And the government has said the second of these has to be a more accurate PCR test, which can cost as much as 219 ($302) per passenger. 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. Reducing the cost, managing the cash burn, and getting access to liquidity, Lundgren told CNBC inNovember. This will assist management to decide as to what EasyJet should be concentrating on and what requires de-emphasising or even outsourcing. 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. 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. easyJet will maintain its advantageous cost position through continued cost action. The increase growth of world tourism will offer opportunities in terms of undertaking joint venture with local/foreign travel companies; hence, Going places and Thomas Cooke are already providing such services to growing number of holidaymakers each year. The reason for EasyJet to put so much emphasis on the human factor as one of the primary risk sources is quite understandable. 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. Clicking on the following button will update the content below. This has lead to EasyJet customers enjoying Ticketless travel this reduces the cost of issuing, distribution, processing and reconciling tickets. Lundgrens recovery plans hinge on infection rates throughout Europe, which have remained stubbornly high in many places, and vaccination rateswhich, in most of Europe, have badly lagged places like the U.S., U.K., and Israel. Strategic risk management is the process of identifying, quantifying, and mitigating any risk that affects or is inherent in a companys business strategy, strategic objectives, and strategy execution. Lundgren has pulled every financial lever available to him to keep EasyJetaloft. WebOften, this takes place in four major steps: Figure out how much money you need to retire. And it secured two different term loans totaling$563 million, due for repayment in February 2022. Standardisation in its activities as an airline leads to both economies of scale and a simpler product, which is cheaper and easier to distribute. We will consider the value chain for EasyJet in more detail later in our discussion. 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. These moves enabled EasyJet to reduce its operating costs, excluding fuel, by about 31% in the year through Sept. 30, 2020. The airline began purchasing carbon offsets for the CO2 of all its flights in 2019. 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. He said he had discovered a secret meeting in Switzerland, arranged by Airbus, between top EasyJet executives and a lawyer who, according to documents revealed in the Panama Papers leak, may have helped clients evade international sanctions through offshore shell companies. As a budget airline focused exclusively on short-haul flights within Europe, it had more flexibility than long-haul carriers to adjust its flight schedule, canceling flights without worrying about losing connections or violating alliance agreements. Disappointing your customers. Managing for value involves managing both value activities and cost drivers. This results in a very strong competitive rivalry in the industry. Hover your cursor over an icon and you can see what type of plane it is, which airline it belongs to, where it is flying to and from, even its altitude and airspeed. Therefore, capability is strongly related to the way that resources are used and controlled. Opportunities in terms of worldwide destinations are now popular with holidaymakers and also the growing trend in international business ventures, e.g. 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. 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)). Low price/low added The strategy has four strategic priorities that will build on easyJets structural advantages in the European aviation market, helping easyJet move closer towards its destination of being Europes most loved airline, winning for customers, shareholders and our people. Having fought off Haji-Ioannou, Lundgren and EasyJets C-suite faced other foes they couldnt control. 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. Continuing to develop our revenue management capability such as enhancements to our pricing algorithms. easyJet is building a network of key cities, broadening their presence across Europe. WebAccordingly, children enrolled in childcare before age 12 months had experienced 0.5-0.7 more infections at age 6 years (in total 4.5-5.1 infections) than peers enrolled at age 3 years, differences that persisted throughout adolescence. 2 airline by market share for each airport it serves. This results in high levels of asset utilisation and reduced unit costs. Another benefit of Internet technology is lower transaction costs at multiple levels in value chain activities. Table 1 shows that EasyJets sales has increase year on year since 1998, with profit and gross margins also experiencing a positive trends. 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. Finally, EasyJet has sustained its price-based advantage by focusing on market segments where low fares are critical and valued by customers. In addition to that, EasyJet has been offering no in-flight meals, no in flight movies. 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. WebEasyJets first generic strategy is to achieve an overall cost leadership in the low cost airline industry. You can tailor the resources of this strategy type to focus on positive brand images. Out on the tarmac, a short distance from the simulators, almost a dozen real EasyJet A320s sit idle. In the long term, this is concerned with the extent to which the organisation is operating profitably. We are seeing significant benefits already from operational resilience processes and predictive maintenance. 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. To what extent does EasyJets concentration on The airline founders misgivings had only mounted after the aircraft maker agreed in January 2020 to deferred prosecution agreements with the U.S., France, and the U.K. and to pay billions of dollars in fines stemming from charges that it had for years routinely bribed airline executives to secure contracts.When the pandemic struck, the aggrieved founder saw an opportunity to force EasyJet to abandon the deal. So when the industry was slammed by COVID-19, government was responsive to pleas for help. At the same time that it was offloading planes to raise cash and placing others into long-term storage in boneyards, the company still took delivery of 14 brand newAirbus A320 and A321 Neos. EasyJet also have a reputation for paying low wages in line with its low cost strategy. It is also anticipated that Ryanair will continue to lower costs, which will allow it to continue to engage in a price war, by lowering fares aggressively. EasyJets new holiday division launched in December 2019, just months before the pandemic took hold. Lundgren wasnt completely despondent: Where bookings were allowed and quarantine rules not restrictive, passengers were coming back. The U.K. is doing well: It had approved two vaccinesone from Pfizer and one from AstraZenecain December and a third, from Moderna, in early January; by mid-May it had given 68% of the adult population at least one shot. easyJet aims to deliver a seamless and digitally enabled customer journey at every stage and is continuously working to enhance the customer experience. 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. The next quarter was not much better: A U.K.-wide national lockdown was imposed in November and, after a brief easing of restrictions in the run-up to Christmas, again in late December. This will involve retention of best salespeople supported by HR management, engineering support in terms of maintenance of the web page supported by technology development to ensure that web site has the latest prices and route and flight information. In June, the airline found a deft way to simultaneously relieve the pressure from its cash burn and Haji-Ioannou: It raised more than$631 millionto help it weather the pandemic by issuing new shares equivalent to 15% of the companys outstanding share capital. Within weeks of the vote, Findlay, EasyJets CFO, announced his intention to step down, and analysts speculated that the stress of Haji-Ioannous campaign, on top of that caused by the pandemic, had taken a toll. 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 internal strengths in terms of brand awareness, cash flows, and operational efficiencies. In terms of strategy, many factors are outside the control of the company, such as use of high quality components and low defect rates for its aircrafts. 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. The airlines hopes for summer 2021, like those of almost all airlines, rest on vaccinations. Yield management is a form of risk management and therefore, adds value. 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. We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. In 2020, those months were grim. The existing competition also have strong brand image globally, EasyJet is recognised nationally and within the European markets, however, national airlines like British Airways is recognised worldwide and has stronger brand awareness. Due to a recession, fewer business tourists are travelling to downfall the quantity of sending amount. When the risks are specific to a certain activity the risks will be managed, and maintained In terms of support activities, EasyJet takes advantage of technological developments in order to reduce costs. 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. 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. All Rights Reserved. This needs to be updated constantly as this will be a live system. Decisions must be made on the trade-offs inherent in development of a strategy. Today, a year after Easy Jets announcement, those perils still hang over the airline. If COVID doesnt ease more quickly, and leisure travel doesnt rebound as hoped,EasyJetshole will only get deeper, and its plans to grow could be spiked indefinitely. And he was not a happy shareholder: For a decade, he had sparred with a succession of EasyJet CEOs and boardsfaulting them for overly ambitious and costly expansion plans and for ordering too many new aircraft from manufacturing giant Airbus. )Compared to some of its low-cost rivals, EasyJet also owned more of its planes outright. 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. EasyJet also operates a flat management structure, which may lack a formal discipline that is needed as the organisation grows. Our mission to make business better is fueled by readers like you. Since the events of September 11th the airline industry suffered heavily, stocks plummeted and ticket prices are at all time lows. A strong and visible brand to create a high level of awareness with consumers. Remote working and hot-desking have been characteristics of easyJet since the beginning. 3. Feeling powerless is one of the worst feelings, not just in business.. When EasyJets board did not accede to his demands, Haji-Ioannou carried through on his threatrequesting a special meeting to vote on the removal of board member Andreas Bierwirth, a former Austrian Airlines and Lufthansaexecutivewho Haji-Ioannou termed a friend of Airbus. When the board tossed out this request on a technicality, Haji-Ioannou resubmitted his call and asked for the removal of the chief financial officer, Andrew Findlay, too. Directly accessible data for 170 industries from 50 countries and over 1 million facts: Get quick analyses with our professional research service. Market Development. Developing the range of ancillaries on offer such as the Inflight retail proposition. The company benefits from being one of just four airlines globally thatcurrentlyhave an investment-gradecreditrating, according to Gerald Khoo,a transportation analystwith brokerage firm Liberum. Currently, around 12% of boarding passes issued by easyJet are mobile passes, although this can be as high as 50% for some flights. To enjoy unlimited access to our journalism, subscribe today. Haji-Ioannou also alleged three large minority EasyJet shareholdersthe asset management companies Invesco, Phoenix Asset Management, and Ninety Onewere straw men, secretly controlled by Airbus, since all three companies manage some of the aerospace giants employee pension assets.But, in the end, Haji-Ioannous campaign failed to catch fire with other investors. 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. The airline had become Europes equivalent of Southwest in the U.S. EasyJet currently has two suppliers, Boeing and Airbus. Pandemics, lockdowns, trade disputes, financial crises and more can depress travel demand and threaten the bottom lines of industry players. He also threatened to sue the airline if its payments to Airbus pushed it toward bankruptcy. Take it up as a as a proactive exercise embedding it into the organizations strategy instead of merely keeping it a reactive one Periodically monitor, review and update the digital risk framework. Value chain analysis can provide important insights into what management need to focus on strategically. Product Development. A typical approach for risk identification is to map out and assess the value chains of all major products. The54-year-old Greek-Cypriot entrepreneur hasnt had a formal management role in the airline since he stepped down as chairman in 2002, but he remained a major shareholder, owning more than a third of the company before the pandemic hit. EasyJet announced it had lost more than $1 billion in the 12 months through September 2020. Therefore, it is vital for EasyJet to have a thorough comprehension of their costs Worse, the company had discovered the hack back in January but hadnt notified people whose credit card details had been accessed until April, and was only now letting other customers know. Advantages of Choosing In-House. However the sustainability of competitive advantages may be problematic: as rivals copy successful strategies, EasyJet will loose its initial advantages. It can restore the reputation of a brand. And hes moved aggressively to grab additional takeoff and landing slots in markets he sees as important. Free resources to assist you with your university studies! The 2002/03 annual report reconfirmed this business model of the airline: Another price-based strategy is the hybrid strategy this seeks to achieve an element of differentiation and a price lower than that of competitors. But what are the internal weaknesses suffered by EasyJet? Having considered the possible future opportunities what are the potential threats that EasyJet needs to bear in mind? It has been streamlines by using e-commerce, firstly by telesales and now through the Internet. EasyJets overall cost leadership strategy uses low costs at each point in the value chain to lower costs. The customers of EasyJet have been using the Internet for making bookings. In addition to that, EasyJet has been offering no in-flight meals, no in flight movies. Also, only one type of aircraft is used, in order to minimise maintenance costs. Thats better, but still a big burden on, say, a family of four. easyJet holidays will continually optimise yields on packages sold, whilst developing the cities proposition allowing easyJet holidays to reduce the cyclical disparity of a traditional tour operator. (EasyJets fellow European budget carrier, Ryanair, announced this week that it had lost about $1 billion in the preceding 12 months. Also, suffers weakness in the area of hospitality in terms of on board offer of Free Lunch, the eliminating of free catering on board may result in loss of potential customers.
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