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. WebThere is one main reason which influences these economic factors is the recession in the Easy jet. Disappointing your customers. 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 terms of competitive advantage, the internet offers overall cost leaders new abilities to reduce costs in primary activities such as marketing (i.e. 100 per cent direct selling of fares; over 90 per cent of sales are online. Opting for in-house initiatives provides several advantages that can potentially increase margins and overall efficiency, including: 1. Potential threats of economic recession, since air travel is effectively a commodity product, it is recession prawn. The airline cut a deal with a health care company to provide the test at half the normal cost, or 60 per test. 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. 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. The way the report has classified the risk is whether the risk is a generic risk that will affect the whole industry of whether the risk is specific to the company. 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 currently has two suppliers, Boeing and Airbus. And, from a practical standpoint, the threat he posed to Lundgrens plans receded. British Airways. A typical approach for risk identification is to map out and assess the value chains of all major products. We will consider the value chain for EasyJet in more detail later in our discussion. And the simulators have been kept busy virtually around the clock, even during the pandemic, as EasyJet has sought to keep its pilots properly certified so they will be ready when flying returns. They have focused on expanding into new markets in Eastern Europe. EasyJets competitive advantages via low prices are sustained in a number of ways. Every so often Easyjet has aligned to face some unusual risks, for example, IT security and fraud risk, brand ownership, dependence on technology, Industrial action, financing and interest rate risk; while the key risk management system of the company is very formal rather than deepest, From June 15, when EasyJet resumed flying, through September 2020, it carried 9.5 million passengers, compared to 37.1 million in the same period the year before. All office-based employees are encouraged to dress casually. 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. Such lower costs benefit EasyJet initially as innovation is rewarded. Meanwhile, the U.K. has announced international travelwill resume as of May 17, but willoperate according to a traffic light system, with arrivals from red-, yellow-, or green-designated countries subject to different requirements. On the other hand, risks which produce It announced plans to gradually ramp up to 75% of its normal capacity by August. This will provide an evaluation of the external business environment in which the company operates. Finally, opportunities may also exist in the area of innovation and alliances, how about a joint venture scheme with Ryanair to maintain and enforce the low cost competitive advantage. Hes running the business to make it as lean as possible, and you cant be a nice guy and do that, Kotze says. At the end of January, EasyJet announced that it had secured another $1.9 billion through a five-year loan, secured against its aircraft. EasyJet also operates a flat management structure, which may lack a formal discipline that is needed as the organisation grows. The type of childcare had little impact on infection risks. 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. Continuing to develop our revenue management capability such as enhancements to our pricing algorithms. As it turned out, it wouldnt need those flights. This also reduces the marginal cost of incremental growth; increasing scale brings valuable economies (Johnson, G., Scholes, K., Whittington, R., (2005). Feeling powerless is one of the worst feelings, not just in business.. It helps to remember that while you cant control what happens to you, you can always control your response. Our revenues have been benefitting from data projects in late yield initiatives and differential seat pricing. A PESTEL analysis of the industry will examine the local, national and global influences of political, economic, social and technological factors to understand opportunities and threats well. The customers of EasyJet have been using the Internet for making bookings. The company carries out And it secured two different term loans totaling$563 million, due for repayment in February 2022. LEGAL The European deregulation of the commercial aviation provided both major strategic threats and opportunities, the national mainstream airlines faced severe price competition from discount carriers. *You can also browse our support articles here >. )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. Enabling risk management through a Noting that EasyJet had failed to say exactly how the deferral affected EasyJets cash burn, the founder said that EasyJet might have engaged in market manipulation by failing to disclose such details and by using overly optimistic forecasts for when the companys revenues and profits might recover. 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. Investments in assets are also key consideration in value creation in that consideration of the extent to which assets and working capital are being utilised. The focused network strategy can be summarised as follows: easyJet recognises that the continued evolution of our product portfolio represents a significant opportunity to build on spend per customer, delivering enhanced sustainable returns. Finally the threats from the suppliers bargaining power, this is very strong in the airline industry for two reasons, one is highly skilled labour can command a very favourable terms and second is the price of oil. With Ryanair maintaining high margins despite reducing yields through strict cost management. Investing in new generation fleet to replace older types drives economic value, lowering fuel and maintenance costs. Budget airlines that rely on the leisure market make most of their money from April to August. Upgauging the fleet enables easyJet to improve competitiveness on costs. Decisions must be made on the trade-offs inherent in development of a strategy. Given the fact that the company offers All work is written to order. 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. Haji-Ioannou said the result was rigged, arguing that the fund companies with Airbus pension business should have been ineligible to vote. The threats are in terms of alternative holidays Disneyland Paris via Eurostar (Euro tunnel) and P&O cruise. easyJet seek to strengthen their position in key markets as the competitive landscape evolves. ECONOMIC the travel industry is vary recession prawn and also very sensitive to changes in oil prices. At the same time, it was wooing at least some business travelers by differentiating itself from no-frills rivals like Ryanair and Wizz, offering some perks and serving first-tier airports. The airlines hopes for summer 2021, like those of almost all airlines, rest on vaccinations. Deliver strong on-time performance, which is consistent with the focus on slot constrained, congested airports. Do you have a 2:1 degree or higher? But the strategy also burdens EasyJet with higher costs as it tries to recover from the pandemic. Analysis of financial resources in order to understand the strategic capability of EasyJet will need examination of financial capability and performance. EasyJet announced it had lost more than $1 billion in the 12 months through September 2020. Founded in 1995, low-cost carrier EasyJet established itself among the largest airline based in the United Kingdom by passenger numbers. Remote working and hot-desking have been characteristics of easyJet since the beginning. EasyJet through its use of an overall cost leadership strategy can use internet-based technologies to reduce value chain costs in a variety of ways: On-line bidding and order processing to eliminate the need for sales calls and decrease sales force expense. 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. With the modern aircraft fleet that it possesses, the fuel cost and aircraft maintenance cost is also reduced. Combining perceived low price with perceived added value can be a highly successful strategy but one that requires innovative thinking. Adjust your investments to Ties are banned except for pilots! 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. Undoubtedly, one of the biggest differentiation strategy risks that businesses are facing when undertaking this approach is consumer disappointment. Product Development. In 2020, it transported a Supported by innovative and effective advertising. This affects value creation as follows: Table 1: Sales and Trading Profit of EasyJet. 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. 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