Luton-based EasyJet is UK’s largest low-cost airline, employing 8,945 people and carrying 61m passengers annually. EasyJet follows Porter’s low-cost strategy, effectively distinguishing itself from other LCCs by competing against established flag-carriers at primary European airports. The company streamlines its operations to cost-reduction, facilitated by a strong capital structure.
Europe’s airline industry has experienced a structural change since the recession in 2009, with major legacy-carrier continuously reducing their short-haul-capacity. Simultaneously, a KPMG study revealed that the cost gap between traditional and budget airlines has recently shrunk by 30%.
EasyJet’s business model distinctly differs from LCC-pioneer Ryanair as the Irish have strategically built a route network focused on serving secondary airports and thereby managed to keep the cost per seat 50% below EasyJet. However the Britons cost-control strategy resulted in a 48% favourable cost base compared to competing legacycarrier such as IAG.
Table of Contents
Part A: Financial Performance
1. Introduction
1.1. Internal Analysis
1.2. External Analysis
2. Financial Analysis
2.1. Operational Performance
2.2. Profitability
2.3. Short-Term Liquidity
2.4. Long-Term Solvency
2.5. Stock Market
2.6. Conclusion
2.7. Recommendation
Part B: Corporate Communication
1. Introduction
2. Evaluating the Use of Graphs
3. Conclusion
Research Objectives and Themes
This report provides a comprehensive examination of EasyJet's business performance, divided into a financial evaluation of its FY13 results and a critical analysis of its corporate communication strategies through graphical data representation.
- Financial operational performance, profitability, and solvency metrics
- Stock market positioning and investor-focused recommendations
- Strategic comparison with low-cost carriers and legacy competitors
- Analysis of impression management techniques in annual reports
- Evaluation of graphical integrity and disclosure transparency
Excerpt from the Book
1. Introduction
The use of visual and rhetorical representation to communicate financial information has become an integral part of companies’ annual reports (Beattie & Jones, 2008). Defined as impression management by Leary and Kowalski (1990), executives tempt to present selected information in a manner that distorts readers’ perceptions of corporate achievements (Neu, Warsame, & Pedwell, 1998).
Neu (1991) further stated that the underlying managerial motive for this behaviour is the desire to present a self-interested view of the company. While negative results tend to be embellished and positive performances overdone.(Beattie & Jones, 2002).
Brennan, Guillamon-Saorin, and Pierce (2009) identified the following seven approaches on how companies attempt to manipulate in accounting narratives.
Summary of Chapters
1. Introduction: Provides an overview of EasyJet's internal structure and its strategic positioning as a low-cost carrier within the European aviation market.
2. Financial Analysis: Examines EasyJet's financial health in FY13, covering operational efficiency, profitability, liquidity, and stock market performance compared to peers.
3. Evaluating the Use of Graphs: Critically analyzes how EasyJet utilizes visual representations in its annual reports to potentially influence reader perception through impression management.
Keywords
EasyJet, Financial Performance, Corporate Communication, Low-Cost Carrier, Profitability, Solvency, Stock Market, Impression Management, Graphical Representation, Data Distortion, Strategic Benchmarking, Investor Relations, Annual Reports, Market Analysis, Liquidity.
Frequently Asked Questions
What is the primary focus of this report?
This report evaluates EasyJet’s business performance, specifically analyzing its financial state during the 2013 fiscal year and assessing its corporate communication practices.
What are the main thematic areas covered?
The report covers financial metrics like profitability, liquidity, and solvency, alongside a qualitative study on impression management and the use of visual aids in financial reporting.
What is the central research objective?
The objective is to determine EasyJet's competitive success in its 2013 financial year and examine if the company used manipulative graphical techniques in its corporate reporting.
Which scientific methods are applied in this study?
The study utilizes financial ratio analysis to assess performance and applies content analysis methods, specifically the CICA deficiency-criteria, to evaluate the transparency of corporate graphs.
What is the core content of the financial section?
The financial section details EasyJet’s operational performance, debt management, share price development, and future value projections based on varying economic scenarios.
Which keywords best characterize this work?
Key terms include EasyJet, Financial Performance, Impression Management, Graphical Representation, and Strategic Benchmarking.
How does EasyJet compare to Ryanair?
The report notes that EasyJet and Ryanair follow different models, with EasyJet focusing on primary airports while Ryanair emphasizes cost-efficiency at secondary airports.
What does the "Lean Program" signify for EasyJet?
The "Lean Program" is a strategic initiative introduced by EasyJet to reduce costs in areas such as engineering, ground handling, and operations to maintain competitive advantage.
Does the report conclude that EasyJet uses impression management?
Yes, the report concludes that EasyJet has utilized emphatic, selective, and benchmarking techniques to portray its results favorably in annual reports.
What is the recommended investor outlook?
Given the strong financial performance and projected dividend sustainability, the report advises that an investment in EasyJet is favorable for potential investors.
- Quote paper
- Markus Bäder (Author), 2015, Quantitative and Qualitative Analysis of EasyJet's Annual Report 2013, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/288365
