EASYJET VERSUS RYANAIR- COMPARAISON DES COMPTES DE RESULTATS DES DEUX ENTREPRISES

Contents

Executive Summary        1

Contents        2

1 INTRODUCTION        3

2 FINANCIAL PERFORMANCE        3

3 FINANCILA POSITION***************************4

4 CASH FLOW***********************************5

5 INVESTORS SHARE PRICES************************6

6 APPENDICES*************************************7

7 REFERENCES************************************8

1.INTRODUCTION

Easyjet Plc is one the most highly competitive low cost airline based in UK, which  operates mainly across the European Countries in North Africa.

EasyJet was selected because the company was one of the European low cost who survived from the big troubles which hit  the low cost flight market this year. The Europe biggest low cost Airline run into difficulties. So. They cancelled thousands fo flights through Europe that affected  hundreds thousand of passengers. Then, Monarch Airlines, collapsed then Air Berlin, the German low cost went into administration.

desesperatly cost  company was selected because the last semester of the year 2017 was surprisingly favorable for them contrary to last year were they were confronted to  negative events that impacted the company’s profit.  Easyjet purchased the shares of Air Berlin, a Germam low cost and the company will be based in Austria On of its  competitors, FlyMonarch entered into admistration in October 2017 and Ryanair run into big difficulties when cancelled thousands of flights since September. It’s a challenge for Easyjet. I would like to know how it will compete.

1. FINANCIAL PERFORMANCE

The financial performance of EasyJet was not as good in 2016 compared to the previous years in 2015 and in 2014 when the company made increased its profit.

EasyJet’s revenue trend declined from 3.51% in 2014-15 to 0.36% in 2015-16. But Ryanair’s revenues trend increased from 12.25% in 2014/15 to 15.60% in 2015/16.

The total revenue trend shows a decline of 0.3% between 2015 and 2016, whereas there was an increase in revenue of 3.5% between 2014 and 2015.

The decrease in revenue was mostly affected by the external events causing the depreciation of the pounds because of the Brexit vote, and a decline in booking when the terrorist events occurred.

However, the number of passengers increased by 4.5 million, and the load capacity rose by 6.5 % despite of the external events, according to the airline.

Ryanair’s revenue increased during the last 3 years. Unlike EasyJet, the company made profit year after year. It increased of 12.25% in 2014 -15 and 15% in 2015-16

Other reasons for the decline in profit is the rising cost of sales which impacted the profit badly

Gross profit and Operating profit have declined

The company gross profit margin deteriorated from20.06% in 2015 to 16.49% in 2016. The cost of Airport Ground and Handling rose from £1122 million in 2015 to £1267 million. Due to the extra cost of opening new bases in Europe and hiring new crew members. Compared to its rival Ryanair which shows a profit increase of 22.34% in 2016 and decreased in cost of sales for the same year.

The operating profit went down from £498 million to £688 million. The percentage of profit was in 14% in 2015 and fell to 10% in 2016 due the increase in depreciation of some aircrafts that the company bought in 2015, delivered in 2016.

ROCE, Return on Capital employed deteriorated from 22.2% in 2015 to 14.75% in 2016 due the fall in operating profit during the year of 2016. However, ROCE is also affected by the long term borrowing of the £500 million Eurobond issued in 2016 due to the acquisition of 20 aircrafts. However, Ryanair had a better performance, ROCE was 21.17% in 2015, it went up to 26.76% in  2016.

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1. FINANCIAL POSITION

EasyJet Financial position has slightly improved during the 2016 year. The net asset was £1279 million in 2015,it  went  up £1454 million in 2016.  The current assets ratio shows 0.92 in 2016 against 0.72 in 2015. which means for every pound of liability, the airline had £1. Of asset. This is caused by in increase in asset and the decrease in current liabilities.  The company got more assets than liabilities. IT proves that the airline can face its liabilities. However, the debtor ratio shows that it took 52.7 days in 2016 to pay back the creditors instead of 48.23 days in 2015. Nevertheless, the creditors will appreciate that the company is financially strong enough to pay back the money they owe to them. It’s good the credit rating and it will facilitate other future borrowings.

3 CASH FLOWS

Cash flow is the health of a business as it indicates if the company is liquid or not. It shows money come in and out the company.

EasyJet Cash generated from operating activities has deteriorated from £689 million in 2015 to £387 million in 2016. This was certainly due to the fall in cash generated from operations which was lower than the previous year. The decreased in revenue during the year of 2016, due to few demand and the pound which depreciated have caused the cash from operating activities to decline

The company paid higher dividend to its shareholders £219 million in 2016 compared to £180 million in 2015. The company paid ordinary dividend of 55.2 pence in 2016 instead of 53.8 pence. EasyJet paid high dividend to encourage the investors to inject a lot money into the company, and they will get a higher return for their investment.

EasyJet has highly invested in new aircraft as they bought 20 aircrafts due to the borrowing of the Eurobonds and the leasing. They invested £549 million in 2016, compared to 541 to £255 million. which is very risky. They expected a very return on investment from 2016. His type of investment was supposed to bring millions of pounds to the company. These aircrafts would help the company to increase the number of passengers transported, it should increase the company fleet and will make the company more competitive in this challenging and though environment. But the airline lost a lot of money instead. But the airline lost a lot of money instead with an adverse profit.

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