Ryanair and easyJet Case Study

I.INTRODUCTIONThis report outlines the analysis of two low-cost airlines performance in Europe, namely easyJet PLC and Ryanair Hldgs during their financial year between 2006 and 2008. It examines the companies? portfolio, future prospects and competitors to die the threats and opportunities facing their business. In conclusion, there is a recommendation whether to garb on easyJet and/or Ryanair?s shares.

II.FINANCIAL AND NON-FINANCIAL RATIO ANALYSISIn terms of the complete financial analysis, there are several findings as follows:? favorableness Ratios highlight the operating performance from the generated profit. (Atrill & McLaney, 2008) in operation(p) Profit MarginFigure 1. Operating Profit Margins (%)The graph shows that easyJet?s operating profit margins declined sharply, hit only 3.85% from 10.16% and this is moderately low, compared to the three-year average of 7.09%. Unlike easyJet, Ryanair has more unchanging profit margins, 21.01% on average. According to the figures, Ryanair seems more vigorous in generating high profit from its sales, which was partially due to hotels, car rentals and early(a) non-flight products selling. On the other hand, easyJet seems had been negatively affected by acute competition among its rivals as well as the price pressures.

surrender on Capital employFigure 2. Return on Capital Employed (%)The ROCE shows the performance of business in generating profit to its long-term cracking suppliers. (Atrill & McLaney, 2008) The highest ROCE ratio, 10.



41% in 2007 specifies that easyJet had a better performance by fully using its assets in generating revenues. However, the ROCE slid dramatically to only 4.46%, which indicates a weak performance because its return on assets was probably to a lower place its cost of capital. In terms of overall ROCE, Ryanair had a higher margin, 11.19%, than easyJet, 7.73%. From this figure, it is suggested that easyJet should operate at Ryanair?s significant discount.

Return on Shareholders? FundFigure 3. Return on Shareholders FundIn terms of the overall ROSF, the...

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