Table below provides an analysis of EasyJets sales revenue and profitability ratio since 1998. Such lower costs benefit EasyJet initially as innovation is rewarded. (EasyJets fellow European budget carrier, Ryanair, announced this week that it had lost about $1 billion in the preceding 12 months. Those planes are Airbuss most fuel-efficient models, offering operational savings for EasyJet in the long run. Lundgren and the board were frustrated. It helps to remember that while you cant control what happens to you, you can always control your response. FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. Porter through the use of the value chain illustrates how resources should be utilised to enhance least-cost production or differentiation strategies (the generic strategies suggested by Porter). 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. In April 2020, EasyJet announced that it had reached an agreement with Airbus to defer delivery of 24 of the aircraft, meaning it would take on no new aircraft in 2021. Pandemics, lockdowns, trade disputes, financial crises and more can depress travel demand and threaten the bottom lines of industry players. The findings in this EasyJet has other advantages over its full-service rivals too. Figure 2: Five Forces Model ACCA Paper 3.5 (2001). Furthermore, a lifetime history of D In addition to that, EasyJet has been offering no in-flight meals, no in flight movies. EasyJet airplanes parked on the tarmac during the official opening of Berlin Brandenburg Airport on Oct. 31, 2020. The idea of remote working can also result in co-ordination and control weaknesses. In essence, Lundgren told the BBC, thismeansonly the rich can go on holidays: The expense of these tests would be way over and above what the cost is of an average EasyJet fare, he said. Improving CSAT across the whole customer journey. )Compared to some of its low-cost rivals, EasyJet also owned more of its planes outright. 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)). If it failed to do so, he threatened to call a vote to remove one director from the board every seven weeks, until the board acquiesced. In April 2020, the airline was able to negotiate a$845 millionloan through the U.K. governments COVID Corporate Finance Facility for large U.K. employers. 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. Decisions must be made on the trade-offs inherent in development of a strategy. EasyJets first generic strategy is to achieve an overall cost leadership in the low cost airline industry. Under pressure from airlines, it later lifted this policy for some European destinations, only to reimpose it as infection rates soared again in Spain and France. The fuel-efficient jets could help EasyJet reduce its carbon footprint at a time when consumers and governments seemed increasingly likely to hold airlines accountable for their climate impact. The airline had become Europes equivalent of Southwest in the U.S. In many instances, strategic risks and the other kinds of risk will impact one another as they are interconnected. WebThe following operating risks are associated with pursuing sustainability initiatives as part of a marketing plan: Loss in profitability Loss of focus Just as sustainability would seem to be a rallying cry for consumers, some companies have jumped on sustainability as a Given that they were doing almost nothing before, there is a big opportunity to move from zero to something, he says of the holiday tours. At the end of January, EasyJet announced that it had secured another $1.9 billion through a five-year loan, secured against its aircraft. This has resulted in a strong Balance Sheet the companies net assets reaching the record level of 724 million (aided by retained profit mainly). Firstly, threats in terms of new & existing competition. It now owns just over half its fleet, down from 70% in 2019and six of every 10 planes it does own have been pledged as collateral against its loans. EasyJet announced it had lost more than $1 billion in the 12 months through September 2020. Protect and build on easyJet's strong brand, Provide an easy and reliable customer experience. EasyJet also operates a flat management structure, which may lack a formal discipline that is needed as the organisation grows. As Internet transactions have a lower cost associated with it EasyJet encourages its customers to book on-line by offering them a discount for on-line ticket reservations. 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. Managing for value involves managing both value activities and cost drivers. 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. Kotze compared Lundgren to his rival CEO, Michael OLeary, who runs Ryanair and has a reputation for being merciless at containing expenses and being generally combative. We mentioned the seven most common risk events above, but other project risks could include contractor failure, unexpected life events, data transfer issues, shifting priorities, legal risk, market risk, and project deferral. Dynamic fares with a simple structure and also ensuring that it are the cheapest fare on the route. 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. EasyJet says the funds will give it the firepower to grab slots at premium airports like Paris Orly, Lisbon, Milan Linate and London's Gatwick. 1 Based on share price of 6.62 at 30 September 2021 Due to a recession, fewer business tourists are travelling to downfall the quantity of sending amount. TECHNICAL Changes in retailing methods as such ticket sales via the Internet is now a common place in air travel, passengers receive an email containing their travel details and booking reference when they book online. This analysis outlines for EasyJets management how individual activities may be altered to reduce costs of operation or improve the value offered to customers. The airlines hopes for summer 2021, like those of almost all airlines, rest on vaccinations. Strategies are largely determined by the extent to which they deliver best value to both customers in terms of being competitiveness in the marketplace (leading low cost airline) and also to provide value to shareholders. Beneath the surface of EasyJets cosmetic cost savings of not offering free in-flight refreshments or different first, business and economy classes, was a philosophy of cost saving that permeated through the entire organisation. 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. easyJet will maintain its advantageous cost position through continued cost action. By mid-May, most of the major European nations had administered first doses to just over a third of adults amid critical vaccine supply shortages and concerns about rare but dangerous blood clots linked to AstraZenecasand Johnson & Johnsonsvaccines.Without a brisker vaccination pace, a third wave of infectionskeeps threateningto take hold in Europe. EasyJet is known for its low-cost competitive pricing. This section we will investigate EasyJets resources as a means of assessing the organisations strategic capability. The second is the threats from substitutes, rail travel v air travel, the growing demand in Eurostar and cruses. Most theories argue that strategic success and improved wealth generation stem from two strategies. 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. The U.K. requireseven those returning from green countriestake COVID-19 tests before boarding a plane to return to the U.K. as well as within two days of returning. And while optimism about leisure travel in Europe is slowly rekindlingthis week, the U.K. announced a resumption of international travel to a limited number of destinationsEasyJet still faces plenty of potential turbulence, as the likelihood of a robust summer season recedes. With Ryanair maintaining high margins despite reducing yields through strict cost management. 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. 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. Increasing automation driving self-service capabilities for customers. Data security and regulatory risk Data security and regulatory risk can be associated with loss, leakage, or unavailability of data. This will require a mindset where innovation (in cost reduction) is regarded as essential to survival. EasyJet also drew down the entirety of its existing revolving credit facilityraising $500 million in cash. Please do not hesitate to contact me. The strategy risks serious disruptions to their customer service processes as employee morale drops at the same time that wait times for customers increase. This time, he succeeded in scheduling a showdown vote for May 22, 2020. Ive always said the four core markets are where we want to put our focus on U.K., Germany, France and Italy, he told the World Travel Market conference in 2018, shortly after the Air Berlin deal concluded. 100 per cent direct selling of fares; over 90 per cent of sales are online. *You can also browse our support articles here >. The first is the threat posed by new entrants, as with the European deregulation of commercial aviation and the emergent of low cost carriers. Since the events of September 11th the airline industry suffered heavily, stocks plummeted and ticket prices are at all time lows. Prioritising slot-constrained airports as these are where customers want to fly to and from and as a result have superior demand and yield characteristics. 3. In a sign of faith in EasyJets prospects, the bond sale was almost six-times oversubscribed. It announced plans to gradually ramp up to 75% of its normal capacity by August. 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. 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. 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. Hes running the business to make it as lean as possible, and you cant be a nice guy and do that, Kotze says. 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. Ryanair had even tried to capitalize on this connection between vaccinations and travel in its marketing, rolling out at jab and go advertising slogan in January, which it had to withdraw after objections from Britains Advertising Standards Authority that it was not promoting responsible behavior. But what are the internal weaknesses suffered by EasyJet? The CEO told theFinancial Timesthat Haji-Ioannous campaign was highly undesirable, unhelpful, and a distraction. EasyJet pointed out that the contract contained noforce majeureclause. EasyJets competitive advantages via low prices are sustained in a number of ways. A lack of real-time reporting makes it easy to miss the signs of an approaching catastrophe. The management of the element of working capital. The web-based questionnaire was distributed to Egyptian healthcare workers from the 20th of April 2020 to the 20th of May 2020. Objectives To assess the psychological distress, anxiety, depression, coping strategies, Still, the connection was critical for airlines. In 2019, excluding fuel and in constant currency, it cost EasyJet 4.45 European pennies per available seat kilometer, a key industry cost metric. This will provide an evaluation of the external business environment in which the company operates. EasyJet may be prepared and has to a large extend engaged in price war with competitors via its lower cost structure (economies of scales due to its larger operations) and also has the financial resource capability to fund short to medium-term losses with the aim of driving out competitors in the longer terms. But flying to those primary airports in Western Europe is more expensive. But the training center is the only part of EasyJets operation at Gatwick still humming. Announced plans to gradually ramp up to 75 % of its existing revolving credit facilityraising $ 500 million in.... 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