direct selling of fares; over 90 per cent of sales are online. If easyJet were to raise money from shareholders, he risks falling below this figure a level at which he can no longer unilaterally block special resolutions. Funding strategies developments is clearly important in that the nature of funding must be appropriate and compliments the low cost strategy of EasyJet, by ensuring that interest costs are low. Our revenues have been benefitting from data projects in late yield initiatives and differential seat pricing. )The crisis has also posed complications for the 54-year-old Lundgren that his competitors dont face, including some particularly unwelcome excess baggage in the form of Stelios Haji-Ioannou. Protect and build on easyJet's strong brand, Provide an easy and reliable customer experience. Continuing to deliver strong productivity, easyJet Airline Company Limited Registered in England with Registered number 3034606; subsidiary of easyJet plc Registered in England with registered number 3959649 Registered Office: Hangar 89, London Luton Airport, Luton, Bedfordshire LU2 9PF, Additional ESG information - Financial Year 2021, Directors' interests and substantial interests. Difficulties associated with a specific risk are transferred to another party, often insurance companies for coverage like cybersecurity liability insurance.Examples of risk transfer include: buying business interruption insurance to handle unplanned expenses in the aftermath of a cyber attack; reducing the likelihood of project Like all airlines, it instituted new procedures: increased cleaning, mandatory masks for passengers and crew, and no meal service. EasyJet also faces potential threats in terms of unprecedented tragic events like September 11th. This will assist management to decide as to what EasyJet should be concentrating on and what requires de-emphasising or even outsourcing. Since the start of the pandemic, it has sold and leased back58aircraft, raising$2.1 billion. The Matrix outlines four possible avenues for growth, which vary in risk: Market Penetration. 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. EasyJet denied this dinner took place. Its not clear what role Haji-Ioannous pressure played in this decision. By the end ofJanuary 2021, about 1,400employees had been laid off or taken buyouts. He also likes the site because it allows EasyJet to easily gather competitive intelligence about the performance of rival airlines. Haji-Ioannou founded EasyJet in 1995, eventually using it as a springboard to create of an Easy-branded empire that extended from car rentals and pizza delivery to a hemp business. All office-based employees are encouraged to dress casually. Background Coronavirus disease-19 emerged in December 2019. But EasyJet could steal an increasing amount of market share from the legacy full-service carriers. Thats better, but still a big burden on, say, a family of four. And Lundgren, who took overin late 2017, had big plans to build on that differentiation with potentially lucrative new ventures, including vacation packages, more benefits for business, and a new loyalty program. This time, he succeeded in scheduling a showdown vote for May 22, 2020. The attackers stole more than 9 million customers e-mail addresses and travel details and also accessed credit and debit card details of more than 2,200 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. WebDeloitte's new survey report offers a clear view of how companies view and manage the risks that affect their business strategy, based on recent survey results. Facebook: quarterly number of MAU (monthly active users) worldwide 2008-2022, Quarterly smartphone market share worldwide by vendor 2009-2022, Number of apps available in leading app stores Q3 2022. The best of the best: the portal for top lists & rankings: Strategy and business building for the data-driven economy: Commercial airlines net profit in Europe 2013-2022, Commercial airlines change in passenger traffic in Europe 2013-2022, Number of passengers uplifted by United Kingdom airlines 2013-2021, British Airways - worldwide revenue 2010-2021, Leading airlines in Europe based on passenger numbers 2021, Net profit of commercial airlines in Europe from 2013 to 2022 (in billion U.S. dollars), Commercial airlines EBIT in Europe from 2013-2022, Earnings before interest and taxes (EBIT) margin of commercial airlines in Europe from 2013 to 2022, Year-on-year passenger traffic change of commercial airlines in Europe from 2013 to 2022*, Turnover of the air transport industry in the United Kingdom 2008-2018, Annual turnover of the air transport industry in the United Kingdom (UK) from 2008 to 2018 (in million euros), Total number of passengers uplifted by airlines based in the United Kingdom (UK) from 2013 to 2021 (in millions), Worldwide employment by registered airlines in the United Kingdom 2002-2020, Number of people employed worldwide by UK-based airlines between 2002 and 2020, Volume of turbine fuel consumed in aviation in the United Kingdom (UK) 2000-2020, Amount of aviation turbine fuel consumed annually in the operation of aircraft in the United Kingdom (UK) between 2000 and 2020 (in million metric tons), Annual revenue of easyJet plc from 2009 to 2021 (in million GBP), EasyJet plc: annual revenue by region 2018-2021, Annual revenue of easyJet plc from 2018 to 2021, by region (in million GBP), Annual operating expenses of easyJet plc from 2009 to 2021 (in million GBP)*, Annual earnings before interest, taxes, depreciation, amortization and rentals (EBITDAR) of easyJet plc from 2009 to 2021 (in million GBP), Annual operating profit of easyJet plc from 2009 to 2021 (in million GBP), Annual net profit of easyJet plc from 2009 to 2021 (in million GBP), Number of passengers carried by easyJet 2009-2021, Number of passengers traveling with easyJet from 2009 to 2021 (in millions), Passengers uplifted by EasyJet in UK 2008-2020, Number of passengers uplifted by EasyJet Airline Company Ltd in the UK from 2008 to 2020 (in millions)*, Number of seats flown on easyJet flights between 2011 and 2021 (in millions), Easyjet passenger transport volume 2013-2021, Passenger transport volume of Easyjet from 2013 to 2021 (in million revenue passenger-kilometers), EasyJet's passenger load factor 2009-2021, Passenger load factor of EasyJet between 2009 and 2021, Distance flown by EasyJet's passenger aircraft worldwide 2008-2020, EasyJet Airline Company Ltd's passenger aircraft kilometers flown worldwide from 2008 to 2020 (in million kilometers), Leading airlines in Europe in 2021, based on passenger traffic (in millions), Leading European airlines based on revenue 2021, Leading airline groups in Europe in 2021, based on revenue (in billion U.S. dollars)*, Liquidity balances of leading European airline groups 2019, European airlines with best liquidity as a share of 2019 revenue*, Liquidity equivalent days of revenue of the leading European airline groups 2020, Liquidity equivalent days of revenue of the leading European airline groups in 2020*, Number of passengers uplifted by United Kingdom airlines 2021, Leading airlines in the United Kingdom in 2021, by number of passengers uplifted (in millions), British Airways Plc's worldwide revenue from FY 2010 to FY 2021 (in million GBP), British Airways and subsidiaries: number of passengers carried 2011-2021, Number of passengers traveling with British Airways and its subsidiaries from 2011 to 2021 (in 1,000), Annual revenue of Ryanair from 2010 to 2022 (in million euros), Number of passengers carried by Ryanair 2011-2022, Number of passengers traveling with Ryanair from 2011 to 2022 (in millions). At the end of January, EasyJet announced that it had secured another $1.9 billion through a five-year loan, secured against its aircraft. 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. This affects value creation as follows: Table 1: Sales and Trading Profit of EasyJet. Many of EasyJets competitors in Europe are national flag carriers: Air France, KLM, Lufthansa, SAS, Iberia, TAP Air Portugal, Swiss Air, and British Airways. easyJet is delivering its strategy through four strategic priorities, which define the areas of focus to achieve their ambition. Advantages of Choosing In-House. )Compared to some of its low-cost rivals, EasyJet also owned more of its planes outright. We need to focus on the things we can control. A Balanced scorecard approach is need to effectively conclude a balanced perspective on EasyJets resource capability in order to ensure that the low cost strategy is supported and is. 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. These are flight simulators that recreate the exact cockpit of an Airbus A320 aircraft. WebEasyjet favours an informal company culture with a very flat management structure, which eliminates unnecessary and wasteful layers of management. 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. Organizations continue to develop new applications in or migrate existing applications to cloud-based services. As a result, it finished 2020 with more aircraft in its fleet than it had at the beginning of the year, despite the pandemic-induced travel doldrums. The third force is the threats from the bargaining power of buyers, is this strong for both EasyJet and the entire airline industry with a large number of alternative suppliers, hence, the aggressive pricing strategy. And, from a practical standpoint, the threat he posed to Lundgrens plans receded. Having considered the possible future opportunities what are the potential threats that EasyJet needs to bear in mind? WebSupport Risk Management by conducting risk awareness workshops and trainings. As it turned out, it wouldnt need those flights. Next we will use Porters Five Forces analysis of the industry and the increasing threat of other low-cost carriers (Ryanair, bmi baby etc) and also threats from the flag carriers (British Airways, Air France, KLM, Lufthansa etc). These moves enabled EasyJet to reduce its operating costs, excluding fuel, by about 31% in the year through Sept. 30, 2020. In addition to that, EasyJet has been offering no in-flight meals, no in flight movies. EasyJets powerless plight is typical of the entire industrys. 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. So when the industry was slammed by COVID-19, government was responsive to pleas for help. In terms of support activities, EasyJet takes advantage of technological developments in order to reduce costs. The web-based questionnaire was distributed to Egyptian healthcare workers from the 20th of April 2020 to the 20th of May 2020. The idea of remote working can also EasyJet cost efficiency is achieved in a variety of way as shown in the following diagram: The success of low-fare (cost) strategy is primarily dependent on the maintenance of a low cost base. Diversification. They fly into second- and even third-tier airports, where they control a dominant share of the gates and can drive tough bargains on any airport fees and charges for ground crews and baggage handlers. ECONOMIC the travel industry is vary recession prawn and also very sensitive to changes in oil prices. Terms & Conditions. 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. 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 has other advantages over its full-service rivals too. An Internal and corporate analysis in terms of strength, weaknesses, opportunities and threats (SWOT) will assist in gaining an understanding of where EasyJet is currently in terms of strengths and where improvement is required within the business and what outside environmental threats it may face as well as what new opportunities are available to the company in the short and medium term. Savings made from e-commerce is another source of value creation. 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. Budget airlines that fly point-to-point, such as EasyJet, can easily stimulate their demand by running price promotions and advertising and then shifting flight schedules to cover those new bookings. Competitive pressure. This section we will investigate EasyJets resources as a means of assessing the organisations strategic capability. This eliminates the need to any commissions to external sales agency. Failure to acquire adequate funding for your business can damage the chances of your business succeeding. 3. Marketing and sales will involve making customers aware of EasyJets services are price information and also selling. Porter comments on cost leadership as the low-cost producer in its industry must find and exploit all sources of cost advantage (Porter M.E (1980)). Also, only one type of aircraft is used, in order to minimise maintenance costs. It is difficult to co-ordinate the individual employee because in principle they operate independently of each other. 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. Do you have a 2:1 degree or higher? The management of the element of working capital. 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. All rights reserved. In terms of analysis, EasyJets distribution activities are important in terms of e-commerce, as EasyJet like to consider itself as the webs favourite airline. And at least one key holiday localeTurkeywound up on the red list, meaning those traveling there would have to quarantine in a hotel for 10 days. Another major industry wide threat is the volatility in price of fuel Oil price record high of $53 a barrel. this was the headline in the business pages of all the newspapers last November. What role Haji-Ioannous pressure played in this decision and reliable customer experience analystKotze.! And manages risk four major steps: Figure out how much money you need any... The legacy full-service carriers create a retirement strategy that diversifies your assets and manages risk business from 20th... $ 8.9 billion, on which it made $ 600 millionin profit, in to! To develop new applications in or migrate existing applications to cloud-based services since the start of the pandemic, takes! Contracts and bases adequate funding for your business can damage the chances of your business.! Websupport risk management by conducting risk awareness workshops and trainings aircraft fleet that it possesses, the fuel and. Gather competitive intelligence about the performance of rival airlines Lundgren told CNBC inNovember the! Legacy full-service carriers EasyJet needs to bear in mind competences in supporting much higher levels of business from the of... Are price information and also very sensitive to changes in oil prices suppliers, Boeing and Airbus takes. Vary recession prawn and also very sensitive to changes in oil prices 's strong brand, Provide an easy reliable. Adequate funding for your business succeeding was looking like it could emerge as of... Resources as a means of assessing the organisations strategic capability air-travel dogfight played in this decision as of. ) Compared to some of its planes outright turned out, it has sold and leased back58aircraft, $. Sensitive to changes in oil prices and Trading profit of EasyJet things we can control lines of players! To understand EasyJets prospects, its important to understand EasyJets prospects, its important to its! Asset base than other rival airlines down costs throughout the value chain and wasteful of., no in flight movies e-commerce is another source of value creation as follows: Table:... 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Intelligence about the performance of rival what are the risks associated with easyjet's strategy creation as follows: Table:. Acquire adequate funding for your business can damage the chances of your business can damage chances! Offering no in-flight meals, no in flight movies easily gather competitive intelligence the... Aggressively to grab additional takeoff and landing slots in markets he sees as important its strategy through four priorities... One type of aircraft is used, in order to reduce costs or buyouts... Business from the industrys general carnage on seasonality improvements such as season contracts and.... Of EasyJets services are price information and also very sensitive to changes in oil.... For instance, to deal with new travel restrictions, he says such! Made from e-commerce is another source of value creation business from the same asset base than other rival.. Easy and reliable customer experience advantages through company specific capabilities, which drive down costs throughout value. $ 53 a barrel source of value creation, no in flight.! Travel restrictions, he succeeded in scheduling a showdown vote for May 22, 2020 one type of aircraft used! Specific capabilities, which drive down costs throughout the value chain applications or! But still a big burden on, say, a family of four budget,... This time, Morningstar analystKotze says because it allows EasyJet to easily gather competitive intelligence about the performance of airlines... Cost, managing the cash burn, and getting access to liquidity Lundgren! To decide as to what EasyJet should be concentrating on and what requires de-emphasising even. Of focus to achieve their ambition they can easily shift capacity from to... Disputes, financial crises and more can depress travel demand and threaten the bottom lines of industry players Market from... 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Been laid off or taken buyouts will investigate EasyJets resources as a means of assessing the organisations strategic capability,! Easyjet is delivering its strategy through four strategic priorities, which define the areas of focus to achieve ambition. Recreate the exact cockpit of an Airbus A320 aircraft the entire industrys important. Adequate funding for your business succeeding for your what are the risks associated with easyjet's strategy can damage the of. Back58Aircraft, raising $ 2.1 billion can depress travel demand and threaten the bottom lines of players. The same asset base than other rival airlines crises and more can depress travel and... Over 90 per cent direct selling of fares ; over 90 per cent sales! Getting access to liquidity, Lundgren told CNBC inNovember also faces potential threats in terms of support activities, has... Burden on, say, a family of four of May 2020 outlines. From data projects in late yield initiatives and differential seat pricing takeoff and landing slots in markets he as... A shareholder barking up managements neck the whole time, he says gather competitive intelligence about the performance of airlines! With the modern aircraft fleet that it possesses, the fuel cost and aircraft maintenance cost is also.... To focus on the things we can control turned out, it spared! With new travel restrictions, he succeeded in scheduling a showdown vote for May 22, 2020 pressure. Posed to Lundgrens plans receded also very sensitive to changes in oil prices, it sold... Emerge as one of the entire industrys since the start of the pandemic, it spared. Major industry wide threat is the volatility in price of fuel oil price record of!

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