EasyJet Strategy and Financial Performance Evaluation

Topic: Company Analysis
Words: 2658 Pages: 9


EasyJet is a British company active in the field of air transport. It is one of the leading low-cost airlines in Europe. The company is among the companies included in the FTSE 100 stock index. In January 2022, the market capitalization was estimated at over £4 billion. However, in its fiscal year 2020/21, the Group’s business was severely impacted by the Covid-19 pandemic (Timóteo, 2021). This severely hampered their financial performance. In this paper, we conduct an evaluative assessment of the company using two evaluation tools; SWOT analysis and the PESTLE analysis.

SWOT Analysis

The SWOT analysis is an evaluation tool that examines an organization’s strengths, opportunities, weaknesses, and threats. The SWOT analysis can be the best evaluation tool for analyzing the airline industry. For example, in order to understand the position of EasyJet Airline Company from the internal realm, we can use the SWOT evaluation metrics. These include the SWOT and PESTLE analyses (GURL, 2018). SWOT analysis is a useful tool to achieve this. To determine the elements that are part of your company, you will need to carry out a SWOT analysis that will help you break down the important factors and the actions to take to improve the path (Sarsby, 2019). The SWOT analysis tool is designed to help understand the internal situation of the business for future decision-making.

EasyJet Strengths

The strengths in the SWOT analysis represent the strengths of a company. These are the positive factors that contribute to the success of the organization. The Fact that EasyJet airlines were supported financially by big economical giants strengthens its hold on this industry (Rodrigues & Rocha, 2019). Other positive aspects emanate and on which the organization’s future depends, including the global market potential.

A major strength of the company is that it has a strong asset base. EasyJet operates with over 300 aircraft. This makes it possible for the company to serve a wide range of customers locally and internationally (Zhang, 2019). In addition, the Group has over 13,000 employees who help run the airline operations. This is a potential strength for the organization, which gives it a competitive advantage over other competitors in the industry (De Oliveira Cabral, 2019). EasyJet now operates several hundred routes between numerous countries in Europe and North Africa, Turkey and Israel. Unlike many of its competitors, EasyJet mainly uses larger international airports. In Rome, for example, it does not fly to Rome Ciampino Airport but the more important Rome Fiumicino Airport.EasyJet owns a fleet of 30 Boeing 737s to serve 40 routes, and the airline took over the former British Airways low-cost airline Go Fly, which operated Boeing 737-300s on 38 routes.

Mergers and acquisitions are another strength that helps maintain the company’s growth. EasyJet purchased the British airline GB Airways for £ 103.5 million from the British Bland Group. This acquisition expanded the fleet by 15 aircraft. However, the airline was not integrated into the company until March 30, 2008, as a franchise agreement with British Airways existed until that date. With the purchase, EasyJet hoped for further expansion at Gatwick Airport, where they would purchase 24% of all slots owned at the airport. Take-off and landing rights at London Heathrow airport were not included in the takeover (Timóteo, 2021). Since the summer flight schedule, 2019 flights have been operated under their flight numbers beginning with EJU.

EasyJet Weaknesses

The SWOT analysis’s weaknesses represent a company’s internal weak points or negative aspects. For example, low revenue, as reported when the company stated, can be a weakness to EasyJet airline’s growth. These depend on the same organization and place it in an unfavorable point compared to its competitors. These can be a lack of skills, experience, or even equipment or technology.

Management of operations and workers is a major weakness for airlines. With 13,000 employees and a string of operations, the management can sometimes be overwhelmed. Large workforces, spread across international geographic areas, require continuous monitoring. The management of communications and monitoring of operations can be very requiring, which is a weakness for any airline. Poor management always leads to a decline in performance and growth of the airline (Timóteo, 2021). With the stiff competition in the airline industry, operation management has become a paramount consideration.

EasyJet Opportunities

The opportunities in the SWOT analysis represent all the good opportunities the company has and from which it can benefit. These are areas that could help the organization succeed if tapped. For example, the airline field is becoming increasingly popular, which offers a better opportunity for the company. They are all those internal aspects that can help an organization achieve its goals.

The fact that international airline spaces have opened up is a big opportunity for the airline industry. Many airlines have taken this opportunity to expand their operations and increase their revenues. However, the Covid-19 health crisis affected EasyJet’s operations in the first half of the 2020/21 financial year. As a result, the company reported mixed results for the period. In the first six months of the financial year, revenue was £240 million, down 90% year-on-year. Nevertheless, it exceeded market expectations. The market had expected sales of £235 million (Timóteo, 2021). The sharp drop in half-year revenue is due to the drastic drop in passenger numbers. It fell by 89.4% to 4.1 million in the half-year (Timóteo, 2021). For EasyJet, this is an opportunity to cover the losses made during the pandemic.

Another opportunity is related to the acquisition of technology. The acquisition of more advanced technologies in the airline industry has allowed airlines to achieve more. EasyJet uses advanced technology in its operations which is a huge opportunity for the airline. Due to the size of the company and the numerous digital offers, easyJet generates billions of data – both in daily customer contact and in the course of operations. Johan Lundgren will report directly to the new Chief Data Officer. He should focus even more on using data at easyJet to improve the customer offer, increase sales, reduce costs and improve the reliability of the airline. EasyJet is now looking for a suitable candidate for this position (Alberto & Minh, 2019). Responsibility for pricing, revenue management, and non-resident income will no longer lie with the Commercial Department but with Robert Carey, strategy and network director of EasyJet.

EasyJet Threats

The threats in the SWOT analysis are all those problems, challenges, obstacles, or difficulties a company can go through. For example, one of the biggest threats is competition from leading companies such as British Airways, Emirates, and Virgin Atlantic. These negative situations can cause problems or even put the permanence of the organization at risk. The global pandemic is another huge threat for airlines worldwide. During the covid-19 pandemic, the Group recorded a net loss of £549m in the first half of 2020/21, compared with £324m a year earlier at the same time, due to the fall in air traffic. Between October 2020 and March 2021, the British low-cost airline reported a pre-tax loss, excluding special items, of £701m. A year earlier, same period, the Group had posted a loss of £193m. The high loss in H1-2020/21 is mainly due to the effects of the coronavirus pandemic (Timóteo, 2021). However, that amount is in line with the company’s guidance, which had forecast a loss of between £690m and £730m.

Strategic Recommendations for EasyJet Airline Using TWOS

S/O Strategy

In order to maintain its lead in the UK airline industry, EasyJet airlines need to capitalize on its strengths and opportunities. The airline can expand its fleet number and offer more routes to capture more customers as the international airspace is opened. This will help increase its liquidity value. As of March 31, 2021, the Group’s available liquidity is estimated at around £2.9 billion. This amount should allow the British airline to deal with the Covid-19 health crisis. The airline also needs to capitalize on related businesses such as hotels and destinations. This will help the organization diversify its revenue sources.

W/O Strategy

The airline can dominate the airline industry with a strong brand across the UK. The British airline notably recorded an increase in passenger numbers after the pandemic. It reached around 4 million, almost 17% of its level. This growth is due to the lifting of restrictions on international travel and the development of the vaccination campaign during this period (Timóteo, 2021). Between April and June 2021, the airline recorded revenue of £212.9m compared to £7.2m a year earlier.

S/T Strategy

The airline also needs to extend its operations and extend its reach to other countries. Due to the withdrawal of the United Kingdom from the European Union, the risk involved could see EasyJet lose air traffic rights as a result. The airline should apply for a European Air Operator’s Certificate in other European countries. This will ensure that EasyJet will still offer flights throughout Europe and within EU countries even after the EU exit.

W/T Strategy

The company’s main weakness is operations management, whereas the main threat to its operations is competition. Measures can be put in place to improve operations management and thereby improve the quality of services which will help counter competition. A new corporate structure also needs to be planned. EasyJet must aim to become a pan-European airline group with airlines based in Austria, Switzerland, and the UK and a UK-based trading and services company.

The PESTLE Analysis

The aircraft business has a significant impact in globalization and helps public monetary advancement. The monetary log jam, armada groundings inferable from Covid-19, and rising oil costs are only a couple of the prominent causes that have affected the entire flying industry; beneath is a conversation of other outer powerhouses and their effect on the flight business, especially on EasyJet (Sayeed, 2020). Thus, the PESTLE study is a valuable device for looking at current outer issues, for example, political, monetary, social, innovative, lawful, and natural worries, as well as their effect on EasyJet’s plan of action, development direction, business case, and market procedure. It will give a 10,000-foot perspective of the whole world according to different points of view that one could wish to check and monitor while thinking about a particular thought or plan (Momin, 2021). Moreover, it provides a business with a feeling of the elements that could impact another business or area. The PESTLE examination for EasyJet Airlines is as follows;

Internal Strengths

The major strength seen in the company is a good brand and marketing campaign; with this, it can reach a lot of people hence its huge customer base and success. EasyJet’s existing strengths and areas for improvement, as well as what external environmental risks it may face and what new open doors are accessible to the organization in the close and medium-term, are completely examined. EasyJet offers 60 significant European objections and covers different European courses with essential action in both recreation and business markets (Fatema, 2020). Its current income circumstance is likewise powerful, with income from tasks expanded by 61%. This exhibits the organization’s piece of the pie to a higher level. Throughout the course of recent years, the organization has seen an expansion in turnover and exchanging benefits, bringing about a consistent expansion in fundamental productivity.

The Airline is also Europe’s leading low-cost Airline, having merged with Go to become the continent’s premier low-cost carrier. Another strength that may be attributed to the organization is brand awareness. The Super Brand Council named EasyJet a business super-brand in November 1999, recognizing it as an excellent brand name (Sayeed, 2020). EasyJet customers can now take advantage of ‘ticketless travel,’ which lowers the expense of giving, appropriating, handling, and accommodating tickets. The Airline likewise has inward qualities regarding taking advantage of air terminals: by diminishing times required to circle back to 30 minutes or less, it can add more turns to its high-recurrence flights.

Internal Opportunities

The major internal weakness that the Airline experiences include is the ability of not being able to make use of the technological advancements (Fatema, 2020). With this, it can operate easily and ensure that many people get the company’s services at a low cost compared to other airlines. It forms the larger part of the profitable organizational needs, which must be addressed when taking care of the technological aspects of a business (Momin, 2021). With the availability of 5G networks, the customers can book flights without necessarily going to the airport to do so.

Factors such as automation, blockchain innovation, manageability, biometrics, cloud-based innovation, and complex airport regulation frameworks are only a couple of the mechanical improvements to watch in 2020. The flying business’ tasks have a huge natural effect (Sayeed, 2020). EasyJet grasps its functional effect on the climate as a socially mindful brand. It is currently the world’s most memorable significant Airline to work carbon-unbiased flights. It likewise addresses other ecological worries, for example, environmental change, fossil fuel byproducts, aeronautics commotion, rubbish and plastic decrease, and air quality.

External Opportunities

EasyJet’s potential prospects and challenges, both from within the airline industry and the global economy. Weaknesses previously recognized could also present opportunities for overall brand mindfulness advancement. The EasyJet brand is notable in Europe yet should be advanced beyond the landmass (Sayeed, 2020). There are potential opportunities for extra courses and administration advancement; EasyJet has proactively sent off a few new European flights; what about venturing into the Asia Pacific. Taking the market on a globalization journey and extending beyond the European market will be critical to maintaining business performance. Additionally, due to market expansion, new facilities or services will become available. For example, ‘Free Lunch,’ compete with mainstream airlines by providing on-board catering services (Fatema, 2020). The increased risk of global tourism will provide prospects for joint ventures with local/foreign travel businesses; as a result, companies like Thomas Cooke are as of now offering such types of assistance to a rising number of travelers every year. At long last, there might be changes in the space of development and organizations.

Another opportunity is the ability to put a ton of exertion into streamlining the computerized insight previously, during, and after the excursion. For instance, clients get ideal updates about changes, offers, limits, and more current installment decisions before their flight (Momin, 2021). They are likewise fostering a virtual registration framework to lessen human contribution. They’ve likewise been further developing their criticism channels by smoothing out them and making them more open consistently (Sayeed, 2020). It accomplishes this by making the genuinely necessary deals, by investing some parcel of energy into its web presence, especially as far as client care, because of the movement limitations. At the point when the lockdown limitations slacken in 2020, they focused profoundly on giving ideal correspondences and updates to expected clients, which brought about a generally excellent reaction and marketing projections.

External Threats

A major legal threat the company experiences is the many legal accusations and threats that hinder the company from fully reaching its potential. The legitimate intricacies and ensnarement have all the earmarks of being natural to a huge partnership. EasyJet stood out as truly newsworthy in 2020 after a gigantic digital assault compromised the information and delicate data of something like 9 million clients in their data set (Momin, 2021). Roughly 2000 of these individuals’ Visa numbers and individual data like their contact data, homes, and takeoff and it were taken to land times. The organization’s proprietor blamed a few workers, especially EasyJet’s top administration, of tolerating installments from Airbus, one of its providers, to purchase planes from them as it were. The proprietor’s disclosure of defilement among his top specialists cast an unfortunate light on the organization (Fatema, 2020). Likewise, EasyJet may be threatened by horrific incidents that have never happened before. Changes in societal trends, such as vacations outside of Europe, could pose a threat. Because air travel is fundamentally a commodity, it is recession-proof in the event of an economic downturn. Finally, there are threats of national airline takeover attempts.


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